TaxTMI Updates e-Newsletter
Dec 06,2019

Passing on benefit of Input Tax Credit - Section 171 of the Central Goods and Services Tax Act, 2017 - Determination of profiteering under GST - Reversal of provisional ITC on unsold units upon issue of Completion Certificate - Comparison of ITC-to-turnover ratio in pre GST and post GST periods

Passing on benefit of Input Tax Credit - Section 171 of the Central Goods and Services Tax Act, 2017 - Comparison of ITC-to-turnover ratio in pre GST and post GST periods - Whether the respondent was required to pass on the benefit of Input Tax Credit to the flat buyers under Section 171 CGST Act, 2017. - HELD THAT: - The Authority accepted the DGAP's investigation and computations showing that the ratio of available input tax credit to turnover in the pre GST period (April, 2016 to June, 2017) was higher (0.30%) than in the post GST period (July, 2017 to December, 2018) (0.20%), indicating that the respondent did not obtain an additional net benefit of ITC after introduction of GST. The Authority also noted the legal position that ITC attributable to unsold flats is provisional and must be reversed on issuance of the Completion Certificate, which the respondent had obtained; that principle was relevant to correct attribution of ITC. The DGAP's finding that there was no reduction in tax rate and no increased ITC benefit was accepted as determinative. Communications by the respondent (credit note stated to be provisional) and the applicant's failure to substantiate a contrary case were considered, and the DGAP's negative conclusion on invocation of Section 171 was endorsed. [Paras 7, 8, 9, 10, 18]

Section 171 is not attracted as there was no net benefit of ITC or reduction in tax rate; therefore the respondent was not required to pass on any ITC benefit.

Determination of profiteering under GST - Computation of profiteering - Whether any quantum of profiteering was payable to the applicant or other flat buyers. - HELD THAT: - Because the Authority concluded that the conditions for invoking Section 171 did not exist (no additional ITC benefit and no tax rate reduction), there was no basis to compute or order payment of any profiteering amount. The DGAP's provisional communications by the respondent acknowledging provisional credit adjustments were treated as commercial steps taken by the respondent and extraneous to a statutory computation of profiteering; the applicant did not substantiate a claim to challenge the DGAP's computation. [Paras 11, 18, 19, 20]

No quantum of profiteering is payable since the anti profiteering provisions are not attracted; the application is dismissed.

Final Conclusion: The Authority, accepting the DGAP's investigation, found that introduction of GST did not result in an additional net ITC benefit to the respondent nor a reduction in tax rate; accordingly Section 171 CGST Act, 2017 is not attracted, the allegation of non passage of ITC benefit is unsustainable and the application is dismissed.

Constitution of Benches of GST Appellate Tribunal (GSTAT) - administration of justice in populous State - affidavit regarding statutory administrative action

Constitution of Benches of GST Appellate Tribunal (GSTAT) - affidavit regarding statutory administrative action - Grant of time to respondent to obtain instructions and place on record further action taken for constitution of appropriate Benches of GSTAT for the State of Uttar Pradesh, and adjournment of the matter. - HELD THAT: - The Court noted the short counter-affidavit filed on behalf of the Union stating that locations for various State and Area Benches of GSTAT had been finalised at the GST Council meeting of 21.06.2019, while the constitution of benches in Uttar Pradesh was to be considered separately. Counsel for the Union was unable to inform the Court of any subsequent decision at the GST Council meeting of 20.09.2019 and sought time to obtain instructions. Having regard to the interest of litigants in the State and the assurance that the matter would be resolved by the appropriate authorities at the earliest, the Court granted a limited period for the respondent to file a proper affidavit, if necessary, bringing on record the further action taken for constitution of appropriate GSTAT benches for Uttar Pradesh. The Court observed that the matter is also engaging the attention of the Division Bench and accordingly allowed a short adjournment to enable compliance. [Paras 2, 3, 5]

Three weeks' time granted to respondent to obtain instructions and file an affidavit regarding further action for constitution of appropriate GSTAT benches for Uttar Pradesh; matter listed on 13.11.2019.

Final Conclusion: Limited procedural relief granted: respondent given three weeks to place on record the steps taken concerning constitution of GSTAT benches for Uttar Pradesh; matter adjourned to 13.11.2019 for further hearing.

Validity of notices under section 153C of the Income-tax Act - Ad-interim stay of assessment proceedings - Job work and ownership of goods - Scope of seized material as 'books of account or documents'

Validity of notices under section 153C of the Income-tax Act - Scope of seized material as 'books of account or documents' - Job work and ownership of goods - Grant of ad-interim relief in respect of notices dated 19.9.2019 issued under section 153C for assessment years 2012-13 to 2017-18 and issuance of notice returnable. - HELD THAT: - The petitioners challenged the impugned notices under section 153C on the basis that only parcels containing gold (sent for job work) were seized and no books of account or documents were seized or requisitioned; they contended that the Assessing Officer's reliance on amended section 153C(1)(b) was misplaced and that the seized gold belonged to another (job worker principle). An alternative contention was that any incriminating material seized during the search dated 27.10.2017 related to the financial year 2017-18 (assessment year 2018-19), for which separate proceedings had been initiated. Having considered these contentions, the High Court issued notice returnable and, by way of interim relief, stayed further proceedings pursuant to the impugned notices dated 19.9.2019 for assessment years 2012-13 to 2017-18. The Court did not adjudicate the substantive validity of the notices or the merits of the job-work/ownership contention, but restrained the respondent from proceeding further pending disposal of the petition.

Notice issued returnable 16th December, 2019; further proceedings pursuant to the notices dated 19.9.2019 for AYs 2012-13 to 2017-18 stayed ad-interim.

Final Conclusion: The High Court issued notice and granted ad-interim relief by staying further proceedings under the impugned notices dated 19.9.2019 issued under section 153C in respect of assessment years 2012-13 to 2017-18; the substantive challenges to the validity of those notices were left open for adjudication on the returnable date.

Deduction of 90% under Clause (baa) of the Explanation below Section 80HHC - Computation on net receipts versus gross receipts for Clause (baa) - Addition/adjustment of losses from export of trading goods in respect of disclaimed turnover for deduction under Section 80HHC

Deduction of 90% under Clause (baa) of the Explanation below Section 80HHC - The Tribunal was right in upholding the Assessing Officer's action of deducting 90% of the income from specified hire and service receipts while computing profits for deduction under Section 80HHC. - HELD THAT: - The Court accepted the reasoning recorded in its earlier orders in TXA No.21 of 2011 and TXA No.28 of 2011 and held that the Tribunal correctly sustained the Assessing Officer's approach of applying the 90% deduction mandated by Clause (baa) of the Explanation below Section 80HHC to the incomes from truck hire, barge hire, ore processing receipts, trans-shipper loader charges, machinery hire and launch hire. The appellate court endorsed the Tribunal's conclusion that such incomes fall within the scope of Clause (baa) and that the statutory deduction is applicable to those receipts. [Paras 4]

Tribunal's upholding of the 90% deduction was affirmed.

Computation on net receipts versus gross receipts for Clause (baa) - The 90% deduction under Clause (baa) must be applied to net receipts and not to gross receipts. - HELD THAT: - While upholding the applicability of the 90% deduction, the Court modified the impugned orders to record that the deduction ought to be computed on the basis of net receipts rather than gross receipts. This conclusion follows the authoritative principle laid down by the Hon'ble Supreme Court in ACG Associated Capsules (P) Ltd. vs. Commissioner of Income Tax, which requires that the statutory percentage be applied to net receipts when the controversy concerns the manner of computing net receipts. [Paras 5]

Deduction to be calculated on net receipts; impugned orders modified accordingly.

Addition/adjustment of losses from export of trading goods in respect of disclaimed turnover for deduction under Section 80HHC - Losses from export of trading goods in respect of disclaimed turnover may be taken into account for computing profit eligible for deduction under Section 80HHC. - HELD THAT: - The Court held the substantial question in favour of the assessee and against the revenue, following its earlier decision dated 27.03.2012 in The Commissioner of Income Tax vs. V. M. Salgaonkar & Brothers Ltd. & anr., which concerned the same assessee and where the appeals by the revenue were dismissed. Consequently, the impugned orders were modified to reflect that losses from export of trading goods in respect of disclaimed turnover are to be permitted in computing the profit eligible for deduction under Section 80HHC. [Paras 6]

Substantial question answered in favour of the assessee; impugned orders modified accordingly.

Final Conclusion: Appeal disposed by affirming the Tribunal's application of the 90% deduction under Clause (baa) while directing that the deduction be computed on net receipts, and by allowing adjustment of export trading losses in respect of disclaimed turnover for computing deduction under Section 80HHC; impugned orders modified, no order as to costs.

Validity of reassessment under Section 147 - Reopening notice under Section 148 - True and full disclosure - Change of opinion - Explanation 1 to Section 147 - Limitation under the first proviso to Section 147 (four years) - Principles of natural justice and opportunity to be heard (notice under Section 142(1) / 143(2)) - Availability of alternative statutory remedy and writ jurisdiction under Article 226

Availability of alternative statutory remedy and writ jurisdiction under Article 226 - Validity of reassessment under Section 147 - Whether the writ petition is maintainable to challenge the notice under Section 148 and the consequential assessment order when the assessee did not earlier challenge the order rejecting objections to reopening and statutory appeal is available - HELD THAT: - The Court held that the challenge to reopening and the consequential assessment order could not be entertained in writ jurisdiction where an effective statutory appellate remedy is available and none of the recognised exceptions to alternative remedy applied. The reasons recorded for reopening, the objections filed by the assessee and the speaking order rejecting those objections form part of the process of reopening and, having not been challenged when rendered, merged with the subsequent assessment order. Interference under Article 226 would necessitate going into factual merits of assessment and would improperly supplant the appellate process. The Court relied on established principles that a writ petition should not be entertained where statutory remedies suffice, unless exceptional circumstances exist, which were not present in this case. The Court accordingly declined to adjudicate the merits of reopening or the assessment in writ proceedings and relegated the assessee to the statutory appellate forum. [Paras 14, 15, 16, 17, 18]

Writ petition not maintainable to decide validity of reopening and assessment; petitioner must avail statutory appellate remedy.

Reopening notice under Section 148 - True and full disclosure - Explanation 1 to Section 147 - Change of opinion - Whether the factual and legal contentions relating to validity of reopening, including alleged false date of audit report and its effect on disclosure and escapement of income, should be decided by the Appellate Authority - HELD THAT: - The Court observed that the assessee repeatedly furnished an incorrect date of audit report in the original, revised and response returns; but whether that incorrect date goes to the root of assessment (i.e., results in escapement of income) is a factual question requiring fact-finding. Explanation 1 to Section 147 and the Assessing Officer's view that there was failure of true and full disclosure were matters intertwined with assessment merits. Since the order rejecting objections to reopening was not challenged and the assessee participated in reassessment, the Court declined to examine these factual contentions and directed that such questions be agitated before the appellate fact-finding authority in a regular appeal. [Paras 9, 10, 11, 19]

Factual and legal issues as to whether the incorrect audit date vitiates disclosure or causes escapement of income are to be decided by the Appellate Authority on appeal; High Court will not decide them in writ proceedings.

Availability of alternative statutory remedy and writ jurisdiction under Article 226 - Relief to be granted when statutory remedy is available - HELD THAT: - Rather than quash or decide the assessment on merits, the Court disposed of the writ petition by directing the assessee to file a regular appeal against the assessment order before the appropriate Appellate Authority within a limited time. The Court permitted the assessee to raise all points including challenge to reopening before the Appellate Authority and cautioned that its observations shall not influence the Appellate Authority's independent decision on merits. [Paras 20]

Petitioner directed to file regular appeal within four weeks; Appellate Authority to decide all contentions on merits.

Final Conclusion: Writ petition dismissed as not maintainable to adjudicate the validity of reopening or the merits of reassessment where an adequate statutory appeal exists and the order rejecting objections to reopening was not challenged; petitioner directed to file a regular appeal against the assessment order within four weeks for the Appellate Authority to decide all contentions on merits.

Summary order. Appeal admitted and a substantial question of law was framed: whether the assessee is liable to pay interest under section 234A of the Income Tax Act, 1961 for the period during which a valid return could not have been filed under sub-section (4) of section 139 of the Act.

Reopening of assessment under section 147 - Validity of notice under section 148 where statutory sanction under section 151 is absent - Sanction by Joint Commissioner versus sanction by Commissioner - Jurisdictional invalidity of reassessment proceedings for want of proper sanction

Reopening of assessment under section 147 - Validity of notice under section 148 where statutory sanction under section 151 is absent - Sanction by Joint Commissioner versus sanction by Commissioner - Jurisdictional invalidity of reassessment proceedings for want of proper sanction - Whether the reassessment notice issued under section 148 is valid where the sanction required by section 151 was obtained from the Commissioner instead of the Joint Commissioner. - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that the reopening proceedings were invalid because the requisite sanction/approval mandated by section 151 was not obtained from the appropriate authority. The court observed that sanction obtained from the Commissioner of Income Tax does not satisfy the statutory requirement of sanction by the Joint Commissioner where the Act specifically mandates the latter. Reliance was placed on this Court's prior decision in Ghanshyam K. Khabrani v. Asst. CIT, which held that sanction by the Commissioner cannot substitute for sanction by the Joint Commissioner prescribed by the statute. In consequence, the reopening notice issued in the present case was held to be without jurisdiction for want of proper statutory sanction. [Paras 3, 4, 5]

Reopening notice under section 148 quashed as void for want of sanction from the Joint Commissioner in terms of section 151; sanction by the Commissioner was held insufficient.

Final Conclusion: Appeal dismissed; no substantial question of law arises as the issue is settled by precedent and the reassessment for AY 2008-09 was quashed for want of the statutory sanction required under section 151.

Disallowance under section 14A and computation under Rule 8D - prospective application of Rule 8D - calculation of expenditure attributable to exempt income (1% thumb rule) - allowability of deposits written off as business loss under section 28 / section 37(1) - nature of lease premium amortization - capital v. revenue - restoration/remand for de novo adjudication in light of judicial precedent - classification of maintenance charges recovered - income from business v. income from house property - rate of depreciation on computer software (60% v. 25%) - precedential weight of coordinate/High Court and Tribunal decisions

Disallowance under section 14A and computation under Rule 8D - prospective application of Rule 8D - calculation of expenditure attributable to exempt income (1% thumb rule) - Extent of disallowance under section 14A for A.Y. 2007-08 - HELD THAT: - For A.Y. 2007-08 Rule 8D(2) was not applicable as it was introduced with effect from 24.3.2008 and held to be prospective by the jurisdictional High Court. The Tribunal accepted precedent applying a consistent thumb rule and directed that disallowance be computed at 1% of exempt income after deducting the amount already disallowed by the assessee in the return. The assessee's suo moto computation at 0.1% was held insufficient and the AO was directed to work out the disallowance at 1% of exempt income. [Paras 2]

Disallowance under section 14A for A.Y. 2007-08 directed to be worked out at 1% of exempt income (after reducing amount already disallowed by assessee)

Disallowance under section 14A and computation under Rule 8D - remand for de novo adjudication - Adjudication of section 14A disallowance for A.Y. 2008-09 and A.Y. 2009-10 (revised computations submitted by assessee) - HELD THAT: - For A.Y. 2008-09 the Tribunal observed that the assessee had revised computations of the section 14A disallowance which were not adjudicated by lower authorities. In the interest of justice, the Tribunal restored the issue to the file of the AO for de novo adjudication, directing that the assessee be given reasonable opportunity and may place fresh evidence. For A.Y. 2009-10 the Tribunal accepted that the grounds on section 14A were similar and accordingly allowed the grounds for statistical purposes by directing fresh consideration in accordance with law. [Paras 14]

Issue remanded to the AO for fresh adjudication for A.Y. 2008-09 and A.Y. 2009-10 (assessee permitted to place revised computations/evidence)

Nature of lease premium amortization - capital v. revenue - restoration/remand for de novo adjudication in light of judicial precedent - Treatment of lease premium amortization paid to development authority (disallowance challenged) - A.Y. 2007-08 (and applied to other years) - HELD THAT: - The Tribunal noted that the question had been the subject of recent judicial consideration (Sun Pharmaceuticals (Gujarat High Court)) and, following its earlier approach, directed restoration of the issue to the AO for fresh decision in light of that High Court precedent and after verifying relevant facts. The Tribunal therefore did not decide on merits but remitted the matter for verification and fresh adjudication. [Paras 3]

Issue remanded to the AO for fresh consideration in light of the Gujarat High Court decision (allowed for statistical purposes)

Classification of maintenance charges recovered - income from business v. income from house property - inclusion of lease amortization within maintenance expenditure - remand for de novo adjudication - Disallowance of lease premium portion included in maintenance expenses and treatment of maintenance charges recovered - A.Y. 2007-08 (and corresponding years) - HELD THAT: - The Tribunal found that amortised lease premium formed part of maintenance expenses and that the substantive issue regarding lease premium had been remanded; in the interest of justice the Tribunal restored the related issue(s) - including whether maintenance recoveries should be taxed under house property or business - to the AO for de novo adjudication. The assessee was permitted to lead evidence and advance arguments afresh before the AO. [Paras 4, 5]

Issues relating to inclusion of lease amortization in maintenance expenses and the tax treatment of maintenance recoveries remitted to the AO for fresh adjudication (allowed for statistical purposes)

Rate of depreciation on computer software (60% v. 25%) - precedential weight of Tribunal and Special Bench decisions - Rate of depreciation allowable on computer software for A.Y. 2007-08 - HELD THAT: - The Tribunal followed its earlier decision in the assessee's own case and the Special Bench authority in Amway India Enterprises, holding that software acquired by lump-sum purchase that yields enduring benefit qualifies for depreciation at 60% rather than 25%. Accordingly the AO was directed to grant depreciation at 60%. [Paras 6]

Depreciation on computer software to be allowed at 60%; ground allowed

Allowability of deposits written off as business loss under section 28 / section 37(1) - precedential weight of High Court and Tribunal decisions - Claim for deduction of deposits written off as irrecoverable (business loss) - A.Y. 2007-08 - HELD THAT: - The Tribunal found the deposits were given in the ordinary course of business, became irrecoverable despite efforts to recover, and were written off in the books. The genuineness was not disputed by Revenue. Relying on Bombay High Court authority (I.B.M. World Trade Corporation) and Tribunal decisions, the Tribunal held such write-offs are allowable as business loss under section 28 (and/or section 37(1)) and directed the AO to allow the claimed deduction. [Paras 7]

Write-offs of the deposits allowed as deduction as business loss; AO directed to grant deduction

Depreciation on VSAT equipment - consistency with prior assessment years - precedential effect of earlier orders in assessee's own case - Revenue appeal against deletion of disallowance of depreciation on VSAT equipment for A.Y. 2007-08 - HELD THAT: - The Tribunal observed that the CIT(A) relied on earlier orders in the assessee's own case for earlier assessment years where the same issue was decided in the assessee's favour. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the revenue appeal. [Paras 9, 10, 11]

Revenue appeal dismissed; deletion of disallowance of depreciation upheld

Final Conclusion: The appeals result in a mixed outcome: for A.Y. 2007-08 the Tribunal directed section 14A disallowance to be computed at 1% of exempt income, allowed depreciation on software at 60%, allowed deduction for deposits written off as business loss, upheld deletion of VSAT depreciation disallowance and remanded the lease premium/maintenance related issues to the AO for fresh adjudication in light of precedent; for A.Y. 2008-09 and 2009-10 the Tribunal remitted the contested section 14A and related lease/maintenance issues to the AO for de novo consideration (allowed for statistical purposes where indicated)

Addition by adopting estimated net profit - treatment of association of persons for taxation - distribution of business receipts among constituents without recording in profit and loss account - application of income versus diversion of income by overriding title - CBDT Circular No.7/2016 - taxation where members offer income - concurrent findings of fact and scope of judicial interference

Addition by adopting estimated net profit - concurrent findings of fact and scope of judicial interference - Deletion of addition made by Assessing Officer by adopting net profit ratio of gross receipts - HELD THAT: - The Tribunal and Commissioner (Appeals) found on facts that the joint venture (association of persons) had not retained income but the members had disclosed and offered the same income to tax in their returns; books were audited and statutory requirements complied with. The Tribunal concluded that, given these concurrent factual findings and satisfaction of conditions in the CBDT circular, making an addition in the hands of the association was not justified. In view of these concurrent findings of fact after appreciation of material on record, there was no legal infirmity warranting interference with the deletion of the addition.

Addition deleted; Tribunal's deletion of the addition by adopting estimated net profit ratio is upheld.

Treatment of association of persons for taxation - distribution of business receipts among constituents without recording in profit and loss account - CBDT Circular No.7/2016 - taxation where members offer income - Permissibility of an AOP distributing business receipts directly among members without recording same in its profit and loss account - HELD THAT: - On the facts, the Tribunal and Commissioner (Appeals) found the joint venture was formed to secure contracts but the execution was carried out by members as per agreement; the members disclosed the income in their books and returns and were assessed accordingly. The authorities found transactions transparent, audited, and not a colourable device. The Tribunal applied the CBDT circular which provides that no additional tax liability arises for the AOP where the income has been offered to tax by its members and the conditions are satisfied. Given these factual conclusions, the Tribunal was justified in holding that distribution without showing positive income in the AOP's P&L did not warrant adding the amount to the AOP.

Tribunal's finding that the AOP's direct distribution of receipts to members (without reflecting positive income in the AOP's P&L) did not justify an addition is upheld.

Application of income versus diversion of income by overriding title - concurrent findings of fact and scope of judicial interference - Whether business receipt distributed among members amounted to 'application of income' or 'diversion of income by overriding title' - HELD THAT: - The Tribunal and Commissioner (Appeals) recorded that the members received and offered the income to tax in their returns and that revenue suffered no loss; they treated the arrangement as allocation among members in accordance with the joint venture terms rather than a diversion or misapplication that would call for taxing the AOP. These concurrent factual findings supported the conclusion that the receipts, as treated in substance and as reflected in members' returns, did not amount to a diversion warranting taxation in the hands of the AOP.

Tribunal's conclusion that the distributions did not constitute a diversion of income justifying taxation of the AOP is affirmed.

Final Conclusion: On the concurrent factual findings that the joint venture's members received and offered the income to tax, complied with audit and TDS requirements, and satisfied the conditions noted in CBDT Circular No.7/2016, the High Court finds no legal infirmity in the Tribunal's order; no substantial question of law arises and the appeals are dismissed.

Applicability of section 2(47)(v) (definition of capital asset) to development agreement - treatment of land as stock-in-trade - effect of development agreement on transfer of possession and rights (section 53A, Transfer of Property Act) - recognition of revenue on proportionate completion in real estate development

Applicability of section 2(47)(v) (definition of capital asset) to development agreement - effect of development agreement on transfer of possession and rights (section 53A, Transfer of Property Act) - Whether the development agreement amounted to a transfer of the land within the meaning of section 2(47)(v) so as to attract capital gains treatment - HELD THAT: - The Tribunal and the Commissioner (Appeals) found on facts that the development agreement did not amount to transfer of possession of the land; ownership remained with the assessee and the final sale deed was to be executed by the assessee in favour of proposed buyers. Although the developer was authorised to construct, identify buyers and decide sale terms, clause 5 reserved execution of the sale deed to the assessee, demonstrating retention of ownership and absence of absolute transfer of the land. In view of these factual findings, the Tribunal concluded that the transaction did not fall within the ambit of section 2(47)(v) as a transfer of a capital asset. The High Court, after examining the record and the findings recorded by the lower authorities, found no legal infirmity in this conclusion and declined to interfere. [Paras 3, 7, 8, 9, 11]

The development agreement was not a transfer of the land under section 2(47)(v); the finding of no transfer of possession/ownership is upheld.

Treatment of land as stock-in-trade - recognition of revenue on proportionate completion in real estate development - Whether the subject land was part of the assessee's stock-in-trade, thereby rendering section 2(47) inapplicable and validating the assessee's method of recognising income - HELD THAT: - The Commissioner (Appeals) recorded that the assessee had consistently treated the land as stock-in-trade since its acquisition (including treatment post-amalgamation) and had accounted for consideration on a proportionate basis tied to completion of construction, collecting payments as per the agreement. The Commissioner accepted that revenue recognition was appropriately postponed until construction milestones and sale-deeds in favour of buyers, and observed that the assessee had offered profit on sale of land to tax in amounts exceeding those specified in the agreement. The Tribunal concurred with these factual findings and legal consequence that section 2(47), being confined to capital assets, was not attracted. The High Court found no legal error in these concurrent findings of fact and law and refused to interfere. [Paras 7, 10, 11]

The subject land was correctly held and treated as stock-in-trade; the provisions of section 2(47) are inapplicable and the assessee's recognition of revenue was proper on the facts.

Final Conclusion: The High Court found no substantial question of law warranting interference with the Tribunal's concurrence with the Commissioner (Appeals) that the development agreement did not result in transfer of the land under section 2(47)(v) and that the land was held as stock-in-trade; the Revenue's appeal is summarily dismissed.

Allowability of subvention expenses as revenue expenditure - burden of proof by production of sale invoices to substantiate discounts - distinction between setting up of a new unit and commencement of business for revenue allowance - treatment of expenses incurred for setting up a new business unit as non-allowable revenue expenditure - attribution of notional interest on advances to sister concern - commercial expediency of inter-company advances versus diversion of funds

Allowability of subvention expenses as revenue expenditure - burden of proof by production of sale invoices to substantiate discounts - Subvention expenses claimed by the assessee are restored to the Assessing Officer for verification and the assessee directed to produce sample sales invoices to prove that the amounts were discounts to customers. - HELD THAT: - The assessee claimed subvention expenses as discounts given to customers under supplier instructions and produced ledger extracts showing total subvention outgo. The Tribunal observed that if sale invoices establish these amounts as customer discounts, disallowance would be unwarranted. Consequently, the Tribunal did not decide the allowability on merits but restored the matter to the Assessing Officer for fresh consideration and directed the assessee to produce sample sales invoices for the period so that the nature of the payments can be verified. The order allows the ground for statistical purposes and requires factual verification by the Assessing Officer. [Paras 7]

Matter remanded to the Assessing Officer for fresh consideration; assessee to produce sample sale invoices.

Distinction between setting up of a new unit and commencement of business for revenue allowance - treatment of expenses incurred for setting up a new business unit as non-allowable revenue expenditure - Expenditure incurred for setting up a new four wheeler dealership unit is not allowable as revenue expenditure and the disallowance is confirmed. - HELD THAT: - The assessee incurred administrative and indirect expenses for establishing a separate four wheeler dealership at a new premises under a fresh agreement. The Tribunal, after examining the ledger details, concluded these expenses related to the setting up of a new business unit (new premises, new lease and agreement) and could not be treated as an extension of the existing business. Consequently, such expenditures are not allowable as revenue expenses and the Assessing Officer's disallowance, upheld by the CIT(A), was affirmed by the Tribunal. [Paras 8]

Disallowance of Rs. 10,16,666 for expenses relating to setting up a new unit confirmed; ground rejected.

Attribution of notional interest on advances to sister concern - commercial expediency of inter-company advances versus diversion of funds - Addition of notional interest on advances to the sister concern is deleted; no diversion of funds found and advances had commercial expediency. - HELD THAT: - The Assessing Officer attributed notional interest on alleged diversion to a sister concern. The Tribunal examined the sister concern's ledger and found the closing balance decreased and no fresh advances were made during the year, indicating no diversion in the relevant year. Further, the sister concern was an authorized distributor supplying spare parts to the assessee, establishing commercial expediency for advances. No addition was made in earlier or later years on this account. On these facts, the Tribunal held that notional interest could not be imposed and directed deletion of the addition. [Paras 9]

Addition of notional interest deleted; ground allowed.

Final Conclusion: The appeal is partly allowed: the disallowance relating to setting up the new unit is confirmed, the notional interest addition on advances to the sister concern is deleted, and the claim of subvention expenses is remanded to the Assessing Officer for verification on production of sample sale invoices.

Deduction under Section 80P(2) - inquiry into activities of co operative society - classification certificate not conclusive for income tax deduction - assessment year specific enquiry - interest income from investments - characterisation as business income - stay of recovery

Deduction under Section 80P(2) - inquiry into activities of co operative society - classification certificate not conclusive for income tax deduction - assessment year specific enquiry - Whether the claim of deduction under Section 80P(2) could be denied by the CIT(A) by invoking a subsequent High Court decision without directing an enquiry into the assessee society's activities for the relevant assessment year. - HELD THAT: - The Tribunal held that the Full Bench of the Kerala High Court in The Mavilayi Service Co-operative Bank Ltd. v. CIT requires the Assessing Officer to conduct an enquiry into the factual activities of the assessee society to determine eligibility for deduction under Section 80P after the insertion of sub section (4). The earlier Division Bench view that a registration/classification certificate is conclusive (Chirakkal) was reversed by the Larger Bench, which held the AO is not bound by the certificate and each assessment year must be separately examined. Accordingly, the CIT(A) erred in denying the claim without such factual examination. The Tribunal restored the issue to the file of the Assessing Officer directing that the AO examine whether the activities of the assessee are in accordance with the functions of a co operative society under the Kerala Co operative Societies Act, 1969 and, only thereafter, determine entitlement to deduction under Section 80P(2) for the assessment year 2015 2016. [Paras 7]

Issue of entitlement to deduction under Section 80P(2) is restored to the Assessing Officer for fresh enquiry and determination in accordance with the Larger Bench decision in Mavilayi.

Interest income from investments - characterisation as business income - deduction under Section 80P(2) on investment income - How interest income from investments with banks and treasuries is to be treated and whether deduction under Section 80P can be granted on such income. - HELD THAT: - The Tribunal noted a co ordinate Bench decision holding that interest from investments with treasuries and banks is part of the assessee's banking activity and is liable to be assessed as income from business. However, as to granting deduction under Section 80P on such interest income, the Assessing Officer must follow the Larger Bench principle in Mavilayi and examine the activities of the society for the relevant assessment year before allowing any deduction. Thus, characterisation as business income stands, but entitlement to Section 80P deduction on that income is remitted to the AO for enquiry and decision. [Paras 7]

AO to examine activities of the assessee and determine, in accordance with the Mavilayi ruling, whether deduction under Section 80P applies to interest income from investments.

Stay of recovery - Whether the stay application seeking suspension of recovery of tax arrears should be granted. - HELD THAT: - Having restored the primary issue to the Assessing Officer for fresh enquiry, the Tribunal observed that the appeal has been otherwise disposed of and that the stay application has consequently become infructuous. [Paras 8]

Stay application dismissed as infructuous.

Final Conclusion: The appeal is allowed for statistical purposes by remitting the question of entitlement to deduction under Section 80P(2), including the grant of deduction on interest from investments, to the Assessing Officer for enquiry and determination for AY 2015 2016 in accordance with the Larger Bench decision in Mavilayi; the stay application is dismissed.

Jurisdiction under section 263 - erroneous and prejudicial to the interest of revenue - Reference to District Valuation Officer under section 55A(a) and its limitations - Acceptance of Registered Valuer's report as estimation of fair market value - Malabar principle - twin conditions for exercise of jurisdiction under section 263

Jurisdiction under section 263 - erroneous and prejudicial to the interest of revenue - Malabar principle - twin conditions for exercise of jurisdiction under section 263 - Validity of exercise of jurisdiction by the Commissioner under section 263 against the assessment order passed u/s 143(3)/254 - HELD THAT: - The Tribunal applied the twin-condition test from Malabar Industrial Co. Ltd., holding that both error and prejudice to revenue must co-exist for section 263 to be invoked. The Commissioner quashed the AO's order on the ground that the AO had not made required inquiries and had accepted a Registered Valuer's report without adequate verification. The Tribunal found that, on the facts of the second-round assessment (remanded by the Tribunal), the AO had passed a speaking order after considering the Registered Valuer's report and other sale instances; further, binding authority precluded making a reference to the DVO to obtain a value lower than that claimed by the assessee. Applying the legal test, the Tribunal concluded that the Commissioner's exercise of power under section 263 was not sustainable and that the order was invalid and bad in law. [Paras 10, 12]

The Commissioner's order under section 263 is set aside and the grounds of the assessee are allowed; the appeal is allowed.

Reference to District Valuation Officer under section 55A(a) and its limitations - Acceptance of Registered Valuer's report as estimation of fair market value - Whether the Assessing Officer could refer the matter to the DVO under section 55A(a) to determine a market value lower than that declared by the assessee, and whether the AO was bound to accept the Registered Valuer's valuation - HELD THAT: - Relying on the decision in CIT vs Puja Prints, the Tribunal held that section 55A(a) does not permit a reference to the DVO for determining market value at a figure lower than that shown by the assessee; consequently where the DVO's figure is lower, the AO cannot supplant the assessee's declared value merely by making such a reference. On the facts, the assessee had filed a Registered Valuer's report and comparable sale instances; the AO considered these and passed a reasoned order adopting the valuer's backward-calculated figure. Since the law precluded adopting a DVO value less than the assessee's declared valuation, the AO's acceptance of the Registered Valuer's report could not be treated as erroneous and prejudicial to revenue. [Paras 12]

The AO was justified in accepting the Registered Valuer's valuation and the reference to the DVO (which produced a lower figure) could not justify interference; the Commissioner's contrary view is set aside.

Final Conclusion: The appeal is allowed: the Commissioner's exercise of jurisdiction under section 263 is held invalid and the assessment order (as upheld on the second round) stands; the AO's adoption of the Registered Valuer's value is sustained in view of the prohibition on DVO reference producing a lower value.

Depreciation on capital assets - Written down value and actual cost - Inflated/bogus billing and collusion with contractors - Search and seizure material as basis for addition - Onus of proof to rebut seized incriminating material - Remand for computation of quantum of disallowance

Depreciation on capital assets - Written down value and actual cost - Inflated/bogus billing and collusion with contractors - Search and seizure material as basis for addition - Onus of proof to rebut seized incriminating material - Entitlement to depreciation where cost of capital asset is alleged to have been inflated through bogus bills and admitted undisclosed receipts by contractors. - HELD THAT: - The Tribunal analysed seized documents and admissions recorded during proceedings against two contractors (OSN and JDMS) showing inflated invoices, lower actual costs by subcontractors and cash routed back outside books. The Assessing Officer found that certain employees of the assessee had signed as authorised signatories of the contractors and that contractors admitted undisclosed receipts and inflated billing. Given these factual findings, the Tribunal held that the 'actual cost' forming the written down value cannot include amounts that correspond to expenditure not actually incurred; where the relevant capital asset did not come into existence to the extent of such inflated payments, depreciation on that inflated portion is not allowable. The Tribunal also observed that once incriminating material and admissions were placed on record suggesting collusion, the onus lay on the assessee to rebut those facts; the assessee failed to discharge that onus. The Tribunal distinguished the authorities relied upon by the assessee on their differing facts and emphasised that additions cannot be rejected where there is preponderant evidence of bogus billing and routing back of funds. [Paras 6]

In principle, depreciation is not allowable on the inflated portion of capital cost attributable to bogus/undone work and collusion; the assessee is not entitled to depreciation on that portion.

Remand for computation of quantum of disallowance - Computation of disallowance - Opportunity of hearing on remand - Quantification of the depreciation disallowance based on the inflated portion of capital cost. - HELD THAT: - Although the Tribunal held that depreciation on the inflated portion is not allowable in principle, it found that the lower authorities (Assessing Officer and CIT(A)) had not computed the disallowance correctly - omissions were noted in relation to undisclosed amounts admitted by contractors and in the aggregation adopted. Consequently, the Tribunal did not determine the exact quantum itself but directed that the matter be restored to the Assessing Officer for recomputation of the disallowance for AY 2012-13, taking into account the Tribunal's factual findings; the assessee is to be given adequate opportunity of being heard. Because the subsequent assessment years' disallowances were dependent on the written down value as determined for AY 2012-13, those appeals were also restored for recomputation on the basis of the revised written down value. [Paras 6, 9]

Quantum not decided on merits; issue remitted to the Assessing Officer for recomputation of disallowance for AY 2012-13 (with opportunity to the assessee), and appeals for AY 2013-14 and 2014-15 restored for decision consequential to that recomputation.

Final Conclusion: The appeals by the Revenue are allowed partly: in principle the Tribunal holds that depreciation is not allowable on the portion of capital cost shown to be inflated by bogus billing and admissions by contractors; however, the precise quantum of disallowance was not determined and is remitted to the Assessing Officer for recomputation for AY 2012-13 (with opportunity to the assessee), and the related issues for AY 2013-14 and 2014-15 are restored for consequential determination.

Tax deduction at source under section 195 - assessee-in-default under section 201 - process royalty - fee for technical services - characterisation of interconnect usage charges and bandwidth/capacity payments - application of Double Taxation Avoidance Agreements to characterization - applicability of section 206AA and treaty override

Process royalty - tax deduction at source under section 195 - assessee-in-default under section 201 - Whether consideration paid as IUC/bandwidth charges falls within the ambit of process royalty and gives rise to TDS obligation on the payer - HELD THAT: - For assessment years 2013-14 to 2015-16 the Tribunal, while noting that an earlier tribunal decision in the assessee's own case was adverse on the royalty question and is pending challenge before the High Court, preferred to follow the tribunal order in the assessee's own case on the royalty aspect. Accordingly the Tribunal held that the consideration paid as IUC/bandwidth charges for alleged interconnect service falls within the ambit of process royalty and that element of income was involved; therefore the assessee was bound to deduct TDS on such payments. The reasoning distinguishes competing tribunal authority relied upon by the assessee because of the adverse earlier decision in the assessee's own case on the royalty aspect and the pendency of the challenge to that decision in the High Court. [Paras 9]

For A.Ys. 2013-14 to 2015-16 the payments were held to be process royalty and the assessee was liable to deduct TDS (assessee-in-default under section 201 where nondeduction occurred).

Fee for technical services - application of Double Taxation Avoidance Agreements to characterization - Whether consideration paid as IUC/bandwidth/capacity payments qualify as Fee for Technical Services (FTS) / Fee for Included Services (FIS) - HELD THAT: - On the question whether the same payments constitute FTS/FIS, the Tribunal found the Delhi Bench decision in Bharti Airtel Ltd. favourable to the assessee and, on the FTS aspect, there was no contrary order pointed out by Revenue. Respectfully following Bharti Airtel Ltd., the Tribunal decided the FTS/FIS issue in favour of the assessee for A.Ys. 2013-14 to 2015-16. For the earlier block (A.Ys. 2008-09 to 2012-13) the royalty question had already been decided against the assessee by the Tribunal; the Tribunal accordingly limited its present adjudication to the FTS aspect for those years and, applying the same reasoning, decided the FTS issue in favour of the assessee for A.Ys. 2008-09 to 2012-13 as well. [Paras 10, 11]

FTS/FIS characterisation was rejected; the Tribunal held in favour of the assessee on the FTS aspect for all years before it.

Applicability of section 206AA and treaty override - tax deduction at source under section 195 - Whether section 206AA (higher withholding where PAN not furnished) applies to payments to non-residents notwithstanding availability of treaty benefits - HELD THAT: - The Tribunal considered appeals by Revenue raising the applicability of section 206AA. The learned CIT(A) had decided these issues in favour of the assessee following prior Tribunal precedents (including Infosys BPO Ltd. and the special bench in Nagarjuna Fertilisers). No contrary binding decision was pointed out by Revenue. Having regard to those precedents, the Tribunal declined to interfere with the CIT(A)'s orders and dismissed the revenue appeals on this point. [Paras 14, 15]

Appeals of the revenue on the applicability of section 206AA were dismissed; CIT(A)'s decisions in favour of the assessee were upheld.

Final Conclusion: Five appeals of the assessee for A.Ys. 2008-09 to 2012-13 were allowed (on the FTS issue), three appeals of the assessee for A.Ys. 2013-14 to 2015-16 were partly allowed (royalty held taxable; FTS not taxable), all six appeals of the revenue were dismissed, and the three stay petitions were dismissed.

Revision of assessment under section 263 - Specified Domestic Transactions - Obligation to refer matters to Transfer Pricing Officer - Prejudicial to the interests of revenue

Revision of assessment under section 263 - Specified Domestic Transactions - Obligation to refer matters to Transfer Pricing Officer - Prejudicial to the interests of revenue - Validity of the revisional order under section 263 setting aside the assessment for alleged failure by the assessing officer to refer specified domestic transactions to the Transfer Pricing Officer and whether the assessment was prejudicial to the interests of revenue. - HELD THAT: - The Tribunal examined the revisional order which contended that the assessing officer ought to have referred specified domestic transactions to the TPO and that the assessment was therefore prejudicial to the interests of revenue. The Tribunal noted that the identical question had been considered and decided in Swastik Coal Corporation Pvt. Ltd. Vs. Pr. CIT, where the Tribunal set aside a similar exercise of revision under section 263 on the ground that the assessment order was not prejudicial to revenue. The Revenue's representative conceded that the present issue is covered by that decision. Applying the consistent view taken in Swastik Coal, the Tribunal concluded that the revisional order could not be sustained because the prerequisite of prejudice to the interests of revenue was not established by the Commissioner and the A.O.'s action did not warrant interference under section 263.

Revisional order under section 263 setting aside the assessment for not referring specified domestic transactions to the TPO is set aside; assessment held not prejudicial to revenue and appeal allowed.

Final Conclusion: The Tribunal allowed the assessee's appeal, set aside the order passed under section 263, and held that the assessment for AY 2014-15 was not prejudicial to the interests of revenue; the revisional action to direct fresh assessment was quashed.

Condonation of delay - remand for fresh consideration - unexplained investment - transfer through General Power of Attorney and capital gains - application of Section 50C to determine full value of consideration

Condonation of delay - Whether the Tribunal should condone the delay in filing the appeal. - HELD THAT: - The Tribunal noted that the appeal was time-barred by 50 days and that the explanation for delay (serious illness and subsequent death of the assessee's husband, supported by medical evidence) was the same as accepted in the related appeal of Smt. Upma Shukla. Applying identical reasoning, the Tribunal exercised its discretion to condone the delay and proceeded to decide the substantive placement of the matter. The finding is recorded after consideration of the parties' submissions and the earlier decision in the connected matter. [Paras 7]

Delay of 50 days in filing the appeal is condoned.

Remand for fresh consideration - unexplained investment - transfer through General Power of Attorney and capital gains - application of Section 50C to determine full value of consideration - Whether the additions made by the assessing officer (confirmed partly by the CIT(A)) on account of unexplained investment/capital gains require fresh adjudication in light of the Tribunal's decision in the connected appeal. - HELD THAT: - The Tribunal observed that in the appeal of Smt. Upma Shukla (decided on 14.10.2019) the Tribunal had held that the assessee there had acted as a General Power of Attorney-holder of the original owner and, consequently, no capital gains arose in her hands. Recognising that the deceased assessee (Shri Vikas Shukla) had factual differences - in particular that he claimed to have purchased the property in 1996 - the Tribunal found the matter required reconsideration by the Assessing Officer in the light of the reasoning in the connected decision. Accordingly, the Tribunal set aside the orders of the authorities below and restored the issue to the file of the AO with a direction to re-decide the matter as per law and in the light of the Tribunal's decision in Smt. Upma Shukla. The remand is for fresh adjudication and verification rather than a final determination on merits by the Tribunal in this appeal. [Paras 7]

Orders below set aside; matter restored to the Assessing Officer for re-decision in accordance with law and the Tribunal's decision in Smt. Upma Shukla (dated 14.10.2019).

Final Conclusion: Delay in filing the appeal is condoned; the impugned additions/orders are set aside and the matter is remitted to the Assessing Officer for fresh decision in accordance with law and the Tribunal's decision in the connected appeal (Smt. Upma Shukla dated 14.10.2019). Appeal allowed for statistical purposes.

Extended period of limitation - willful mis-statement - suppression of facts - proviso to Section 28(1) of the Customs Act, 1962 - jurisdiction to issue show cause notice - provisional assessment - ingredients for invoking extended period

Extended period of limitation - willful mis-statement - suppression of facts - proviso to Section 28(1) of the Customs Act, 1962 - jurisdiction to issue show cause notice - Validity and maintainability of the show cause notice dated 27.06.2017 invoking the extended period under the proviso to Section 28(1) of the Customs Act, 1962 - HELD THAT: - The Court examined whether the show cause notice sufficiently alleged the active ingredients - collusion, willful misstatement or suppression of facts - necessary to invoke the extended five year period. Reliance was placed on authorities holding that invocation of the proviso requires specific and explicit averments in the show cause notice and proof of a mental element (wilful intent) rather than mere non-payment. The impugned notice recounts enquiries, a recorded statement and the import/sale particulars for the period 01.07.2012 to 09.12.2012 and alleges non-disclosure of correct RSP leading to differential duty; in light of the material referred to in paras of the notice and the Circular clauses on ingredients for extended period, the Court found that the notice could not be characterised as wholly without jurisdiction. The writ petition was therefore premature since the statutory authority had material and had not acted without jurisdiction. [Paras 21]

The show cause notice is not without jurisdiction; the writ petition is premature and is rejected.

Provisional assessment - ingredients for invoking extended period - jurisdiction to issue show cause notice - Requirement for fresh consideration by the statutory authority and opportunity of hearing - HELD THAT: - Although the Court upheld the competence of the authority to issue the notice, it directed that the petitioner be afforded a reasonable opportunity to file explanations and that the second respondent shall consider the petitioner's submissions and decide in accordance with law without being influenced by the Court's observations. All rights and contentions of the parties were kept open, thereby leaving adjudication on merits to the authority after hearing. [Paras 21]

Petitioner permitted to tender reply and seek personal hearing; authority to consider and decide afresh in accordance with law after hearing.

Final Conclusion: Writ petition dismissed as premature; the petitioner may submit its explanations and seek personal hearing and the competent authority is directed to consider and decide the show cause notice in accordance with law after providing a reasonable opportunity to the petitioner.

Clearance for home consumption on payment of appropriate customs duty - import clearance without CIB and RC Import Permit - interim relief - single consignment or multiple consignments treated as same consignment for clearance - no requirement of successive writ petitions for partial deliveries

Clearance for home consumption on payment of appropriate customs duty - interim relief - Petitioner entitled to interim relief permitting clearance of the imported goods specified in the writ petition for home consumption on payment of appropriate customs duty, by way of an order similar to that passed in Writ Petition (L) No.1477 of 2018. - HELD THAT: - The parties conceded that the challenge in this petition is identical to the one in other pending writ petitions, particularly Writ Petition (L) No.1477 of 2018, and the Court therefore granted relief in the present petition by passing orders similar to those earlier orders. The relief relates specifically to the imported goods mentioned in the petition and permits clearance for home consumption on payment of appropriate customs duty as an interim measure. The Court limited the relief to the consignments/transactions before it and did not purport to make a generalized direction in respect of future imports. [Paras 3, 5, 7]

Interim relief granted permitting clearance of the imported goods specified in the petition for home consumption on payment of appropriate customs duty, by order similar to that in Writ Petition (L) No.1477 of 2018; no generalised order for future imports.

Single consignment or multiple consignments treated as same consignment for clearance - no requirement of successive writ petitions for partial deliveries - Successive writ petitions are not required merely because an importer's consignment is delivered in lots or partial consignments; clearance under the present order is permitted so long as the specified quantity under the purchases/purchase orders/invoices reaches the port in single or multiple consignments. - HELD THAT: - The Court clarified that where a consignment of a certain specified quantity, as set out in the petition (by reference to the Bills of Entry/purchases/purchase orders/invoices before the Court), reaches the port either in a single consignment or in multiple consignments, clearance shall be permitted on the strength of the order passed in the present writ petition. The limitation ensures that the relief applies only to the consignments covered by the petition and does not relieve the petitioner of statutory processes for any further or different consignments. [Paras 6, 7]

No need to file successive writ petitions for partial or multiple deliveries of the same specified consignment; clearance permitted under the present order for such consignments.

Acceptance of affidavit in reply on record - Affidavit in reply, if tendered in the Registry, shall be accepted and treated as an affidavit in this petition. - HELD THAT: - The Court directed the Registry to accept any affidavit in reply tendered there and to treat it as an affidavit in the present petition, thereby permitting procedural regularisation of pleadings filed before the Court. [Paras 8]

Affidavit in reply filed in the Registry to be accepted as an affidavit in this petition.

Final Conclusion: Interim reliefs were granted in respect of the imported goods specified in the petition permitting clearance for home consumption on payment of appropriate customs duty (by orders similar to those in Writ Petition (L) No.1477 of 2018); the relief extends to the specified consignment whether delivered in single or multiple lots, successive writ petitions for partial deliveries are not required, and affidavits in reply tendered in the Registry will be accepted as affidavits in the petition.

Transaction value - high sea sale - canalizing agent - inclusion of service charges in assessable value - importer (status between importation and clearance) - Customs Valuation Rules - assessable value under Section 14 of the Customs Act, 1962

Inclusion of service charges in assessable value - transaction value - Customs Valuation Rules - assessable value under Section 14 of the Customs Act, 1962 - Service charges of Rs. 34 per MT received by the respondent are includable in the assessable value for customs valuation. - HELD THAT: - The Tribunal found on the material on record and the agreement that the respondent imported coal on its own account and sold it to NTPC after clearance. Transaction value for customs purposes is the price actually paid or payable by the buyer to the seller on import into India. There is no evidence that the service charges of Rs. 34 per MT received by the respondent were passed on to the overseas supplier or formed part of the price paid to the supplier. The Department's reliance on earlier precedent was distinguishable insofar as the statutory provision was amended and the factual matrix (where the seller had acted as a canalizing agent and high sea sale had been established) was different. Absent evidence that the service charges were part of the consideration paid to the overseas seller or otherwise required to be added under the valuation rules, they cannot be included in the assessable value under Section 14 and the Customs Valuation Rules. [Paras 9, 10]

Service charges of Rs. 34 per MT received by the respondent are not includable in the assessable value.

High sea sale - canalizing agent - importer (status between importation and clearance) - Whether the transaction between the respondent and NTPC was a high sea sale and whether the respondent acted as a canalizing agent or NTPC was the importer. - HELD THAT: - The Tribunal examined the agreement and transactions and concluded that the respondent imported the coal on its account, filed the bills of entry and cleared the goods, and thereafter sold the coal to NTPC. The agreement did not characterize MMTC as a canalizing agent for NTPC nor was there evidence of any privity of contract between the overseas suppliers and NTPC. High sea sales are sales effected before goods cross the customs frontier; here the goods were cleared by the respondent and the sale occurred post-clearance. The respondent also discharged appropriate indirect tax liabilities by paying CST. On these facts, the transaction could not be treated as a high sea sale and MMTC could not be held to be a canalizing agent nor NTPC the importer for the relevant purposes. [Paras 9, 11]

The transaction is not a high sea sale; the respondent did not act as a canalizing agent and NTPC was not the importer for the purposes of the Customs Act.

Final Conclusion: The Tribunal upheld the first appellate order, rejected the Revenue's appeal and held that the Rs. 34 per MT service charges are not includable in the customs assessable value; the transaction was not a high sea sale nor was MMTC a canalizing agent.

Refund of Special Additional Duty (SAD) - correlation between imported goods and goods sold - unjust enrichment - de novo remand for re-examination of claims - change of cause title

Change of cause title - Application for change of cause title pursuant to fresh certificate of incorporation - HELD THAT: - The Miscellaneous Application sought substitution of the party name from M/s Honda Siel Cars India Ltd. to M/s Honda Cars India Ltd. on account of a fresh certificate of incorporation issued by the Registrar of Companies. The Revenue did not object to the change. The Tribunal allowed the application and directed the cause title to be altered accordingly. [Paras 1]

Miscellaneous Application allowed; cause title changed to "M/s Honda Cars India Ltd.".

Refund of Special Additional Duty (SAD) - correlation between imported goods and goods sold - unjust enrichment - de novo remand for re-examination of claims - Whether the appellants are entitled to refund of 4% SAD on imported CBU cars and whether the authorities below properly evaluated correlation and unjust enrichment - HELD THAT: - The appellants claimed refund of 4% SAD paid on imported CBU cars under Notification No. 102/2007-Cus and produced sales invoices, VAT/CST challans, chassis/frame and engine numbers, a VAT auditor's certificate and a Chartered Accountant's certificate, together with books of account showing the refund as receivable. The adjudicating authority and the Commissioner (Appeals) rejected the refunds on the grounds that correlation between imported cars and those sold was not established and that unjust enrichment was not excluded. The Tribunal found that the lower authorities had not properly scrutinized or recorded detailed findings on the documentary evidence produced and that both parties agreed that such scrutiny had not been carried out. Consequently, the Tribunal remanded the matter for de novo adjudication so that the adjudicating authority may re-examine the claims in the light of the available and any additional evidence, including verification of correlation and the question of whether the burden of SAD was passed on, leaving all issues open for fresh consideration. The Tribunal directed that, as far as practicable, the de novo adjudication be completed within four months from communication of the order. [Paras 7, 8]

Appeal allowed by way of remand; refund claims to be re-examined de novo by the adjudicating authority with issues of correlation and unjust enrichment kept open.

Final Conclusion: The Tribunal allowed the application to change the cause title and allowed the appeal by directing a de novo remand for detailed re-examination of the refund claims under Notification No. 102/2007-Cus, leaving issues of correlation between imported and sold vehicles and unjust enrichment open for fresh adjudication within the stipulated time.

Transfer of company petition to National Company Law Tribunal - priority of workmen's dues vis-a -vis secured creditors - official liquidator's duties and control in liquidation - locus standi of ex-management after appointment of official liquidator - geo-tagging and monitoring of security guards in liquidation

Transfer of company petition to National Company Law Tribunal - Transfer of the Company Petition to the NCLT was permitted and the impugned order retaining the petition in the Company Court was set aside. - HELD THAT: - The Court recorded that respondent No.3 (the petitioner in the Company Petition) supported the secured creditor's application for transfer. The learned Company Judge had rejected the transfer application relying on a stay of the IRP's appointment by the NCLAT; that stay was subsequently vacated, removing the foundation of the impugned order. The impugned order also conflicted with the Court's earlier decision in Action Ispat and Power Pvt. Ltd. v. Shyam Metalics & Energy Ltd. & Ors. In view of these developments and the absence of any irreversible steps affecting assets of the company under liquidation, the Court found no merit in retaining the petition before the Company Court and allowed transfer to the NCLT. [Paras 1, 7, 8, 9]

The appeal was allowed; the impugned order dated 30.09.2019 was set aside and the company petition was transferred to the NCLT.

Priority of workmen's dues vis-a -vis secured creditors - official liquidator's duties and control in liquidation - The Official Liquidator's contention that workmen's dues would receive a superior or different priority under the Companies Act as compared to the Insolvency and Bankruptcy Code was rejected as premature and unsubstantiated for the present stage. - HELD THAT: - The OL submitted that provisions under the Companies Act would secure parity of workmen's dues with secured creditors whereas the IBC protects workmen's claims only for 24 months preceding liquidation. The Court observed that no workman had raised the issue and that it was academic at this stage because assets have not been sold and the question of distribution has not arisen. The Court further noted protection of workmen's claims in assets dealt with under the SARFAESI Act by virtue of Section 13(9) of that Act, and therefore rejected the OL's submission as a basis to resist transfer. [Paras 4, 5, 6]

The submission of the Official Liquidator on this priority issue was rejected as premature and did not justify retention of the petition before the Company Court.

Locus standi of ex-management after appointment of official liquidator - The ex-management has no locus to oppose the secured creditor's transfer application once the Official Liquidator is appointed and representing the company under liquidation. - HELD THAT: - The Court made clear that, following appointment of the OL, the ex-management no longer has locus standi in matters concerning the company under liquidation. Arguments advanced by the ex-management to contend that irreversible steps in liquidation warranted retention of proceedings were rejected; sales of personal properties of guarantors under SARFAESI were held irrelevant to the company's assets and beyond the OL's interest. [Paras 7]

Submissions by the ex-management were held to be without locus and unmeritorious.

Official liquidator's duties and control in liquidation - geo-tagging and monitoring of security guards in liquidation - The Court directed the Official Liquidator to file an affidavit furnishing specified information about engagement and deployment of security guards and to examine adoption of geo-tagging for monitoring, for the Court's consideration. - HELD THAT: - Observing instances of disproportionately high security charges being incurred in liquidation, the Court required the OL to disclose details about empanelment of security agencies, contracts with them, particulars of guards deployed (including identity and statutory employment records), bills raised by the agencies, and negotiation of rates. The Court also asked the OL to examine and make submissions on geo-tagging and geo-attendance technology to monitor guards, noting existing implementations in other government contexts and available software solutions. The affidavit and supporting documents were ordered to be filed within three weeks for further consideration. [Paras 10, 11, 12]

OL directed to file a detailed affidavit with specified particulars and suggestions on geo-tagging within three weeks; matter listed for compliance.

Final Conclusion: The appeal was allowed: the order of the Company Court dated 30.09.2019 was set aside and the company petition transferred to the NCLT; the Official Liquidator's priority-based objection was rejected as premature; the ex-management's locus was repelled; and the OL was ordered to furnish specified disclosures about security arrangements and to consider geo-tagging for monitoring guards, to be filed within three weeks.

Pronouncement of order - Tribunal's compliance with Rule 150 - Rule 151(2) - Court Master's note of pronouncement - Order to be in writing, signed and dated by Bench

Rule 151(2) - Court Master's note of pronouncement - Pronouncement of order - Original record does not contain the Court Master's endorsement or roznama recording pronouncement of the Tribunal's order. - HELD THAT: - The Bench examined the original record produced by respondent Nos.1 and 2. The Register and loose papers produced show references to an order reserved and a draft entry, but there is no contemporaneous endorsement by the Court Master that the order of the Bench was pronounced in open court. The Court noted that if pronouncement had been made under sub-rule (2) of Rule 151, the Court Master must make a note in the order sheet; no such note or roznama exists in the original file and this absence was conceded in Court. [Paras 12]

No Court Master's endorsement or roznama recording pronouncement was found in the original record.

Tribunal's compliance with Rule 150 - Pronouncement of order - Whether the contesting respondent should be permitted to inspect the original record and make submissions on the question of compliance with the pronouncement requirements. - HELD THAT: - In view of the contested allegations of non-compliance with the Rules and the absence of the Court Master's note in the original file, the Bench granted the contesting respondent an opportunity to inspect the original record and to make submissions thereafter. The Court declined to accept the petitioner's affidavit until the original record was produced and examined. The Bench also took on record an affidavit and adjourned the matter for further consideration after inspection and submissions. [Paras 14, 15, 18]

Contestant allowed to inspect the original record; matter adjourned for further submissions and hearing on 22nd November, 2019.

Final Conclusion: On perusal of the original file the Bench found no contemporaneous Court Master's endorsement or roznama recording pronouncement of the Tribunal's order; the contesting respondent was permitted to inspect the record and make submissions, and the matter was adjourned for further hearing on 22nd November, 2019.

Compounding of offences - composition of offences under Section 621-A of the Companies Act, 1956 - power of the Company Law Board to compound offences - no bar on prosecution under the SEBI Act consequent to compounding under the Companies Act - SEBI's regulatory and prosecutorial powers under Section 11 / 11B of the SEBI Act

Composition of offences under Section 621-A of the Companies Act, 1956 - power of the Company Law Board to compound offences - Whether the Company Law Board could compound offences under the Companies Act, 1956 by imposing composition fees. - HELD THAT: - The Court held that Section 621-A, as it stood at the relevant time, confers on the Company Law Board the power to compound certain offences punishable under the Companies Act either before or after institution of prosecution. The statutory scheme and the jurisprudence referred to support that the Company Law Board may exercise its compounding power without prior permission of a criminal court, and the compounding is governed by the procedures in Section 621-A including intimation to the Registrar and consequences where compounding occurs after institution of prosecution. The Company Law Board's exercise of its power to accept composition fees in the present proceedings therefore fell within the scope of Section 621-A. [Paras 13, 14, 15]

Compounding of the offences by the Company Law Board by imposing composition fees was within the power conferred by Section 621-A of the Companies Act, 1956.

Compounding of offences - no bar on prosecution under the SEBI Act consequent to compounding under the Companies Act - SEBI's regulatory and prosecutorial powers under Section 11 / 11B of the SEBI Act - Whether settlement/compounding of offences under the Companies Act forestalled or precluded SEBI from initiating proceedings under the SEBI Act and its regulations. - HELD THAT: - The Court concluded that compounding of offences under Section 621-A of the Companies Act did not in any manner preclude or stifle the appellant (SEBI) from initiating proceedings for alleged violations under the SEBI Act, 1992 or the regulations framed thereunder. The statutory scheme shows that composition under the Companies Act relates to offences under that Act and the rights and powers available to SEBI under its statute remain unaffected. The judgment also noted that SEBI itself has guidelines for compounding under the SEBI Act but that fact does not mean compounding under the Companies Act bars SEBI action. [Paras 12, 16, 17]

Compounding of offences under the Companies Act did not bar SEBI from initiating appropriate proceedings under the SEBI Act; SEBI's rights to prosecute are preserved.

Final Conclusion: Appeals dismissed; the Company Law Board was empowered to compound the Companies Act offences by composition fees under Section 621-A, and such compounding does not prevent SEBI from pursuing proceedings under the SEBI Act; SEBI's rights to initiate appropriate action are preserved.

Approval of Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016 - Compliance with Section 30(2) and Regulation 38(3A) of the CIRP Regulations - Role and commercial wisdom of the Committee of Creditors - Eligibility under Section 29A - Priority of distribution under Section 53 of the Code - No locus of operational creditors in approval of resolution plan by the Committee of Creditors - Resolution Plan implementation subject to other laws and requisite statutory approvals

Approval of Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016 - Compliance with Section 30(2) and Regulation 38(3A) of the CIRP Regulations - The resolution plan submitted by the Consortium (Fitcast Founders & Engineers Pvt. Ltd. and Omkara Assets Reconstruction Pvt. Ltd.) is approved by the Adjudicating Authority under section 31(1)/30(6) as it conforms to the requirements of section 30(2) and applicable regulations. - HELD THAT: - The Adjudicating Authority examined the resolution plan and the compliance checklist furnished by the Resolution Professional and found that the plan provides for payment of insolvency resolution process costs, payment to operational creditors not less than liquidation value, management and implementation arrangements, and other requirements specified by the Board. The Committee of Creditors approved the plan by the requisite voting share (67.08%, later 83.89% upon Bank of India's acceptance). On this basis and having regard to the statutory tests under section 30(2) and Regulation 38(3A), the Authority concluded that the plan meets the statutory requirements and allowed IA No. 352 of 2019 subject to observations and directions. [Paras 11, 13]

Application for approval of the resolution plan is allowed and the approved plan shall come into force with immediate effect.

Role and commercial wisdom of the Committee of Creditors - Jurisdictional limitation on adjudicating authority to re-evaluate commercial decisions - The Adjudicating Authority will not interfere with the commercial wisdom of the Committee of Creditors in approving or rejecting a resolution plan, and it has no mandate to second guess commercial decisions of the COC. - HELD THAT: - Relying upon the statutory scheme and relevant precedents referenced in the order, the Authority observed that the Code leaves commercial evaluation of plans to the COC. The Tribunal stated that decisions of the COC are based on commercial wisdom and therefore do not attract interference by the Adjudicating Authority, which is confined to satisfying itself about statutory compliance of the plan under section 30(2) and related provisions. [Paras 10, 11]

No interference with the COC's commercial decision; scrutiny is limited to statutory compliance.

No locus of operational creditors in approval of resolution plan by the Committee of Creditors - Operational creditors have no locus in the approval process of a resolution plan by the Committee of Creditors. - HELD THAT: - The Authority recorded that the statutory scheme vests the approval of resolution plans with the COC of financial creditors and that operational creditors do not participate in the COC's decision making regarding approval. This position was affirmed in the order as part of the rationale for confining the Tribunal's review to statutory compliance rather than stakeholder objections from operational creditors. [Paras 9]

Operational creditors do not have standing to challenge COC approval in the approval process under the Code.

Priority of distribution under Section 53 of the Code - Section 53 prescribes the order of priority on liquidation and places operational creditors after certain classes (including secured financial creditors who have relinquished security), thereby affecting the minimum payment that must be provided to operational creditors in a resolution plan. - HELD THAT: - The Authority reviewed section 53 to explain the statutory hierarchy of distribution in liquidation and noted that operational creditors rank behind certain creditors (workmen, secured creditors as specified). This statutory priority informs the assessment of the plan's treatment of operational creditors and supports the proposition that operational creditors do not have an overriding claim in the approval process beyond the protections mandated by the Code (including not receiving less than liquidation value as per section 30(2)(b)). [Paras 7, 8]

Section 53's priority scheme is applicable and relevant to evaluation of the plan's treatment of operational creditors.

Resolution Plan implementation subject to other laws and requisite statutory approvals - Approval of the resolution plan does not automatically waive or abet pending legal proceedings; the resolution applicant must obtain necessary statutory or regulatory approvals and may approach competent authorities for reliefs specified in the plan. - HELD THAT: - The Authority directed that clause(s) in the plan seeking concessions or withdrawal of proceedings do not supplant the jurisdiction of other competent courts or authorities. The approved plan shall operate subject to existing laws, and the resolution applicant is given liberty to seek appropriate reliefs from relevant authorities. The RP is directed to forward records to the Insolvency and Bankruptcy Board of India and the RA is to secure required approvals within one year or as provided by law. [Paras 6, 12]

Plan approval is subject to other laws; RA must obtain statutory approvals within prescribed timelines and RP to forward records to the IBBI.

Final Conclusion: The Adjudicating Authority, having satisfied itself that the resolution plan approved by the Committee of Creditors complies with section 30(2) and relevant regulations, allowed the application to approve the plan under section 31(1)/30(6) with directions that the plan takes immediate effect, remains subject to applicable laws and approvals, pending legal proceedings are not automatically affected, required statutory approvals be obtained within stipulated time and records be forwarded to the Insolvency and Bankruptcy Board of India.

Interim ex-parte restraint on use of power of attorney - clarification and conditional relief pending hearing - opportunity of hearing before passing regulatory order - prevention of misuse of clients' securities

Interim ex-parte restraint on use of power of attorney - clarification and conditional relief pending hearing - opportunity of hearing before passing regulatory order - Direction (ii) of the WTM's ex-parte ad interim order (restraining the appellant from acting on powers of attorney) was not finally adjudicated and was remitted to the WTM for fresh consideration in light of the appellant's requests for clarification. - HELD THAT: - The Tribunal noted that the appellant sought limited relief and clarifications concerning the effect of direction (ii) on settlement of trades and the use of powers of attorney for transferring securities to meet clearing obligations. The Tribunal recorded the respondent's apprehension about possible further misuse of powers of attorney but did not resolve the merits of that contention. Instead, observing that the appellant's letters of November 24, 25 and 26, 2019 sought clarification, the Tribunal directed that the WTM should examine those requests and pass an appropriate order after affording the appellant an opportunity of hearing. The Tribunal therefore remitted the matter to the WTM for fresh consideration and determination on merits following hearing, without granting any interim modification of direction (ii) itself. [Paras 3, 4, 6, 7]

The appeal is disposed of by directing the WTM to consider the appellant's requests dated November 24, 25 and 26, 2019 and to pass an appropriate order after giving the appellant an opportunity of hearing by December 02, 2019.

Final Conclusion: The Tribunal did not set aside or modify the ex-parte ad interim restraint; it remitted the issue concerning direction (ii) to the WTM for fresh consideration and directed the WTM to hear the appellant and pass an appropriate order by December 02, 2019.

Prohibition of manipulative, fraudulent and unfair trade practices - Self trades / wash trades - Change of beneficial ownership - Evidence required to establish PFUTP violations - Penalty under Section 15HA of SEBI Act

Self trades / wash trades - Prohibition of manipulative, fraudulent and unfair trade practices - Evidence required to establish PFUTP violations - Change of beneficial ownership - Penalty under Section 15HA of SEBI Act - Whether the appellant indulged in self trades/wash trades in the scrip of Vamshi Rubber Limited during January 01, 2011 to June 30, 2011 and whether the penalty imposed by the Adjudicating Officer under Section 15HA was justified. - HELD THAT: - SEBI's AO concluded that the appellant executed 187 self trades involving 19,727 shares and violated Regulation 4(2)(g) of the PFUTP Regulations, warranting penalty under Section 15HA. The Tribunal examined trading records and noted instances of matching buy and sell quantities on several days but found significant lacunae in the AO's reasoning: the impugned order did not record timing of matched trades to show that buys and sells were executed within a short interval; it did not address whether beneficial ownership in fact remained unchanged on days when deliveries were allegedly taken; nor did it demonstrate how the alleged trades adversely affected the market. While the Tribunal recognised that proof on a preponderance of probabilities can suffice for PFUTP findings, it held that fraudulent or unfair trading must still be established with a sufficient degree of confidence. In the absence of findings on timing, change of beneficial ownership and market impact, and given the appellant's undisputed status as a day trader who sometimes placed buy and sell orders with substantive time gaps and incurred losses, the Tribunal gave the appellant the benefit of doubt. The Tribunal therefore found the AO's conclusion and consequent penalty unsustainable. [Paras 6, 7]

The appeal is allowed; the impugned order is quashed; no orders as to costs.

Final Conclusion: The Tribunal set aside the AO's penalty order under Section 15HA for alleged wash/self trades in VRL shares because the AO did not record timing, beneficial ownership change or market impact to establish PFUTP violations with sufficient confidence; the appellant was given the benefit of doubt and the order was quashed.

Exercise of writ jurisdiction under Article 226/227 despite availability of statutory appeal - jurisdiction of the National Company Law Tribunal under Section 60(5) of the IBC to entertain questions arising out of insolvency resolution - judicial review of administrative action concerning public law decisions under the MMDR Act - fraudulent initiation of insolvency proceedings and power of adjudicating authority to inquire under Section 65 - scope and limits of moratorium under Section 14 of the IBC - availability of efficacious alternative remedy before NCLAT and appellate scheme under the IBC

Exercise of writ jurisdiction under Article 226/227 despite availability of statutory appeal - jurisdiction of the National Company Law Tribunal under Section 60(5) of the IBC to entertain questions arising out of insolvency resolution - judicial review of administrative action concerning public law decisions under the MMDR Act - High Court was justified in entertaining writ petition under Article 226/227 against an NCLT order which the Tribunal had no jurisdiction to pass in law. - HELD THAT: - The IBC is a complete code providing a three-tier adjudicatory mechanism (NCLT-NCLAT-Supreme Court) for insolvency matters, and ordinarily availability of a statutory appeal before NCLAT militates against bypassing that remedy by invoking Article 226. However, where a tribunal exercises a jurisdiction not vested in it at all - i.e., acts coram non judice - a superior court may intervene without driving the party to the prescribed statutory appellate forum. The MMDR Act confers and regulates statutory rights in the public law domain; decisions taken by the State under the MMDR Act (including refusal of deemed extension of mining leases) are administrative/public law acts amenable to judicial review by superior courts. The NCLT, being a creature of statute with powers circumscribed by Section 60 and related provisions, cannot be elevated into a superior court competent to judicially review administrative action under the MMDR Act or to grant reliefs of that character. The duties of the resolution professional under Sections 18, 20 and 25 do not enlarge NCLT's jurisdiction to entertain public law disputes; the moratorium under Section 14 preserves status quo but does not create new rights such as renewal of a statutory lease. In the facts of the case the NCLT had chosen to exercise a jurisdiction not vested in it by directing the State to execute supplemental lease deeds; accordingly the High Court was justified in setting aside the NCLT order and remanding the matter. [Paras 45]

NCLT lacked jurisdiction to direct execution of supplemental mining lease deeds under the MMDR Act; High Court rightly entertained the writ and set aside the NCLT order.

Fraudulent initiation of insolvency proceedings and power of adjudicating authority to inquire under Section 65 - availability of efficacious alternative remedy before NCLAT and appellate scheme under the IBC - NCLT and NCLAT have jurisdiction to inquire into allegations of fraudulent or malicious initiation of the insolvency process; such allegations do not justify bypassing the statutory appellate remedy. - HELD THAT: - The IBC expressly contemplates inquiry into fraudulent or malicious initiation of CIRP (Section 65) and other fraudulent transactions (Sections 66 and 69), and authorises the Adjudicating Authority to impose penalties and examine misfeasance. Where the allegation is that CIRP was initiated fraudulently for purposes other than genuine insolvency resolution, the matter falls squarely within the mischief of Section 65(1) and is within the jurisdiction of NCLT (and consequently NCLAT). Therefore allegations of fraud or collusion in the initiation of CIRP do not, by themselves, permit bypassing the alternative statutory remedy of appeal to NCLAT; the statutory appellate route remains the appropriate forum to test such contentions unless the challenge is to the very coram non judice character of the tribunal's action (see issue one). [Paras 51, 52]

NCLT/NCLAT competent to inquire into fraudulent initiation of CIRP; allegations of fraud do not ipso facto justify avoiding the appellate remedy under the IBC.

Final Conclusion: The appeals are dismissed. The High Court did not err in intervening under Article 226/227 because the NCLT had exercised a jurisdiction not vested in it by directing execution of supplemental mining lease deeds under the MMDR Act; concurrently, NCLT/NCLAT retain jurisdiction to inquire into fraudulent initiation of insolvency proceedings under the IBC, and such allegations must ordinarily be tested through the statutory appellate mechanism.

Maintainability of an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 despite prior winding up/liquidation proceedings - effect of Section 11(d) of the Insolvency and Bankruptcy Code, 2016 - treatment of winding up petitions and parallel proceedings vis-a -vis insolvency proceedings

Maintainability of an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 despite prior winding up/liquidation proceedings - effect of Section 11(d) of the Insolvency and Bankruptcy Code, 2016 - Application filed by a financial creditor under Section 7 of the I&B Code was maintainable even though a winding up petition had earlier resulted in appointment of an Official Liquidator. - HELD THAT: - The Tribunal considered the position in light of the Supreme Court's decision in Forech India Ltd. v. Edelweiss Assets Reconstruction Co. Ltd., which explained that Section 11(d) only bars a corporate debtor from initiating proceedings under Section 10 where a liquidation order has been made, and does not operate to bar financial creditors from filing applications under Section 7 merely because winding up proceedings are pending or an order of liquidation has been initiated in another forum. The Court noted the statutory evolution addressing parallel proceedings and transfers of winding up petitions to the adjudicating authority under the Code, and followed the reasoning that admission of a financial creditor's application under the Code is an independent proceeding to be decided in accordance with the Code. Applying that principle to the facts (where the Official Liquidator had been appointed earlier but the Section 7 petition was filed and admitted subsequently), the Court held there was no bar to maintainability of the Section 7 application and declined to interfere with the Adjudicating Authority's order admitting the application. [Paras 12, 13]

The Section 7 application was maintainable and the appeal was dismissed.

Final Conclusion: The appeal is dismissed; the admission of the financial creditor's Section 7 application is upheld on the ground that Section 11(d) does not bar such an application merely because winding up proceedings or appointment of an Official Liquidator had earlier occurred.

Limitation under Article 137 of the Limitation Act - right to apply accrues on date of default - applications under Section 9 of the Insolvency and Bankruptcy Code governed by the Limitation Act - requirement to produce default recorded with the information utility

Limitation under Article 137 of the Limitation Act - right to apply accrues on date of default - applications under Section 9 of the Insolvency and Bankruptcy Code governed by the Limitation Act - The petition under Section 9 is time barred under Article 137 of the Limitation Act. - HELD THAT: - The Adjudicating Authority applied the principle that the right to apply accrues when a default occurs and that applications under Section 9 of the Code fall within Article 137 if no other limitation period applies. Relying on the reasoning reproduced from B.K. Educational Services (P.) Ltd. v. Paras Gupta & Associates and the discussion in Gaurav Hargovindbhai Dave v. Asset Reconstruction Co. (India) Ltd. , the Authority found that the date of default was 30.09.2015 and that the petition filed on 15.05.2019 was beyond the three year period prescribed by Article 137. On that basis the claim based on salaries from September 2014 to May 2015 was held to be barred by limitation. [Paras 10, 11]

The claim is barred by Article 137 and the Section 9 petition is time barred and not liable to be admitted.

Requirement to produce default recorded with the information utility - The petitioner failed to produce evidence of default recorded with an information utility or other specified record necessary for admission under Section 9. - HELD THAT: - The Authority observed that, in addition to limitation, admission under Section 9 requires the petitioner to place on record default recorded with an information utility or other specified evidence as may be necessary. The petitioner did not bring such a record or evidence on record before this Authority. This deficiency, coupled with the petition being time barred, led to the rejection of the petition. [Paras 13]

Petition was also rejected for failure to produce the default record required for admitting a Section 9 application.

Final Conclusion: The Section 9 petition filed by the applicant was dismissed: the claim was held time barred under Article 137 of the Limitation Act and the petitioner failed to produce the requisite record of default with an information utility, and accordingly the petition is rejected.

Regular bail under Section 439 CrPC - tripod/triple test - flight risk, tampering with evidence, influencing witnesses - gravity of offence as a factor in bail consideration - perusal of prosecution material in sealed cover at bail stage - inadmissibility of recording final findings on merits based solely on sealed cover material

Tripod/triple test - flight risk, tampering with evidence, influencing witnesses - regular bail under Section 439 CrPC - Whether the appellant was entitled to regular bail having regard to the triple test and attendant facts - HELD THAT: - The Court accepted that the High Court had answered the triple test in the appellant's favour (no flight risk; no present possibility of tampering with evidence; no realistic prospect of influencing witnesses). The Court noted that the High Court could, notwithstanding a favourable outcome on the triple test, advert to the gravity of the offence as an additional relevant factor. Applying these principles to the material before it - including the duration of custody, availability of the appellant for further investigation, the fact that co-accused were on bail or interim protection, and the appellant's age and health - the Court concluded that the appellant's continued custody was not justified. The Court emphasised that observations touching upon merits recorded in the course of bail proceedings should not prejudice the trial. In the result the appeal was allowed and bail granted subject to conditions including bonds, passport deposit, availability for interrogation and prohibitions on tampering, intimidation and public comment. [Paras 25, 26]

Grant of regular bail to the appellant subject to specified conditions; High Court order declining bail set aside.

Perusal of prosecution material in sealed cover at bail stage - inadmissibility of recording final findings on merits based solely on sealed cover material - Whether the High Court was justified in recording findings on merits based on material produced in sealed cover and in the counter affidavit - HELD THAT: - The Court recalled its earlier ruling that a court may peruse materials produced in sealed cover to satisfy its judicial conscience at the bail stage, but must not convert such perusal into conclusive findings on merits. It disapproved the High Court's approach of incorporating verbatim allegations from the respondent's counter affidavit and of recording findings purportedly based on sealed cover material. Although this Court did open and peruse the sealed cover for satisfaction, it refrained from treating those materials as determinative and held that findings of fact on the basis of sealed cover material are not justified at the bail stage and must await trial where the accused can meet the case against him. [Paras 22, 23, 24]

High Court's recording of findings based on sealed cover and counter affidavit material disapproved; such materials may be perused to satisfy judicial conscience but cannot be the basis for final findings denying bail.

Final Conclusion: The appeal is allowed; the Delhi High Court order refusing regular bail is set aside and the appellant is directed to be released on bail on furnishing bonds and sureties and subject to conditions (passport deposit, availability for interrogation, prohibition on tampering/intimidation and on public comment). Observations in this judgment are not to be construed as expressions on merits and shall not prejudice consideration of other accused.

Refund under Section 11B of the Central Excise Act, 1944 - payment under protest - limitation bar to refund claims - effect of filing an appeal on the characterisation of payment as under protest - binding effect of jurisdictional High Court precedents - distinction between claim for input tax credit and claim for refund

Refund under Section 11B of the Central Excise Act, 1944 - payment under protest - limitation bar to refund claims - effect of filing an appeal on the characterisation of payment as under protest - binding effect of jurisdictional High Court precedents - distinction between claim for input tax credit and claim for refund - Whether the refund claim under Section 11B was barred by limitation or was maintainable because the tax was paid 'under protest' and appeal was pending - HELD THAT: - The Tribunal examined the fact that the appellant had deposited the disputed service tax post the Order-in-Original but while the first appeal was pending and placed on record a board resolution recording payment 'under protest' to avoid interest. Although that board resolution was not earlier brought to the notice of lower authorities nor discussed in their orders, the Tribunal held that filing of the appeal and the circumstances of payment indicated that the duty had been paid under protest. The Tribunal distinguished the Supreme Court decision in M/s ALD Automotive Pvt. Ltd. on the ground that it concerned a mandatory provision for claiming input tax credit under a State VAT statute and therefore did not govern a refund claim under Section 11B of the Central Excise Act. The Tribunal further relied on binding decisions of the jurisdictional High Court which treat payments made under protest (and payments made under mistake of law where appeals are filed) as not barred by limitation for refund claims. Applying those jurisdictional precedents, the Tribunal concluded that the limitation bar could not be invoked to deny the refund in the present case and that the appellant was entitled to the refund with consequential benefits as per law. [Paras 5, 6, 7, 8, 9]

Refund claim under Section 11B held not barred by limitation because the duty was paid under protest and appeal was pending; appeal allowed with consequential benefits.

Final Conclusion: The appeal is allowed and the refund claim under Section 11B is permitted to be adjudicated in favour of the appellant; consequential benefits, if any, to follow as per law.

Intellectual Property Services - holder of Intellectual Property Right - permitting the use or enjoyment of intellectual property for royalty consideration - recognition and conferment of rights under the Protection of Plant Varieties and Farmers' Rights Act, 2001 - requirement of registration to confer exclusive rights - applicability of Board Circular No. 80/10/2004-S.T. - limitation and extended period under the Finance Act

Intellectual Property Services - permitting the use or enjoyment of intellectual property for royalty consideration - Whether the consideration received as "Royalty" for supply of parent seeds attracts Service Tax as Intellectual Property Service for the disputed period. - HELD THAT: - The Tribunal found that the decisive question is whether the appellant, by supplying parent seeds under licence and receiving royalty, was providing a taxable "Intellectual Property Service". The statutory definition requires that the service be provided by the holder of an Intellectual Property Right recognized under law in force in India. On the facts, the appellant did receive amounts described as royalty, but the legal test for liability under Section 65(105)(zzr) is not satisfied merely by contractual terminology or by showing receipt of amounts as "royalty". The Tribunal held that inter se agreements between parties, however worded, cannot by themselves create a statutory charge where the statute requires the provider to be the holder of an IPR recognized under Indian law. Applying the governing statutory scheme and the Board Circular, the Tribunal concluded that the service tax demand under the head of Intellectual Property Service was unsustainable on merits and set aside the impugned demand. [Paras 7, 13]

Demand of Service Tax on the consideration received as royalty for supply of parent seeds for the disputed period is not sustainable and is set aside on merits.

Recognition and conferment of rights under the Protection of Plant Varieties and Farmers' Rights Act, 2001 - requirement of registration to confer exclusive rights - applicability of Board Circular No. 80/10/2004-S.T. - Whether mere filing of applications for registration under the PPV Act or contractual clauses is sufficient to make the appellant a holder of Intellectual Property Right for the purposes of levy of Service Tax. - HELD THAT: - The Tribunal examined the PPV Act's scheme and the Board Circular which limits taxable IPRs to rights prescribed by laws in force in India. It held that under the PPV Act the exclusive right is conferred only upon completion of the statutory registration process and issuance of the registration certificate in terms of Sections 23, 24 and 28. Mere filing of an application or relying on contractual clauses cannot convert an applicant into the statutory "holder" of a right. Agreements between parties are civil in nature and cannot create the statutory status required for chargeability under the Finance Act. Consequently, the Revenue's contention that filing applications or contractual recognition sufficed to fasten service tax liability was rejected. [Paras 8, 9, 11]

Mere application for registration or contractual provisions does not make the appellant a holder of IPR under the PPV Act; registration is necessary to confer the right for service tax purposes.

Limitation and extended period under the Finance Act - suppression and disclosure in books of account - Whether the demand can be sustained for the extended period of limitation. - HELD THAT: - The Tribunal observed that the appellant had reflected the consideration as "Royalty" in its books and had responded to Revenue's queries; there was no finding of suppression, fraud or deliberate misrepresentation that would justify invoking the extended period. Further, because the substantive demand was not sustainable on merits for the disputed period (the appellant did not hold IPRs as required), the extended period could not be invoked. The Tribunal therefore held that the demand could not be sustained beyond the normal limitation period. [Paras 14]

Demand for the extended period is not sustainable; the demand is barred beyond the normal period.

Final Conclusion: The appeal is allowed on merits and on limitation: the demand of Service Tax treating the royalty received on supply of parent seeds as taxable Intellectual Property Service is set aside, and the Revenue's invocation of the extended period is rejected, with consequential relief as per law.

Online Information Database Access and Retrieval (OIDAR) service - Telecommunication Service - Services provided from outside India and received in India - Information Technology Software Services - Management, Maintenance and Repair (MMR) services - Commercial Coaching or Training Services - Management Consultancy Services - Service tax - extended period - Penalty under Sections 76 and 77

Online Information Database Access and Retrieval (OIDAR) service - Telecommunication Service - Whether the services provided by the overseas group entity to the appellant attract service tax as OIDAR or as Telecommunication Service - HELD THAT: - The Tribunal accepted the appellants' case that the overseas entity provided network infrastructure and intra-group connectivity (WAN/PGN) and did not supply online information or database access for consideration to the appellant. The Commissioner had not controverted the factual contentions with supporting evidence or contractual analysis. Prior Tribunal decisions and the character of services (infrastructure for connectivity, server/portal maintenance, licence and shared maintenance costs) indicate the payments were for sharing of infrastructure/maintenance and not fees for supply of online information or retrieval. On this basis the appellant was held not liable to service tax under the OIDAR category; the submissions equating the service to telecommunication were not sustained in light of the factual matrix and applicable definitions. [Paras 9]

No service tax payable by the appellant on the services in question as OIDAR; liability under Telecommunication Service not established.

Management, Maintenance and Repair (MMR) services - Information Technology Software Services - Services provided from outside India and received in India - Whether maintenance/upgradation/enhancement of software provided by foreign suppliers are taxable as MMR or fall under Information Technology Software Services and hence outside service tax for the period in dispute - HELD THAT: - The Tribunal accepted the appellants' contention that the services related to upgradation/enhancement and maintenance of software and are properly treated as IT software services which were brought under the tax net only with effect from 16/05/2008. The Commissioner failed to appreciate this distinction and did not establish that the services were rendered in India or otherwise taxable prior to the relevant date. Accordingly, the Tribunal held that the appellants are not liable to service tax in respect of the MMR services as adjudicated. [Paras 10]

No service tax payable by the appellant on Management, Maintenance or Repair services as adjudicated.

Commercial Coaching or Training Services - Management Consultancy Services - Services provided from outside India and received in India - quantification for normal period - Liability for service tax in respect of Commercial Coaching/Training and Management Consultancy services where the appellants claim services were rendered outside India or taxed when rendered in India - HELD THAT: - The appellants asserted that these services were mainly provided abroad and that, where rendered in India, service tax had been discharged. The Commissioner observed lack of documentary proof in the record to substantiate the appellants' claim and the appeal papers did not contain the data needed to determine the situs of provision and taxability. Given the absence of necessary evidence before the Tribunal, the matter was not finally adjudicated on merits; instead the Tribunal directed that the authority examine records, ascertain which services were availed in India, quantify duty for the normal period (extended period not invocable), and re-quantify any penalty accordingly. [Paras 11, 12]

Issue remanded to the original authority for limited purpose of ascertaining and quantifying service tax payable on Commercial Coaching and Management Consultancy services for the normal period; extended period not to be invoked.

Service tax - extended period - Penalty under Sections 76 and 77 - Whether penalty and extended period can be invoked against the appellants - HELD THAT: - The Commissioner had waived penalty under Section 78 on finding absence of mens rea; the Tribunal agreed that appellants had a bona fide belief and that the extended period for demand could not be invoked. Since service tax was held not payable in respect of OIDAR and MMR services, penalties to that extent under Sections 76 and 77 were set aside. For the remanded items (Coaching and Consultancy services) the Tribunal directed the original authority to compute duty for the normal period and to decide on penalty under Sections 76 and 77 after re-quantification. [Paras 12]

Extended period cannot be invoked; penalties under Sections 76 and 77 set aside insofar as they relate to OIDAR and MMR services; penalty on remanded items to be determined after re-quantification for the normal period.

Final Conclusion: The impugned order is set aside in part: demands for service tax in respect of OIDAR and Management, Maintenance and Repair services are annulled; penalty to that extent is deleted; liability on Commercial Coaching and Management Consultancy services is remitted to the original authority for determination and quantification for the normal period (extended period disallowed), with penalties to be considered after re-quantification.

Dominant service test - classification of cash van service versus security service - service tax liability on security services - penalty for non-payment of service tax - precedential effect of tribunal decisions

Classification of cash van service versus security service - dominant service test - service tax liability on security services - penalty for non-payment of service tax - Whether amounts treated as receipts liable to service tax as 'security services' for financial year 2012-13 where appellant provided cash vans with security guards. - HELD THAT: - The Tribunal held that the issue for 2012-13 is squarely covered by its earlier Final Order Nos.72386-72388/2018 dated 19.09.2018 which applied the dominant service test to similar contracts. On examination of the agreements and relying on the precedent in the Tribunal's decision in Kingfisher Airlines Ltd. (and the Apex Court's affirmation in Commissioner v. Jet Airways (I) Ltd. ), the Tribunal concluded that where the principal obligation is transportation of cash by cash van, the dominant service is supply of cash van (transportation) and not a security service merely because security guards accompany the vans. Consequently, differential receipts identified by Revenue cannot be taxed as 'security services' and penalties premised on such classification are not sustainable. Both parties agreed the earlier reasoning applies to the present period; accordingly the impugned adjudication confirming demand and imposing penalty was set aside and the appeal allowed.

Impugned order confirmed in original proceedings set aside; appeal allowed and demand and penalty in respect of service tax as 'security services' for financial year 2012-13 quashed.

Final Conclusion: The Tribunal allowed the appeal for financial year 2012-13, holding that the dominant service was cash van (transportation) and not security service; the demand and penalty confirmed by the lower authorities were set aside and consequential relief granted.

Eligibility of cenvat credit on Group Medical Insurance - eligibility of cenvat credit on Outdoor/Catering services - eligibility of cenvat credit on Staff/Employee transportation - interpretation of input service definition under Rule 2(l) of Cenvat Credit Rules, 2004 - application of exclusion clause (Clause (c)) to employee-centric services w.e.f. 01.04.2011 - invocation of extended period and imposition of penalty where dispute is interpretative

Eligibility of cenvat credit on Group Medical Insurance - interpretation of input service definition under Rule 2(l) of Cenvat Credit Rules, 2004 - application of exclusion clause (Clause (c)) to employee-centric services w.e.f. 01.04.2011 - Cenvat credit on Group Medical Insurance is not permissible. - HELD THAT: - The Tribunal followed its earlier decision in Bharat Fritz Werner Ltd. which, after considering the Larger Bench decision in Wipro Ltd., held that Group Medical Insurance falls within the exclusion contained in Clause (c) of Rule 2(l) as amended w.e.f. 01.04.2011. The High Court decision relied upon by the appellant was distinguished by the Tribunal in Bharat Fritz Werner Ltd.; accordingly, the appellants are not entitled to credit on Group Medical Insurance for the periods under consideration. [Paras 6]

Credit on Group Medical Insurance denied.

Eligibility of cenvat credit on Outdoor/Catering services - interpretation of input service definition under Rule 2(l) of Cenvat Credit Rules, 2004 - application of exclusion clause (Clause (c)) to employee-centric services w.e.f. 01.04.2011 - Cenvat credit on Outdoor Catering (Catering Service/Lunch & Banquet) is not permissible post-amendment. - HELD THAT: - Relying on the Larger Bench decision in Wipro Ltd., which construed the exclusion in Clause (c) w.e.f. 01.04.2011, the Tribunal held that Outdoor Catering Service is excluded from input service credit after the amendment. The appellant's reliance on earlier precedents was not accepted in view of the Larger Bench ratio; thus the Commissioner was right to deny credit on catering services. [Paras 6]

Credit on Outdoor/Catering services denied.

Eligibility of cenvat credit on Staff/Employee transportation - interpretation of input service definition under Rule 2(l) of Cenvat Credit Rules, 2004 - Cenvat credit on Staff/Employee transportation is permissible. - HELD THAT: - Applying the reasoning in Reliance Industries, the Tribunal held that the transportation facility in question was directly related to employee productivity (transport between residence and workplace) and thus falls within the definition of input service, the exclusion clause not being attracted. The Tribunal also noted consistency with an earlier final order in the appellant's own case on identical services and allowed credit accordingly. [Paras 6]

Credit on Staff/Employee transportation allowed.

Invocation of extended period and imposition of penalty where dispute is interpretative - Extended period of limitation and penalties are not tenable; matters remanded for re-quantification for the normal period. - HELD THAT: - The Tribunal found that the core controversy concerns interpretation of the definition of input service, an interpretative question; consequently, invocation of the extended period was held to be not sustainable and the penalties under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC(1)(c) of the Central Excise Act, 1944 were set aside. The matter was remanded to the original authority to recompute the demand for the normal one-year period in respect of impugned services determined to be taxable/credit-ineligible. [Paras 6]

Extended period not invoked; penalties set aside; remand for re-quantification for normal period.

Final Conclusion: Appeal partly allowed: credit on Group Medical Insurance and Outdoor/Catering denied, credit on Staff Transportation allowed; extended period and penalties set aside and matter remanded to the original authority for recomputation of demand for the normal one-year period.

Taxability of construction of residential complex service prior to 01.07.2010 - works contract service characterization for builder-buyer agreements - prospective effect of the Explanation to construction of complex w.e.f. 01.07.2010 - deemed provider of construction of residential complex service - liability of contractor versus builder prior to the 2010 amendment

Taxability of construction of residential complex service prior to 01.07.2010 - works contract service characterization for builder-buyer agreements - prospective effect of the Explanation to construction of complex w.e.f. 01.07.2010 - Whether service tax could be levied on the appellant's activities (construction of residential units and related sale agreements) for the period prior to 01.07.2010. - HELD THAT: - The Tribunal held that prior to the Explanation inserted w.e.f. 01.07.2010 into the definition of construction of complex, agreements between builders/developers and prospective buyers for construction of residential units were to be treated as works contracts and, in the absence of the Explanation, there was no legislative intention to treat the builder as a deemed provider of construction-of-residential-complex service to buyers. The ratio in M/s Krishna Homes v. CCE (Tri-Del) was followed: the 2010 Explanation expanded the scope of Clause (zzzh) prospectively to deem a builder to provide construction-of-residential-complex service to the buyer when the complex is intended for sale and sums are received before grant of completion certificate. Consequently, demands for service tax raised for periods prior to 01.07.2010 are not sustainable; the Tribunal applied the distinction affirmed by the Supreme Court in Larsen & Toubro (works-contract character) and concluded that the 2010 amendment effected a prospective change in taxable incidence. [Paras 7, 8, 9]

Demands of service tax, interest and penalties for the period prior to 01.07.2010 are unsustainable and are set aside.

Final Conclusion: The appeal is allowed; the impugned order is set aside and the demands, interest and penalties relating to the period prior to 01.07.2010 are quashed with consequential relief, if any.

Summary order. Permission granted to withdraw the appeals and pending applications; the appeals and pending applications are dismissed as withdrawn.

Condonation of delay under Section 5 of the Limitation Act, 1963 - Admission of a substantial question of law - Refund of unutilized Cenvat Credit on closure of unit - Continuation of interim stay

Condonation of delay under Section 5 of the Limitation Act, 1963 - Application for condonation of 15 days' delay in re-filing Central Excise Appeal Cases was allowed. - HELD THAT: - The Court, after hearing counsel for both parties and considering the reasons furnished, found that there were reasonable grounds for the delay in re-filing the appeals. Exercising its discretion under Section 5 of the Limitation Act, 1963, the Court concluded that the delay should be condoned and allowed the applications for re-filing. [Paras 2, 3]

Delay in re-filing the appeals of 15 days is condoned; the condonation applications are allowed and disposed of.

Admission of a substantial question of law - Refund of unutilized Cenvat Credit on closure of unit - The substantial question of law relating to entitlement to refund of unutilized Cenvat Credit on closure of a unit was framed and admitted for consideration in the appeals. - HELD THAT: - The Court identified and recorded the substantial question of law raised in the appeals, namely whether the CESTAT was correct in holding that an appellant engaged in manufacture of chewing tobacco and operating under the relevant Rules was entitled to refund of Cenvat Credit lying unutilized on the date of closure of the unit. Having considered the issues, the Court admitted the appeal and directed that the matter be listed for final disposal. [Paras 1, 2, 3]

The substantial question of law concerning entitlement to refund of unutilized Cenvat Credit on closure of the unit is admitted and the appeals are to be listed for final disposal.

Continuation of interim stay - Continuation of the interim stay granted earlier by the Court during the pendency and final hearing of the appeals was ordered. - HELD THAT: - The Court ordered that the stay already granted by its order dated 11.09.2019 shall continue to operate during the pendency and final hearing of the Central Excise Appeal Cases. In view of the continuation of the interim protection, the applications for stay were disposed of accordingly. [Paras 4]

The earlier stay order dated 11.09.2019 is continued and shall remain operative pending final hearing; stay applications disposed of.

Final Conclusion: The Court condoned the short delay in re-filing the appeals, admitted the substantial question of law concerning entitlement to refund of unutilized Cenvat Credit on unit closure for final disposal, and directed that the interim stay previously granted shall continue during pendency of the appeals.

Applicability of Section 11-B to rebate claims under Notification No.19/2004 - limitation period for refund/rebate claims - rebate under Rule 18 to be governed by the terms of the notification - subordinate legislation cannot dispense with statutory limitation - clarificatory effect of amendment to notification

Applicability of Section 11-B to rebate claims under Notification No.19/2004 - rebate under Rule 18 to be governed by the terms of the notification - Section 11-B of the Central Excise Act applies to rebate claims made under Notification No.19/2004 issued under Rule 18. - HELD THAT: - The Court examined whether the omission of any time limit in Notification No.19/2004 meant that claims for rebate under Rule 18 could be entertained outside the statutory limitation. Having considered precedent and the legislative scheme, the Court held that claims for rebate/refund must conform to Section 11-B of the Act. It rejected the proposition that a notification issued under Rule 18 could displace or dispense with the limitation prescribed by Section 11-B. The Court treated the later amendment (bringing Section 11-B explicitly within Notification No.19/2004) as clarificatory and consistent with the principle that subordinate legislation cannot override or abrogate statutory requirements governing limitation and the mechanism for refund claims. [Paras 8, 9, 11, 13, 14]

Section 11-B governs rebate claims under Notification No.19/2004 and the notification cannot be read to exclude the statutory limitation.

Limitation period for refund/rebate claims - clarificatory effect of amendment to notification - subordinate legislation cannot dispense with statutory limitation - Rebate claims made beyond the period prescribed by Section 11-B are time-barred and the original authority rightly rejected such claims as barred by time. - HELD THAT: - The Court found it undisputed that the claims in these petitions were submitted beyond the one year period prescribed by Section 11-B. Applying the statutory framework and the reasoning in leading decisions that refund claims must be brought within the statutory limitation, the Court held that the rejection of the rebate applications as time-barred was legally sustainable. The amendment of Notification No.19/2004 effected on 01.03.2016 was held to be clarificatory; it did not operate to revive or retrospectively validate claims made beyond the statutory period for exports that occurred prior to the amendment. [Paras 9, 13, 14, 15]

Claims filed beyond the limitation under Section 11-B are time-barred; the orders rejecting the rebate claims were upheld.

Final Conclusion: Writ petitions dismissed; the orders rejecting the rebate claims as time barred under Section 11 B (as applicable to Notification No.19/2004) are upheld.

CENVAT credit admissibility - paper transaction - relevancy of statements under Section 9D - burden of proof regarding admissibility of CENVAT credit - penalty under Rule 26(2) of the Central Excise Rules

CENVAT credit admissibility - paper transaction - burden of proof regarding admissibility of CENVAT credit - relevancy of statements under Section 9D - Whether the appellant was entitled to the CENVAT credit denied by the adjudicating authority on the allegation that the transactions were mere paper transactions - HELD THAT: - The Tribunal examined the materials relied upon by the Revenue and the appellants' defences and concluded that the denial of credit could not be sustained. The findings of the Tribunal include that: (a) the impugned inputs claimed as inadmissible were found in the appellant's stock and recorded in statutory records; (b) Revenue did not treat the matter as a case of shortage of inputs; (c) the procedure under Section 9D for treating statements recorded during investigation as relevant evidence was not followed, and statements relied upon could not be accepted without compliance with Section 9D; (d) Revenue did not investigate suppliers or fund flows to establish diversion, nor did it ascertain quantitatively whether the quantity of raw material claimed was insufficient to manufacture the finished goods; and (e) substantial entries at the State ICC corroborated receipts. The Tribunal also noted technical evidence (CIPET opinion) did not conclusively preclude use of the contested materials and that Revenue's investigation was incomplete and faulty. On these grounds the Tribunal held that the appellant had discharged the burden regarding admissibility of CENVAT credit and that the denial (being based on inadmissible statements and incomplete investigation) was unsustainable. [Paras 16, 17, 18]

CENVAT credit taken by the appellant is held to be correctly taken; the demand for recovery of such credit is set aside.

Penalty under Rule 26(2) of the Central Excise Rules - relevancy of statements under Section 9D - Whether penalties imposed on the appellants (including under Rule 26(2) of the Central Excise Rules) could be sustained - HELD THAT: - The Tribunal addressed the imposition of penalty in the light of its primary conclusion on credit and the evidentiary infirmities. Because the demand for recovery was set aside-inter alia due to reliance on investigative statements not admitted in compliance with Section 9D and on incomplete investigation-the concomitant penalties could not survive. The Tribunal therefore set aside the penalties imposed on the appellants. (The adjudication on legal vires of Rule 26(2) was argued, but the operative decision disposed the penalties as consequential to the reversal of demand.) [Paras 18]

Penalties imposed on the appellants are set aside.

Final Conclusion: The impugned order confirming denial of CENVAT credit, recovery and penalties is set aside; appeals are allowed and the demands and penalties confirmed by the adjudicating authority are vacated with consequential relief, if any.

Revenue neutrality - CENVAT credit admissibility and reversal - bona fide mistake - suppression of facts and mis-declaration - extended period of limitation not invokable without willful suppression

Revenue neutrality - CENVAT credit admissibility and reversal - bona fide mistake - Whether the demand for excess CENVAT credit is sustainable on merits where the sister unit reversed the credit and the appellant availed the same, rendering the transaction revenue neutral and arising from a bona fide mistake. - HELD THAT: - The Tribunal found on the record that the appellant had availed CENVAT credit of Rs. 8,63,199/- on the basis of an invoice by its sister concern, and that the sister concern had reversed the entire credit which was then availed by the appellant. Both units manufacture identical goods and the Revenue did not contend that both units retained the same credit. In these circumstances the Tribunal applied the settled principle that where the transaction is revenue neutral and there is no loss to the exchequer or unjust gain to the assessee, allegations of suppression or mis-declaration cannot be sustained. The Tribunal also accepted that the error in the invoice was a bona fide mistake and that the facts do not demonstrate willful misappropriation of credit. On this basis the impugned demand for recovery of excess credit was held unsustainable on merits and was set aside. [Paras 6]

Demand for excess CENVAT credit set aside as unsustainable on merits due to revenue neutrality and bona fide mistake.

Extended period of limitation not invokable without willful suppression - suppression of facts and mis-declaration - Whether the demand was time-barred because extended period of limitation could not be invoked in absence of willful suppression of facts. - HELD THAT: - The Tribunal noted that the show-cause notice was issued in January 2017 for the period of September 2013. Having found no willful suppression or intention to evade payment of duty - the error being a bona fide mistake and the transaction being revenue neutral - the Tribunal held that the extended period of limitation could not be invoked. Consequently the demand was also barred by limitation. [Paras 6]

Demand held time-barred; extended period of limitation not invokable in absence of willful suppression.

Final Conclusion: Appeal allowed; the impugned order dated 4.2.2019 is set aside - the demand for reversal of CENVAT credit is unsustainable on merits as revenue neutral and arising from a bona fide mistake, and is also barred by limitation.

Seizure of goods - tax invoice compliance - pre-authenticated tax invoice requirement - penalty under Section 48(5) of UP Value Added Tax Act - afterthought defence - onus of documentary evidence to support invoice dates

Seizure of goods - tax invoice compliance - pre-authenticated tax invoice requirement - Lawfulness of seizure of the goods (yarn) intercepted while being transported - HELD THAT: - The Court upheld the factual and legal basis for seizure. At interception the vehicle carried Tax Invoice No. 41 (dated 14.8.2009) of the revisionist and a seller's invoice dated 20.8.2009, but the second copy of the tax invoice was not present and the tax invoice was not pre-authenticated as required by the Act. The revisionist did not produce contemporaneous documentary evidence to substantiate the explanation that the invoice date discrepancy arose from inadvertence or delayed dispatch; a letter filed with the revision was neither produced at the time of interception nor before the authorities and could not be relied upon. In these circumstances the authorities were entitled to infer irregularity and to seize the goods.

Seizure was justified and properly sustained.

Penalty under Section 48(5) of UP Value Added Tax Act - afterthought defence - onus of documentary evidence to support invoice dates - Validity of penalty proceedings and the Tribunal's upholding of the penalty - HELD THAT: - The Court found that penalty proceedings were rightly initiated and sustained. The revisionist failed to provide material contemporaneous proof to support the claim that the goods were dispatched later than the invoice date; the explanation advanced was treated as an afterthought. Given absence of supporting documents and non-compliance with statutory invoice formalities, the authorities and the Tribunal were justified in drawing adverse inference and imposing penalty under the Act.

Penalty levied under the statute was justified and the Tribunal's order upholding it requires no interference.

Appreciation of memo of appeal - findings consonant with the material on record - Whether the Tribunal erred in not accepting the content of the memo of appeal or in its findings being inconsistent with the record - HELD THAT: - The Court held that the Tribunal properly appreciated the record. The revisionist did not produce supporting documentary evidence before the seizure, penalty order, or first appellate authority; the belated letter filed with the revision could not be considered. Consequently the Tribunal's rejection of the revisionist's contentions and its findings were in consonance with the material on record.

Tribunal's treatment of the memo of appeal and its findings are justified and sustained.

Authority to infer afterthought - appellate review of factual findings - Whether the Tribunal was justified in criticizing or disregarding alleged illegalities by the first appellate authority - HELD THAT: - The Court noted that the Tribunal's conclusions did not amount to improper disparagement but flowed from the evidence and procedural timeline. There was no material to show that the first appellate authority committed legal error warranting interference; the Tribunal's assessment that the revisionist's explanations were afterthoughts was supported by the absence of contemporaneous evidence.

Tribunal's approach to the first appellate authority's findings was legally permissible and does not warrant interference.

Final Conclusion: The revision petition is dismissed; the Tribunal's order upholding seizure and penalty under the UP Value Added Tax Act for Assessment Year 2009-10 is affirmed.

Input tax credit entitlement - Registration status of the selling dealer - Reassessment under Section 39(1) of the Karnataka Value Added Tax Act, 2003 - Rectification of assessment order - Burden of proof for tax payment to claim input tax credit

Input tax credit entitlement - Registration status of the selling dealer - Burden of proof for tax payment to claim input tax credit - Denial of input tax credit to the petitioner on the ground that the selling dealer was de-registered during the relevant period. - HELD THAT: - The Court found on the record that the selling dealer, M/s. Total Scaffolding Technologies, was registered on 29.06.2013 and de-registered on 10.08.2015, i.e., it remained a registered dealer during the tax periods in question. The Court held that where the selling dealer is registered under the Act, the transactions of the purchasing dealer cannot be impugned solely on the ground of alleged de-registration. The authority's rejection of the input tax credit claim principally because the selling dealer was de-registered during the relevant periods was not sustainable. The Court observed that the petitioner had placed invoices and bank statements on record to demonstrate payment of tax and that these materials ought to be examined by the prescribed authority to determine entitlement to input tax credit. The determinative legal position is that registration status during the relevant period and supporting evidence of tax payment must be properly considered before denying input tax credit. [Paras 7]

The denial of input tax credit on the ground of the selling dealer's alleged de-registration is unsustainable and requires reconsideration by the prescribed authority in the light of the registration record and the documents produced by the petitioner.

Reassessment under Section 39(1) of the Karnataka Value Added Tax Act, 2003 - Rectification of assessment order - Validity of the reassessment order, consequential demand notices and the endorsement rejecting the rectification application. - HELD THAT: - The Court set aside the reassessment order, the consequential demand notices and the endorsement rejecting the rectification application because the authority had failed to consider the registration status of the selling dealer and the documents placed by the petitioner. The matter was restored to the file of the prescribed authority for reconsideration in accordance with law, with a direction to the petitioner to appear on a specified date and to the authority to conclude the reassessment proceedings expeditiously while considering the relevant documents furnished by the petitioner. [Paras 8]

Impugned reassessment order, demand notices and the rectification endorsement are set aside and the proceedings are remitted to the prescribed authority for fresh consideration in accordance with law.

Final Conclusion: Impugned reassessment order, demand notices and the endorsement rejecting rectification are set aside; the matter is remitted to the prescribed authority to reconsider the petitioner's claim for input tax credit in accordance with law, taking into account the selling dealer's registration status and the documents produced by the petitioner, and to conclude the proceedings expeditiously.

Agriculturist-producer - sale as culmination of agricultural activity - dealer under the Central Sales Tax Act - inter-state sale assessable under the CST Act - definition of turnover and its interplay between State GST Act and Central Sales Tax Act - requirement of carrying on business or systematic buying and selling to attract dealer status

Agriculturist-producer - requirement of carrying on business or systematic buying and selling to attract dealer status - definition of turnover and its interplay between State GST Act and Central Sales Tax Act - Whether an agriculturist-producer of raw rubber can be treated as a dealer under the CST Act in view of amendments to the State GST Act. - HELD THAT: - The Court applied the principle from Kanyakumari District Planter's Association that mere systematic cultivation, conversion into a marketable commodity and sale at a profit does not, by itself, establish carrying on business of buying and selling to attract dealer-status under the CST Act, especially where amendments to the State Act's definition of turnover were not mirrored in the Central Act. The appellate findings-uncontested by Revenue-established that the respondent had no selling agency, sales office or marketing officer, raised bills from the estate, had no external warehouse, and sold only its own produce from the estate. Transport was supported by Form N1 and village officer certificates. The Tribunal accepted that these sales were the culmination of agricultural activity and that Revenue produced no material showing buying and selling in trade to render the respondent a dealer under the CST Act. On these facts and legal principle, the Court held for the respondent. [Paras 6, 7, 8]

Agriculturist-producer of raw rubber was not a dealer under the CST Act; question answered in favour of the respondent.

Inter-state sale assessable under the CST Act - sale as culmination of agricultural activity - dealer under the Central Sales Tax Act - Whether the inter-state sale of raw rubber latex/rubber sheets by the respondent was assessable under the CST Act. - HELD THAT: - Because the Tribunal and the First Appellate Authority found, on facts not disputed by Revenue, that the respondent disposed of only its own agricultural produce from the estate and did not engage in trading or maintain selling agencies or external storage, the sales were held to be the culmination of agricultural operations and not transactions attracting CST liability. The Revenue failed to place material showing that the respondent had engaged in buying and selling so as to become a dealer under the CST Act; accordingly, the assessment of inter-state sales was set aside. [Paras 6, 7, 8, 9]

Assessment of inter-state sale of raw rubber was not sustainable under the CST Act; appeal in favour of the respondent.

Final Conclusion: The questions of law raised by the State were answered against the Revenue: the respondent, being an agriculturist selling its own produce from the estate as the culmination of agricultural activity, is not a dealer under the CST Act and the inter-state sale assessment under the CST Act was set aside; the Tax Case is dismissed.

Priority of employees' dues vis-a -vis secured creditors - application of Companies Act Section 529A to co-operative societies - recovery as arrears of land revenue under Section 50 of the MRTU & PULP Act - scope of Section 169(1) and Section 169(2) of the Maharashtra Land Revenue Code - distribution of sale proceeds under Section 13(7) of the SARFAESI Act - contractual displacement of statutory distribution - enforcement of recovery certificate against secured creditor pursuant to contractual undertaking

Application of Companies Act Section 529A to co-operative societies - Section 529A of the Companies Act cannot be applied to a co-operative society governed by the Maharashtra Co-operative Societies Act. - HELD THAT: - Section 167 of the Societies Act expressly declares that the provisions of the Companies Act, 1956 shall not apply to societies registered under that Act. The Karkhana was a co-operative society registered under the Societies Act; therefore Section 529A of the Companies Act, which confers priority on workers' dues, is inapplicable. The High Court's reliance on Section 529A was therefore erroneous. [Paras 8, 14]

Section 529A of the Companies Act does not apply to the Karkhana; employees cannot invoke Section 529A for priority over other creditors in this case.

Recovery as arrears of land revenue under Section 50 of the MRTU & PULP Act - scope of Section 169(1) and Section 169(2) of the Maharashtra Land Revenue Code - priority of employees' dues vis-a -vis secured creditors - A recovery certificate under Section 50 of the MRTU & PULP Act making employees' dues recoverable as arrears of land revenue does not, by itself, create a paramount charge that ranks ahead of secured creditors; such dues fall within the category covered by Section 169(2) and take priority only over unsecured claims. - HELD THAT: - Section 50 makes amounts recoverable in the same manner as arrears of land revenue, but that statutory treatment does not convert them into true arrears of land revenue under Section 169(1). A distinction exists between sums that are arrears of land revenue (which attract a paramount charge under Section 169(1)) and sums recoverable in the same manner as arrears of land revenue (which fall under Section 169(2) and get priority only over unsecured claims). Prior authoritative decisions confirm that legislative provision for recovery 'as if' arrears of land revenue does not itself displace the doctrine of priority. Consequently, employees' dues recoverable under Section 50 are not a statutory first charge capable of defeating a secured creditor's claim under the SARFAESI scheme. [Paras 9, 10, 14]

Employees' dues recoverable under Section 50 MRTU & PULP Act do not attain paramountcy under Section 169(1); they rank only above unsecured claims and cannot, by that feature alone, override the claim of a secured creditor.

Distribution of sale proceeds under Section 13(7) of the SARFAESI Act - contractual displacement of statutory distribution - enforcement of recovery certificate against secured creditor pursuant to contractual undertaking - Where the secured creditor, in the sale contract executed pursuant to Section 13(4) SARFAESI Act, undertakes an obligation inconsistent with the default distribution under Section 13(7), the contract governs distribution of sale proceeds and the secured creditor must honour its contractual undertaking; accordingly the secured creditor here is liable to satisfy employees' dues as per the sale contract. - HELD THAT: - Section 13(7) prescribes the default order of application of sale proceeds: costs, then dues of the secured creditor, then residue to persons entitled. That statutory sequence applies 'in the absence of any contract to the contrary.' The sale letter dated 08.03.2010 and the sale certificate of 14.09.2010 form a contractual composite by which the Bank undertook responsibility for 'employees' dues' while the purchaser agreed to accept other encumbrances and liabilities. The Court found the sale letter to be part of the contractual matrix referenced by the sale certificate and rejected the Bank's later attempt to narrow its undertaking to provident fund only. Consequently, the contract displaced the statutory distribution and the Bank must apply the sale proceeds in accordance with its undertaking to pay employees' dues; other statutory employee liabilities remain the purchaser's obligation. [Paras 12, 13, 14]

The sale contract displaces the default distribution under Section 13(7); the Appellant-Bank is bound to satisfy the employees' dues from the sale proceeds as per its undertaking, and the purchaser is liable for other agreed liabilities.

Priority of employees' dues vis-a -vis secured creditors - enforcement of recovery certificate against secured creditor pursuant to contractual undertaking - In execution of the recovery certificate issued by the Industrial Court, the Collector may recover from the sale proceeds held by the secured creditor in trust to the extent of the secured creditor's contractual undertaking to pay employees' dues; the High Court's direction to permit recovery from the proceeds held by the Bank is sustained to that extent. - HELD THAT: - Although employees' dues do not enjoy statutory paramountcy in this case, the Bank's contractual commitment in the sale documents creates an obligation to apply the sale proceeds in favour of the employees. Consequently the recovery certificate can be executed against the Bank insofar as it entails recovery from the sale proceeds held by the Bank in trust. The Court directed that such recovery be effected within six months and that other agreed liabilities be discharged by the purchaser within the same period. [Paras 2, 13, 14, 15]

Execution of the recovery certificate is permissible against the Appellant-Bank to the extent of its contractual undertaking to pay employees' dues; recovery is to be completed within six months and other liabilities are to be discharged by the purchaser within six months.

Final Conclusion: The appeal is allowed in part: Section 529A of the Companies Act is inapplicable to the co-operative society; employees' dues recoverable under Section 50 MRTU & PULP Act do not attain paramountcy under Section 169(1) of the Land Revenue Code and rank only above unsecured claims; however, the sale contract entered under SARFAESI displaced the default distribution under Section 13(7) and, accordingly, the Bank is contractually bound to satisfy the employees' dues from the sale proceeds while the purchaser must discharge other agreed liabilities; execution of the recovery certificate against the Bank is permitted to that extent, with recovery and payment ordered within six months.

Determination of rules of procedure in arbitration - Arbitral tribunal's discretion to determine admissibility, relevance and weight of evidence - Consent to procedure and estoppel against objection - Section 34(2)(a)(iii) - inability to present case - Limited scope of appellate review under Section 37 read with Section 34 - Exercise of powers under Article 142 of the Constitution to mould relief and end litigation

Determination of rules of procedure in arbitration - Consent to procedure and estoppel against objection - Section 34(2)(a)(iii) - inability to present case - Whether the arbitrator's closure of evidence without allowing cross-examination vitiated the award under Section 34(2)(a)(iii) because the party was unable to present its case. - HELD THAT: - The Court held that the arbitral tribunal may determine procedural rules and the admissibility and weight of evidence, and parties are free to agree the procedure. The proceedings dated 28.11.2009 recorded the presence of parties and counsel and an express agreement that no cross-examination would be undertaken and that parties would rely on affidavits and documents; the evidence was accordingly closed on that day. No application was made to recall that order before the award was rendered, nor were the predecessor directors/shareholders, who had relevant knowledge, produced despite opportunity. In these circumstances the respondent, having accepted the procedure, was estopped from later contending denial of opportunity; there was no unilateral procedural denial by the arbitrator that would attract Section 34(2)(a)(iii). The arbitrator did consider the claim of expenditure and rejected it on the basis of lack of reliable evidence. Therefore the contention of procedural prejudice was unsustainable. [Paras 12, 13, 14, 16, 17]

The challenge under Section 34(2)(a)(iii) that the respondent was unable to present its case because cross-examination was denied is rejected; the arbitrator's procedure was consented to and did not vitiate the award.

Limited scope of appellate review under Section 37 read with Section 34 - Arbitral tribunal's discretion to determine admissibility, relevance and weight of evidence - Whether the High Court, in an appeal under Section 37, could re-open the merits of the award beyond the limited grounds of challenge under Section 34 and remand the matter to the arbitrator. - HELD THAT: - The Court noted that the Additional District Judge had upheld the award on a Section 34 petition and that both the arbitrator and the trial court had concurrently considered the material. An appellate intervention under Section 37 is constrained by the limited remit of Section 34; the Single Judge's acceptance of an afterthought procedural grievance and consequent remand impermissibly expanded review of the merits. Where parties agreed procedure and the arbitrator dealt with the claims (including the asserted construction expenditure) and recorded reasons for rejecting them, the High Court was not justified in setting aside the award and remanding the matter merely because it would have reached a different conclusion. [Paras 9, 10, 17]

The High Court erred in re-opening the merits and remanding the matter; its order is set aside and the award is restored.

Exercise of powers under Article 142 of the Constitution to mould relief and end litigation - Whether the Court should, in the interest of justice, mould relief to put an end to the litigation between the parties. - HELD THAT: - Recognising the factual findings that construction activity had not progressed beyond initial columns and that reliable evidence of the alleged expenditure was lacking, the Court exercised its power under Article 142 to effect a final settlement. Taking into account the breach, the lapse of time, and loss to the landowners who must now re-contract or face demolition and redevelopment costs, the Court directed a composite payment to conclude the dispute and ordered restoration of possession on receipt of the sum. [Paras 18, 19]

The Court, exercising Article 142, directed the appellant to pay the respondent a specified sum in full settlement, restored the award, and provided for resumption of possession on payment.

Final Conclusion: The High Court's order remanding the arbitration award for fresh evidence and reconsideration is set aside; the arbitral award dated 13.01.2010 is restored. The Court finds no merit in the contention that denial of cross-examination vitiated the award since the procedure was agreed and no prejudice is shown. By exercising Article 142 the Court directed a final composite payment by the appellant and consequential resumption of possession, and ordered parties to bear their own costs.

Evidence on affidavit - Summon and examine as to the facts contained therein - Obligation to summon on application under S.145(2) - Cross-examination limited to facts in affidavit - No requirement to assign reasons in S.145(2) application

Obligation to summon on application under S.145(2) - No requirement to assign reasons in S.145(2) application - Evidence on affidavit - Whether an applicant seeking recall/re-examination or cross-examination of a complainant under S.145(2) of the Negotiable Instruments Act is required to assign reasons in the application, and the scope of examination when a deponent who has given evidence by affidavit is summoned. - HELD THAT: - The Court examined the scheme of Section 145 read with Sections 143-146 and relevant decisions of higher courts and held that S.145(2) contains two limbs: a discretionary power in the court to summon and examine a person who has given evidence on affidavit, and a mandatory duty on the court to summon such person when an application is made by the prosecution or the accused. The provision does not require the applicant to assign reasons in the application; on the contrary, if an application is made the court is obliged to recall the deponent to be examined as to the facts contained in the affidavit. The affidavit already serves as the examination-in-chief; therefore, on being summoned pursuant to S.145(2) the deponent is to be subjected to cross-examination limited to the facts stated in the affidavit. The Court further held that dismissal of an application under S.145(2) on the ground that the applicant did not specify particulars of legal liability or quantify amounts was not a plausible reasoning where the accused had specifically pleaded facts (for example, that a blank cheque was filled up with a wrong amount and a false story was concocted) justifying cross-examination. Allowing cross-examination in such circumstances causes no prejudice to the complainant and facilitates effective adjudication. [Paras 7, 8, 9, 16]

S.145(2) does not obligate the applicant to assign reasons; upon an application the court must summon the deponent to be examined as to the facts in the affidavit, and such examination is confined to cross-examination; the impugned order dismissing the S.145(2) application was unsustainable and is set aside.

Final Conclusion: Petition allowed; order dated 22.1.2019 is set aside and the application under S.145(2) is allowed. The trial court is directed to fix a date for examination/cross-examination of the complainant/witnesses.