whether the contesting respondents herein, i.e. National Fertilizers Limited and Gas Authority of India Limited, are liable to pay external development charges to the appellant— Municipal Council as per its demand? = the contesting respondents are not liable to pay any amount in the form of external development fee as demanded by the appellants.

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No(s). 2511/2011
THE MUNICIPAL COUNCIL, RAGHOGARH & ANR. …Appellant(s)
 VERSUS
NATIONAL FERTILIZER LTD. & ORS. …Respondent(s)
WITH
Civil Appeal No. 2512/2011
THE MUNICIPAL COUNCIL, RAGHOGARH & ANR. …Appellant(s)
 VERSUS
GAS AUTHORITY OF INDIA LIMITED & ORS. …Respondent(s)
JUDGMENT
N.V. RAMANA, J.
1. These two Appeals arise out of a common Judgment
2
passed on 3rd August, 2007 in First Appeal Nos.1 of 1996 and 175
of 1995, respectively, by the High Court of Madhya Pradesh, Bench
at Gwalior.
2. The short question that arises for our consideration in
these appeals is whether the contesting respondents herein, i.e.
National Fertilizers Limited and Gas Authority of India Limited, are
liable to pay external development charges to the appellant—
Municipal Council as per its demand?
3. Both the contesting respondents in these appeals were
allotted forest lands within the municipal limits of the appellant
Council. Subsequently, the respondents were served with a notice
calling upon them to deposit external development charges @
Rs.5/- per sq. meter in consonance with Government of Madhya
Pradesh, Housing and Environment Department, Notification No.
F.3-39/32/85, dated 28-11-1985. Raising objections, respondents
challenged the notices by filing Civil Suits before the District Judge,
Guna, Madhya Pradesh contending that they are Central
Government entities and would not come under the purview of the
said Notification and hence sought declaration and permanent
injunction restraining the appellant from demanding external
3
development fee from them.
4. The District Judge, Guna by separate judgments dated
11th October, 1995 decreed the Suits in favour of respondents and
declared that the defendants (appellant and proforma respondents
herein) jointly or severally have no right to recover amount by name
of external development fee and no amount shall be recovered from
the plaintiffs (respondents herein) in the form of external
development fee.
5. Against the said judgment of the District Judge, the
appellant moved the High Court by way of First Appeals challenging
the decree that the Suit has been filed before expiry of period of
notice under Section 80, CPC and no Suit is maintainable against
the Municipal Council without notice under Section 319 of the
Municipalities Act. The other stand taken by the appellant was that
since the plaintiffs are avoiding recovery of external development
fee, therefore, without payment of ad valorem court fee suit ought to
have been dismissed or the trial Court should have rejected the
plaint for insufficient payment of court fee.
6. The Division Bench of the High Court by judgment dated
4
12th May, 2005 allowed the First Appeals and set aside the decree
passed by the trial Court. The High Court, however, without giving
its opinion on the merits, held that both the Suits have not been
properly valued and notice issued was not one under Section 80,
CPC and Suits as filed were not maintainable. In the absence of
notice under Section 319 of the Madhya Pradesh Municipalities Act,
Suit against Municipal Council is not maintainable.
7. The contesting respondents herein challenged aforesaid
judgment of the High Court in Civil Appeal Nos. 3502 and 3503 of
2006 before this Court. By order dated 21st November, 2006 this
Court opined that having regard to the fact that the State of M.P.
did not prefer any appeal against the judgment and decree passed
by the learned trial Judge, the Division Bench of the High Court
went wrong in holding that the suit was barred under Section 80,
CPC. So far as the non-maintainability of the suit for want of notice
under Section 319 of the M.P. Municipalities Act is concerned,
neither any such plea was taken in the written statement nor any
issue was raised before the trial Court by the Municipal Council.
Therefore, it was held that the Division Bench of the High Court
was wrong in holding that the Suit was not maintainable. This
Court, accordingly, set aside the judgment passed by the High
5
Court and remitted the matter back to the High Court for
consideration of the first appeals on merit.
8. The High Court, after considering the matter on merits,
by the judgment impugned herein, formed the opinion that the trial
Court did not commit any error in declaring that the appellant
Municipal Council had no authority under law to charge external
development cost and thereby affirmed the judgment of the trial
Court and dismissed the appeals of the Municipal Council.
Aggrieved thereby, the said Municipal Council is in appeal before
us.
9. The case put forward on behalf of the appellant Municipal
Council is that it is a statutory body providing various amenities
and necessities to the general public residing in its area limits.
Relying on Order No.F./3-39/32/85 dated 28-11-1983 of Housing
and Environment Department, Government of Madhya Pradesh, it
is stated that the areas where there is a Municipal Committee or
Municipal Corporation, the internal development work of colonies
by House Construction Societies and individual persons will be
done in supervision of respective Municipal Committee or Municipal
Corporation. For that all the activities pertaining to maintenance,
6
civil amenities, development work and construction require heavy
expenditure. About Rs.5 lakhs per month is the electricity bill to
maintain the streetlights and to run pump houses. Nearly Rs.25
lakhs per annum are the vehicle maintenance charges, Rs.50 lakhs
for supply of water and pipeline maintenance and about Rs.25
lakhs for sanitation and Rs.2 crores per year is required for
maintenance, construction and development of roads. In view
thereof, in accordance with the prevailing rules, the externational
development fee @ Rs.5/- per. Sq.m. has been legally charged on
the contesting respondents and they are liable to make payment.
But, unfortunately the trial Court committed legal error and
declared that the defendants (appellant and proforma respondents
herein) jointly or severally have no right to recover amount by name
of external development fee from the plaintiffs (respondents herein)
and the same view has been affirmed by the High Court. The entire
development activity in the Municipality, Rahograh has come to
standstill and it is therefore necessary for this Court to set aside the
impugned judgment.
10. On behalf of contesting respondents, it is contended that
the contesting respondents are not private entities, nor colonizers.
The ownership of the institutions lies with the Government of India
7
in whose control the day to day activities of the institutions are run.
The institutions being totally secured, no outsider can enter the
Company premises without prior permission. As regards the
maintenance, cleanliness, electricity, roads and safeguarding
environment in the entire area is being done by the institutions and
therefore they are not binding on the demands of Municipal Council
for making payment of external development charges. The Courts
below have thoroughly examined the issue in clear legal view and
only thereafter rendered the judgment in their favour and therefore
there is no occasion for this Court to exercise the power under
Article 136 of the Constitution to interfere in these appeals.
11. Having heard learned counsel on either side, we have also
given our thoughtful consideration to various Government of
Madhya Pradesh Orders including the first and foremost Order on
the issue in question viz., No. 2681/1677/32, dated 6th July, 1978
for levying internal development charges. The subsequent Order No.
2997/C.R.129/32/Bhopal, dated 27th July, 1978 provides certain
relaxations regarding the mode of payment of the amount required
to be deposited under original order dated 6th July, 1978. The next
one is the Order No. F.3-39/32/85 dated 28th November, 1983 on
levying external development fee @ Rs.5/- per sq. mtr.
8
12. It is clearly noticeable from the aforementioned
Government Orders that they are meant for housing construction
societies, colonizers and individual persons where the internal
developmental works of the colonies are done by the respective
house construction society, colonizers or individual persons. In the
same way, if any colonizer, house construction society or individual
person constructs a colony under the supervision of Municipal
Committee or Municipal Corporation, as the case may be, Rs.5/-
per sq. mtr. towards external development charges are applicable.
While so, in the case on hand, the contesting respondents are
neither colonizers nor house construction societies or individuals.
The dwelling units developed by them are for their employees only
and not meant for sale or for letting out on rent. Apparently, the
construction of dwelling units and the residential areas developed
by the contesting respondents are done by the contesting
respondents i.e. Government entities being Public Sector
Undertakings with the investment of Central Government.
13. For all the aforementioned reasons we do not see any
error in the impugned judgment. In our opinion, the trial Court as
well as the High Court considered all the relevant issues in their
9
true spirit and came to the right conclusion that the contesting
respondents are not liable to pay any amount in the form of
external development fee as demanded by the appellants. The
appeals fail and therefore stand dismissed devoid of merit without
any order as to costs.
...................................J.
 (N.V. RAMANA)
 ...................................J.
 (S. ABDUL NAZEER)
NEW DELHI,
JANUARY 30, 2018.

accident claim = Insurance law - corporate laws- only issue which was raised by the insurer was in regard to the award of future prospects to the extent of 30 per cent. =Since the deceased was 42 years of age, an addition of 25% on the ground of future prospects would be warranted instead of 30% computed by the Tribunal.- The Tribunal has held that the annual income of the deceased (on the basis of the income tax returns for 2010-11, 2011-12 and 2012-13) would be Rs 1,81,500. Adding a component of 25% for future prospects, the income would stand at Rs 2,26,875. Deducting an amount of one fourth towards personal expenses, the loss of dependency per annum works out to Rs 1,70,156. Applying a multiplier of 14, the total loss of dependency would work out to Rs 23,82,187. The Tribunal has awarded a sum of Rs 3,14,335 towards medical expenses. An addition of Rs 70,000 would be required to be made in terms of the decision in Pranay Sethi (supra) on account of the conventional heads of loss of estate (Rs 15,000), loss of consortium (Rs 40,000) and funeral expenses (Rs 15,000). Hence, the total compensation is quantified at Rs 27,66,522 on which the claimants would be entitled to interest @ 9% p.a. from the date of the filing of the claim petition. The apportionment shall be carried out in terms of the award of the Tribunal. We order accordingly.

1

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO 000767 OF 2018
(Arising out of SLP (C) No.23086 of 2016)
RELIANCE GENERAL INSURANCE COMPANY LTD ..Appellant
VERSUS
SHALU SHARMA AND ORS ..Respondents
J U D G M E N T
Dr D Y CHANDRACHUD, J
1 The present appeal arises from the judgment of a Single Judge of the
Delhi High Court in an appeal against an award of the Motor Accident Claims
Tribunal (MACT).
2 Narinder Sharma died in an accident which occurred on 14 September
2013. The accident involved a motor vehicle which was insured against third
party risks by the appellant. The dependents filed a claim for compensation
before the MACT. The Tribunal held that the accident was caused due to the
negligence of the driver of the offending vehicle. Compensation of Rs 30,26,810
REPORTABLE
2
was awarded together with interest at 9 per cent per annum. The Tribunal
factored in a component of 30 per cent towards the loss of future prospects in
assessing the compensation.
3 The High Court has observed that the only issue which was raised by the
insurer was in regard to the award of future prospects to the extent of 30 per
cent. The deceased was conducting his own business in the name and style of
M/s Mahak Cable Networks at East Punjabi Bagh, New Delhi. He was 42 years
old on the date of the accident. According to the appellant, the increase in his
gross total income as shown in the income tax returns for 2010-11, 2011-12
and 2012-13 would not justify the award of future prospects, or at least to that
extent. The High Court negatived the submission of the insurer and held that
having due regard to the progressive increase in the income of the deceased,
the award of future prospects by the Tribunal could not be faulted.
4 The judgment of a Constitution Bench of this Court in National
Insurance Company Limited v Pranay Sethi1 settles the issue. The deceased
was self-employed. In such a case, future prospects cannot be denied. The
grant must be in accordance with the following principle set down in the
judgment:
“(iv) In case the deceased was self-employed or on a fixed salary,
an addition of 40% of the established income should be the warrant
where the deceased was below the age of 40 years. An addition of

1
(2017) 13 SCALE 12
3
25% where the deceased was between the age of 40 to 50 years
and 10% where the deceased was between the age of 50 to 60
years should be regarded as the necessary method of computation.
The established income means the income minus the tax
component.”
Since the deceased was 42 years of age, an addition of 25% on the ground of
future prospects would be warranted instead of 30% computed by the Tribunal.
5 The Tribunal has held that the annual income of the deceased (on the
basis of the income tax returns for 2010-11, 2011-12 and 2012-13) would be
Rs 1,81,500. Adding a component of 25% for future prospects, the income
would stand at Rs 2,26,875. Deducting an amount of one fourth towards
personal expenses, the loss of dependency per annum works out to Rs
1,70,156. Applying a multiplier of 14, the total loss of dependency would work
out to Rs 23,82,187. The Tribunal has awarded a sum of Rs 3,14,335 towards
medical expenses. An addition of Rs 70,000 would be required to be made in
terms of the decision in Pranay Sethi (supra) on account of the conventional
heads of loss of estate (Rs 15,000), loss of consortium (Rs 40,000) and funeral
expenses (Rs 15,000). Hence, the total compensation is quantified at
Rs 27,66,522 on which the claimants would be entitled to interest @ 9% p.a.
from the date of the filing of the claim petition. The apportionment shall be
carried out in terms of the award of the Tribunal. We order accordingly.
4
6 When the Special Leave Petition was entertained by this Court, the
following order was passed on 12 August 2016:
“Issue notice.
Since the objection in this special leave petition is mainly to
enhancement of the income of the deceased by 30% as prospective
earning capacity, the petitioner shall deposit 75% of the awarded
amount along with interest accrued thereupon before the Tribunal,
within six weeks.
If such deposit is made within the stipulated time, execution
proceedings against the petitioner shall remain stayed.
The amount so deposited, shall be released to the respondent
forthwith.”
The appellant shall deposit the balance computed in terms of the present
judgment within a period of eight weeks before the Tribunal which shall be
disbursed to the claimants upon due verification. If the amount withdrawn by the
claimants in terms of the order of this Court dated 12 August 2016 exceeds the
amount to which they are entitled under the present judgment, no recoveries shall
be made. The appeal is accordingly disposed of. There shall be no order as to
costs.
...........................................CJI
 [DIPAK MISRA]
 ...........................................J
 [A M KHANWILKAR]
 ...........................................J
 [Dr D Y CHANDRACHUD]
New Delhi;
February 02, 2018

U.P. Consolidation of Holdings Act - After Teja Singh died, his name was substituted by Appellant Harbhajan Kaur (since deceased) by the Supervisor Qanoongo since he found her to be in possession of the land - with out publicity - challenged - The High Court held that though Para 423 of the Land Records Manual authorizes the Supervisor Qanoongo to make entry of possession in remarks column but it shall be done after full publicity about his visit. In this case, neither publicity was done nor notice was given to the legal heirs of Teja Singh and, therefore, both the Settlement Officer and the Deputy Director, Consolidation were justified in quashing the entries made in favour of the present appellants - We are in agreement with the aforesaid findings to the extent that Supervisor Qanoongo could not have made entries in favour of the appellants without giving public notice and without giving notice to the legal heirs of Teja Singh. The dispute is as to which of the parties is in possession of the land. The High Court erred in directing that the names of both the parties should be removed. This could not have been done. Therefore, the direction of the High Court that the entry of possession cannot continue in favour of either of the parties is set aside. The matter is remanded to the Supervisor Qanoongo, who after hearing both the sides, shall decide as to who is in legal possession of the land in dispute and thereafter make relevant entry in the revenue records.

1
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S). 1497 OF 2018
(@SLP (C) NO(S).5278 OF 2014)
Jagtar Singh & Ors. …. Appellant(s)
Versus
State of Uttarakhand & Ors. … Respondent(s)
J U D G M E N T
Deepak Gupta J.
1. Leave granted.
2. This appeal is directed against the judgment and order
dated 29.07.2013 passed in Writ Petition No. 3791 of 2001
whereby the writ petition filed by the petitioners was
dismissed.
2
3. The facts giving rise to this appeal are that the land,
which is the subject matter of dispute, was earlier shown in
possession of one Teja Singh and entry in this behalf was
reflected in Varg-4 of the revenue record. After Teja Singh
died, his name was substituted by Appellant Harbhajan Kaur
(since deceased) by the Supervisor Qanoongo since he found
her to be in possession of the land. Jagir Singh and Karnail
Singh, sons of Teja Singh, filed objections under the U.P.
Consolidation of Holdings Act claiming that after the death of
their father, they being the sons continued to be in possession
of the land and their name should have been recorded in the
revenue record. These objections were dismissed. However,
on appeal being filed by the sons, the Settlement Officer,
Consolidation set aside the order passed by the Consolidation
Officer and directed that the names of Jagir Singh and
Karnail Singh be recorded in the revenue records. Revision
filed before the Deputy Director of Consolidation was
dismissed and thereafter, the writ petition was filed.
3
4. The High Court held that though Para 423 of the Land
Records Manual authorizes the Supervisor Qanoongo to make
entry of possession in remarks column but it shall be done
after full publicity about his visit. In this case, neither
publicity was done nor notice was given to the legal heirs of
Teja Singh and, therefore, both the Settlement Officer and the
Deputy Director, Consolidation were justified in quashing the
entries made in favour of the present appellants. The High
Court went on to hold as follows:
“In the impugned orders passed by the S.O.C.
and D.D.C., so far as the finding that the
Supervisor Qanoongo has no right to correct the
entry in revenue record, which is already in
existence, is concerned, this finding is affirmed,
but so far as the direction given to enter the
names of Karnail Singh and Jagir Singh on the
land in dispute is concerned, the same is
quashed and it is held that the entry of
petitioners and the respondents cannot
continue in revenue record after consolidation
and it is directed that entry of Varg-4 be deleted
from the land in question of both the parties,
petitioners as well as the respondents.”
5. We are in agreement with the aforesaid findings to the
extent that Supervisor Qanoongo could not have made entries
in favour of the appellants without giving public notice and
4
without giving notice to the legal heirs of Teja Singh. The
dispute is as to which of the parties is in possession of the
land. The High Court erred in directing that the names of
both the parties should be removed. This could not have
been done. Therefore, the direction of the High Court that the
entry of possession cannot continue in favour of either of the
parties is set aside. The matter is remanded to the Supervisor
Qanoongo, who after hearing both the sides, shall decide as to
who is in legal possession of the land in dispute and
thereafter make relevant entry in the revenue records.
6. The appeal is disposed of in the above terms. Pending
applications, if any, shall also stand disposed of.
………………………..J.
(Madan B. Lokur)
…………………………J.
(Deepak Gupta)
New Delhi
February 02, 2018

rent control case - failed to prove the shop is in dilapidated condition - no eviction order = The appellant filed eviction petitions against the respondents before the Rent Controller, Bahadurgarh, under Section 13 of the Act on the ground that the shops which are built up on mud had become unsafe, inhabitable and were in dilapidated condition = the Rent Controller discussed the expert evidence led by both the parties and after detailed examination of both the reports, he formed an opinion that the appellant was not able to prove that the shops were in a dilapidated condition - do not find any merit in these appeals which are accordingly dismissed - However, if the condition of the premises, as of today, is dilapidated and the appellant is correct in his submission that the Chhajja of the premises had fallen down in the year 2012, it would be open to the appellant to file a fresh petition on the aforesaid ground as these events would furnish a fresh cause of action to the appellant..

1
NON REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 480 of 2018
SURINDER .....APPELLANT(S)
VERSUS
NAND LAL .....RESPONDENT(S)
W I T H
CIVIL APPEAL NO. 481 of 2018
A N D
CIVIL APPEAL NO. 482 of 2018
J U D G M E N T
A.K. SIKRI, J.
These matters were listed for hearing on January 18, 2019. The
counsel for the respondents did not appear though the matters were
passed over once and were called again for the second time. In these
circumstances, we heard the learned counsel appearing for the
appellant and reserved the judgment. However, in order to give an
2
opportunity, this Court granted one week’s time to the respondents to file
their written submissions. Even when more than one week has lapsed,
no written submissions have been filed by the respondents. In these
circumstances, we have ourselves perused the entire record while
considering the submissions of the appellant’s counsel.
2) The appellant herein is the owner of the premises situated in Main
Bazar, Old Najafgarh Road, Bahadurgarh, Haryana. In these premises
few shops were constructed in mid 1960s1
 by the father of the appellant
and one shop each was let out by the respondents in these appeals.
The premises are governed by the Haryana Urban (Control of Rent and
Eviction) Act, 1973 (hereinafter referred to as the ‘Act’) as per which
tenants can be evicted only on certain specified grounds. One of the
grounds for eviction is that the premises let out is in dilapidated condition
and cannot be repaired/reconstructed without evicting the tenant. The
appellant filed eviction petitions against the respondents before the Rent
Controller, Bahadurgarh, under Section 13 of the Act on the ground that
the shops which are built up on mud had become unsafe, inhabitable
and were in dilapidated condition. The Rent Controller was pleased to
dismiss the eviction petitions after recording a finding that tenanted
premises were not in a dilapidated condition. The appeal was preferred
by the appellant against the orders of the Rent Controller before the
1 Though respondents had disputed the year of construction and according to
them construction was carried out 30-40 years ago only.
3
Additional District Judge-cum-Appellate Authority under the Act. These
appeals were also dismissed. Thereafter, the appellant filed revision
petitions, which have also been dismissed by the High Court. Identical
orders are passed dismissing these revision petitions and the operative
portion of order dated July 09, 2015 passed by the High Court in the
revision petitions is as follows:
“In the present case, petitioner had sought ejectment of
respondent No.1 from the shop in question on the ground that
it had been rendered unfit and unsafe for human habitation.
In this regard, petitioner examined his expert. Respondent
No.1 also examined his expert to establish that the premises
in question was fit for human habitation. The Courts below
after going through the reports of the expert and the
photographs, placed on record, came to the conclusion that
the premises in question was fit for human habitation. In fact,
the shop in question had not been got repaired by the
petitioner.
In the facts and circumstances of the present case, no
ground for interference with the finding of fact arrived at by
the Courts below, is made out.”
3) The learned counsel for the appellant has made twofold submissions. In
the first place, it was argued that during the course of the trial, the
appellant had placed on record the report of an expert, viz., an Engineer
who was also examined as PW-3. He also filed an affidavit stating that
he had carried out physical inspection of the shop and gave a detailed
report dated March 10, 2006, which was exhibited as Exhibit P-2. The
condition mentioned by him finds mention at pages 29 and 30 in
paragraph 19 of the judgment dated April 30, 2010 of the trial court.
4
Relying on that report, learned counsel for the appellant argued that it
speaks volumes about the state of existing construction and clearly
shows that the shop in question is in a dilapidated condition. It states
that cracks have been developed in the superstructure walls, RCC slabs
of the stairs, roof projection. It also mentions that cement plaster has
been eroded at some places leaving the bricks in the walls as naked and
the naked walls have been eroded leaving their joints and coming out of
the superstructure walls due to sudden dampness, efflorescence in walls
caused by wash/waste water drains passing along with the rear walls of
the shop. It also states that the roof projection deflected and cracks
developed may cause heavy damage due to sudden collapse at any
time. It also states that floor level of the shop is lower than the existing
main road level, thus, attracting dampness from rain water and dry
weather flow. Learned counsel for the appellant submitted that, no
doubt, the respondents had also examined a retired Engineer as RW-4,
who had filed his affidavit and his report was accepted as R-1.
However, the report filed by RW-4 did not discuss the conditions of the
shops and it only mentioned about the photographs of the roof and
flooring which was taken with the help of a digital camera and the report
also mentioned about Chhajja in the front side stating it to be in a good
condition. He, thus, submitted that the findings of the courts below were
totally perverse which relied upon the report of RW-4 and ignored the
5
report of PW-3.
4) Second submission of the learned counsel for the appellant was that the
subsequent events which happened fortified the report of PW-3
inasmuch as in the year 2012, when the appeal of the appellant was
pending before the Additional District Judge-cum-Appellate Authority, the
Chhajja had fallen down. This event, according to him, proves that the
premises are in dilapidated condition and unsafe for habitation. He
submitted that even when this fact was brought to the notice of the
Appellate Authority as well as the High Court, these courts have not
taken note of this subsequent development, though they were supposed
to look into the same. On this ground also it was argued that the
findings of the courts below are perverse.
5) In his judgment dated April 30, 2010, the Rent Controller discussed the
expert evidence led by both the parties and after detailed examination of
both the reports, he formed an opinion that the appellant was not able to
prove that the shops were in a dilapidated condition. Discussion on this
aspect runs as follows:
“23. In the opinion of the court, the petitioners have not been
able to prove that the shop is in dilapidated condition. On
perusal of photographs Ex.R3, it is evident that the roof of the
shop has been consisting of wooden battons. It has come in
the cross-examination of PW2 Surender that ever since the
shop has been let out to the respondent, they have never
bothered to get the same repaired or white-washed. Their
own witness of petitioners PW4 Parveen Kumar has also
6
stated in the cross-examination that the shop of Nand Lal
from outside is in good condition. He also stated that
between his shop and the shop of Varinder no other shops is
there and the stairs of his shop are broken and had cracks but
the remaining shop is fine. PW3 Sunil stated in his cross
examination all the four shops where the construction at the
same time. Since PW4 Parveen stated in his
cross-examination that except four stairs his shop is fine and
that all the shops were constructions together, it is improbable
that one shop is about to fall being dilapidated and the other
shop is fine. Beside this, PW1 Sh.R.Punia has stated in his
cross-examination that he has not mentioned in the report the
size of the plaster which has eroded from the walls and at
what places.”
6) Thus, after examining the expert witnesses who are produced by both
sides, the Rent Controller returned the aforesaid findings, which findings
were approved by the Appellate Authority as well in its judgment dated
September 17, 2012. We find that the view taken was plausible view
which cannot be considered as perverse. The revisionary jurisdiction of
the High Court is limited and, therefore, it rightly observed that no
ground for interference with the finding of fact arrived at by the courts
below was made out.
7) Insofar as the contention of the appellant based on alleged subsequent
event is concerned, except arguing that it was taken before the appellate
court as well as the High Court, no material is produced to support this
submission. Grounds of appeal filed before the Appellate Authority or
the copy of the revision petition has not been placed on record.
Moreover, judgments of the Appellate Authority as well as the High Court
7
do not reflect that such a contention was raised before the said courts.
In the absence thereof, the alleged subsequent event cannot be taken
into consideration.
8) We, therefore, do not find any merit in these appeals which are
accordingly dismissed.
However, if the condition of the premises, as of today, is
dilapidated and the appellant is correct in his submission that the
Chhajja of the premises had fallen down in the year 2012, it would be
open to the appellant to file a fresh petition on the aforesaid ground as
these events would furnish a fresh cause of action to the appellant.
.............................................J.
(A.K. SIKRI)
.............................................J.
(ASHOK BHUSHAN)
NEW DELHI;
FEBRUARY 01, 2018.

corporate law - whether it can be treated as ‘input service’ - The assessee during the period from January, 2010 to June, 2010 availed Cenvat Credit of service tax paid on outward transportation of goods through a transport agency from their premises to the customer’s premises = Cenvat Credit is permissible in respect of ‘input service’ and the Circular relates to the unamended regime. Therefore, it cannot be applied after amendment in the definition of ‘input service’ which brought about a total change. Now, the definition of ‘place of removal’ and the conditions which are to be satisfied have to be in the context of ‘upto’ the place of removal. It is this amendment which has made the entire difference. That aspect is not dealt with in the said Board’s circular, nor it could be. = apex court held that Cenvat Credit on goods transport agency service availed for transport of goods from place of removal to buyer’s premises was not admissible to the respondent. Accordingly, this appeal is allowed, judgment of the High Court is set aside and the Order-in-Original dated August 22, 2011 of the Assessing Officer is restored.

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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 11261 OF 2016
COMMISSIONER OF CENTRAL EXCISE
SERVICE TAX .....APPELLANT(S)
VERSUS
ULTRA TECH CEMENT LTD. .....RESPONDENT(S)
J U D G M E N T
A.K. SIKRI, J.
The core issue involved in the present case is with regard to the
admissibility or otherwise of the Cenvat Credit on Goods Transport
Agency service availed for transport of goods from the place of removal
to buyer’s premises. This issue has arisen in the following factual
background:
The respondent M/s. Ultratech Cement Ltd. (hereinafter referred to
as the ‘assessee’) is involved in packing and clearing/forwarding of
cement classifiable under Chapter sub heading 25232910 of Central
Excise Tariff Act, 1985, with Central Excise Registration No.
AAACL6442LEM014. The assessee is also availing the benefit of
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Cenvat Credit facility under the Cenvat Credit Rules, 2004 (‘Rules, 2004’
for short). The assesseeherein gets finished goods (cement) from its
parent unit on stock transfer basis and sells the same in bulk form and
packed bags. The assessee during the period from January, 2010 to
June, 2010 availed Cenvat Credit of service tax paid on outward
transportation of goods through a transport agency from their premises
to the customer’s premises. According to the appellant/Revenue, the
transport agency service used by the assessee for transportation of their
final product from their premises to customers premises cannot be
considered to have been used directly or indirectly in relation to
clearance of goods from the factory viz., place of removal in terms of
Rule 2(l) of the Rules and as such cannot be considered as input service
to avail Cenvat credit.
Accordingly, the Office of the Commissioner of Central Excise:
Bangalore II Commissionerate issued show cause notice dated February
3, 2011 to the assessee inter alia stating that on scrutiny of ER-1 return
submitted by the assessee for the period January, 2010 to June, 2010, it
was noticed that the assessee have wrongly availed the Cenvat Credit of
Service Tax paid on outward transportation of goods from the factory to
the Customer’s premises, inasmuch as the Goods Transport Agency
Service used for the purpose of outward transportation of the goods
from factory to customer’s premises is not input service within the ambit
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of Rule 2(l)(ii) of the Rules, 2004. It was further mentioned that the total
Cenvat Credit claimed was in the sum of Rs. 25,66,131/- and the
assessee was called upon to show cause as to why the said amount be
not recovered and penalty be not imposed. The assessee submitted its
reply to the show cause notice contesting the position contained therein.
2) After hearing, the Adjudicating Authority passed Order-in-Original dated
August 22, 2011 holding that once the final products are cleared from
the factory premises, extending the credit beyond the point of clearance
of final product is not permissible under Cenvat Credit Rules and post
clearance use of services in transport of manufactured goods cannot be
input service for the manufacture of final product. Further, the
Adjudicating Authority held that CBEC vide its Circular No. 97/8/2007-ST
dated August 23, 2007 has clarified the definition of place of removal.
With respect to fulfillment of requirement of Circular dated August 23,
2007, it was held that the assessee has not produced any documentary
evidence to prove that conditions laid down vide Circular dated August
23, 2007 has been fulfilled. Accordingly, the Adjudicating Authority
passed the order as under:
“(i) Demanding the irregular Cenvat credit availed on
outward transportation of goods amounting to
Rs.25,66,131/- under Rule 14 of Cenvat Credit Rules, 2004
read with Section 11A of Central Excise Act, 1944;
(ii) Demanding interest under Rule 14 of Cenvat Credit
Rules, 2004 read with Section 11AB of Central Excise Act,
1944 read with Section 75 of the Finance Act, 1994;
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(iii) Did not order for initiation of action under Rule 15(1) of
Cenvat Credit Rules, 2004 read with Rule 25 of Central
Excise Rules, 2002;
(iv) Imposed penalty of Rs.25,66,131/- under Rule 15(3) of
Cenvat Credit Rules, 2004;
(v) Imposed penalty of Rs.1,00,000/- under Rule 25 of
Central Excise Rules, 2002.”
3) Aggrieved by the Order-in-Original No. 24/2011 dated August 22, 2011,
respondent/assessee preferred an appeal before Commissioner
(Appeals). The Commissioner (Appeals) vide Order-in-Appeal No.
57/2012-CE dated March 15, 2012 allowed the appeal and set aside the
Order-in-Original holding that assessee is eligible for availment of
service tax paid on GTA service on the outward freight from the factory
to the customers’ premises as per the Board’s Circular
97/8/2007-Service Tax dated August 23, 2007. It was now the turn of
the Revenue to feel aggrieved by the order. Accordingly, appeal was
filed before the Customs, Excise and Service Tax Appellate Tribunal
(CESTAT) by the Revenue which was rejected vide judgment dated May
1, 2015. Further appeal to the High Court preferred by the assessee
has met the same fate as the said appeal has been dismissed by the
High Court of Karnataka vide its judgment dated June 29, 2016, which is
the subject matter of the present appeal.
4) As mentioned above, the assessee is involved in packing and clearing of
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cement. It is supposed to pay the service tax on the aforesaid services.
At the same time, it is entitled to avail the benefit of Cenvat Credit in
respect of any input service tax paid. In the instant case, input service
tax was also paid on the outward transportation of the goods from
factory to the customer’s premises of which the assessee claimed the
credit. The question is as to whether it can be treated as ‘input service’.
5) ‘Input service’ is defined in Rule 2(l) of the Rules, 2004 which reads as
under:
“2(l) “input service” means any service:-
(i) Used by a provider of taxable service for providing an
output services; or
(ii) Used by the manufacturer, whether directly or
indirectly, in or in relation to the manufacture of final
products and clearance of final products upto the
place of removal and includes services used in
relation to setting up, modernization, renovation or
repairs of a factory, premises of provider of output
service or an office relating to such factory or
premises, advertisement or sales promotion, market
research, storage upto the place of removal,
procurement of inputs, activities relating to business,
such as accounting, auditing, financing recruitment
and quality control, coaching and training, computer
networking, credit rating, share registry, and security,
inward transportation of inputs or capital goods and
outward transportation upto the place of removal;”
6) It is an admitted position that the instant case does not fall in sub-clause
(i) and the issue is to be decided on the application of sub-clause (ii).
Reading of the aforesaid provision makes it clear that those services are
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included which are used by the manufacturer, whether directly or
indirectly, in or in relation to the manufacture of final products and
clearance of final products ‘upto the place of removal’.
7) It may be relevant to point out here that the original definition of ‘input
service’ contained in Rule 2(l) of the Rules, 2004 used the expression
‘from the place of removal’. As per the said definition, service used by
the manufacturer of clearance of final products ‘from the place of
removal’ to the warehouse or customer’s place etc., was exigible for
Cenvat Credit. This stands finally decided in Civil Appeal No. 11710 of
2016 (Commissioner of Central Excise Belgaum v. M/s.
Vasavadatta Cements Ltd.) vide judgment dated January 17, 2018.
However, vide amendment carried out in the aforesaid Rules in the year
2008, which became effective from March 1, 2008, the word ‘from’ is
replaced by the word ‘upto’. Thus, it is only ‘upto the place of removal’
that service is treated as input service. This amendment has changed
the entire scenario. The benefit which was admissible even beyond the
place of removal now gets terminated at the place of removal and doors
to the cenvat credit of input tax paid gets closed at that place. This
credit cannot travel therefrom. It becomes clear from the bare reading of
this amended Rule, which applies to the period in question that the
Goods Transport Agency service used for the purpose of outward
transportation of goods, i.e. from the factory to customer’s premises, is
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not covered within the ambit of Rule 2(l)(i) of Rules, 2004. Whereas the
word ‘from’ is the indicator of starting point, the expression ‘upto’
signifies the terminating point, putting an end to the transport journey.
We, therefore, find that the Adjudicating Authority was right in
interpreting Rule 2(l) in the following manner:
“… The input service has been defined to mean any service
used by the manufacturer whether directly or indirectly and
also includes, interalia, services used in relation to inward
transportation of inputs or export goods and outward
transportation upto the place of removal. The two clauses in
the definition of ‘input services’ take care to circumscribe
input credit by stating that service used in relation to the
clearance from the place of removal and service used for
outward transportation upto the place of removal are to be
treated as input service. The first clause does not mention
transport service in particular. The second clause restricts
transport service credit upto the place of removal. When
these two clauses are read together, it becomes clear that
transport services credit cannot go beyond transport upto
the place of removal. The two clauses, the one dealing with
general provision and other dealing with a specific item, are
not to be read disjunctively so as to bring about conflict to
defeat the laws’ scheme. The purpose of interpretation is to
find harmony and reconciliation among the various
provisions.
15. Credit availability is in regard to ‘inputs’. The credit
covers duty paid on input materials as well as tax paid on
services, used in or in relation to the manufacture of the
‘final product’. The final products, manufactured by the
assessee in their factory premises and once the final
products are fully manufactured and cleared from the factory
premises, the question of utilization of service does not arise
as such services cannot be considered as used in relation to
the manufacture of the final product. Therefore, extending
the credit beyond the point of removal of the final product on
payment of duty would be contrary to the scheme of Cenvat
Credit Rules. The main clause in the definition states that
the service in regard to which credit of tax is sought, should
be used in or in relation to clearance of the final products
from the place of removal. The definition of input services
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should be read as a whole and should not be fragmented in
order to avail ineligible credit. Once the clearances have
taken place, the question of granting input service stage
credit does not arise. Transportation is an entirely different
activity from manufacture and this position remains settled
by the judgment of Honorable Supreme Court in the cases
of Bombay Tyre International 1983 (14) ELT, Indian Oxygen
Ltd. 1988 (36) ELT 723 SC and Baroda Electric Meters 1997
(94) ELT 13 SC. The post removal transport of
manufactured goods is not an input for the manufacturer.
Similarly, in the case of M/s. Ultratech Cements Ltd. v. CCE,
Bhatnagar 2007 (6) STR 364 (Tri), it was held that after the
final products are cleared from the place of removal, there
will be no scope of subsequent use of service to be treated
as input. The above observations and views explain the
scope of relevant provisions clearly, correctly and in
accordance with the legal provisions.”
8) The aforesaid order of the Adjudicating Authority was upset by the
Commissioner (Appeals) principally on the ground that the Board in its
Circular dated August 23, 2007 had clarified the definition of ‘place of
removal’ and the three conditions contained therein stood satisfied
insofar as the case of the respondent is concerned, i.e. (i) regarding
ownership of the goods till the delivery of the goods at the purchaser’s
door step; (ii) seller bearing the risk of or loss or damage to the goods
during transit to the destination and; (iii) freight charges to be integral
part of the price of the goods. This approach of the Commissioner
(Appeals) has been approved by the CESTAT as well as by the High
Court. This was the main argument advanced by the learned counsel
for the respondent supporting the judgment of the High Court.
9) We are afraid that the aforesaid approach of the Courts below is clearly
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untenable for the following reasons:
10) In the first instance, it needs to be kept in mind that Board’s
Circular dated August 23, 2007 was issued in clarification of the
definition of ‘input service’ as existed on that date i.e. it related to
unamended definition. Relevant portion of the said circular is as under:
“ISSUE: Up to what stage a manufacturer/consignor can
take credit on the service tax paid on goods transport by
road?
COMMENTS: This issue has been examined in great detail
by the CESTAT in the case of M/s Gujarat Ambuja
Cements Ltd. vs CCE, Ludhiana [2007 (6) STR 249 Tri-D].
In this case, CESTAT has made the following
observations:-
“the post sale transport of manufactured goods is not an
input for the manufacturer/consignor. The two clauses in the
definition of ‘input services’ take care to circumscribe input
credit by stating that service used in relation to the clearance
from the place of removal and service used for outward
transportation upto the place of removal are to be treated as
input service. The first clause does not mention transport
service in particular. The second clause restricts transport
service credit upto the place of removal. When these two
clauses are read together, it becomes clear that transport
service credit cannot go beyond transport upto the place of
removal. The two clauses, the one dealing with general
provision and other dealing with a specific item, are not to be
read disjunctively so as to bring about conflict to defeat the
laws’ scheme. The purpose of interpretation is to find
harmony and reconciliation among the various provisions”.
Similarly, in the case of M/s Ultratech Cements Ltd vs CCE
Bhavnagar 2007-TOIL-429-CESTAT-AHM, it was held that
after the final products are cleared from the place of
removal, there will be no scope of subsequent use of service
to be treated as input. The above observations and views
explain the scope of the relevant provisions clearly, correctly
and in accordance with the legal provisions. In conclusion, a
manufacturer / consignor can take credit on the service tax
paid on outward transport of goods up to the place of
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removal and not beyond that.
8.2 In this connection, the phrase ‘place of removal’ needs
determination taking into account the facts of an individual
case and the applicable provisions. The phrase ‘place of
removal’ has not been defined in CENVAT Credit Rules. In
terms of sub-rule (t) of rule 2 of the said rules, if any words
or expressions are used in the CENVAT Credit Rules, 2004
and are not defined therein but are defined in the Central
Excise Act, 1944 or the Finance Act, 1994, they shall have
the same meaning for the CENVAT Credit Rules as
assigned to them in those Acts. The phrase ‘place of
removal’ is defined under section 4 of the Central Excise Act,
1944. It states that,-
“place of removal” means(i)
a factory or any other place or premises of
production or manufacture of the excisable goods ;
(ii) a warehouse or any other place or premises wherein
the excisable goods have been permitted to be stored
without payment of duty ;
(iii) a depot, premises of a consignment agent or any other
place or premises from where the excisable goods are to be
sold after their clearance from the factory;
from where such goods are removed.”
It is, therefore, clear that for a manufacturer /consignor,
the eligibility to avail credit of the service tax paid on the
transportation during removal of excisable goods
would depend upon the place of removal as per the
definition. In case of a factory gate sale, sale from a
non-duty paid warehouse, or from a duty paid depot (from
where the excisable goods are sold, after their clearance
from the factory), the determination of the ‘place of removal’
does not pose much problem. However, there may be
situations where the manufacturer /consignor may claim that
the sale has taken place at the destination point because in
terms of the sale contract /agreement (i) the ownership of
goods and the property in the goods remained with the
seller of the goods till the delivery of the goods in acceptable
condition to the purchaser at his door step; (ii) the seller
bore the risk of loss of or damage to the goods during transit
to the destination; and (iii) the freight charges were an
integral part of the price of goods. In such cases, the credit
of the service tax paid on the transportation up to such place
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of sale would be admissible if it can be established by the
claimant of such credit that the sale and the transfer of
property in goods (in terms of the definition as under section
2 of the Central Excise Act, 1944 as also in terms of the
provisions under the Sale of Goods Act, 1930) occurred at
the said place.”
11) As can be seen from the reading of the aforesaid portion of the
circular, the issue was examined after keeping in mind judgments of
CESTAT in Gujarat Ambuja Cement Ltd. and M/s. Ultratech Cement
Ltd. Those judgments, obviously, dealt with unamended Rule 2(l) of
Rules, 2004. The three conditions which were mentioned explaining the
‘place of removal’ as defined under Section 4 of the Act, there is no
quarrel upto this stage. However, the important aspect of the matter is
that Cenvat Credit is permissible in respect of ‘input service’ and the
Circular relates to the unamended regime. Therefore, it cannot be
applied after amendment in the definition of ‘input service’ which brought
about a total change. Now, the definition of ‘place of removal’ and the
conditions which are to be satisfied have to be in the context of ‘upto’ the
place of removal. It is this amendment which has made the entire
difference. That aspect is not dealt with in the said Board’s circular, nor
it could be.
12) Secondly, if such a circular is made applicable even in respect of
post amendment cases, it would be violative of Rule 2(l) of Rules, 2004
and such a situation cannot be countenanced.
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13) The upshot of the aforesaid discussion would be to hold that
Cenvat Credit on goods transport agency service availed for transport of
goods from place of removal to buyer’s premises was not admissible to
the respondent. Accordingly, this appeal is allowed, judgment of the
High Court is set aside and the Order-in-Original dated August 22, 2011
of the Assessing Officer is restored.
.............................................J.
(A.K. SIKRI)
.............................................J.
(ASHOK BHUSHAN)
NEW DELHI;
FEBRUARY 01, 2018.