TaxTMI Updates e-Newsletter
Dec 27,2013

Characterisation of gains as business income or short term capital gains - holding period test for shares (less than 30 days as indicia of trading) - cumulative multi factor test to distinguish trading from investment - onus of proof on assessee to show investment treatment with shift to Revenue thereafter - remand to Assessing Officer for computation on basis of holding period

Characterisation of gains as business income or short term capital gains - holding period test for shares (less than 30 days as indicia of trading) - remand to Assessing Officer for computation on basis of holding period - Addition treating short term capital gain as business income was not finally adjudicated and the matter was remanded to the Assessing Officer to determine, on the basis of holding period and in accordance with the Tribunal's earlier reasoning, what part of the profit constitutes business income and what part constitutes capital gains. - HELD THAT: - The Tribunal followed its earlier reasoning in the assessee's own case and in the decision in Sugamchand C. Shah, applying the cumulative tests to distinguish trading from investment, including the holding period as an important indicium. The Tribunal recorded that where shares are not held even for about a month (less than 30 days), the presumption is that the intention is to reap profit as a trader and gains should be taxed as business income, whereas where shares are held for more than a month they should be treated as investment and taxed as short term capital gains. Because the Assessing Officer had not collected the basic data necessary to work out frequency and holding periods, the Tribunal restored the matter to the file of the AO and directed that the AO afford the assessee an opportunity to compute and segregate gains between business income and capital gains in accordance with the cited principles. The Tribunal therefore did not decide the quantification on merits but remanded the issue for fresh consideration and computation by the AO.

Matter restored to the Assessing Officer for computation and determination of business income versus capital gains on the basis of holding period and the cumulative factors laid down by the Tribunal; Revenue's ground treated as allowed for statistical purposes.

Final Conclusion: The appeal is treated as allowed for statistical purposes and the issue is remanded to the Assessing Officer to compute and segregate gains between business income and short term capital gains in accordance with the Tribunal's criteria, notably the holding period test and cumulative factors, after giving the assessee an opportunity to furnish computations.

Allowance of entertainment expenses in absence of supporting bills - estimation of travelling and conveyance expenditure where original vouchers are not available - treatment of mobile handset expenditure as capital expenditure and allowance of depreciation - restriction of disallowance for personal use of telephone to 10% - disallowance for personal use of motor car restricted to 10% - addition on account of household withdrawals and maintainability of such estimate - interest consequences under sections 234B and 234D to follow appellate adjustments

Allowance of entertainment expenses in absence of supporting bills - Extent to which entertainment expenses could be allowed where many original bills were not produced and some hotel bills were unsigned or lacking addresses. - HELD THAT: - The Tribunal accepted that small refreshment expenses incurred during business meetings may not be supported by formal bills, but found it could not allow the entire claim where several hotel bills produced did not show adequate identification (e.g., address). Balancing these factors and considering the assessee's explanation of business promotion activity, the Tribunal exercised its power to estimate a reasonable allowance out of the claimed entertainment expenses rather than sustain full disallowance. [Paras 3, 6]

Assessing Officer directed to allow Rs. 25,000 out of the entertainment expenses claimed; appellate confirmation set aside.

Estimation of travelling and conveyance expenditure where original vouchers are not available - Whether and to what extent travelling and conveyance expenses unsupported by original bills could be allowed. - HELD THAT: - The Tribunal noted that many travel-related items (taxi fares, local conveyance, refreshments at agent meetings) commonly lack formal receipts. While the Assessing Officer legitimately disallowed unsupported amounts, the Tribunal found that some allowance should be made and adopted an estimative approach assessing a reasonable portion of such expenses in view of the nature of the assessee's marketing activity and partial production of bills. [Paras 7, 10]

Assessing Officer directed to allow an additional sum of Rs. 3,50,000 from travelling and conveyance expenditure; appellate confirmation otherwise set aside to that extent.

Treatment of mobile handset expenditure as capital expenditure and allowance of depreciation - restriction of disallowance for personal use of telephone to 10% - Whether the amount spent on purchase of a mobile handset is capital in nature (and if so depreciation allowable) and appropriate percentage disallowance for personal use of telephone expenses. - HELD THAT: - The Tribunal accepted that the purchase of the Nokia handset was capital in nature and therefore the assessee was entitled to claim depreciation rather than a revenue deduction. Further, relying on consistent practice of the Bench, the Tribunal held that only 10% of telephone expenses should be disallowed as personal use (not 20% as applied by the Assessing Officer), and directed the Assessing Officer to allow depreciation on the handset and restrict personal-use disallowance to 10%. [Paras 11, 14]

Order of the Assessing Officer and CIT(A) set aside to the extent indicated; depreciation on the handset to be allowed and personal-use disallowance for telephone limited to 10%.

Disallowance for personal use of motor car restricted to 10% - Proper estimation of personal-use portion of motor car running and maintenance expenses where details of personal usage are not shown. - HELD THAT: - In the absence of particulars establishing extent of personal use, the Tribunal accepted that some disallowance is warranted but found the Assessing Officer's estimate of 20% excessive. Having regard to the Bench's consistent view, the Tribunal fixed the personal-use disallowance at 10% of car expenses and directed the Assessing Officer to compute accordingly. [Paras 15, 18]

Disallowance towards personal use of motor car directed to be restricted to 10% of the claimed car expenses.

Addition on account of household withdrawals and maintainability of such estimate - Whether addition on account of household withdrawals was justified where the Assessing Officer estimated household expenses and treated certain withdrawals as unexplained. - HELD THAT: - The Tribunal considered that while the Assessing Officer relied on electricity payment records and questioned the adequacy of declared household withdrawals, he failed to account for the wife's withdrawals and did not appreciate that several business claims were found bogus by the Assessing Officer (and some allowed partly on appeal), affecting the overall cash position. Considering these factual matrices, the Tribunal found no justification for the addition and set it aside. [Paras 19, 22]

Addition on account of household withdrawals deleted and the order of CIT(A) set aside on this issue.

Interest consequences under sections 234B and 234D to follow appellate adjustments - Calculation of interest under sections 234B and 234D in light of appellate adjustments. - HELD THAT: - The Tribunal treated interest under the cited provisions as consequential to the substantive adjustments allowed or disallowed in the appeal and directed the Assessing Officer to compute interest consistent with the appellate directions. [Paras 23]

Interest under sections 234B and 234D to be calculated by the Assessing Officer consequential to the appellate relief granted.

Final Conclusion: The appeal is partly allowed: specified portions of entertainment, travelling, telephone and motor car expenses have been allowed or re-quantified; addition on household withdrawals deleted; and interest under sections 234B/234D is to be recalculated by the Assessing Officer consequentially.

Exemption under Section 10A - total income of the undertaking versus total income of the assessee - exercise of powers under Section 263 - giving effect to appellate order - allowability of payments to LIC towards gratuity - remand for fresh consideration - retrospective operation of amendment to Section 43B

Exemption under Section 10A - total income of the undertaking versus total income of the assessee - giving effect to appellate order - exercise of powers under Section 263 - Validity of CIT's invocation of Section 263 to set aside the Assessing Officer's giving effect order that allowed deduction under Section 10A - HELD THAT: - The Tribunal held that the Assessing Officer had, in the giving effect order, complied with the direction of the CIT(A) and allowed the claim of deduction under Section 10A for the STPI unit after considering the revised computation filed by the assessee. The AO's original assessment denial had two distinct reasons; one (splitting/reconstruction) was successfully challenged before the CIT(A) and this Tribunal in earlier years, and the other (that total income of the assessee was a loss) was not agitated by the assessee below. However, on merits the Tribunal accepted the interpretation adopted by the Karnataka High Court in Yokogawa India Ltd. that Section 10A (though cast as a deduction) remains in Chapter III and the term "total income" in Section 10A is to be understood with reference to the undertaking (the STPI unit) and not the aggregate total income of the assessee. The AO's giving effect order expressly noted the revised claim and restricted exemption to that amount; starting computation from the business loss figure did not demonstrate an error prejudicial to Revenue in the giving effect order. Consequently the twin conditions for exercise of jurisdiction under Section 263 were not satisfied and the CIT's order was quashed. [Paras 12, 15, 16]

Order of the CIT under Section 263 quashed; deduction under Section 10A allowed as directed by CIT(A) and in accordance with the AO's giving effect order.

Allowability of payments to LIC towards gratuity - remand for fresh consideration - Whether the claim for payment made to LIC towards group gratuity scheme should be allowed or requires fresh examination - HELD THAT: - This Tribunal noted that in an earlier assessment year the matter had been remitted to the Assessing Officer for fresh examination because the AO's order did not record whether payments were in fact made to LIC. The same factual question arises for the impugned assessment year; therefore, the Tribunal set aside the concurrent orders and remitted the issue to the AO for fresh consideration with directions to afford the assessee adequate opportunity of being heard. [Paras 26]

Issue set aside and remitted to the Assessing Officer for fresh consideration.

Retrospective operation of amendment to Section 43B - Allowability of deduction for delayed remittance to ESI and PF in light of amendment to Section 43B - HELD THAT: - Relying on the Apex Court's decision in CIT v. Alom Extrusion Ltd. (recognised in the order), the Tribunal held that the amendment to Section 43B made by the Finance Act, 2003 operates retrospectively and therefore applies to employees' contributions as well. On that basis the CIT(A)'s direction to allow the claim for delayed remittance to ESI and PF was held to be justified. [Paras 28, 29, 30]

CIT(A)'s direction to allow deduction for delayed remittance to ESI/PF upheld.

Final Conclusion: Assessee's appeal allowed by quashing the CIT's Section 263 order and upholding the allowance of Section 10A deduction as given effect to by the AO; Revenue's appeal partly allowed for statistical purposes by remitting the gratuity to LIC issue to the AO, while the direction allowing delayed ESI/PF deduction was upheld.

Treatment of seized cash as advance tax from date of request - computation of interest under sections 234B and 234C excluding credited seized cash - credit of seized cash contingent on request by assessee for adjustment

Treatment of seized cash as advance tax from date of request - computation of interest under sections 234B and 234C excluding credited seized cash - Assessment to be recomputed for interest under sections 234B and 234C by treating the cash seized in search as advance tax w.e.f. 24.03.2008 upon the assessee's request. - HELD THAT: - The Tribunal examined the Assessing Officer's refusal to treat cash seized during search as advance tax despite the assessee's written request dated 24.03.2008 to adjust the seized amount against its advance tax liability. Relying on precedent authority which holds that where the assessee requests adjustment of seized cash as advance tax, the seized amount must be treated as advance tax from the date of such request and interest under sections 234B and 234C cannot be charged on that account, the Tribunal found no infirmity in the CIT(A)'s direction. The Tribunal noted conflicting judicial exposition but accepted the line of authority entitling the assessee to credit from the date of application for adjustment. For these reasons the Tribunal held that the Assessing Officer erred in charging interest without giving credit for the seized amount and directed recomputation accordingly. [Paras 6, 8]

Appeal dismissed; CIT(A)'s order upheld directing recomputation of interest treating seized cash as advance tax w.e.f. 24.03.2008.

Final Conclusion: The Revenue's appeal is dismissed and the Commissioner (Appeals) order is upheld directing recomputation of interest under sections 234B and 234C by treating the cash seized during search as advance tax from 24.03.2008.

Interest on borrowed capital as revenue expenditure - capitalization of interest - nexus between borrowed funds and non-business use - ad hoc disallowance of interest - finality of factual findings by the Tribunal

Interest on borrowed capital as revenue expenditure - capitalization of interest - nexus between borrowed funds and non-business use - ad hoc disallowance of interest - Deletion of the disallowance of Rs. 14,52,654 being interest relating to borrowed capital for project work-in-progress - HELD THAT: - The Tribunal held, and this Court concurs, that the assessee was expanding its business by setting up a new unit and that interest on borrowed funds used for expansion/extension of business is allowable as revenue expenditure. The Assessing Officer did not demonstrate any direct nexus between the borrowed funds and their use for non-business purposes, nor did he satisfactorily justify the adoption of an average 15% ad hoc disallowance from the profit and loss account or show how the figure of Rs. 96,84,365/- was properly made out; the Tribunal found the AO factually incorrect in that regard and recorded that fresh utilization during the year was Rs. 26,42,240/-. In view of these findings and the precedents relied upon by the Tribunal, the deletion of the addition was justified. Although the matter is remanded insofar as the AO made an ad hoc disallowance without clear findings, the Tribunal's factual conclusions supporting the allowability of the interest are not interfered with.

The Tribunal's deletion of the addition of Rs. 14,52,654 is upheld and the disallowance is rejected.

Final Conclusion: The appeal is dismissed; the question is decided in favour of the assessee and against the revenue, with the Tribunal's factual conclusion that the interest was allowable as revenue expenditure affirmed while noting the remand for the Assessing Officer's lack of clear findings on the ad hoc disallowance.

Registration under Section 12AA - approval under Section 80G - genuineness of charitable activities - discretion of the Commissioner under Rule 11AA(3) - Tribunal as final fact finding authority

Registration under Section 12AA - approval under Section 80G - genuineness of charitable activities - Tribunal as final fact finding authority - Validity of the Tribunal's direction to the Commissioner to grant registration under Section 12AA and approval under Section 80G after examining the society's objects and activities - HELD THAT: - The Tribunal examined the assessee's aims, objects and activities and found nothing on record to demonstrate that the society's objects were not charitable or that it was engaged in non charitable activities. The Tribunal, applying its role as the final fact finding authority, recorded that in absence of material negativing charitable status the requests for registration under Section 12AA and approval under Section 80G should not be denied. The High Court accepted the Tribunal's factual conclusions and reasoning, noting the Tribunal's primacy as a fact finder and found no reason to interfere with its direction. Although the department relied on the Commissioner's discretionary power under Rule 11AA(3) to satisfy himself about genuineness, the Court observed that the Commissioner had not placed material before the Tribunal to substantiate denial, and the Tribunal after consideration directed grant of registration and approval.

Tribunal's order directing grant of registration under Section 12AA and approval under Section 80G is sustained; the appeals are dismissed.

Final Conclusion: The appeals filed by the Department are dismissed at the admission stage; the Income Tax Appellate Tribunal's order directing the Commissioner to grant registration under Section 12AA and approval under Section 80G is upheld and no substantial question of law is found to arise.

Fabricated evidence - appreciation of evidence - revision under section 264 of the Income-tax Act, 1961 - judicial review under Articles 226 and 227 of the Constitution of India - exemplary costs

Fabricated evidence - appreciation of evidence - revision under section 264 of the Income-tax Act, 1961 - Validity of findings by the Assessing Officer and the revisional authority that documents produced by the appellant were fabricated and whether the High Court should interfere with those findings on writ jurisdiction. - HELD THAT: - The Court examined the orders of the Assessing Officer and the revisional authority, noting that the appellant had not produced evidence before the Assessing Officer but was permitted by the Commissioner in revision under section 264 to place material. The revisional authority considered the materials, conducted spot inspection and concluded that the documents and the claim of development/improvement of the land were fabricated and not genuine. The Single Judge reproduced those factual findings and refused to interfere under Articles 226 and 227, also observing that the appellate authority had leniently reduced penalty. This Court independently perused the reasoning of the AO and the revisional authority, found no error in their appreciation of evidence, accepted the conclusion that the claim was false, and held that there was no jurisdictional or legal infirmity warranting interference with the factual findings recorded by the authorities. [Paras 4]

The factual findings that the appellant produced fabricated evidence were upheld and the writ petitions as dismissed by the Single Judge were not interfered with.

Exemplary costs - judicial review under Articles 226 and 227 of the Constitution of India - Whether the imposition of exemplary costs by the Single Judge was sustainable. - HELD THAT: - The Single Judge imposed exemplary costs on the basis that the petitioner advanced a totally false and fabricated claim for deduction. Having accepted the authorities' findings that the evidence was fabricated and the claim not genuine, this Court found no reason to upset the Single Judge's exercise of discretion in awarding exemplary costs. The appellate review did not disclose any miscarriage of justice or legal error in that exercise. [Paras 4]

The order imposing exemplary costs was sustained.

Final Conclusion: The High Court affirmed the factual findings of the Assessing Officer and the revisional authority that the appellant's documents were fabricated, declined to interfere under Articles 226 and 227, upheld the Single Judge's dismissal of the writ petitions and the imposition of exemplary costs, and accordingly dismissed the appeals.

Reassessment notice - limitation for reopening assessment - reasons recorded for reopening assessment - validity of reopening

Reassessment notice - limitation for reopening assessment - Reassessment notice issued under Section 148 was not barred by limitation. - HELD THAT: - The Court examined the timeline of proceedings and the dates on which notices under Section 148 and subsequent notices were issued. Having considered the parties' contentions and the factual chronology recorded in the proceedings, the Court found that the assessing officer issued the notice for reopening within the stipulated time and therefore the notice could not be treated as time-barred. The Court held that no substantial question of law arises from the contention that the reassessment notice was barred by limitation. [Paras 10]

The challenge that the reassessment notice was barred by limitation is rejected.

Reasons recorded for reopening assessment - validity of reopening - Reasons recorded by the Assessing Officer for reopening the assessment were adequate and valid. - HELD THAT: - The Court perused the reasons recorded by the assessing officer for reopening the case and observed that a detailed order had been passed. On that basis the Court concluded that the reasons furnished were sufficient to justify reopening and that the assessee's challenge to the sufficiency of reasons lacked merit. Consequently, the Court found no substantial question of law arising from the contention regarding the adequacy of reasons. [Paras 10]

The contention that the reasons recorded were improper or inadequate is rejected.

Final Conclusion: Appeal dismissed; no substantial question of law arises. Application for dispensation (I.A. 1/2012) is disposed of as not surviving consideration.

Penalty under Section 271(1)(c) - deduction under Section 80HHC - interpretation of 'profit' as positive profit - concealment or furnishing inaccurate particulars of income - existence of a bona fide or debatable legal view

Penalty under Section 271(1)(c) - concealment or furnishing inaccurate particulars of income - existence of a bona fide or debatable legal view - Whether the penalty under Section 271(1)(c) could be sustained where the assessee claimed deduction under Section 80HHC on a legally debatable basis - HELD THAT: - The Court accepted the concurrent findings of the CIT(A) and the Tribunal that the assessee's claim under Section 80HHC arose from a bona fide view of law which was the subject of legitimate debate among assessees and authorities. The authorities recorded that the claim was not an attempt to conceal income or to furnish inaccurate particulars; rather it reflected a prevailing interpretation later affected by judicial pronouncement and statutory amendment. On a plain reading, Section 271(1)(c) penalises concealment of particulars of income or furnishing inaccurate particulars; where the claim is founded on a debatable legal position genuinely held, those conditions are not satisfied. The appellate authorities' reasoning that similar calculations were commonly made and that mere disallowance would not equate to concealment was upheld as not calling for interference. [Paras 6, 7, 8, 9, 10]

Penalty under Section 271(1)(c) was not exigible and the deletion of the penalty was justified.

Deduction under Section 80HHC - interpretation of 'profit' as positive profit - Whether the assessee could claim deduction under Section 80HHC in view of the Supreme Court's decision in IPCA Laboratories that 'profit' means a positive profit - HELD THAT: - The Court noted the Supreme Court's ruling in IPCA Laboratories that the word 'profit' in Section 80HHC requires a positive net profit and that where the net figure is a loss no deduction is permissible. The appellate authorities nevertheless found that the assessee's claim was based on a contested interpretation and that the assessment and penalty proceedings did not establish concealment or inaccurate particulars. The High Court held that, on the facts and findings recorded, the conditions for imposing penalty were not fulfilled despite the IPCA decision; consequently the Tribunal's confirmation of the CIT(A)'s approach was maintained. [Paras 2, 8, 9, 10]

The Tribunal's view that the deduction claim fell within a legally debatable area and did not attract penalty despite the IPCA precedent was upheld.

Final Conclusion: All three questions raised by the revenue were answered against the revenue and in favour of the assessee; the income-tax appeal is dismissed and the deletion of the penalty upheld.

Penalty for concealment under Section 271(1)(c) - Burden of proof in penalty proceedings - Effect of additions based on seized material - Reliance on search records under Section 132 - Requirement of documentary evidence for claimed goodwill

Penalty for concealment under Section 271(1)(c) - Effect of additions based on seized material - Reliance on search records under Section 132 - Requirement of documentary evidence for claimed goodwill - Burden of proof in penalty proceedings - Whether the penalty under Section 271(1)(c) could be sustained where entries were discovered in search records and the assessee's explanation (including that an entry represented goodwill) was not supported by documentary evidence - HELD THAT: - The Tribunal found that entries and note-book records discovered during search proceedings under Section 132 revealed unrecorded sales, abbreviated and symbolic entries and an entry of Rs. 1,72,748.99 in the name of a partner which the assessee described as goodwill. The Assessing Officer made additions on the basis of seized material and discrepancies between note-books and regular books. The Court declined to re-open or re-appraise the Tribunal's factual findings, noting that where the Tribunal records that sufficient evidence was not led to explain seized entries and the explanation put forward is not supported by documentary proof, penalty proceedings under Section 271(1)(c) are attractable. While earlier authorities establish that the revenue bears the initial burden and that bona fide explanations may negate penalty, those principles do not preclude imposition of penalty where the explanation is unsupported and disbelieved on the material before the Tribunal. The Tribunal's conclusion that the explanation of goodwill was not substantiated and that the seized material furnished adequate basis for invoking Section 271(1)(c) was held to be a permissible factual finding which sustains the penalty. [Paras 8, 9, 10]

Penalty under Section 271(1)(c) sustained as the seized entries were not satisfactorily explained and there was no documentary proof for the claimed goodwill

Final Conclusion: Reference answered in favour of the revenue and against the assessee; the Tribunal was justified in upholding the penalty as the seized records and inadequate documentary explanation supported invocation of Section 271(1)(c).

Discharge of onus under Section 68 - genuineness of transactions - creditworthiness of creditors - summoning of creditors under Section 131 - probative value of bank statements and books of account - banking channel entries not conclusive of genuineness

Discharge of onus under Section 68 - genuineness of transactions - creditworthiness of creditors - probative value of bank statements and books of account - banking channel entries not conclusive of genuineness - Whether the additions under Section 68 in respect of unsecured loans were justified on findings that the creditors were not creditworthy and the transactions were not genuine - HELD THAT: - The court applied settled law that once the assessee identifies creditors by name, PAN and account details the initial onus under Section 68 shifts to the Revenue to disprove genuineness; however, the Assessing Officer is entitled to make bona fide enquiries into creditworthiness and genuineness. On the material before the AO and accepted by the Tribunal, each creditor had only very small bank balances prior to issuing cheques and equivalent cash credits were deposited on the same day; several creditors filed returns showing meagre/inadequate income and no regular books of account were maintained. The AO examined bank records and contemporaneous entries and concluded that the sums were routed through the creditors' accounts and amounted to accommodation entries rather than genuine loans. The court found no error in the AO's examination of the accounts or in drawing adverse inference from those records, and held that mere receipt of funds through banking channels or production of balance sheets/cash-flow statements after assessment did not automatically establish genuineness where the underlying records and contemporaneous bank balances did not support creditworthiness. [Paras 6, 7, 8]

Additions under Section 68 in respect of unsecured loans were justified as the creditors were not shown to be creditworthy and the transactions were not established as genuine.

Summoning of creditors under Section 131 - discharge of onus under Section 68 - genuineness of transactions - Whether the Assessing Officer erred in refusing to summon the remaining creditors and thereby improperly confirming additions - HELD THAT: - The court examined the AO's conduct and the record and found no jurisdictional error in declining to summon other creditors (except one who appeared and was examined). The AO had examined available records and the statement of the examined creditor which did not satisfactorily explain source of funds. The court held that the AO's refusal to issue further summons did not vitiate the inquiry where the material on record itself supported the finding of non-creditworthiness and accommodation entries, and there was no demonstration that the AO declined a bona fide opportunity to verify genuineness. [Paras 7, 8]

Refusal to summon the remaining creditors did not constitute an error; the AO's approach and consequent additions were sustainable.

Final Conclusion: The appeal is dismissed; the Tribunal's confirmation of additions under Section 68 for the unsecured loans in Assessment Year 2005-06 is sustained on the ground that the creditors' contemporaneous bank balances and records did not establish creditworthiness or genuineness of the transactions.

Capital gains vs business income - adventure in the nature of trade - intention at inception - ascertainment of cost as on 1.4.1974

Capital gains vs business income - adventure in the nature of trade - intention at inception - Whether the surplus amount of sale of land is assessable as long term capital gain and not as an adventure in the nature of trade - HELD THAT: - The Court accepted the findings of the CIT(A) and the Income Tax Appellate Tribunal that the assessee, an heir who had inherited ancestral agricultural land, entered into an agreement with a coloniser whereby the coloniser alone undertook development, obtained statutory clearances, fixed prices of plots and realised any benefit from development. The assessee's role was limited to executing sale deeds in favour of the coloniser's nominees and receiving the agreed lump sum consideration; he was not engaged in the business of buying and selling land nor entitled to share any excess profit arising from development. The Court applied the established test that an 'adventure in the nature of trade' requires elements akin to ordinary trading operations and an intention to resell at profit at the inception; those elements were absent on the material facts. Consequently the transaction was held to be a realisation of capital investment and taxable under capital gains, not as business income. [Paras 10, 17, 20, 24]

Confirmed that the sale proceeds are taxable as long term capital gain and not as an adventure in the nature of trade; question answered against the revenue and for the assessee.

Ascertainment of cost as on 1.4.1974 - capital gains vs business income - Whether the Assessing Officer should ascertain and deduct the cost of land as on 1.4.1974 to compute the capital gain - HELD THAT: - Having held that the receipts are taxable as capital gains, the Court found no error in the CIT(A)'s direction (upheld by the Tribunal) that the AO should determine the cost of the land as on 1.4.1974 and allow the appropriate deduction in computing capital gain. The direction concerned quantification in conformity with the treatment of the transaction as a capital asset realisation and was therefore sustained. [Paras 11, 24]

Held that the AO is to ascertain the cost of land as on 1.4.1974 and deduct the same in working out the capital gain; question answered against the revenue and for the assessee.

Final Conclusion: Both reference questions are answered against the revenue and in favour of the assessee: the sale proceeds are taxable as long term capital gain and the Assessing Officer is directed to ascertain cost as on 1.4.1974 for computation of the capital gain; the reference is disposed accordingly and the AO will carry out the order of the CIT(A).

Addition on account of unexplained commission - assessment in hands of third party - double taxation - addition on account of unexplained payment - entries found at third party's premises and handwriting evidence - application of normal profit rate

Addition on account of unexplained commission - assessment in hands of third party - double taxation - entries found at third party's premises and handwriting evidence - Addition of Rs.16,40,000/- on account of unexplained commission was not sustainable against the assessee. - HELD THAT: - The Tribunal found that the impugned papers evidencing the commission payments were recovered from the residential premises of a third party, Sri Santosh Kumar Agrawal, whose handwriting and statements connected him to the transactions. The same amount had been assessed in the hands of Sri Santosh Kumar Agrawal in his regular assessments and accepted by the assessing officer. In view of assessment already made in the hands of that third party, the Tribunal held that making the same addition in the hands of the assessee would result in double taxation and was therefore not justified.

Addition of Rs.16,40,000/- deleted in the hands of the assessee.

Addition on account of unexplained payment - transactions attributable to third party - entries found at third party's premises and handwriting evidence - Addition of Rs.8,74,780/- on account of unexplained payments was not sustainable against the assessee. - HELD THAT: - The Tribunal concluded that the payments represented transactions between M/s. Mohan Lal Jain & Sons and Sri Santosh Kumar Agrawal, and that there were no transactions between M/s. Mohan Lal Jain & Sons and the assessee firm. Correspondence showed repeated requests to Sri Santosh Kumar Agrawal for payment and his confirmation that the dealings were with him; his wife being a partner in the assessee firm did not alter the factual position. Consequently, the Tribunal found no justification for making the addition in the assessee's hands.

Addition of Rs.8,74,780/- deleted in the hands of the assessee.

Application of normal profit rate - addition on suppressed receipts - On addition relating to suppressed receipt of Rs.1,20,618/-, application of profit at 8% was justified, resulting in a limited addition. - HELD THAT: - The Tribunal endorsed applying a normal/progressive profit rate of 8% to the suppressed receipt, confirming an addition of the resulting amount (Rs.9,649/-) while granting relief to the extent of the remainder (Rs.1,11,149/-). The finding reflects the Tribunal's acceptance of the method and rate adopted for computation of taxable income from the said receipt.

Addition confirmed to the extent computed at 8% profit; balance of the claimed amount allowed as relief.

Final Conclusion: The Income Tax Appeal under Section 260-A was dismissed. The Tribunal's deletions of the additions of Rs.16,40,000/- and Rs.8,74,780/- in the assessee's hands were upheld, and the limited addition computed at 8% on the suppressed receipt was confirmed; no substantial question of law warranted interference.

Reference to Valuation Officer under Section 55A - fair market value - obligation to refer valuation - reliance on documentary evidence from UPSIDC - no requirement to refer in absence of dispute or doubt

Reference to Valuation Officer under Section 55A - obligation to refer valuation - no requirement to refer in absence of dispute or doubt - reliance on documentary evidence from UPSIDC - fair market value - Whether the Assessing Officer was under an obligation to refer the valuation of the land to the Valuation Officer under Section 55A and whether failure to do so vitiated the orders below. - HELD THAT: - The Court examined Section 55A and its purpose of enabling reference to a Valuation Officer where the Assessing Officer is of the opinion that the assessee's claimed value is at variance with fair market value or where, having regard to the nature of the asset and other relevant circumstances, a reference is necessary. In the present case the assessing authorities relied upon a contemporaneous letter from UPSIDC stating the cost of the plot as on 1.4.1981 at Rs.9.75 per square yard. The assessee's registered valuer's estimate was considered but the UPSIDC documentary record provided clear material on the rate. Because the assessee did not dispute the UPSIDC rate and the documentary evidence established the cost, there was no dispute, doubt or inability to determine fair market value requiring invocation of Section 55A. Accordingly the authorities were not obliged to make a reference to the Valuation Officer and declining to do so did not amount to illegality or substantial impropriety.

The obligation to refer under Section 55A did not arise; reliance on the UPSIDC letter sufficed and failure to refer did not vitiate the orders.

Final Conclusion: The substantial question is answered in favour of the Revenue: in Assessment Year 1995-96 the Assessing Officer and appellate authorities were not required to refer the valuation to a Valuation Officer under Section 55A where documentary evidence from UPSIDC fixed the 1.4.1981 rate and no dispute or doubt existed; the appeal is dismissed.

Penalty under Section 271(1)(c) for concealment of income - valuation of closing stock - estimation / best judgment assessment - res judicata effect of valuation under Trade/State Tax enactment

Penalty under Section 271(1)(c) for concealment of income - valuation of closing stock - Validity of initiating and sustaining penalty proceedings under Section 271(1)(c) where Assessing Officer adjusted/confirmed valuation of closing stock by applying the lowest purchase rates and treated the undervaluation as concealment of income. - HELD THAT: - The Tribunal and this Court accepted the finding that the assessee had materially under valued closing stock without producing any evidence to justify valuation lower than purchase price or to show deterioration. The Assessing Officer did not merely estimate a value on best judgment; he applied the lowest of the available purchase rates for the commodities comprising the closing stock because no supporting material was produced by the assessee. In those circumstances the action of the Department was not an assessment based on mere estimation but founded on a factual conclusion of concealment. Reliance on precedents where penalties were held unsustainable in cases of bona fide best judgment estimates was distinguished on facts. No error of law was found in holding that penalty proceedings could be initiated and sustained under Section 271(1)(c).

Penalty proceedings under Section 271(1)(c) were validly initiated and sustained because the undervaluation of closing stock was found to be unexplained and amounted to concealment of income.

Estimation / best judgment assessment - res judicata effect of valuation under Trade/State Tax enactment - Whether the assessment in the present case was an estimation precluding penalty, and whether a valuation accepted under a Trade/State Tax enactment operates as res judicata in income tax proceedings. - HELD THAT: - The Court accepted the earlier finding that the assessment was not a best judgment estimate: the Assessing Officer applied available purchase rates in the absence of any material from the assessee rather than making an arbitrary estimate. Consequently, authorities holding that penalties cannot be imposed where income is determined by bona fide estimation were held inapplicable on the facts. The earlier consideration that valuation under Trade/State Tax enactments does not bind income tax authorities was noted: different statutes and authorities govern the two regimes, and Trade Tax valuation does not operate as res judicata in income tax proceedings.

The assessment was not an estimation that would preclude penalty; and valuation under the Trade/State Tax enactment is not binding on income tax proceedings.

Final Conclusion: The Income Tax Appeal is dismissed: the Tribunal and authorities correctly held that the unexplained, materially lower valuation of closing stock amounted to concealment of income warranting penalty under Section 271(1)(c), and the case did not fall within authorities immunising bona fide estimations from penalty; Trade/State Tax valuation was not treated as binding on income tax assessment.

Use of subsequently issued advance licences to clear previously imported goods - exemption from customs duty on production of an Advance Licence - interest under Section 61(2) of the Customs Act is payable only when duty is exigible - deeming fiction under Section 72 making duty immediately chargeable on expiry of warehousing period - Paragraph 65 of the Import & Export Policy permitting clearance against subsequently issued Duty Free Licences - General Exemption No. 147 and the linkage between exemption and interest liability

Use of subsequently issued advance licences to clear previously imported goods - Paragraph 65 of the Import & Export Policy permitting clearance against subsequently issued Duty Free Licences - exemption from customs duty on production of an Advance Licence - Advance licences issued after importation could be utilised to clear goods that remained uncleared in warehouse. - HELD THAT: - The Court found that Paragraph 65 of the Import & Export Policy 1992-97 expressly permits clearing goods already imported or arrived but not cleared against Duty Free Licences issued subsequently (para 6). The respondents' contention that subsequently issued advance licences could not be used for earlier imports was rejected because the policy language allows utilisation so long as the goods have not been cleared (para 7). The statutory scheme including the General Exemption and notifications under Section 25(1) gives effect to exemption on production of a valid advance licence at the time of clearance (paras 9-11). Applying these provisions to the facts, the advance licence produced by the petitioner could have been used to clear the warehoused consignments (paras 7, 11, 19(i)). [Paras 6, 7, 9, 11, 19]

Advance licences could be utilised against earlier imports which remained uncleared in warehouse; the respondents erred in rejecting the advance licence submitted by the petitioner.

Interest under Section 61(2) of the Customs Act is payable only when duty is exigible - General Exemption No. 147 and the linkage between exemption and interest liability - deeming fiction under Section 72 making duty immediately chargeable on expiry of warehousing period - No interest under Section 61(2)/Section 62(2) is payable on duty that is rendered nil by exemption on production of a valid advance licence; interest is linked to the principal duty exigible at clearance. - HELD THAT: - While Section 72 creates a deeming fiction making duty chargeable on expiry of the warehousing period and Section 61/62 prescribe liability for interest on delayed payment (paras 4-5, 8), the Court held that where exemption applies on production of an advance licence the principal duty is nil and, being accessory, interest cannot be levied on a non-existent principal (para 12 quoted and explained in paras 13-14). The Supreme Court's reasoning in Pratibha Processors, which tied exemption under General Exemption No.147 to the absence of duty and therefore absence of interest, was found to be binding and applicable (paras 12-13). Distinguishing decisions where the notification could not operate to negate Section 72 (Kesoram, SBEC) the Court held those authorities inapplicable on facts (paras 14-17). Concludingly, interest is payable only in respect of any portion of duty for which advance licences were not submitted (para 19(ii)). [Paras 8, 12, 13, 14, 19]

No interest is recoverable on customs duty exempted by production of advance licences; interest would be payable only on any duty not covered by the advance licences.

Final Conclusion: The petition succeeds: advance licences issued after importation could be used to clear the warehoused goods; on production of the advance licence (with DEEC Book) the petitioner was entitled to exemption from customs duty and, consequently, no interest was payable on the exempted duty. The customs duty paid earlier pursuant to the interim order is to be treated as final and no interest for delayed payment will be recoverable.

Mid-term review - scope of review as a prospective likelihood determination - composition of domestic industry under Rule 2(b) of the 1995 Rules - major proportion criterion for domestic industry - determination of normal value and export price in absence of cooperation - use of third country export data and market reports - cumulation of imports in a review/likelihood determination - causal link between dumping and injury - non confidential public file and confidentiality claims

Mid-term review - scope of review as a prospective likelihood determination - Nature and scope of mid term/ review proceedings under Rule 23 and Section 9A(5) - HELD THAT: - The Tribunal held that a review under the first proviso to Section 9A(5) and Rule 23 is prospective in nature and is concerned with whether cessation of the duty is likely to lead to continuation or recurrence of dumping and injury. A review is a post levy evaluation distinct from the original investigation; it involves counter factual and forward looking assessment of likely dumped imports, prices and impact on domestic producers rather than a re run of the initial injury determination under Article 3. The relevant procedural rules (Rules 6-11,16-20) apply mutatis mutandis but the object and scope of inquiry remain different from an original investigation. [Paras 11]

Review is a prospective likelihood determination and need not replicate the original injury inquiry; the Tribunal endorsed the DA's approach to assess likelihood of continuation or recurrence of dumping and injury.

Composition of domestic industry under Rule 2(b) of the 1995 Rules - major proportion criterion for domestic industry - Whether the Designated Authority erred in changing the composition of the domestic industry in the mid term review - HELD THAT: - The Tribunal held that Rule 2(b) provides two alternative means to identify 'domestic industry' - the producers as a whole or those whose collective output constitutes a major proportion of total domestic production. For a review (which is a likelihood exercise), it is not necessary to re examine the original constitution of domestic industry; application of the 'major proportion' criterion is lawful. The DA found that participating producers accounted for more than 50% of domestic output and therefore met the Rule 2(b) test. The Tribunal rejected the appellant's reliance on Reliance Industries as misplaced, observing that that case dealt with a different factual context. [Paras 11, 12]

No legal infirmity in DA's adoption of the 'major proportion' criterion; change in composition at review stage did not vitiate the likelihood analysis.

Determination of normal value and export price in absence of cooperation - use of third country export data and market reports - Lawfulness of DA's determination of normal value and export price where exporters did not cooperate - HELD THAT: - The Tribunal upheld the DA's methodology: where exporters did not cooperate, the DA may construct normal value and export price using available information, including exporters' third country sales and industry market reports. For Chinese Taipei, DA relied on Formosa's third country export data; for Indonesia and EU (ex. France) the DA used Chlor Alkali market reports and DGCI&S import transaction data. The Tribunal found these bases rational and permissible under the Rules and AD Agreement when exporters are uncooperative. [Paras 13, 14]

DA's construction of normal value and export price using third country exports and market statistics was valid and sustainable.

Cumulation of imports in a review/likelihood determination - Permissibility of cumulating imports from multiple subject countries in a mid term review - HELD THAT: - The Tribunal affirmed that in a review (prospective likelihood determination) the rigid numerical thresholds in Rule 11/Annexure II are not strictly determinative because prior anti dumping measures may have depressed import volumes. For likelihood assessments, cumulation of imports from subject countries is permissible to determine whether withdrawal would lead to continuance or recurrence of injury. The Tribunal relied on prior decisions and held that cumulation was properly undertaken by the DA in the facts of this case. [Paras 15]

Cumulation of imports for the purpose of likelihood determination in the review was appropriate and correctly applied.

Causal link between dumping and injury - non injurious price (NIP) and price undercutting/underselling - Whether DA established a causal link between dumping and injury and correctly carried out injury analysis including NIP comparison - HELD THAT: - The Tribunal found that the DA examined the prescribed injury parameters, calculated NIP (allowing a reasonable return), compared landed import values with NIP and domestic prices, and recorded significant price undercutting and underselling. The DA also considered capacity, unused capacities, potential exports and financial indicators (returns on investment), concluding the domestic industry remained fragile and that withdrawal of duty would likely lead to recurrence of injury. The appellant had not challenged the NIP calculation within the appeal memo timeframe. On the record, the Tribunal held there was sufficient evidence of causal link and injury likelihood. [Paras 9, 15]

DA established causal link and performed a lawful injury/likelihood analysis; findings sustain continuation of the duty.

Non confidential public file and confidentiality claims - Whether the DA improperly claimed excessive confidentiality and withheld relevant information from the appellant - HELD THAT: - The Tribunal examined the public file and procedural record and found that the DA had placed non confidential versions on the public file, notified interested parties, sent questionnaires and made material available for inspection. The appellant (or its representative) had inspected the public file and obtained non confidential submissions. The Tribunal accepted the DA's assessment that certain commercially sensitive production/cost data could be protected and held there was no undue secrecy or suppression impacting appellant's ability to contest the review. [Paras 16]

No excess confidentiality; DA's disclosures were sufficient and the confidentiality claim did not vitiate the process.

Final Conclusion: All grounds raised by the appellant against the mid term review were rejected. The Tribunal upheld the Designated Authority's mid term review findings and the consequent Customs notification continuing anti dumping duties; the appeal is dismissed.

Violation of import through non-authorised port - technical violation - redemption fine and penalty - intellectual property rights infringement - re-export of infringing imports - destruction of IPR-infringing goods

Violation of import through non-authorised port - technical violation - redemption fine and penalty - Validity of reduction of redemption fine and penalty in respect of cosmetics (other than DOVE and AXE) imported through Tuticorin Port when it was not an authorised port. - HELD THAT: - The Court held that the restriction on import through specified ports arose from non-availability of testing facilities and that the impugned cosmetics (other than DOVE and AXE) were subsequently tested by the Assistant Drugs Controller and found fit for release. The Court treated the original contravention as a technical violation in view of subsequent testing and availability of facilities, and therefore found no reason to interfere with the lower appellate authority's reduction of the redemption fine and penalty. [Paras 7]

Reduction of the redemption fine and penalty by the lower appellate authority is sustained.

Intellectual property rights infringement - re-export of infringing imports - destruction of IPR-infringing goods - Whether goods bearing DOVE and AXE trademarks, found to contravene Intellectual Property Rights, should be allowed for re-export or required to be destroyed. - HELD THAT: - The Court noted that the lower appellate authority followed the decision of the High Court of Madras in Wipro Cyprus which permitted the importer to take back the goods from the port for re-export subject to compliance with law. Applying that precedent, the Court found no fault with the lower appellate authority's order permitting re-export of the DOVE and AXE consignments despite the IPR infringement finding, rather than mandating destruction. [Paras 8, 9]

The order allowing re-export of the DOVE and AXE consignments is upheld.

Final Conclusion: The Department's appeal is dismissed; the reductions in fine and penalty are sustained and the direction permitting re-export of the DOVE and AXE consignments is upheld.

Doctrine of unjust enrichment - provisional assessment - notional duty deposit - refund of duty - acceptance of Chartered Accountant's certificate as evidence - rectification of Tribunal order by Review/ROM

Rectification of Tribunal order by Review/ROM - ROM application for correction of mistake in the Tribunal's Final Order was allowed and the Final Order dated 30-9-2011 was modified accordingly. - HELD THAT: - The Tribunal examined the appellant's submission that the refund amount and its linkage to the Order in Appeal No. 26/Commr(A)/JMN/2011 required correction. On review of the record and the appellant's contention, the Tribunal found the contention correct and allowed the ROM application to rectify the earlier Final Order, modifying its text to record the substantive findings and relief in favour of the appellant. [Paras 1, 2]

ROM allowed; Tribunal's Final Order dated 30-9-2011 modified to reflect the corrected findings and relief.

Doctrine of unjust enrichment - provisional assessment - notional duty deposit - refund of duty - acceptance of Chartered Accountant's certificate as evidence - Doctrine of unjust enrichment does not apply to duty deposited on provisional assessment as a notional deposit; the appellant is entitled to refund and the Chartered Accountant's certificate tendered is acceptable evidence. - HELD THAT: - The Tribunal applied established precedents holding that where duty is deposited on an estimated/provisional basis (computed at 110% under the relevant Board circular), such payment is a notional deposit and not subject to the doctrine of unjust enrichment when final assessment shows lower liability. The Tribunal relied on earlier decisions which held that adjustment or refund in such cases is permissible and that a Chartered Accountant's certificate is an acceptable evidentiary proof of accounting treatment and non recovery. In view of these authorities and the CA certificate produced, the Tribunal found no basis to sustain the finding of unjust enrichment and held that the refund sanctioned should be granted to the appellant. [Paras 3, 4, 5, 6]

Unjust enrichment held not attracted to the provisional duty deposit; CA certificate accepted; appellant entitled to the sanctioned refund and appeal allowed with consequential relief.

Final Conclusion: The ROM application was allowed and the Tribunal's Final Order was rectified and modified to hold that duty deposited on provisional assessment was a notional deposit to which the doctrine of unjust enrichment did not apply; the Chartered Accountant's certificate was accepted and the appellant was granted the refund with consequential relief.

Competence to issue show cause notice - jurisdictional Assistant Commissioner of Central Excise or Dy. Commissioner of Central Excise - Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 - condition of notification requiring procedure under the Rules - recovery of customs duty under Section 28 of the Customs Act

Competence to issue show cause notice - jurisdictional Assistant Commissioner of Central Excise or Dy. Commissioner of Central Excise - Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 - Whether a show cause notice alleging breach of conditions of Notification No. 21/2002-Cus., read with the Rules, could be validly issued by the Commissioner of Customs instead of the jurisdictional Assistant Commissioner/Dy. Commissioner of Central Excise - HELD THAT: - The Court examined Condition No. 5 of Notification No. 21/2002 which mandates that the procedure in the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 must be followed. Rule 8 of those Rules entrusts the jurisdictional Assistant Commissioner of Central Excise or Dy. Commissioner of Central Excise with ensuring use of imported goods for the intended purpose and empowers that officer to issue notice to recover customs duty under Section 28 where conditions are violated. The show cause notice in the present proceedings was issued by the Commissioner of Customs, an authority not conferred the power to issue such notices under Rule 8. The Revenue's reliance on a bond provision nominating Assistant Commissioner of Central Excise/Customs was noted, but did not supplant the statutory allocation of authority under the Rules. On this basis the applicants established a strong prima facie case that the notice was issued by an incompetent authority, warranting relief pending adjudication. [Paras 5]

Findings recorded that the Commissioner of Customs was not the competent authority to issue the show cause notice; applicants entitled to complete waiver of pre deposit and stay of recovery during pendency of the appeals.

Final Conclusion: Waiver of the entire pre deposit of duties, interest and penalties granted and recovery stayed because the show cause notice was issued by an authority not empowered under the Rules to issue notice for violation of the Notification; appeals to proceed on merits.

Exemption under Notification No. 6/2005-S.T. - definition and taxability of outdoor catering services (amendment effective 16-6-2005) - inclusion of receipts realised after service became taxable in aggregate value - failure to obtain service tax registration / non-filing of declaration on crossing threshold - abatement under Notification No. 1/2006-S.T. - exemption under Notification No. 21/2004-S.T. until rescission

Exemption under Notification No. 6/2005-S.T. - definition and taxability of outdoor catering services (amendment effective 16-6-2005) - Whether the respondent was entitled to the benefit of Notification No. 6/2005-S.T. for the relevant periods and whether amounts received fell within the exemption limits in view of the amendment to the definition of outdoor catering services. - HELD THAT: - The Tribunal accepted the Commissioner (Appeals)'s conclusion that the respondent's receipts in the periods January 2005 to March 2006 and April 2006 to October 2006 were each below the exemption threshold and that the definition of outdoor catering services was amended with effect from 16-6-2005 so as to attract tax only where services were provided from premises of the recipient. The Revenue's contention that certain payments received in June 2005 should be aggregated so as to deny the exemption was not upheld; the appellate authority's acceptance of the respondent's averments and consequent allowance of relief was not disturbed.

Benefit of Notification No. 6/2005-S.T. upheld and the Commissioner (Appeals) order allowing relief affirmed.

Inclusion of receipts realised after service became taxable in aggregate value - Whether value of services rendered when not taxable but paid after the service became taxable must be included in the aggregate value for exemption computation. - HELD THAT: - The Tribunal rejected the Revenue's argument that receipts realised after the date on which the service became taxable should be included in the aggregate value for computing entitlement to exemption. It held that value of services rendered when the service was not taxable should not be included merely because payment was received after the service became taxable.

Receipts realised after the service became taxable are not to be included in the aggregate for exemption calculation.

Failure to obtain service tax registration / non-filing of declaration on crossing threshold - Whether non-filing of the declaration or failure to obtain registration upon crossing the threshold of Rs. 3 lakhs (as contended) is fatal to the respondent's claim to exemption under Notification No. 6/2005-S.T. - HELD THAT: - The Tribunal did not accept the Revenue's contention that non-filing of declaration or not obtaining registration when the threshold was crossed necessarily defeated the claim to exemption. It observed that non-compliance in formal filing did not automatically disentitle the respondent to the benefit of the exemption and that the Revenue had acted mechanically without examining available exemptions.

Non-filing of declaration / failure to obtain registration is not fatal to entitlement to the exemption where the substantive facts establish eligibility.

Abatement under Notification No. 1/2006-S.T. - Whether the respondent was entitled to claim abatement under Notification No. 1/2006-S.T. (50% abatement) in computing taxable value. - HELD THAT: - The Tribunal noted the respondent's counsel's contention that abatement under Notification No. 1/2006-S.T. should have been considered, but recorded that this contention was not raised before the lower authorities and there was no material on record to show that payments included amounts for supply of food that would attract abatement. Consequently, the point was not decided on merits.

Abatement contention not adjudicated on merits as it was not raised before lower authorities and there was no supporting material.

Exemption under Notification No. 21/2004-S.T. until rescission - Whether the respondent remained eligible for exemption under Notification No. 21/2004-S.T. up to its rescission on 1-3-2006. - HELD THAT: - The Tribunal accepted the appellant's (respondent before the Tribunal) submission that Notification No. 21/2004-S.T. applied until its rescission on 1-3-2006 and observed that the Revenue had not adequately examined exemptions available to the small service provider. The Commissioner (Appeals)'s allowance of the respondent's contentions, which included reliance on the earlier notification where relevant, was not interfered with.

Exemption under Notification No. 21/2004-S.T. recognised up to its rescission and relevant relief maintained.

Final Conclusion: The appeal by the Department is dismissed; the order of the Commissioner (Appeals) granting relief to the respondent is affirmed and the cross-objection is disposed of.

Pre-deposit for stay of appeal - financial hardship - balance-sheet evidence for determining pre-deposit - stay of recovery upon compliance with pre-deposit

Pre-deposit for stay of appeal - financial hardship - balance-sheet evidence for determining pre-deposit - stay of recovery upon compliance with pre-deposit - Quantum of pre-deposit required for maintaining stay and effect of appellant's financial condition on that quantum - HELD THAT: - The Tribunal's direction for a pre-deposit of a portion of the service-tax demand was founded on figures recorded in the earlier reporting period. The High Court found that those figures did not represent the appellant's correct financial position for the relevant later reporting period and that the plea of financial hardship was not appropriately considered. Having examined the Balance Sheet and Profit & Loss figures for the later year, the Court concluded that justice requires reduction of the pre-deposit. The Court declined to re-open or decide the merits of the demand, noting that the Tribunal had relied on the Adjudicating Authority's findings of fact. Instead, the Court modified the pre-deposit direction, specifying the reduced amount to be deposited within a fixed period and providing that on compliance the recovery of the remaining adjudged dues shall be stayed pending final disposal of the appeal. The appellant's undertaking to pay the reduced amount without prejudice to its contentions was recorded.

Pre-deposit reduced and fixed at Rs.55,00,000/- to be paid within eight weeks; on compliance the recovery of balance dues stayed pending final disposal of the appeal.

Final Conclusion: The appeal is disposed of by modifying the Tribunal's pre-deposit direction: the appellant is directed to make a pre-deposit of Rs.55,00,000/- within eight weeks, and upon compliance recovery of the remaining admitted dues is stayed pending the Tribunal's final decision; the merits of the service-tax demand remain undisturbed.

Compounding scheme for works contract service - Option to avail compounding scheme - Calculation of tax liability under changing compounding rates - Pre-deposit requirement for admission of appeal and stay on recovery - Duty of department to provide guidance during enquiry

Compounding scheme for works contract service - Option to avail compounding scheme - Calculation of tax liability under changing compounding rates - Applicant had effectively availed the works contract compounding scheme and the differential tax liability was to be determined by applying the respective compounding rates to the relevant sub-periods. - HELD THAT: - The Tribunal examined the registration and the initial payment of service tax made by the applicant on 6.12.2008 under the category 'works contract service' and the correspondence surrounding the applicant's statements. The record shows the applicant registered and paid tax consistent with opting for the compounding scheme. The consultant's breakdown treating July 2007-March 2008 at the 2% compounded rate and April-September 2008 at the 4% compounded rate was accepted as the correct method to compute the total liability for the period July 07 to Sept 08. The Tribunal also noted the letter dated 03-12-2008 and the circumstances of the statement given before officers, observing that the applicant had not been properly guided, but found from the initial payment that the compounding option had been exercised.

Differential tax liability is to be determined by applying 2% for July 07-March 08 and 4% for April-September 2008; the computation resulted in a shortfall of approximately Rs.24,000 which the applicant was required to deposit.

Pre-deposit requirement for admission of appeal and stay on recovery - Duty of department to provide guidance during enquiry - Relief by conditional pre-deposit and waiver of balance pre-deposit was granted, and stay on collection of remaining dues during appeal was ordered upon compliance. - HELD THAT: - Balancing the circumstances, including the departmental failure to adequately guide the applicant during his statement and the admitted shortfall in tax computed on the compounding basis, the Tribunal exercised its discretion under the appellate regime. The applicant was directed to deposit the determined shortfall (Rs.24,000) within four weeks and to report compliance by the specified date for admission of the appeal. Upon such deposit, the Tribunal waived the requirement of pre-deposit of the balance dues arising from the impugned order and ordered a stay on collection of those dues during the pendency of the appeal.

Applicant directed to deposit the shortfall within four weeks; on such deposit the remaining pre-deposit requirement is waived and recovery of the balance is stayed during the appeal.

Final Conclusion: The Tribunal held that the appellant had effectively availed the works contract compounding scheme and, after applying the appropriate compounding rates to the respective sub-periods, a balance tax shortfall of about Rs.24,000 remained; the appellant was directed to deposit that amount within four weeks, upon which the Tribunal waived the pre-deposit of the remaining disputed dues and stayed their recovery pending the appeal.

CENVAT credit - input service - integral connection to business - precedent effect of Tribunal's own final order - remand for fresh consideration - principles of natural justice

CENVAT credit - precedent effect of Tribunal's own final order - rent-a-cab service - air travel agent's service - Admissibility of CENVAT credit on rent-a-cab service and air travel agent's service for the period in dispute. - HELD THAT: - The Tribunal applied the decision in Final Order Nos.1304 to 1310/2009, passed earlier in the same assessee's case, as a binding precedent since those orders remain in operation and no stay of their operation has been obtained. In view of that precedent and the finding of the lower appellate authority, CENVAT credit on rent-a-cab service and air travel agent's service was held to be admissible to the respondent for the period under consideration.

CENVAT credit on rent-a-cab service and air travel agent's service is admissible and the Commissioner (Appeals) decision on these two services is affirmed.

CENVAT credit - input service - integral connection to business - sponsorship service - renting of immovable property service - principles of natural justice - remand for fresh consideration - Admissibility of CENVAT credit on sponsorship service and renting of immovable property service was not finally adjudicated and is remanded to the Commissioner (Appeals) for fresh consideration. - HELD THAT: - The Tribunal observed that the Commissioner (Appeals) recorded the assessee's submissions but did not indicate that the Department was heard, and did not apply the legal test that an 'input service' requires an integral connection with the business as explained in the Ultratech Cement decision (para 34). Given that the lower appellate order does not display consideration of whether these services are integrally connected to the business, the question of CENVATability of sponsorship service and renting of immovable property service must be addressed afresh. The Commissioner (Appeals) is directed to reconsider these services in accordance with law, the requirement of an integral nexus to business, and the principles of natural justice.

Order of the Commissioner (Appeals) is set aside insofar as sponsorship service and renting of immovable property service are concerned; those issues are remanded for fresh consideration in accordance with law and principles of natural justice.

Final Conclusion: Appeals partly allowed: the Tribunal affirmed the Commissioner (Appeals) decision permitting CENVAT credit for rent-a-cab and air travel agent's services, and set aside and remanded the Commissioner (Appeals) decision on sponsorship service and renting of immovable property service for fresh consideration in accordance with law and principles of natural justice.

Inclusion of reimbursable expenses in taxable value - stay of operation - deposit to be retained pending disposal of appeal - admission of collection from customers - condonation of delay

Deposit to be retained pending disposal of appeal - inclusion of reimbursable expenses in taxable value - admission of collection from customers - Whether the amount deposited by the respondent should be released or kept with the Revenue pending disposal of the appeal. - HELD THAT: - Revenue sought stay of the Commissioner (Appeals) order and asked that amounts deposited by the respondent (tax, interest and 25% of penalty) should not be released until disposal of the appeal. The Commissioner (Appeals) had held that amounts collected towards documentation, inspection and royalty were to be treated as reimbursable expenses and included in taxable value with effect from 19.4.2006, and had dropped demand prior to that date. On the material before the Tribunal there was prima facie indication that the respondent admitted charging these expenses to customers. In these circumstances the Tribunal acceded to the Revenue's request and ordered that the deposit made by the respondent be kept with the Revenue until the appeal is finally disposed of.

Deposit made by the respondent to be retained by the Revenue till disposal of the appeal.

Condonation of delay - Decision on the application for condonation of delay in filing the cross-objection. - HELD THAT: - The respondent had filed an application for condonation of delay in presenting a cross-objection. The Tribunal did not decide the condonation application on merits in the present order but recorded that it would be considered at the time of hearing of the appeal.

Application for condonation of delay is to be considered at the time of the appeal hearing (remanded for fresh consideration).

Final Conclusion: The Tribunal ordered that the amounts deposited by the respondent (tax, interest and 25% penalty) shall be retained by the Revenue pending final disposal of the appeal; the respondent's application for condonation of delay in filing the cross-objection was not decided and will be considered at the time of the appeal hearing.

Intellectual Property Right - Intellectual Property Service - goodwill - trademark assignment with or without goodwill - prima facie case for waiver of pre-deposit - stay of recovery upon pre-deposit

Intellectual Property Right - Intellectual Property Service - goodwill - trademark assignment with or without goodwill - Whether the consideration received on transfer/licence of trademark/goodwill is exigible to service tax as an "Intellectual Property Service" and whether goodwill forms part of the trademark transaction in the present transfer. - HELD THAT: - The Tribunal reproduced the statutory definitions of "Intellectual Property Right" and "Intellectual Property Service" and examined the contractual scheme whereby the assessee transferred the spare parts division and separately licensed the trademark to the transferee with an 8.5% licence fee for ten years. Reference was made to Chapter provisions of the Trade Marks Act which permit assignment or transmission of a registered or unregistered trademark with or without the goodwill of the business concerned. On the material before it, the Tribunal observed that prima facie the goodwill was assigned together with the trademark and that the value received related to the right to use the trademark for a specified period. In view of this linkage between goodwill and the trademark transaction, the Tribunal concluded that the claim that service tax could not be levied on the portion attributable to goodwill was not made out at the prima facie stage. [Paras 4]

Prima facie finding that goodwill was assigned with the trademark and the demand of service tax on the amount relating to trademark/goodwill was not shown to be untenable at the prima facie stage.

Prima facie case for waiver of pre-deposit - pre-deposit for stay of demand - stay of recovery upon pre-deposit - Whether the applicant is entitled to waiver of pre-deposit and suspension of recovery of the adjudged service-tax demand pending the appeal. - HELD THAT: - Applying the prima facie appraisal, the Tribunal found that the applicant had failed to establish a prima facie case for complete waiver of pre-deposit of the adjudged dues. Consequently, the Tribunal directed a specified pre-deposit by the assessee within a time frame and ordered that upon such deposit the balance of the adjudged dues would remain stayed until disposal of the appeal. The direction was framed as an interlocutory condition for grant of stay pending appeal rather than a final adjudication on merits. [Paras 4]

Applicant directed to make a pre-deposit of the specified sum within four weeks; upon such deposit recovery of the balance stayed pending disposal of the appeal.

Final Conclusion: The Tribunal held on a prima facie basis that goodwill was transferred with the trademark and that the challenge to the service-tax demand on that portion was not made out at the interlocutory stage; consequently the application for waiver of pre-deposit was refused, but stay of recovery of the balance was granted subject to a specified pre-deposit within the time prescribed.

Exemption under Notification No. 24/2004-S.T. in respect of vocational training institutes - waiver of pre-deposit of tax, interest and penalties - stay of recovery of service tax, interest and penalties during pendency of appeal - prima facie entitlement to exemption

Exemption under Notification No. 24/2004-S.T. in respect of vocational training institutes - prima facie entitlement to exemption - Whether the Institute providing vocational training courses is prima facie entitled to exemption under Notification No. 24/2004-S.T. - HELD THAT: - The Tribunal found that the Institute conducts vocational training courses in areas such as fashion designing, graphic arts, media communication and digital communication, which are vocational in character and not academic. On the materials and submissions before it the Bench was satisfied that the case falls within the ambit of Notification No. 24/2004-S.T. and that a strong prima facie case in favour of the applicants was made out. Because the dispute was considered to be of narrow compass and the applicants had established a prima facie entitlement to the exemption, the Tribunal proceeded to deal with the stay application accordingly. [Paras 5]

Prima facie entitlement to exemption under Notification No. 24/2004-S.T. established.

Waiver of pre-deposit of tax, interest and penalties - stay of recovery of service tax, interest and penalties during pendency of appeal - Whether pre-deposit of the adjudged service tax, interest and penalties should be waived and recovery stayed pending appeal. - HELD THAT: - Having accepted that the applicants had a strong prima facie case on the question of exemption, the Tribunal granted unconditional waiver of the pre-deposit of the entire adjudged amount of service tax along with interest and penalties. The Tribunal also ordered a stay on recovery of the said amounts for the duration of the appeal, while noting that the appeal itself could be finally heard on a later date. [Paras 5]

Waiver of pre-deposit of the entire amount of service tax, interest and penalties granted and recovery stayed during pendency of the appeal.

Final Conclusion: The Tribunal, recording a prima facie finding that the Institute's courses are vocational and fall within Notification No. 24/2004-S.T., granted waiver of pre-deposit of the entire service tax demand including interest and penalties and stayed recovery thereof; matter listed for final hearing on 21-2-2012.

Club or Association Services - Intellectual Property Services - pre-deposit requirement - stay of recovery - prima facie determination

Club or Association Services - service tax liability - prima facie determination - Whether the activity of collective administration of copyrights and retention of a portion of licence revenue by the applicant falls within Club or Association Services for the period 16-6-2005 to 31-3-2010. - HELD THAT: - The Tribunal, relying on a closely similar earlier decision in the case of M/s. Indian Performing Right Society Ltd., found that prima facie the appellants' activity of administering copyrights and retaining part of licence fees is not covered by the category of Club or Association Services. In view of that prima facie conclusion and the similarity of facts, the Tribunal exercised its appellate discretion to relieve the appellants from the statutory pre-deposit requirementIntellectual Property Services, but the order addresses the earlier specified period.

Pre-deposit requirement waived and recovery of service tax, interest and penalties stayed for the period 16-6-2005 to 31-3-2010, on the prima facie view that the activity is not covered by Club or Association Services.

Final Conclusion: Waiver of pre-deposit granted and recovery stayed during pendency of the appeal in view of the Tribunal's prima facie conclusion that the appellants' retained licence revenue did not fall within Club or Association Services for the period 16-6-2005 to 31-3-2010.

Waiver of pre-deposit - classification as Commercial and Industrial Construction Services - stay of demand - remand for fresh consideration on merits

Waiver of pre-deposit - classification as Commercial and Industrial Construction Services - final disposal of appeal - Pre-deposit requirement was waived and the appeal was entertained for final disposal on prima facie classification grounds. - HELD THAT: - The Tribunal examined the nature of the appellant's contract for supervising, measurement, quality check and making payments on behalf of the principal and found prima facie that the activity did not fall within the ambit of Commercial & Indl. Const. Service. In consequence, the Tribunal waived the requirement of pre-deposit of the disputed amounts and proceeded to take up the appeal for final disposal instead of maintaining the stay conditionally on a pre-deposit. This determination was made on a prima facie assessment to enable adjudication on merits rather than to uphold the impugned conditional stay. [Paras 3]

Pre-deposit waived and appeal taken up for final disposal because activity prima facie did not constitute Commercial & Industrial Construction Service.

Stay of demand - remand for fresh consideration on merits - The matter was remanded to the Commissioner (Appeals) for fresh adjudication on merits without insisting on any pre-deposit for hearing the appeal. - HELD THAT: - The Tribunal observed that the impugned order had dismissed the appellant's appeal for non-compliance with a stay order that required a pre-deposit and that the impugned order did not decide the merits. In view of the absence of a merits decision, the Tribunal directed that the Commissioner (Appeals) should hear the case on merits and pass an appropriate order, expressly instructing that no pre-deposit be insisted upon as a condition for hearing the appeal. The remand was for substantive consideration on merits rather than merely for quantification or computation. [Paras 4]

Matter remanded to Commissioner (Appeals) to decide on merits without insisting on pre-deposit for hearing.

Final Conclusion: The Tribunal waived the pre-deposit requirement and took the appeal for final disposal on a prima facie view that the activity did not constitute Commercial & Industrial Construction Services, and remanded the matter to the Commissioner (Appeals) for fresh adjudication on merits without requiring any pre-deposit.

Club or Association service - service tax demand - prima facie finding - waiver of pre-deposit - stay of recovery

Club or Association service - prima facie finding - Activity of the Indian Performing Right Society Ltd. is, on a prima facie view, not covered by the 'Club or Association' service category. - HELD THAT: - The Tribunal examined the factual matrix: the Society takes assignments of copyrights from authors, composers and publishers on a principal-to-principal basis, licenses music to clients and collects remuneration which is thereafter distributed to members while retaining amounts for its expenditure. On a prima facie assessment the Tribunal found that these activities do not fall within the scope of 'Club or Association' service as contended by Revenue. The Tribunal's conclusion is provisional and confined to the prima facie character of the finding in the context of the interlocutory application for waiver of pre-deposit. [Paras 4]

Prima facie activity not covered under 'Club or Association' service.

Service tax demand - waiver of pre-deposit - stay of recovery - Requirement of pre-deposit of the confirmed service tax demand, interest and penalties was waived and recovery stayed pending the appeal. - HELD THAT: - Having recorded the prima facie view that the Society's activities do not fall under the impugned service category, the Tribunal exercised its interlocutory power to waive the requirement of pre-deposit of the entire service tax demand, interest and penalties and to stay recovery during the pendency of the appeal. The order is interlocutory and directed to preserve the position until final adjudication. [Paras 4]

Pre-deposit waived and recovery stayed during pendency of the appeal.

Final Conclusion: The Tribunal granted an interlocutory waiver of pre-deposit and stayed recovery of the service tax demand, interest and penalties, having recorded a prima facie view that the Society's activities are not covered by 'Club or Association' service; matter to be adjudicated finally on appeal.

Input service - rent-a-cab service used for employee conveyance - clearing and forwarding service as input service - place of removal - ownership and risk determining place of sale

Input service - rent-a-cab service used for employee conveyance - Cenvat credit is admissible on rent-a-cab service used to convey employees to and from the factory as an input service under Rule 2(l) of the Cenvat Credit Rules, 2004. - HELD THAT: - The Tribunal followed the decision of the Hon'ble High Court in Commissioner v. Stanzen Toyotetsu India (P) Ltd. which held that provision of rent-a-cab to transport workers to the factory has a direct bearing on manufacturing activity, is not merely a welfare measure, and constitutes an activity relating to business. Applying that reasoning, the Tribunal concluded that the rent a cab service used for conveyance of employees to and from the factory qualifies as an input service under Rule 2(l) and the appellant is therefore entitled to Cenvat credit. [Paras 3]

Claim for Cenvat credit on rent a cab service allowed.

Input service - clearing and forwarding service as input service - place of removal - ownership and risk determining place of sale - Cenvat credit is admissible on clearing and forwarding (C&F) service used for transportation of goods from factory to port for export because the port of shipment is the place of removal where ownership and risk remained with the exporter. - HELD THAT: - The appellant had pleaded before the adjudicating authority that the sale/transfer occurred at the port of shipment since ownership and risk remained with the exporter until customs clearance. The adjudicating authority and the first appellate authority treated the factory gate as the place of removal without addressing this plea. The Tribunal noted precedents, including its decision in Commissioner v. Stangl Pickles & Preserves , which recognize that for export consignments the Bill of Lading issued at the port signifies transfer/ownership, and that ownership and risk remaining with the exporter up to the port supports treating the port as place of removal. Because the lower authorities failed to consider the appellant's contention on ownership and place of sale, their view disqualifying outward transportation services as input service could not be sustained. Consequently, C&F services used to transport goods to the port for export fall within the definition of input service under Rule 2(l) when the place of removal is the port. [Paras 4, 6, 7]

Claim for Cenvat credit on C&F services used up to the port of export allowed; impugned orders set aside.

Final Conclusion: The appeal is allowed: Cenvat credit on rent a cab services for employee conveyance is permitted; Cenvat credit on clearing and forwarding services up to the port of export is permitted because the port was the place of removal where ownership and risk remained with the appellant; impugned orders are set aside.

Alteration in number of operating packing machines - Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 - Rule 8 - maximum number of packing machines installed on any day during the month determines the number of operating machines for the month - Prima facie satisfaction for grant of interim relief - Deposit condition as pre condition for interim relief

Rule 8 - maximum number of packing machines installed on any day during the month determines the number of operating machines for the month - Alteration in number of operating packing machines - Application of Rule 8 to addition of packing machines in July 2009 and its effect on duty liability for the month - HELD THAT: - The Tribunal applied Rule 8 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, which treats the number of operating packing machines for a month as the maximum number of machines installed on any day of that month where addition/installation occurs. The appellant had admittedly installed two new packing machines in July 2009; consequently the maximum number of machines operating on any day in July 2009 must be treated as the number for the entire month and the duty for the full month is prima facie payable. The appellant failed to demonstrate any prima facie case or to plead financial hardship to justify relief from the confirmed duty liability. On that basis the Tribunal found no reason to stay or reduce the liability and directed payment as a condition for further hearing.

Rule 8 applies; duty for the month is determined by the maximum number of packing machines installed on any day of July 2009; no prima facie case in favour of the appellant; directed deposit of the duty before further consideration.

Prima facie satisfaction for grant of interim relief - Deposit condition as pre condition for interim relief - Whether interim relief should be granted subject to deposit and the terms of such deposit - HELD THAT: - The Tribunal, being not satisfied of a prima facie case for the appellant and noting absence of pleaded financial hardship, exercised its discretion to require deposit of the entire duty amount as a precondition for continuing the appeal. The appellant was directed to deposit the duty within 12 weeks, and the appeal was listed for final hearing subject to such deposit.

Interim relief refused; appellant directed to deposit the specified duty within 12 weeks; appeal to be heard on the listed date subject to compliance.

Final Conclusion: The Tribunal held that Rule 8 applies to the addition of packing machines in July 2009, making the maximum number of machines on any day determinative of the month's duty liability, found no prima facie case or pleaded hardship, and directed deposit of the duty as a condition for hearing the appeal.

Penalty for duty evasion - concessional rate of duty - withdrawal of exemption - inadvertent mistake - absence of mens rea / intention to evade duty

Penalty for duty evasion - withdrawal of exemption - inadvertent mistake - absence of mens rea / intention to evade duty - Whether penalty for payment of duty at concessional rate after withdrawal of the exemption on 27.4.2002 was justified - HELD THAT: - The Tribunal found on the material that the assessee had been entitled to a concessional rate of duty by notification dated 1.3.2002 which was withdrawn by notification dated 27.4.2002, and that the continued payment at the concessional rate until September 2002 resulted from inadvertent mistake without any intention to evade duty. The Tribunal set aside the penalty imposed by the Adjudicating Authority and observed that absence of mens rea disentitles Revenue from imposing penalty. The High Court examined the Tribunal's reasoning and held it not illegal or unwarranted, noting that non-payment (or underpayment) of duty for a limited period after withdrawal of exemption did not necessarily establish intentional evasion where the assessee subsequently paid the duty with interest upon discovery of the mistake. On that basis the Court found no substantial question of law and dismissed the Revenue's appeal.

Tribunal's setting aside of the penalty affirmed; no substantial question of law arises and Revenue's appeal is dismissed.

Final Conclusion: Appeal dismissed. The Tribunal's finding that the underpayment resulted from an inadvertent mistake and that there was no intention to evade duty was held not to be illegal or unwarranted; therefore the penalty could not be sustained.

Effect of omission of subordinate legislation on pending adjudications - continuance of accrued liabilities despite omission or repeal by a saving provision - application of Rule 96ZO(3) of the Central Excise Rules to pending abatement proceedings - effect of amendments, repeal or omission on existing proceedings under a statutory saving provision

Application of Rule 96ZO(3) of the Central Excise Rules to pending abatement proceedings - effect of omission of subordinate legislation on pending adjudications - continuance of accrued liabilities despite omission or repeal by a saving provision - Whether omission of Rule 96ZO(3) of the Central Excise Rules in 2001 rendered void the adjudication and orders refusing abatement that were based on Rule 96ZO(3) in proceedings initiated earlier. - HELD THAT: - The Court held that omission of a rule does not automatically invalidate proceedings or adjudications which had already given rise to obligations or liabilities. Relying on the reasoning in Shree Bhagwati Steel Rolling Mills, the Court applied the statutory principle embodied in the post enactment saving provision introduced into the Central Excise law by the Finance Act, 2001, which preserves the previous operation of rules and does not affect rights, privileges, obligations or liabilities already acquired, accrued or incurred, nor the continuation of investigations or legal proceedings. Accordingly, the absence of an express saving clause in the notification omitting Rule 96ZO(3) did not render the impugned orders null; the adjudication of the abatement claim could properly proceed having regard to the law as it stood when the liability accrued. The Court also noted that the factual findings of non compliance with the obligations under Rule 96ZO(3) were based on case specific facts and there was no reason to interfere with those findings.

Omission of Rule 96ZO(3) in 2001 did not render void the prior proceedings or the orders refusing abatement under that Rule; the appeal is dismissed.

Final Conclusion: The High Court dismissed the appeal, holding that omission of Rule 96ZO(3) did not invalidate adjudication or orders refusing abatement in proceedings initiated earlier, and that the factual findings of non compliance with the Rule warranted no interference.

Dispensation of pre-deposit - prima facie assessment - prohibition on adjudicating merits in pre-deposit applications - remand for independent decision by Commissioner of Appeals - conditional effectiveness of appellate order subject to compliance

Dispensation of pre-deposit - prima facie assessment - prohibition on adjudicating merits in pre-deposit applications - Validity of the Tribunal recording an adverse merits finding while deciding an application for dispensation of pre-deposit. - HELD THAT: - The Tribunal may, in exceptional cases, assess the prima facie strength of the case and treat its conclusion as constituting hardship warranting dispensation of pre-deposit. However, the Tribunal is not entitled to record adverse observations on the merits in a negative manner when disposing of an application for dispensation of pre-deposit. The portion of the Tribunal's order that contains adverse merit findings beginning with the reference to precedential decision in LCS City Makers Pvt. Ltd. v. CST is expunged. The question of merit is left open for decision by the learned Commissioner of Appeals at the hearing of the appeal; the Commissioner must decide the matter independently and without being influenced by the expunged observations. The appellate order's effectiveness is made conditional on the petitioner making payment of 50% of the demanded amount within 15 days; failure to comply will result in recall of the present order and revival of the impugned Tribunal order.

Expunge the Tribunal's adverse merit observation; remit the merits to the learned Commissioner of Appeals for independent determination; make the order effective only upon payment of 50% of the demanded amount within 15 days, failing which the Tribunal's order stands revived.

Final Conclusion: Appeal admitted and disposed by expunging the Tribunal's adverse merit observations made in the course of a pre-deposit dispensation application, remitting the merits to the Commissioner of Appeals for independent decision, and making the order effective conditionally upon payment of 50% of the demanded amount within 15 days, otherwise reviving the impugned Tribunal order.

Pre-deposit under Section 35F of the Central Excise Act, 1944 - discretion to dispense with pre-deposit on grounds of undue hardship - principles of natural justice - opportunity of personal hearing - dismissal of appeal for non-compliance with pre-deposit condition

Pre-deposit under Section 35F of the Central Excise Act, 1944 - dismissal of appeal for non-compliance with pre-deposit condition - principles of natural justice - opportunity of personal hearing - Validity of CESTAT's dismissal of the appellant's appeal dated 28.5.2012 on the ground of non-compliance with the pre-deposit direction in the order dated 30.11.2011. - HELD THAT: - The Court found that both impugned orders turned on the petitioner's liability to pre-deposit the duty as contemplated by Section 35F and that the CESTAT's dismissal of the appeal rested solely on alleged non-compliance with its pre-deposit direction. The order of 30.11.2011 directed pre-deposit of 50% without recording reasons and without addressing the appellant's pleaded financial hardship, including reference to BIFR. The tribunal proceeded in the petitioner's absence but, even where proceedings continue ex parte, the tribunal is obliged to apply its discretion judicially and to record reasons when refusing to exercise the power under the first proviso to Section 35F. The Court also accepted the uncontradicted plea that the 30.11.2011 order was communicated only in April 2012, and accordingly the six week period to comply ran from communication of the certified copy; the CESTAT erred in treating the pre-deposit period as expired and in dismissing the appeal on that basis.

Order dated 28.5.2012 dismissing the appeal for non-compliance with the pre-deposit condition is not justified and is set aside; the petitioner shall be afforded an opportunity to renew its application for waiver/modification.

Discretion to dispense with pre-deposit on grounds of undue hardship - principles of natural justice - opportunity of personal hearing - Direction to the CESTAT on fresh consideration of the petitioner's application for modification/waiver of the pre-deposit condition. - HELD THAT: - The Court remanded the matter to the CESTAT to consider the petitioner's application for modification of the pre-deposit condition and to pass appropriate orders in accordance with law after giving the petitioner an opportunity of personal hearing. The Court emphasised that the tribunal may either modify or retain its earlier direction but must assign reasons for its conclusion and apply its discretion objectively, particularly in relation to pleaded undue hardship. The Court fixed a date for appearance to avoid delay and warned that failure to appear may revive the order dated 28.5.2012 without further opportunity.

CESTAT directed to consider the modification application afresh, hear the petitioner personally, and pass a reasoned order; petitioner to appear on the date fixed and undertake to attend future hearings.

Final Conclusion: The writ petition is allowed in part: the order of 28.5.2012 is set aside and the matter is remitted to the CESTAT to decide the petitioner's application for modification/waiver of the pre-deposit condition under Section 35F after giving personal hearing and recording reasons; directions issued for the petitioner's appearance and warning as to revival of the earlier order if the petitioner fails to appear.

False declaration - extended period of limitation under Section 11A of the Central Excise Act, 1944 - onus on revenue to investigate market practice and verify returns - verification and approval of invoices and RT-12 returns - penalty under Section 11AC and non-retrospectivity of subsequently inserted penal provision

False declaration - extended period of limitation under Section 11A of the Central Excise Act, 1944 - verification and approval of invoices and RT-12 returns - onus on revenue to investigate market practice and verify returns - Declaration filed from 5th April, 1994 was a false declaration and exercise of power under Section 11A was justified - HELD THAT: - The Tribunal found the original declaration to be false based on the RG-1 register entries, RT-12 returns, the Superintendent's letter dated 14th November, 1994 and the appellant's reply dated 30th November, 1994. The Court accepted that the RG-1/register and RT-12 entries lacked underlying supporting documents to distinguish branded supplies from own-branded/unbranded supplies, so that the true nature of clearances could not be ascertained without special knowledge. Given these circumstances, the Tribunal was entitled to conclude that relevant facts were not within the Department's knowledge at the time of filing and that extending the period under Section 11A was permissible. The appellant's contention that the revenue was obliged to investigate the asserted market practice upon receiving the reply was rejected because the material in the registers and returns, together with the correspondence, supported the Tribunal's conclusion of a false declaration. The Court refused to interfere with that conclusion. [Paras 1, 2]

Appellant's challenge to the Tribunal's finding of a false declaration and to the validity of invoking Section 11A was dismissed; the extended period was held to be rightly invoked.

Penalty under Section 11AC and non-retrospectivity of subsequently inserted penal provision - Imposition of penalty under Section 11AC was incorrect because Section 11AC was inserted after the period under assessment - HELD THAT: - The Tribunal held, and the Court did not disturb that holding, that imposition of penalty under Section 11AC could not be sustained as that provision was inserted subsequent to the assessment period in question. Consequently, the penalty under the newly inserted provision could not be applied to the earlier period. [Paras 1]

The Tribunal's conclusion that penalty under Section 11AC was not correctly imposable was accepted; that part of the challenge did not succeed for the appellant.

Final Conclusion: The High Court dismissed the appeal: the Tribunal's finding of a false declaration (justifying invocation of the extended limitation under Section 11A) was upheld, and the Tribunal's conclusion that penalty under Section 11AC was inapplicable to the assessment period was accepted.

Interim restraint against coercive recovery of disputed duty, interest and penalty - stay of recovery pending disposal of appeal and stay application before the Tribunal - effect of vacancy in appellate tribunal on grant of interim relief - quashing of detention order - pre-deposit requirement for pursuing appellate remedy

Interim restraint against coercive recovery of disputed duty, interest and penalty - stay of recovery pending disposal of appeal and stay application before the Tribunal - effect of vacancy in appellate tribunal on grant of interim relief - Respondents are restrained from recovering the disputed duty, interest and penalty from the petitioners pending consideration of their stay applications before the Tribunal. - HELD THAT: - The Tribunal was unable to take up the petitioners' stay applications for a considerable period on account of a vacancy in the office of the technical member. Although the vacancy has been filled recently, the Tribunal will require time to deal with the backlog of pending stay applications filed during the vacancy. In view of these circumstances and the petitioners' contention that coercive recovery pending determination of their stay applications would render their appeals infructuous, the court concluded that interests of justice require an interim restraint on recovery until the Tribunal considers the stay petitions. [Paras 10]

Recovery of the disputed duty, interest and penalty from the petitioners is restrained pending consideration of their stay applications by the Tribunal.

Quashing of detention order - interim restraint against coercive recovery of disputed duty, interest and penalty - The detention order dated 07-02-2013 passed by the third respondent is quashed. - HELD THAT: - The petitioners produced the detention order allegedly issued to effect recovery of the disputed dues while their stay applications remained pending before the Tribunal that could not be heard due to the vacancy. Having granted interim restraint on recovery in the circumstances explained, the court found it appropriate to quash the specific detention order impinging on the petitioner's property and goods. [Paras 10]

Detention order dated 07-02-2013 is quashed.

Final Conclusion: Writ petitions disposed by restraining respondents from recovering the disputed duty, interest and penalty pending adjudication of the petitioners' stay applications before the Tribunal; the detention order dated 07-02-2013 is quashed; no costs.

Eligibility for exemption under Notification No.70/92-CE - condition of undertaking by principal manufacturer for job-work exemption - non-compliance with mandatory condition disentitles job-worker from notification benefit - effect of prior departmental proceedings on limitation for extended period - pre-deposit requirement and conditional waiver in appellate stay applications

Eligibility for exemption under Notification No.70/92-CE - condition of undertaking by principal manufacturer for job-work exemption - non-compliance with mandatory condition disentitles job-worker from notification benefit - Applicant not prima facie entitled to exemption under Notification No.70/92-CE as the mandatory undertaking by the principal manufacturer was not furnished to the jurisdictional commissionerate. - HELD THAT: - The adjudicatory issue turns on whether the job-work clearances by the applicant fall within the exemption of Notification No.70/92-CE. The Tribunal found on the record that the principal manufacturer (the ordnance factory) had not submitted the undertaking to the jurisdictional commissionerate certifying that duty would be ultimately paid by it, a condition which the notification makes mandatory. Applying the principle in Commissioner of Central Excise, New Delhi v. Hari Chand Shri Gopal, the benefit of the notification cannot be extended where the mandatory condition has not been complied with. On the prima facie material, therefore, the applicant cannot be held entitled to the exemption under the notification.

Benefit of Notification No.70/92-CE cannot, prima facie, be extended to the applicant because the required undertaking from the principal manufacturer was not filed.

Effect of prior departmental proceedings on limitation for extended period - pre-deposit requirement and conditional waiver in appellate stay applications - Partial waiver of pre-deposit granted; applicant directed to deposit a specified amount as condition for stay of recovery of the balance during the appeal. - HELD THAT: - While the Tribunal concluded that the notification benefit is not prima facie available, it noted that on the same factual controversy the department had earlier issued and subsequently dropped proceedings seeking recovery of Service Tax for job-work. That circumstance supports the applicant's contention regarding the correctness of invoking the extended period of limitation. Balancing the interests of revenue and the applicant, and having considered precedents on grant of interim relief in tax appeals, the Tribunal did not allow total waiver of pre-deposit. Instead, it directed a conditional deposit within a stipulated period and ordered stay of recovery of the remaining adjudged dues during the pendency of the appeal, warning that failure to comply would result in dismissal of the appeal.

Applicant directed to make a partial pre-deposit within the time specified; on such deposit the balance adjudged dues shall be stayed during the appeal, non-compliance to result in dismissal.

Final Conclusion: On the record the applicant is not prima facie entitled to the exemption under Notification No.70/92-CE because the mandatory undertaking by the principal manufacturer was not filed; however, having noted earlier departmental proceedings on the same issue were dropped, the Tribunal allowed a conditional waiver by directing a partial pre-deposit and stayed recovery of the balance during the appeal subject to compliance with the deposit direction.

Condonation of delay - proportionate reversal of CENVAT credit - liability to pay 10% of value of exempted final products - pre-deposit for stay of recovery - interpretation and retrospective amendment of Rule 6 of the CENVAT Credit Rules

Condonation of delay - effect of High Court direction on forum remedy - Application for condonation of delay of 85 days in filing the appeal - HELD THAT: - The writ petition before the High Court had been disposed by order dated 22.06.2011 directing extension of interim stay for two weeks to enable the assessee to avail the remedy before the Tribunal and further directing that a proper application for condonation of delay would be considered without closing the matter on delay aspect. Having regard to that direction of the High Court, the Tribunal accepted the counsel's submissions and condoned the delay of 85 days in filing the appeal. [Paras 1]

Delay of 85 days condoned; COD application allowed.

Proportionate reversal of CENVAT credit - liability to pay 10% of value of exempted final products - interpretation and retrospective amendment of Rule 6 of the CENVAT Credit Rules - pre-deposit for stay of recovery - Whether the assessee's reversal of CENVAT credit negates liability to pay 10% of the value of finished goods cleared under exemption, and the consequent interim relief by pre-deposit - HELD THAT: - Rule 6(3)(b) as it stood up to 31.03.2008 required payment equal to 10% of the total price of exempted final products (subject to specified exceptions). By Notification effective 01.04.2008 an option was provided to pay 10% or an amount equivalent to CENVAT credit attributable to inputs/input services based on a prescribed formula; the Finance Act, 2010 effected retrospective amendment and also provided an option (subject to conditions and time limits) to make payment and furnish documentary evidence including a Chartered Accountant's certificate. The assessee asserted that it had reversed proportionate credit (supported by a CA certificate) and produced figures of reversal, but the Commissioner and the Tribunal found no adequate records establishing reversal in the prescribed manner or evidence of having availed the statutory option within the stipulated period. On the prima facie record the Tribunal did not accept the contention that proper reversal had been made. [Paras 3, 5]

Submission of proportionate reversal not accepted on the record; assessee directed to deposit a further amount of Rs.20,00,000 within four weeks, upon which recovery of the balance adjudged dues stayed till disposal of the appeal; EH application disposed.

Final Conclusion: The Tribunal condoned the delay in filing the appeal in view of the High Court's direction; on merits, it found the assessee had not satisfactorily established proportionate reversal of CENVAT credit for the period Feb.'08 to Dec.'08 and directed a conditional pre-deposit of Rs.20,00,000, staying recovery of the balance pending disposal of the appeal.

Condonation of delay - Waiver of pre-deposit - Stay of recovery - Prima facie case for grant of stay - Cenvat credit not liable for reversal where duty on final product accepted

Condonation of delay - Application for condonation of delay in filing the supplementary appeal. - HELD THAT: - The applicant explained that the main appeal was filed within the normal limitation period but, following an objection by the registry, a supplementary appeal became necessary. The Tribunal accepted this explanation and exercised its discretion to condone the delay in filing the supplementary appeal. [Paras 2]

Delay in filing the supplementary appeal is condoned.

Waiver of pre-deposit - Stay of recovery - Prima facie case for grant of stay - Cenvat credit not liable for reversal where duty on final product accepted - Application for waiver of pre-deposit of duty, interest and penalty and stay of recovery during pendency of the appeal. - HELD THAT: - The Tribunal noted that the assessee had paid duty during the period in dispute exceeding the quantum of credit denied and had also availed credit through PLA. Relying on the Bombay High Court decision in Ajinkya Enterprises, the Tribunal observed that where the department has accepted duty on the final products, Cenvat credit availed need not be reversed even if the activity is later held not to amount to manufacture. On this prima facie view, the Tribunal found the assessee had made out a strong case and therefore exercised its discretion to waive the pre-deposit and stay recovery of the disputed dues pending the appeal. [Paras 3, 5]

Pre-deposit of dues waived and recovery stayed during the pendency of the appeal; stay petition allowed.

Final Conclusion: The Tribunal condoned the delay in filing the supplementary appeal and, finding a prima facie case (including reliance on the principle that Cenvat credit need not be reversed where duty on the final product was accepted), waived the pre-deposit and stayed recovery of the disputed dues pending the appeal.

Liability to be fixed separately for each assessee - joint and several confirmation of duty and imposition of penalty - segregation of confirmed demand and penalty between co assessees - remand for fresh adjudication to determine individual liability - lifting the corporate veil

Joint and several confirmation of duty and imposition of penalty - liability to be fixed separately for each assessee - segregation of confirmed demand and penalty between co assessees - Confirmation of duty and imposition of penalty jointly and severally on two different manufacturing units without segregating the liability between them is not sustainable. - HELD THAT: - The Tribunal noted that the impugned order confirmed central excise duty, interest and imposed penalty jointly and severally upon M/s. Rimjhim Ispat Ltd. and M/s. Juhi Alloys Ltd. without allocating the amount of duty or penalty to each entity. Relying upon earlier Tribunal precedents and subsequent affirmance by the High Court, the Tribunal held that demands and penalties must be fixed separately for each assessee and a common order confirming joint demands against distinct legal entities cannot be upheld. The decision distinguished authorities relied upon by Revenue concerning related persons and lifting the veil, observing that those precedents do not authorize confirmation of joint demands against two different legal entities where one manufactured billets and the other manufactured flats; rather, the Revenue must, on the evidence, confirm demands against the appropriate entity for the goods attributed to it. The Tribunal therefore set aside the impugned order on this ground without deciding the merits of the duty liability. [Paras 3, 5, 6]

Impugned order confirmed jointly and severally set aside; joint confirmation of duty and penalty against two different assessees without segregation held unsustainable.

Remand for fresh adjudication - fresh appreciation of evidence - cross-examination in de novo proceedings - Matter remanded to adjudicating authority for fresh decision to fix individual liabilities and permit full rehearing on merits, including evidence appreciation and cross examination. - HELD THAT: - The Tribunal ordered remand for fresh adjudication so that the adjudicating authority may determine and apportion liability against each individual assessee separately. The Tribunal clarified that it did not express any opinion on the merits and that both Revenue and assessee are entitled to raise all legal issues and seek fresh appreciation of the evidence, including a request for cross examination in the de novo proceedings. [Paras 2, 6]

Proceedings remitted for de novo adjudication to fix liability separately and to allow parties to raise all legal and evidentiary contentions, including cross examination.

Final Conclusion: Impugned order confirming duty, interest and penalty jointly and severally against M/s. Rimjhim Ispat Ltd. and M/s. Juhi Alloys Ltd. set aside; matter remanded for fresh adjudication to determine and apportion liability against each assessee separately, with liberty to re open evidence and seek cross examination; no decision on merits recorded.

Monetary limit for filing appeal to the Tribunal - maintainability of departmental appeal - application of Board instruction F. No. 390/Misc./163/2010-JC dated 17-8-2011

Monetary limit for filing appeal to the Tribunal - maintainability of departmental appeal - application of Board instruction F. No. 390/Misc./163/2010-JC dated 17-8-2011 - Whether the departmental appeal is maintainable where the amount involved is below the monetary limit prescribed by the Board and the appeal was filed after the instruction became effective. - HELD THAT: - The Tribunal noted that the Board had prescribed a monetary limit of Rs. 5 lakhs for filing departmental appeals to the Tribunal by instruction F. No. 390/Misc./163/2010-JC dated 17-8-2011, which was made applicable with effect from 1-9-2011. The amount involved in the present appeal was Rs. 3,92,334/-, which is below the prescribed Rs. 5 lakhs threshold. The appeal was filed on 2-9-2011, i.e., after the instruction's effective date. Applying the Board instruction to the facts, the Tribunal held that the departmental appeal was not maintainable and therefore had to be dismissed. [Paras 2]

The departmental appeal is not maintainable and is dismissed.

Final Conclusion: Appeal dismissed as not maintainable because the amount involved was below the Rs. 5 lakhs threshold prescribed by the Board instruction that was in force when the appeal was filed.

Inclusion of free packing material cost in assessable value - availability of credit of duty on packing material - assessable value

Inclusion of free packing material cost in assessable value - availability of credit of duty on packing material - Whether the cost of packing material supplied free of cost is to be included in the assessable value of goods manufactured by the respondents where the respondents have availed credit of duty paid on such packing material. - HELD THAT: - The Tribunal noted that the respondents themselves admitted that they were availing credit in respect of the duty paid on the packing material and also stated that the cost of packing material was already included in the assessable value of the goods cleared. In view of this admitted fact, the Tribunal held that the cost of packing material supplied free of cost must be included in the assessable value of the goods. Consequently, the Commissioner (Appeals) order was modified to reflect inclusion of the cost of packing material in the assessable value. [Paras 4, 5]

The impugned order is modified to direct inclusion of the cost of packing material in the assessable value of the goods manufactured by the respondents; appeal allowed accordingly.

Final Conclusion: The appeal was allowed by modifying the Commissioner (Appeals) order: since the respondents availed credit of duty paid on packing material and acknowledged inclusion of its cost, the cost of packing material supplied free must be included in the assessable value of the goods.

Cum-duty benefit - duty paid on scrap - job work - demand against principal for scrap cleared by job worker - Section 4(4)(d)(ii) of the Central Excise Act, 1944

Cum-duty benefit - duty paid on scrap - job work - Section 4(4)(d)(ii) of the Central Excise Act, 1944 - Availability of cum-duty benefit while computing duty liability in respect of duty paid on scrap cleared by a job worker when demand is made from the principal (respondent). - HELD THAT: - The Tribunal noted that the demand under challenge related to scrap cleared by the job worker but was raised against the respondent (the principal). Applying the provisions embodied in Section 4(4)(d)(ii) of the Central Excise Act, 1944, the Tribunal held that where the demand is made from the principal in respect of scrap cleared by the job worker, the duty paid on such scrap must be taken into account on a cum-duty basis while computing the duty liability. The Tribunal thereby upheld the Commissioner (Appeals) order allowing the cum-duty benefit and rejected the Revenue's contention that cum-duty benefit is not available because the scrap was generated on a job work basis. [Paras 4]

Benefit of cum-duty in computing duty liability is available in respect of duty paid on scrap cleared by the job worker where the demand is made from the principal; Revenue's appeal dismissed.

Final Conclusion: The appeal by the Revenue was dismissed; the Tribunal affirmed that cum-duty benefit under Section 4(4)(d)(ii) of the Central Excise Act, 1944 is available in computing duty liability for scrap cleared by a job worker when the demand is raised against the principal.

Modification of interlocutory order - conditional abeyance of proceedings pending appeal - remittal and security as condition for maintaining stay - power to regulate interim terms pending disposal of appeal

Modification of interlocutory order - conditional abeyance of proceedings pending appeal - remittal and security as condition for maintaining stay - Order of the learned Single Judge was modified to prescribe specific remittal amounts, a deadline for furnishing security for the balance, and to keep proceedings under the impugned orders in abeyance until disposal of the appeal. - HELD THAT: - The Court, having heard submissions including the appellant's contention that there was no chicken business during 2009-10 and that the amount directed earlier was substantial, exercised its power to alter the interim terms. Instead of the earlier arrangement, the Court directed that the appellant remit a specified portion of the amount in two instalments by fixed dates and furnish security for the remaining balance by the stipulated deadline. Upon compliance with these conditions the proceedings pursuant to the impugned orders will be kept in abeyance until the appeal is disposed of. The Court further provided that the appeal shall not be disposed of unless and until these conditions are complied with, thereby regulating the interim stay through remittal and security requirements.

Order modified to require remittance of specified sums by set dates and furnishing of security for the balance; proceedings under the impugned orders to be kept in abeyance pending disposal of the appeal, which shall not be disposed of until conditions are complied with.

Final Conclusion: The Single Judge's order was modified by directing payments in two instalments and security for the balance by specified dates; on compliance, proceedings under the impugned orders will remain in abeyance and the appeal is disposed of subject to those conditions.

Reassessment / reopening of assessment - reason to believe - limitation period for reassessment - repeal and savings - accrued or acquired right - procedural law versus substantive right - jurisdiction to reopen assessments

Repeal and savings - limitation period for reassessment - procedural law versus substantive right - Applicability of the limitation and reassessment machinery in the Gujarat Value Added Tax Act, 2003 to reassessment notices issued after repeal of the Gujarat Sales Tax Act, 1969 where no notice had been issued under the earlier Act. - HELD THAT: - The Court held that the successor statute (Gujarat VAT Act, 2003) substantially altered both the limitation regime and the reassessment machinery as compared to the repealed Gujarat Sales Tax Act, 1969: the graded eight year/ five year limitation scheme was replaced by a uniform five year outer limit and the terminal event was shifted from issuance of notice to passing of the final reassessment order. Changes to limitation are ordinarily procedural and apply retrospectively, but an exception exists where a cause has already become time barred under the earlier law. Here, however, no notice for reopening had been issued while the Sales Tax Act remained in force; therefore there was no accrued or acquired obligation or liability under the old Act. Relying on the purposive reading of the proviso to Section 100 (repeal and savings) and principles that a mere right to take advantage of a statute is not an accrued right, the Court concluded that matters where no reassessment notice had been issued prior to repeal must be governed by the VAT Act and its limitation and procedural framework.

Section 35 of the VAT Act governs reopening of assessments instituted after repeal; the VAT Act's five year rule and requirement to complete reassessment within that regime apply where no notice had been issued earlier.

Jurisdiction to reopen assessments - reason to believe - Validity of the reassessment notices issued after enactment of the VAT Act in the present matters where no final order was passed and the VAT Act's limitation would preclude completion. - HELD THAT: - Because the VAT Act applies and prescribes a five year outer limit measured to the passing of an order, and because in these cases no notice had been issued before repeal nor any final order passed within the five year window under the successor law, the authorities lacked jurisdiction to proceed with reassessment. The Court therefore did not find it necessary to examine the sufficiency of the reasons recorded for reopening in individual cases once jurisdictional invalidity under the VAT Act was established.

All reassessment notices issued in the group of petitions are invalid for want of jurisdiction and are quashed.

Final Conclusion: The writ petitions are allowed; insofar as no notices for reopening had been issued under the Gujarat Sales Tax Act before its repeal, reassessment must be governed by Section 35 of the Gujarat VAT Act, 2003, and the impugned notices issued after repeal are without jurisdiction and are quashed, with no stay granted on this judgment.