TaxTMI Updates e-Newsletter
Jan 01,2025

Condonation of delay - proviso to Rule 23 of the Odisha Goods and Services Tax Rules - revocation of registration - consideration of revocation subject to deposit of tax, interest, late fee and penalty - interest of revenue

Condonation of delay - proviso to Rule 23 of the Odisha Goods and Services Tax Rules - Delay in invoking the proviso to Rule 23 of the OGST Rules was condoned - HELD THAT: - The Court, following the coordinate Bench decision in M/s. Mohanty Enterprises (reproduced in the order), held that the delay in invoking the proviso to Rule 23 is to be condoned. The petitioner's request for condonation was allowed in the exercise of the Court's discretion and for the purpose of enabling consideration of the petitioner's application for revocation of registration. [Paras 3]

Delay in invoking the proviso to Rule 23 is condoned and the petitioner is entitled to relief on that ground.

Revocation of registration - consideration of revocation subject to deposit of tax, interest, late fee and penalty - interest of revenue - Petitioner's application for revocation of registration to be considered subject to payment and compliance - HELD THAT: - The Court directed that, in the interest of revenue, the petitioner's application for revocation of registration shall be considered in accordance with law provided the petitioner deposits all taxes, interest, late fee, penalty and complies with other formalities. The order places a conditional obligation on the petitioner to make requisite payments and fulfill procedural requirements before departmental acceptance of returns or revocation is processed. [Paras 3, 4]

The revocation application shall be considered on merits by the department upon the petitioner's compliance with payment of dues and other formalities.

Final Conclusion: Writ petition disposed of by condoning the delay and directing the department to consider the petitioner's application for revocation of registration in accordance with law, subject to deposit of all taxes, interest, late fee, penalty and compliance with other formalities.

Cancellation of GST registration - condonation of delay in invoking proviso to Rule 23 of the Odisha Goods and Services Tax Rules - revocation of cancellation subject to deposit of taxes, interest, late fee and penalty

Condonation of delay in invoking proviso to Rule 23 of the Odisha Goods and Services Tax Rules - revocation of cancellation subject to deposit of taxes, interest, late fee and penalty - cancellation of GST registration - Petition for condonation of delay in invoking the proviso to Rule 23 and direction to consider application for revocation of GST registration cancellation on deposit and compliance. - HELD THAT: - The High Court, following the coordinate Bench decision in M/s. Mohanty Enterprises, condoned the delay in invoking the proviso to Rule 23 of the OGST Rules and directed that the petitioner's application for revocation of cancellation of GST registration be considered. The court conditioned the relief on the petitioner depositing all taxes, interest, late fee, penalty and complying with other formalities; the revocation application is to be considered in accordance with law. The order was passed in the interest of revenue and disposes of the petition. [Paras 3, 4]

Delay condoned and direction issued to consider revocation application upon deposit of dues and compliance with formalities; writ petition disposed of.

Final Conclusion: Delay in invoking the proviso to Rule 23 OGST Rules is condoned and the petitioner is permitted to have his revocation application considered by the department subject to deposit of all dues and compliance with statutory formalities; writ petition disposed.

Stay of tax demand on deposit - deposit condition for grant of stay - effect of executive notification on appellate deposit requirement - application of bench directions in WP(C) no.42015 of 2023

Stay of tax demand on deposit - deposit condition for grant of stay - effect of executive notification on appellate deposit requirement - Modification of the deposit condition required for maintaining a stay of the first appellate authority's order - HELD THAT: - The High Court accepted the petitioner's submission that directions of the First Division Bench dated 16th February, 2024 (in the batch of writ petitions led by WP(C) no.42015 of 2023) required deposits to secure a stay, and that subsequent executive notifications by the Central revenue (dated 16th August, 2024) and a corresponding State notification (dated 29th October, 2024) reduced the deposit requirement. Applying those notifications, the Court directed that the deposit to maintain stay of the impugned first appellate order be fixed at 10% of the remaining disputed tax, and ordered compliance with that reduced deposit requirement in place of the earlier indicated percentages. [Paras 5, 6]

The petition is disposed of with the deposit for stay reduced to 10% of the remaining disputed tax and the impugned first appellate order to remain stayed on that basis.

Final Conclusion: Writ petition disposed of by directing compliance with the reduced deposit requirement (10% of remaining disputed tax) to secure stay of the first appellate authority's order, in light of the corresponding executive notifications and prior Bench directions.

Service of notice by electronic upload on tax portal - right to be heard / opportunity of personal hearing - remand for fresh adjudication - conditional interim deposit as pre-condition to recall - revival of assessment on non-compliance

Service of notice by electronic upload on tax portal - right to be heard / opportunity of personal hearing - remand for fresh adjudication - Validity of the assessment proceedings and entitlement to fresh adjudication where show cause notices and assessment order were uploaded on the GST Portal and the assessee did not receive personal service. - HELD THAT: - The Court found that the show cause notices and the impugned assessment order were uploaded under the "Additional Notices and Orders" tab on the GST Portal and were not served on the petitioner by tender or RPAD, resulting in the petitioner being unaware of the initiated proceedings and unable to participate. In these circumstances the Court set aside the impugned order and remanded the matter to the adjudicating authority for fresh consideration, treating the impugned order as a show cause notice once conditions (including deposit) are met. The Court proceeded on the basis that natural justice requires affording the petitioner an opportunity to file objections and be heard before final adjudication on the discrepancies pleaded to exist between GSTR-2A and GSTR-3B. [Paras 4, 5, 7]

Impugned order set aside and matter remanded for fresh adjudication after treating the assessment order as a show cause notice, subject to compliance with the conditions ordered.

Conditional interim deposit as pre-condition to recall - revival of assessment on non-compliance - Conditions for remand: requirement of deposit and consequences of non-compliance. - HELD THAT: - The Court directed that the petitioner deposit 25% of the disputed tax within two weeks as a condition precedent to treating the impugned order as a show cause notice and to secure the remedy of fresh adjudication. On payment and on filing objections within four weeks, the adjudicating authority shall consider the objections and pass orders after affording a reasonable opportunity of hearing. The Court further directed that failure to pay the deposit within two weeks or failure to file objections within four weeks would result in revival of the impugned assessment order. [Paras 6, 7]

Petitioner to deposit 25% of disputed tax and file objections within stipulated periods; non-compliance will revive the impugned assessment.

Final Conclusion: Writ petition allowed in part: impugned assessment order dated 27.04.2024 set aside and remanded for fresh adjudication on the conditions that the petitioner deposits 25% of the disputed tax within two weeks and files objections within four weeks; on compliance the authority shall decide after hearing, and on non-compliance the assessment shall revive; no order as to costs.

Revocation of registration under Section 30(2) of the CGST Act, 2017 - reinstatement of GST registration on compliance with statutory requirements - requirement to furnish pending GST returns and deposit outstanding tax, interest and penalty - administrative reconsideration of revocation application by the Competent Authority within a stipulated timeline

Revocation of registration under Section 30(2) of the CGST Act, 2017 - requirement to furnish pending GST returns and deposit outstanding tax, interest and penalty - administrative reconsideration of revocation application by the Competent Authority within a stipulated timeline - Petitioner granted liberty to apply for revocation of the order of cancellation of GST registration and to seek revival of registration subject to compliance. - HELD THAT: - The High Court, on the parties' consensus and by following the order in WPMS No.2285 of 2024, permitted the petitioner to move an application under Section 30(2) of the CGST Act, 2017, within two weeks. The petitioner must, with that application, furnish all pending GST returns and deposit the outstanding dues of tax, interest and penalty. Upon receipt of such application and compliance, the Competent Authority is directed to consider the petitioner's application and pass an appropriate order in accordance with law within four weeks thereafter. The Court did not adjudicate the merits of the original cancellation but provided a procedural route for administrative reconsideration on compliance with the specified conditions. [Paras 8, 9]

Liberty granted to file revocation application under Section 30(2) with pending returns and payments; Competent Authority to decide within four weeks.

Final Conclusion: Writ petition disposed by permitting the petitioner to apply for revocation of the cancellation order on furnishing pending returns and depositing outstanding dues; the Competent Authority to consider and decide the application within the stipulated timeframe.

Negative blocking of the Electronic Credit Ledger - emergent power to temporarily withhold input tax credit under Rule 86A - temporary nature and oneyear operative limit of an order under Rule 86A - distinction between blocking of ITC and recovery proceedings under Sections 73/74 (assessment) and provisional attachment under Section 83 - quashing of orders which disallow debit in excess of ITC available in the ECL

Negative blocking of the Electronic Credit Ledger - emergent power to temporarily withhold input tax credit under Rule 86A - quashing of orders which disallow debit in excess of ITC available in the ECL - Lawfulness of negative blocking of the petitioner's Electronic Credit Ledger - HELD THAT: - The Court, relying on the reasoning in Best Crop Science Pvt. Ltd. (as extracted in the judgment), held that Rule 86A is an emergent provision permitting temporary withholding of utilisation of ITC where the authority has reasons to believe the credit was fraudulently availed or is ineligible. An order under Rule 86A is temporary, may operate for a maximum of one year and does not itself constitute a recovery order; determination of any wrongly availed ITC is to be proceeded with under Sections 73/74 and, if necessary, provisional measures under Section 83. An order which effects a "negative blocking" - i.e., disallowing debit from the ECL in excess of the ITC available at the time the order is passed so as to require the taxpayer to replenish the ECL - impermissibly converts Rule 86A into a mechanism of recovery and larger cash outflow for the taxpayer. Applying that principle to the facts before it, the Court found the negative blocking unsustainable and set aside the action of negative blocking, granting consequential reliefs to the petitioner. [Paras 4, 5, 6]

The action of negative blocking on the Electronic Credit Ledger is quashed and set aside; the writ petition is partly allowed and the petitioner is entitled to consequential reliefs.

Final Conclusion: The writ petition is partly allowed: the impugned negative blocking of the petitioner's Electronic Credit Ledger is quashed and set aside, with consequential reliefs granted, the Court applying the emergent and temporary character of Rule 86A and distinguishing blocking from recovery proceedings under the CGST scheme.

Validity of assessment orders without signature - Signed digital or manual signature requirement for orders - Section 73 of the CGST/SGST Acts - Effect of unsigned orders - cure by upload on common portal - Fresh opportunity of hearing on re-issuance of orders - Relating back of fresh orders to the date of original orders

Validity of assessment orders without signature - Effect of unsigned orders - cure by upload on common portal - Unsigned or unsigned-by-the-officer orders uploaded on the GST portal are invalid and cannot be treated as valid orders under the CGST/SGST Acts unless affixed with the digital or manual signature of the officer passing the order. - HELD THAT: - The Court agreed with the reasoning in the Division Bench decision of the Telangana High Court and with other coordinate decisions cited therein that omission of the officer's signature goes to the root of the validity of an order. The safeguards in the statutory scheme relied upon by the respondents (as considered in earlier authorities) do not cure the fundamental defect of an unsigned order; mere uploading on the common portal does not dispense with the requirement of a signature. For these reasons the impugned unsigned orders cannot be sustained and were quashed. [Paras 2, 3]

Impugned unsigned orders under Section 73 are quashed as invalid for want of the officer's digital or manual signature.

Fresh opportunity of hearing on re-issuance of orders - Signed digital or manual signature requirement for orders - Relating back of fresh orders to the date of original orders - Respondents are permitted to issue fresh orders after affixing a digital signature or serving a manually signed copy, but such fresh orders must be passed by the competent officer presently in office after affording a fresh opportunity of hearing; the fresh orders shall be deemed to relate back to the date of the original orders and shall not be open to challenge on limitation grounds. - HELD THAT: - The Court directed that, because several original orders were unsigned and therefore set aside, competent authorities may upload fresh orders with the required digital signature or serve manually signed copies. Recognising that officers may have changed since the original orders, the Court specified that the officer presently competent may pass fresh orders only after giving the petitioners a fresh hearing. The Court further held that fresh orders issued in compliance with this direction shall be deemed to relate back to the date of the original orders and shall not be questioned on the ground of having been issued beyond the period of limitation. Other contentions unrelated to the signature requirement were left open for determination by the authorities. [Paras 3]

Fresh signed orders may be issued after affording fresh hearing; such orders will relate back to the original order date and cannot be impugned as time-barred.

Final Conclusion: Writ petitions allowed: impugned unsigned orders under Section 73 set aside; respondents may pass fresh digitally or manually signed orders after affording fresh hearings, and such fresh orders shall be deemed to relate back to the dates of the original orders; other contentions left open.

Validity of show cause notice issued under Section 74 - inspection, search and seizure by a proper officer - borrowed satisfaction - use of evidence seized during invalid search - refund of pre-deposit paid under protest - release of seized materials

Inspection, search and seizure by a proper officer - validity of show cause notice issued under Section 74 - borrowed satisfaction - Whether a show cause notice under Section 74 issued by a proper officer is vitiated where the substantial part of investigation including inspection, search and seizure was carried out by an officer who was not the proper officer - HELD THAT: - The Court found that substantial part of the investigation, including inspection, search and seizure and recording of statements, was carried out by respondent no.2 who was not the proper officer under the CGST/KGST framework, and that respondent no.3 merely completed formalities before the show cause notice was issued. Relying on the statutory scheme in Chapters XIV and XV of the CGST Act (which confine powers of inspection, search, seizure and issuance of notices to a proper officer) the Court held that an investigation conducted by an officer without jurisdiction is to be regarded as void ab initio for the purposes of initiating proceedings under Section 74. Consequently a show cause notice issued by a proper officer based on the materials and satisfaction borrowed from an invalid investigation lacks the requisite independent satisfaction and is unlawful; the proper officer, on receiving a transferred file, must conduct or redress the investigation and arrive at an independent satisfaction before issuing a fresh notice under Section 74. [Paras 6, 8, 15]

Impugned show cause notice dated 11.04.2023 set aside insofar as it relates to the petitioner.

Refund of pre-deposit paid under protest - use of evidence seized during invalid search - Whether the sum deposited by the petitioner during the invalid investigation is liable to be refunded - HELD THAT: - Having held that the earlier investigation, search and seizure by an improper officer is void and that the show cause notice based on those materials is illegal, the Court concluded that the payment of the pre-deposit made under protest in the course of that invalid investigation must be refunded. The Court directed refund of the deposit to the petitioner within a specified period while reserving liberty to the authorities to proceed in accordance with law if they choose to re-investigate properly. [Paras 8, 15, 16]

Respondent directed to refund the sum deposited by the petitioner (Rs.50,00,000/-) within eight weeks.

Release of seized materials - inspection, search and seizure by a proper officer - Whether materials seized during the investigation by the improper officer are to be returned to the petitioner - HELD THAT: - Because the seizure and other investigatory acts were carried out substantially by an officer who was not empowered as a proper officer, the Court held that the consequential reliance on those seized materials for issuing the notice was impermissible. In consequence, the seized documents and other goods which were taken during the invalid investigation were ordered to be released to the petitioner, subject to the respondents' liberty to act afresh in accordance with law. [Paras 8, 15, 16]

Seized materials to be released to the petitioner within eight weeks.

Restoration of GST registration - Prayer for restoration of GST registration - HELD THAT: - The petitioner withdrew the specific prayer for restoration of GST registration and sought liberty to approach the appropriate authority or to file a fresh petition, a course to which the respondents had no objection. The Court recorded the withdrawal and dismissed that part of the writ petition while preserving the petitioner's liberty to seek restoration through proper channels. [Paras 3]

Prayer for restoration of GST registration dismissed with liberty to the petitioner to approach the competent authority or file a fresh petition.

Final Conclusion: The writ petition is disposed of: the show cause notice issued under Section 74 is set aside as it was founded on investigation, search and seizure carried out by an officer who was not the proper officer; the pre-deposit paid by the petitioner is directed to be refunded and seized materials released within eight weeks; liberty reserved to the authorities to proceed afresh in accordance with law; the petitioner's prayer for restoration of GST registration is dismissed with liberty to seek appropriate remedy.

Refund of IGST - time-bound disposal of refund applications - personal hearing - reasoned order - transfer to appropriate authority - administrative jurisdiction over refund claims

Time-bound disposal of refund applications - personal hearing - reasoned order - Pending refund applications filed in shipping bills to be disposed of within a time-bound period with an opportunity of personal hearing and by passing a reasoned order. - HELD THAT: - The court directed respondents 2 and 3 to dispose of the petitioners' pending refund and interest applications within four weeks. The direction includes giving the petitioners a personal hearing and passing a reasoned order on the merits of each application. The respondents made a statement on record accepting this timeline, and the court implemented that undertaking as an imperative direction. The court's direction binds the competent authority to decide the applications on merits and to record reasons for its decision after hearing the petitioners. [Paras 3, 5]

Respondents 2 and 3 shall dispose of the petitioners' refund applications within four weeks after hearing the petitioners and passing reasoned orders.

Refund of IGST - transfer to appropriate authority - administrative jurisdiction over refund claims - Question of whether respondents 2 and 3 or the GST Authorities are the appropriate authority to sanction IGST refunds was left undecided and confined to administrative determination by respondents 2 and 3. - HELD THAT: - The court expressly declined to decide which authority is statutorily competent to sanction IGST refunds. Instead, it directed that if respondents 2 and 3, after hearing the petitioners and considering the circular relied upon by them, consider that the GST Authorities are the appropriate sanctioning authority, they shall transfer the applications to those GST Authorities. Any GST Authority receiving such transferred applications is directed to dispose of them within four weeks from receipt, after hearing the petitioners and passing reasoned orders. Thus, the determination of proper administrative jurisdiction was remitted to respondents 2 and 3 for fresh consideration and action consistent with the directions given. [Paras 3, 5, 6]

The court did not decide the appropriate authority; respondents 2 and 3 must, after hearing the petitioners, either decide the applications or transfer them to the GST Authorities, which must then decide them within four weeks.

Final Conclusion: The petition is disposed of by directing respondents 2 and 3 to dispose of the petitioners' refund and interest applications within four weeks after hearing the petitioners and passing reasoned orders; if respondents 2 and 3 consider GST Authorities to be the appropriate forum they shall transfer the applications, and the GST Authorities must then decide them within four weeks; the court refrained from deciding which authority is ultimately competent.

Show Cause Notice - admissibility of evidence - search and seizure - electronic evidence - certificate identifying document under Section 145(2) of the Central Goods and Services Tax Act, 2017 - preliminary challenge to statutory proceedings - judicial interference in ongoing adjudicatory process

Show Cause Notice - certificate identifying document under Section 145(2) of the Central Goods and Services Tax Act, 2017 - admissibility of evidence - judicial interference in ongoing adjudicatory process - Validity of the Show Cause Notice dated 31 May 2024, insofar as it is challenged for reliance on material obtained during search and for alleged non-compliance with the certificate requirement of Section 145(2). - HELD THAT: - The petitioner's contention that material extracted from electronic devices during search cannot be relied upon because the procedure under Section 145(2) was not complied with does not warrant pre-emptive judicial interdiction of the SCN proceedings. The Court observed that the petitioner remains free to raise the admissibility objection and other contentions during the course of the statutory proceedings initiated by the SCN. Given this availability of an adequate forum to ventilate the challenge to admissibility, the High Court declined to entertain a collateral attack on the validity of the SCN at the interlocutory stage. All substantive rights and contentions of the petitioner are preserved for determination in the pending proceedings.

Writ petition dismissed; no interim stay of SCN granted; petitioner's rights to challenge admissibility and other contentions in the statutory proceedings kept open.

Final Conclusion: The High Court declined to quash or stay the Show Cause Notice dated 31 May 2024 on a preliminary challenge of non-compliance with the certificate requirement under Section 145(2), dismissing the writ petition while leaving all substantive defenses and objections open to be raised in the course of the SCN proceedings.

Violation of principles of natural justice - amendment of GST registration on change of principal place of business - non-compliance with amendment procedure under Rule 21(A) of the Central Goods and Services Tax Rules, 2017 - cancellation of GST registration - parallel consideration of amendment application and show cause notice

Violation of principles of natural justice - amendment of GST registration on change of principal place of business - Validity of the order dated 12 September 2024 rejecting the petitioner's application for amendment prior to the expiry of time granted to furnish additional documents. - HELD THAT: - The record shows that after the petitioner filed an application for amendment consequent to change of principal place of business, the respondents issued a notice dated 04 September 2024 calling for additional documents and fixed 13 September 2024 as the last date for reply. The respondents, however, rejected the amendment application on 12 September 2024, i.e., before the petitioner could respond to the notice. The court found that passing the rejection order prior to expiry of the time granted to the petitioner resulted in denial of an opportunity to be heard and therefore constituted a violation of the principles of natural justice. On that ground the order dated 12 September 2024 cannot be sustained and was quashed and set aside. [Paras 4]

Order dated 12 September 2024 rejecting the amendment application quashed and set aside for violation of natural justice.

Parallel consideration of amendment application and show cause notice - cancellation of GST registration - non-compliance with amendment procedure under Rule 21(A) of the Central Goods and Services Tax Rules, 2017 - Direction for fresh consideration of the amendment application and the Show Cause Notice and the manner in which they are to be disposed of. - HELD THAT: - Having quashed the premature rejection, the court directed that the petitioner furnish the documents called for by the notice dated 04 September 2024. Thereafter, the respondents were directed to consider the application for amendment and the impugned Show Cause Notice in parallel and to dispose of both in accordance with law. The court preserved all parties' rights and contentions on the merits, thereby remitting the matters for fresh consideration without adjudicating the substantive merits of the amendment or the grounds for cancellation. [Paras 5, 6]

Petition allowed by quashing the rejection; petitioner to furnish required documents and the amendment application and Show Cause Notice to be considered and disposed of in parallel in accordance with law; merits kept open.

Final Conclusion: The writ petition is allowed: the order dated 12 September 2024 rejecting the amendment application is quashed for breach of natural justice; the petitioner shall furnish the documents called for, and the amendment application and the Show Cause Notice shall be considered and disposed of in parallel in accordance with law, with all rights on merits kept open.

Input tax credit - denial of input tax credit under Sub section (4) of Section 16 - effect of notification of Sub section (5) of Section 16 - remand for fresh consideration in light of subsequent notification - opportunity of hearing before passing fresh order

Input tax credit - denial of input tax credit under Sub section (4) of Section 16 - effect of notification of Sub section (5) of Section 16 - opportunity of hearing before passing fresh order - Ext.P1 insofar as it denied input tax credit to the petitioner on account of Sub section (4) of Section 16 is set aside and the matter is remitted for fresh consideration in light of Sub section (5) of Section 16. - HELD THAT: - The petitioner challenged denial of input tax credit for the financial year 2018 19 made by Ext.P1 on the basis of Sub section (4) of Section 16 of the CGST/SGST Acts. Learned counsel for the petitioner asserted that the subsequent notification of Sub section (5) of Section 16 alters the entitlement to credit. Having heard the parties and having regard to that assertion, the Court set aside Ext.P1 to the extent it denied the credit on the ground of Section 16(4) and directed the competent authority to reconsider the claim. The authority is required to take note of the provisions of Section 16(5), afford the petitioner an opportunity of hearing, and pass a fresh order. A time limit of three months from receipt of a certified copy of the judgment was imposed for this exercise.

Ext.P1 is quashed insofar as it denied input tax credit; matter remitted to the competent authority to decide afresh after considering Section 16(5) and after affording an opportunity of hearing within three months.

Final Conclusion: Writ petition allowed to the extent indicated; the impugned order denying input tax credit is set aside and the matter is remitted for fresh adjudication in accordance with Section 16(5) after hearing the petitioner, to be completed within three months of receipt of certified copy of this judgment.

Condonation of delay - revocation of cancellation of registration - abandonment of main relief - statutory remedy - condition of deposit of taxes, interest, late fee and penalty for restoration

Abandonment of main relief - statutory remedy - Petitioner permitted to abandon its primary prayer and pursue relief limited to revocation of the cancellation order. - HELD THAT: - The Court recorded that the petitioner had originally availed the statutory remedy against the cancellation order but now elected to give up its main prayer and seek only restoration of registration. The Court permitted abandonment of the principal relief and treated the petition as confined to the supplementary relief concerning the cancellation order. The Court acknowledged the availability of statutory remedies but exercised its discretion to allow the petitioner to restrict its challenge to the cancellation and to proceed on the narrower claim. [Paras 3]

Abandonment of the main prayer allowed; petition confined to challenge against the cancellation order.

Condonation of delay - revocation of cancellation of registration - condition of deposit of taxes, interest, late fee and penalty for restoration - Delay in invoking the proviso to Rule 23 OGST Rules is condoned and revocation of the cancellation order is directed subject to compliance with conditions similar to M/s. Mohanty Enterprises. - HELD THAT: - Relying on the coordinate Bench's order in M/s. Mohanty Enterprises (reproduced at paragraph 2 of that order), the Court condoned the delay in invoking the proviso to Rule 23 of the OGST Rules and directed that the petitioner's application for revocation of the cancellation will be considered provided the petitioner deposits all taxes, interest, late fee, penalty and complies with other formalities. Applying that principle, the Court held that upon the petitioner complying with those directions, it will be entitled to revocation of the cancellation order dated 10th March, 2023. The Court framed the relief in a manner protective of the revenue by conditioning restoration on payment and compliance. [Paras 4, 5]

Delay condoned and revocation of the cancellation order directed on compliance with payment of taxes, interest, late fee, penalty and other formalities.

Final Conclusion: Writ petition disposed of; petitioner allowed to abandon its main prayer and granted relief for revocation of the cancellation order dated 10th March, 2023 subject to deposit of taxes, interest, late fee, penalty and compliance with other formalities as directed.

Cancellation of GST registration - revocation of administrative order - maintainability of writ in presence of alternative remedy - direction to administrative authority to decide pending application with expedition and in accordance with law

Exemption from court fees - Exemption from court fees was allowed. - HELD THAT: - The Court recorded that exemption is allowed, subject to all just exceptions, and disposed of the connected miscellaneous applications accordingly. No further reasoning is recorded in the order beyond the grant of exemption and disposal of those applications. [Paras 1]

Exemption allowed and miscellaneous applications disposed of.

Cancellation of GST registration - revocation of administrative order - maintainability of writ in presence of alternative remedy - direction to administrative authority to decide pending application with expedition and in accordance with law - Writ petition not entertained because an application for revocation of the cancellation order was pending; direction issued to the competent authority to decide that application with expedition and in accordance with law. - HELD THAT: - The petitioner challenged the respondents' order cancelling its GST registration but had filed an application for revocation of that cancellation on 14 October 2014 which remains pending. The Court found no ground to entertain the writ petition while the statutory/administrative remedy is awaiting consideration. Accordingly, the writ petition was disposed of by directing the competent authority of the respondents to examine and dispose of the petitioner's revocation application with expedition and in accordance with law. [Paras 3, 4, 5]

Writ petition disposed of; competent authority directed to consider and decide the pending revocation application expeditiously and in accordance with law.

Final Conclusion: The Court allowed exemption from court fees, disposed of the miscellaneous applications, declined to entertain the writ petition in view of a pending application for revocation of the GST registration cancellation, and directed the competent authority to examine and dispose of that application with expedition and in accordance with law.

Input Tax Credit - limitation - quashing of adjudication order - writ jurisdiction as alternative remedy to appeal - rectification under departmental procedure - compliance with circular

Input Tax Credit - limitation - quashing of adjudication order - Impugned adjudication order dated 22nd April, 2024 rejecting the petitioner's claim of Input Tax Credit as barred by limitation was set aside and quashed. - HELD THAT: - The Court considered the petition filed under its writ jurisdiction in which the petitioner sought relief against the adjudication order denying ITC on the ground of limitation. Noting that the petitioner had not preferred an appeal but had approached the Court by way of writ petition, the High Court set aside and quashed the adjudication order dated 22nd April, 2024. The quashing was granted in the context that administrative remedial measures and procedures for rectification and restoration of claims had been instituted after the order was passed.

Adjudication order dated 22nd April, 2024 is set aside and quashed.

Compliance with circular - rectification under departmental procedure - writ jurisdiction as alternative remedy to appeal - Petitioner is required to comply with the departmental procedure and the Central Board's circular of 15th October, 2024 by applying for rectification; the writ petition is disposed of accordingly. - HELD THAT: - The Court observed that after the writ petition was presented, a circular dated 15th October, 2024 of the Central Board of Indirect Taxes and Customs and an ordinance notified on 29th October, 2024 provided for restoration/rectification procedures. Given that a departmental procedure has been formulated and time remains available to the petitioner to make the required application for rectification, the Court directed compliance with the circular and disposed of the petition rather than entertain final adjudication on merits. The direction effectively places the matter back before the revenue authorities to consider the petitioner's rectification application in accordance with the prescribed procedure.

Petitioner to apply for rectification in terms of the CBIC circular and departmental procedure; writ petition disposed of subject to such compliance.

Final Conclusion: The High Court quashed the adjudication order dated 22nd April, 2024 rejecting the claim of Input Tax Credit and directed the petitioner to seek rectification in accordance with the Central Board's circular and the departmental procedure, disposing of the writ petition accordingly.

Rectification of mistake apparent from the record - jurisdiction under Section 254(2) of the Income Tax Act - limitation for filing miscellaneous application under Section 254(2) - subsequent decision of higher court not a ground for review/rectification - comparative scope of review under Order XLVII Rule 1 CPC and Section 254(2)

Jurisdiction under Section 254(2) of the Income Tax Act - rectification of mistake apparent from the record - Whether the Tribunal could invoke Section 254(2) to set aside its earlier order in light of a subsequent Supreme Court decision - HELD THAT: - The Court held that Section 254(2) empowers the Tribunal to amend its order only to "rectify any mistake apparent from the record" and is akin to, but more restricted than, the Civil Court's review jurisdiction under Order XLVII, Rule 1 CPC. A decision of the Supreme Court rendered after the Tribunal's original order could not be treated as a mistake apparent on the face of the record because that decision did not exist when the Tribunal passed its order. Therefore the subsequent judgment could not justify invoking Section 254(2) to substitute the Tribunal's earlier decision. The Court applied the principle that change in law or a later coordinate/larger Bench decision is not by itself a ground for review/rectification, relying on the ratio in Beghar Foundation and subsequent pronouncements to that effect. [Paras 11, 12, 13, 14, 17]

Tribunal had no jurisdiction under Section 254(2) to set aside its earlier order on the ground of a subsequent Supreme Court decision; the Miscellaneous Applications could not be entertained on that basis.

Limitation for filing miscellaneous application under Section 254(2) - Whether the Miscellaneous Applications filed by the Revenue were time-barred under Section 254(2) - HELD THAT: - The Court noted that Section 254(2) prescribes a six months limitation period from the end of the month in which the Tribunal's order was passed for seeking amendment to rectify a mistake apparent from the record. The Revenue's Miscellaneous Applications were filed with a delay of 92 days beyond that prescribed period and no application for condonation of delay was made. The Tribunal therefore erred in entertaining and allowing the belated applications; there was no power to condone the statutory limitation in the absence of an application and justification. [Paras 15]

Miscellaneous Applications were barred by limitation under Section 254(2) and the Tribunal erred in allowing them.

Comparative scope of review under Order XLVII Rule 1 CPC and Section 254(2) - Whether the jurisdiction conferred by Section 254(2) is equivalent to civil review jurisdiction under Order XLVII, Rule 1 CPC - HELD THAT: - The Court observed that while Section 254(2) is akin to the review jurisdiction under Order XLVII, Rule 1 CPC in that it permits correction of mistakes apparent on the face of the record, a comparative reading shows the Tribunal's power under Section 254(2) is more restricted. This restricted scope limits the circumstances in which the Tribunal may amend its earlier order, reinforcing that subsequent changes in law do not amount to a mistake apparent from the record. [Paras 12, 16]

Section 254(2) confers a review-like power on the Tribunal but of narrower scope than Order XLVII, Rule 1 CPC.

Final Conclusion: The High Court allowed the petitions, holding that the Tribunal erred in exercising jurisdiction under Section 254(2) to reopen its earlier orders on the basis of a subsequent Supreme Court decision and in entertaining time barred miscellaneous applications; the Tribunal's order setting aside its earlier decision was set aside.

Dismissal for non-compliance of defects - restoration of appeal on curing defects - opportunity to cure procedural defects - suspension of penalty proceedings pending appellate disposal

Dismissal for non-compliance of defects - restoration of appeal on curing defects - opportunity to cure procedural defects - Order Ext.P7 setting aside the appeal for non-cure of defects was set aside and the appeal was directed to be restored on specified condition - HELD THAT: - The High Court, while not expressing any opinion on the merits of the appeal, found that the petitioner had not noticed the communication pointing out defects and sought a limited relief to cure those defects. In the exercise of writ jurisdiction the court set aside the impugned order dismissing the appeal for non-compliance and directed that if the petitioner cures the defects pointed out by the Appellate Authority within one week from receipt of a certified copy of the judgment, the appeal shall stand restored to the file and be disposed of on merits. The court made clear that failure to cure the defects within the stipulated period would result in the appeal standing dismissed as earlier directed by the Appellate Authority, and that the Appellate Authority remains free to decide the appeal in accordance with law after affording the petitioner an opportunity of hearing once defects are cured.

Ext.P7 set aside; appeal to be restored if defects are cured within one week and thereafter decided on merits; otherwise dismissal to stand.

Suspension of penalty proceedings pending appellate disposal - Proceedings for imposition of penalty (Ext.P8) were ordered to remain suspended pending disposal of the restored appeal subject to curing of defects - HELD THAT: - The court directed that the penalty proceedings shall remain suspended until the Appellate Authority disposes of the appeal, but only if the petitioner cures all defects within the time specified. This conditional suspension preserves the status quo to permit adjudication of the appeal on merits while making the suspension contingent on compliance with the court's direction to cure defects within the prescribed time.

Ext.P8 penalty proceedings suspended until the appeal is decided, provided the petitioner cures the defects within the time directed.

Final Conclusion: Writ petition allowed in part: impugned dismissal order set aside and conditional restoration of appeal ordered on curing defects within one week; penalty proceedings suspended pending disposal of the appeal if defects are so cured; no expression of opinion on the merits.

Opportunity of hearing - insufficient time to comply with notice under section 142(1) - minimum reasonable time of seven days for furnishing information - draft assessment vitiated for non-compliance with rules and Act - failure to consider objections under section 144C(2) before passing final order - Dispute Resolution Panel's quasi-judicial duty to provide hearing - remand for fresh consideration and communication of DRP order to Assessing Officer

Insufficient time to comply with notice under section 142(1) - minimum reasonable time of seven days for furnishing information - opportunity of hearing - draft assessment vitiated for non-compliance with rules and Act - Time afforded by the notices dated 24.09.2021 and 27.09.2021 was inadequate and the draft assessment passed on that basis is vitiated for want of a fair opportunity to furnish information and be heard. - HELD THAT: - The court found that the notice dated 24.09.2021 required extensive documents and certification to be furnished by 26.09.2021 and a subsequent notice dated 27.09.2021 required further material by 28.09.2021, leaving less than the minimum reasonable time to obtain and file the information. The petitioner had requested extension to 28.09.2021 as Saturdays and Sundays were non-working days. The High Court held that decision-making without allowing adequate time to file replies and supporting documents amounts to denial of opportunity of hearing and that the draft assessment prepared on that defective foundation is contrary to the requirements of the Rules and the Act. For these reasons the draft assessment and consequential proceedings could not be sustained. [Paras 8, 9, 10]

The notices did not afford sufficient time; the draft assessment premised on those notices is vitiated and cannot sustain the final order.

Failure to consider objections under section 144C(2) before passing final order - Dispute Resolution Panel's quasi-judicial duty to provide hearing - remand for fresh consideration and communication of DRP order to Assessing Officer - Final assessment order dated 30.11.2021 passed without awaiting DRP decision and without considering objections is unsustainable; objections filed on 01.11.2021 must be considered and the matter remanded to the DRP and Assessing Officer for fresh decision. - HELD THAT: - The petitioner filed objections under section 144C(2) to the draft assessment, but the DRP had not decided those objections and the Assessing Officer did not address them before passing the final order on 30.11.2021. The High Court emphasised that the DRP is a quasi-judicial authority entitled to afford hearing, and where objections are pending the Assessing Officer must act after receipt of the DRP's communication. Given the procedural infirmities, the Court set aside the final order, directed the authorities to deal with the objections submitted on 01.11.2021, required the DRP to provide an opportunity of hearing and to communicate its decision to the Assessing Officer, and mandated that a fresh order be passed accordingly within three months. [Paras 10, 11, 12]

The final assessment order is set aside; the objections are to be considered afresh, the DRP shall hear the petitioner and communicate its decision, and the Assessing Officer shall pass a fresh order within three months.

Final Conclusion: The final assessment order dated 30.11.2021 is quashed for procedural infirmity: inadequate time to comply with s.142(1) notices and premature finalisation without DRP consideration. The objections filed on 01.11.2021 are to be adjudicated, the DRP shall afford hearing and communicate its order to the Assessing Officer, who shall pass a fresh order within three months; remedy by appeal remains available thereafter.

Compulsory selection for scrutiny - random selection for scrutiny - principles of natural justice - requirement of personal hearing in online assessment proceedings - availability of statutory appellate remedy - extraordinary remedy under Article 226

Compulsory selection for scrutiny - random selection for scrutiny - Validity of selection of the petitioner's returns for scrutiny under CBDT guidelines and whether those guidelines preclude random selection by Assessing Officers. - HELD THAT: - The Court held that the CBDT guidelines placed reliance upon are rules for compulsory selection of certain categories of returns for scrutiny during the financial year 2021-22 and for conduct of assessment proceedings in such cases. Those guidelines identify categories that must be mandatorily taken up for scrutiny but do not operate as an exhaustive bar preventing Assessing Officers from making random selections of other returns for scrutiny. Consequently, selection of the petitioner's return for scrutiny could not be impugned solely on the basis that it did not fall within the mandatory categories enumerated in the guidelines. [Paras 2]

Guidelines for compulsory selection do not preclude Assessing Officers from random selection; selection for scrutiny was not invalid on that ground.

Principles of natural justice - requirement of personal hearing in online assessment proceedings - Whether there was a violation of principles of natural justice because no personal hearing was granted to the petitioner in the assessment proceedings conducted through the online system. - HELD THAT: - The Court noted that the online system for lodging replies contains a specific provision (a column) to request personal hearing. The petitioner, when uploading its response, did not tick the column requesting personal hearing; although a substantive reply was filed and considered by the Assessing Officer. In the absence of a positive request for personal hearing in the prescribed online form, there was no obligation on the Assessing Officer to grant a personal hearing. On these facts the Court found no infringement of the principles of natural justice requiring interference with the assessment orders. [Paras 3]

No violation of natural justice arose from the absence of an oral or personal hearing where no request for such hearing was made in the prescribed online manner and the reply was considered.

Availability of statutory appellate remedy - extraordinary remedy under Article 226 - Appropriateness of invoking writ jurisdiction under Article 226 in the presence of statutory appellate remedies under the Income Tax Act. - HELD THAT: - The Court observed that statutory appellate remedies are available under the Income Tax Act and, in view of the findings on scrutiny selection and natural justice, there was no reason to invoke the extraordinary writ jurisdiction. The Court therefore declined to exercise Article 226 jurisdiction to interfere with the assessment orders and dismissed the petition, while leaving open the statutory remedy of appeal subject to usual exceptions including limitation. [Paras 1, 4, 5]

Writ under Article 226 not warranted where statutory appellate remedy exists and no illegality was shown; petition dismissed with liberty to prefer an appeal.

Final Conclusion: Writ petition dismissed; the assessment orders are not interfered with on the grounds advanced, and the petitioner is left free to file the statutory appeal, subject to applicable exceptions including limitation.

Disallowance under section 14A r.w. rule 8D - amortization of premium on held-to-maturity securities - provision for standard assets under section 36(1)(viia) - provision for fraud/dacoity as deductible business expense - deduction under section 80P(2)(a)(i) for Regional Rural Banks - rule of consistency in assessments - remand for verification of establishment expenses - additions cannot be based on surmise and conjecture

Disallowance under section 14A r.w. rule 8D - rule of consistency in assessments - Deletion of disallowance under section 14A r.w.r. 8D in respect of tax-free income - HELD THAT: - The Tribunal accepted the CIT(A)'s finding that where an assessee has a mixed corpus of interest-free own funds and interest-bearing funds and the interest-free own funds substantially exceed the investments generating exempt income, it is to be presumed that such investments are funded from interest-free own funds and no disallowance under section 14A r.w.r. 8D is warranted. The CIT(A)'s reliance on earlier Tribunal/High Court decisions and parity of facts in the assessee's other years supported deletion of the disallowance. The same reasoning was applied mutatis mutandis to AY 2017-18 and AY 2018-19 where facts were identical. [Paras 5, 14, 17]

Deletion of the section 14A disallowance upheld for AY 2016-17 and applied to AY 2017-18 and AY 2018-19.

Amortization of premium on held-to-maturity securities - Allowability of amortization of premium paid on held-to-maturity securities as a deduction - HELD THAT: - The Tribunal agreed with the CIT(A) and earlier judicial precedents that premium amortization on securities classified as 'held to maturity' is an allowable deduction and not to be disallowed by the AO. The AO's addition was deleted in light of settled law recognising amortization of premium on held-to-maturity investments as permissible for profit and loss computation. [Paras 6, 15]

Amortization claimed on held-to-maturity securities allowed; addition deleted.

Provision for standard assets under section 36(1)(viia) - rule of consistency in assessments - Deletion of addition disallowing provision for standard assets under section 36(1)(viia) - HELD THAT: - The Tribunal noted that the assessee's claim for provision for standard assets was accepted in preceding and succeeding assessment years and that the Coordinate Bench had earlier decided the issue in the assessee's favour for an earlier year. Applying the rule of consistency, and in absence of any change in accounting policy, the Tribunal found no error in the CIT(A)'s deletion of the AO's disallowance despite the AO's reliance on contrary superior court authority. [Paras 7]

Addition disallowing provision for standard assets deleted.

Provision for fraud/dacoity as deductible business expense - Allowability of provision for fraud/dacoity as claimed expenditure - HELD THAT: - The Tribunal observed that the assessee produced an FIR to substantiate the fraud and that the AO rejected the claim merely for want of a calculation; the CIT(A) had allowed the claim following the assessee's earlier favourable order and relevant CBDT guidance. The assessee stated at the hearing that any subsequent recovery would be offered to tax in the year of recovery. Given the documentation and precedent, the Tribunal found no reason to interfere with the deletion. [Paras 8]

Provision for fraud/dacoity allowed; addition deleted.

Deduction under section 80P(2)(a)(i) for Regional Rural Banks - rule of consistency in assessments - Allowability of deduction under section 80P(2)(a)(i) to the Regional Rural Bank assessee - HELD THAT: - The Tribunal upheld the CIT(A)'s acceptance of the assessee's claim for deduction under section 80P(2)(a)(i) by noting statutory deeming under the Regional Rural Banks Act that RRBs are treated as cooperative societies, CBDT circular applicability, and consistent judicial and tribunal precedents relied upon by the CIT(A). Given the precedents and parity of facts, the AO's disallowance under section 80P(4) was rightly set aside. [Paras 9, 17]

Deduction under section 80P(2)(a)(i) allowed; AO's disallowance deleted for AYs 2016-17, 2017-18 and 2018-19.

Remand for verification of establishment expenses - Remand of expenditure claimed under the head 'Estab-PNB' for verification by AO - HELD THAT: - The Tribunal found that the assessee did not adequately explain or substantiate the nature of payments claimed under 'Estab-PNB' (staff deputed from sponsor bank) with sufficient vouchers before the AO, and that the CIT(A)'s allowance was cryptic. Rather than decide on conjectural material, the Tribunal restored the issue to the AO to verify submissions and supporting documents and to decide in accordance with law. [Paras 10]

Issue restored to AO for verification; remanded for factual examination.

Additions cannot be based on surmise and conjecture - Deletion of addition disallowing general establishment expenses where AO acted on estimations - HELD THAT: - The Tribunal held that the AO's wide-ranging disallowance of establishment expenses was founded on surmise and conjecture and not on examination of available material. The Tribunal agreed with the CIT(A) that additions cannot be sustained on mere assumptions, noted the assessee's explanation regarding branch expansion and wage revisions, and applied precedential findings in the assessee's own case to delete the addition. [Paras 11]

Addition disallowing establishment expenses deleted.

Final Conclusion: The Revenue appeals are dismissed in major part: for AY 2016-17 the appeal is partly allowed only to remand the specific 'Estab-PNB' expenditure for verification by the AO; for AY 2017-18 and AY 2018-19 the appeals are dismissed, with the Tribunal upholding deletions and allowances made by the CIT(A) on the other issues.

Fees for technical services - make available - subscription access to online/cloud platform not amounting to royalty - tax resident certificate - burden on Revenue to prove transfer of technical knowledge - Article 12(4) of IndiaUS DTAA

Fees for technical services - make available - Article 12(4) of IndiaUS DTAA - subscription access to online/cloud platform not amounting to royalty - burden on Revenue to prove transfer of technical knowledge - Nature of receipts from Indian customers - whether subscription fees for access to the assessee's cloudnative machine data analytics platform constitute fees for technical services or royalty taxable in India under the IndiaUS DTAA and the Incometax Act - HELD THAT: - The Tribunal examined the contractual arrangements, the mode of delivery and precedents considering online subscription and platform access. It accepted that the assessee provided recurring subscription access to a proprietary platform but did not make available technical knowledge, knowhow or enable the recipient to perform independently. The Tribunal followed the reasoning of the Coordinate Bench in Coursera Inc. and other precedents holding that mere access to content or a platform, without transfer of technical expertise or human intervention enabling independent use, does not satisfy the makeavailable requirement of Article 12(4). The Assessing Officer's emphasis on global losses and the absence of tax in the parent company's returns was held not determinative where a valid tax resident certificate was furnished and the income was offered as business income in the residence State. The burden lies on the Revenue to prove that technical or consultancy services were coupled with transfer of expertise; that burden was not discharged on the facts. Consequently the receipts do not qualify as FTS under Article 12(4) of the IndiaUS DTAA. [Paras 11, 12]

Receipts from Indian customers (subscription fees) do not qualify as fees for technical services or royalty and are not taxable in India under Article 12(4) of the IndiaUS DTAA.

Tax resident certificate - Validity and effect of the tax resident certificate (TRC) submitted by the assessee in relation to treaty benefits - HELD THAT: - The Tribunal noted that the assessee filed a TRC and offered the income as business income in the resident country. It held that furnishing a TRC and offering the receipts to tax in the residence State is material; the fact that the resident entity shows global losses does not negate treaty entitlement where the income is shown as taxable in the residence State. The Assessing Officer's rejection of the TRC on the ground of global losses was not upheld. [Paras 2, 11, 12]

The TRC filed by the assessee is to be accepted for the purposes considered and does not deprive the assessee of treaty protection on the facts before the Tribunal.

Verification of TDS credit - Claim for allowance of TDS credit - HELD THAT: - The Tribunal observed discrepancies between TDS credited by the Assessing Officer and the TDS claimed by the assessee. Rather than adjudicating on merits, the Tribunal directed the Assessing Officer to verify the TDS records and allow credit as per law after proper verification. [Paras 13]

TDS credit claim remitted to the Assessing Officer for verification and allowance in accordance with law.

Refund verification - Assessee's contention regarding an alleged refund recorded by the Assessing Officer - HELD THAT: - The assessee denied that any such refund had been granted. The Tribunal did not decide the substance but remitted the matter to the Assessing Officer to verify the record and allow relief if merited. [Paras 15]

Issue of the alleged refund remitted to the Assessing Officer for verification and appropriate action.

Penalty u/s 270A - Maintainability of penalty proceedings under section 270A at the present stage - HELD THAT: - The Tribunal found the challenge to initiation of penalty proceedings under section 270A to be premature at this stage of adjudication and therefore declined to adjudicate the penalty ground. [Paras 16]

Ground challenging initiation of penalty under section 270A dismissed as premature.

Final Conclusion: Appeal partly allowed: receipts from Indian customers treated not to be fees for technical services/royalty under the IndiaUS DTAA for Assessment Year 202122; TRC accepted for purposes considered; TDS credit and alleged refund remitted to the Assessing Officer for verification; challenge to penalty initiation dismissed as premature.

Special audit under section 142(2A) - limitation and time-bar - fag-end referral to special audit - jurisdictional satisfaction and requirement of independent application of mind - specification and time for furnishing special audit report under section 142(2C) - proviso to section 142(2C) on grant of extension - competent authority to grant extension - void ab initio for failure to follow mandatory procedure - pari materia application to other assessment years

Special audit under section 142(2A) - fag-end referral to special audit - limitation and time-bar - Validity of referring the assessee to special audit at the fag end of limitation period and whether such referral was a device to extend limitation - HELD THAT: - The Tribunal upheld the CIT(A)'s finding that the AO's directions for special audit issued on 30-03-2013-one day before the expiry of the limitation under section 153(1) for AY 2010-11-gave rise to a legitimate suspicion that the reference was made merely to extend the time for assessment. Applying the principles relied upon by the CIT(A) and the Tribunal's view of the relevant authorities, the timing of the referral was held to be fatal to the assessment because the procedure was used as a tool to prolong limitation rather than to genuinely discharge the statutory requirement for a special audit. The Tribunal agreed with the conclusion that such misuse of the special-audit mechanism vitiates the assessment proceedings. [Paras 6]

Referral to special audit made at the fag end of the limitation period was impermissible in the facts and renders the assessment vitiated.

Jurisdictional satisfaction and requirement of independent application of mind - Special audit under section 142(2A) - Whether satisfaction for reference to special audit was valid when recorded/endorsed by both the Assessing Officer and the Commissioner - HELD THAT: - The Tribunal endorsed the CIT(A)'s conclusion that section 142(2A) contemplates the recording of satisfaction by the designated authority exercising that power, requiring an independent application of mind. In the present case the satisfaction/opinion was recorded by the AO and then also recorded/endorsed by the CIT who subsequently granted approval. The Tribunal held that such 'borrowed' or non-independent satisfaction is not in accordance with the statutory mandate, relying on the settled principle that a power vested in a particular authority must be exercised by that authority independently. Consequently, the procedural non-compliance in recording satisfaction rendered the special-audit order and consequential assessment invalid. [Paras 6]

Satisfaction recorded/endorsed by the CIT in place of an independent exercise by the prescribed authority was improper and vitiates the special-audit order.

Specification and time for furnishing special audit report under section 142(2C) - proviso to section 142(2C) on grant of extension - competent authority to grant extension - Whether the period for furnishing the special audit report and subsequent extension were valid where the period was specified/extended by the CIT or on application by the special auditor rather than by the AO or the assessee - HELD THAT: - The Tribunal agreed with the CIT(A) that under section 142(2C) the initial period for furnishing the special-audit report must be specified by the Assessing Officer and that the proviso permits an extension either suo-moto by the AO or on an application by the assessee. In this case the initial period was specified by the CIT and the extension was granted on an application by the special auditor; the AO's subsequent letter merely conveyed approval. The Tribunal held that the extension was not granted in the manner contemplated by the proviso and therefore was beyond the competent authority's powers. Because the report was furnished after the invalidly extended period, the consequential assessment made after that date was held to be vitiated. [Paras 6, 7]

Period specification by the CIT and extension granted other than in terms of the proviso to section 142(2C) was invalid; the resulting assessment is vitiated.

Void ab initio for failure to follow mandatory procedure - pari materia application to other assessment years - Whether the conclusions on procedure and invalidity apply to the other assessment years before the Tribunal - HELD THAT: - The Tribunal observed that the legal principles and defects identified in relation to AY 2010-11 applied pari materia to the other assessment years before it. It noted that co-ordinate benches have decided similar issues against the revenue for AY 2014-15 and 2016-17, and the Revenue did not point to any distinguishing facts. Consequently, the Tribunal declined to interfere with the CIT(A)'s orders for the other years which were founded on the same procedural infirmities. [Paras 8]

Findings of procedural invalidity apply to the other assessment years before the Tribunal; appeals dismissed and cross-objections rendered infructuous.

Final Conclusion: The Tribunal upheld the CIT(A)'s conclusion that the special-audit process and consequential assessments were vitiated by multiple procedural infirmities-fag-end referral suggestive of an attempt to extend limitation, nonindependent satisfaction/approval by the CIT, and invalid specification/extension of time under section 142(2C)-and dismissed the revenue appeals, applying the same reasoning pari materia to the other assessment years before it.

Section 68 - burden to prove identity, creditworthiness and genuineness of share application money - Rule 11UA(2)(b) - option to value unquoted equity shares by Discounted Cash Flow (DCF) method - Section 56(2)(viib) - taxation of share premium where consideration exceeds fair market value of shares - Rejection of valuation report requires material contrary or reasoned exercise by tax authorities

Section 68 - burden to prove identity, creditworthiness and genuineness of share application money - Rejection of valuation report requires material contrary or reasoned exercise by tax authorities - Validity of additions made under section 68 in respect of share capital/share premium on the ground of unexplained/unidentified investors - HELD THAT: - The Tribunal examined whether the assessees discharged the initial onus under section 68 by placing on record documents to establish identity, creditworthiness and genuineness of the investor companies. The record showed incorporation documents, audit reports, balance sheets, ITR acknowledgements, share application forms, share certificates, confirmations of accounts and bank statements of the investor companies were produced before the AO and on appeal. The Tribunal held that mere bald allegations by the revenue that the investing companies were 'shells' was not supported by any independent material brought on record by the AO/CIT(A). Where the assessee furnishes the prescribed evidence and the revenue fails to produce contrary material or to carry suspicions to a logical conclusion by independent inquiry, addition under section 68 cannot be sustained. Reliance was placed on the principle in the cited high court authority that AO must conclusively establish non-existence or other contrary material before invoking section 68. Applying these principles to the facts, the Tribunal found the documents furnished were of vital significance and the AO/CIT(A) did not bring material justifying the additions confirmed by the CIT(A). [Paras 13, 14, 25]

Additions under section 68 in respect of the challenged share subscriptions were not sustainable and the appeals on this ground are allowed.

Rule 11UA(2)(b) - option to value unquoted equity shares by Discounted Cash Flow (DCF) method - Section 56(2)(viib) - taxation of share premium where consideration exceeds fair market value of shares - Rejection of valuation report requires material contrary or reasoned exercise by tax authorities - Whether the valuation report prepared under Rule 11UA(2)(b) (DCF method) could be rejected and income enhanced under section 56(2)(viib) without reasoned material or recalculation by the AO/CIT(A) - HELD THAT: - The Tribunal considered whether the assessee was entitled to exercise the statutory option in Rule 11UA(2)(b) to value unquoted shares by DCF and whether the AO/CIT(A) could disregard that valuation without furnishing material to the contrary or conducting its own reasoned valuation. The Tribunal observed that Rule 11UA(2)(b) provides the assessee a choice of recognized valuation methods and that the valuator's DCF computation produced a per-share value which supported the premium charged. The AO and CIT(A) rejected the valuation report without assigning reasoned findings or adducing contrary material and without seeking clarifications or giving opportunity to explain alleged discrepancies. The Tribunal held that the tax authorities cannot arbitrarily discard a valuation undertaken under a method permitted by Rule 11UA(2)(b) unless they demonstrate that the method or its application was demonstrably wrong or produce material to justify an alternate conclusion. On the facts, the DCF valuation was not shown to be wholly erroneous and the enhancement under section 56(2)(viib) was therefore not justified. [Paras 15, 16, 26, 27]

The rejection of the DCF-based valuation and the consequential enhancement under section 56(2)(viib) are not sustained; the appeals on this ground are allowed.

Final Conclusion: Both appeals are allowed: additions made under section 68 and enhancements under section 56(2)(viib) (based on rejection of the DCF valuation) are set aside because the assessees furnished requisite evidence of identity, creditworthiness and genuineness and the valuation under Rule 11UA(2)(b) was not shown to be demonstrably wrong nor rejected with reasoned material by the revenue.

Reconciliation of turnover - estimation of income - addition on unreported receipts - point of taxation rules versus percentage of completion method - supporting documents filed through ITBA/ITP System - reopening of assessment based on information from DG GSTI

Estimation of income - addition on unreported receipts - point of taxation rules versus percentage of completion method - Deletion of the estimated addition (10% of disputed receipts) made by the AO under reopening u/s 147/148 for the assessment year 2014-15. - HELD THAT: - The Tribunal examined the basis of the reopening (information from DG GSTI alleging under-reporting) and the AO's treatment of the variation in turnover as undisclosed business receipts with an estimated profit @10%. The Tribunal observed that the variation arose from different computation mechanisms - Service Tax point of taxation rules which recognise advances on receipt, and Accounting Standard/percentage of completion method (AS7/POCOM) under incometax which recognises revenue on completion stages. Having considered the reconciliation submitted by the assessee and supporting documents filed through the ITBA/ITP system, the Tribunal found that the AO treated the difference as unrecorded receipts and made an adhoc estimation without properly appreciating the accounting principles and reconciliation. On this basis the Tribunal held there was no justification to sustain the estimated profit addition and therefore deleted the addition. [Paras 9, 10, 11]

Estimated profit addition on purportedly underreported receipts deleted; addition not sustained.

Reconciliation of turnover - supporting documents filed through ITBA/ITP System - failure to consider evidence - Whether the assessee had furnished reconciliation and supporting documents in response to notices and whether the lower authorities were justified in rejecting that reconciliation. - HELD THAT: - The Tribunal reviewed the records and the ITBA/ITP acknowledgements and noted that the assessee had uploaded a reconciliation of turnover, details of fresh advances, copies of agreements, PCOM charts and details of expenses on which reverse charge was paid, with specific acknowledgement numbers and paperbook page references. The Tribunal found that these documents were on record before the AO and CIT(A), and that the AO's finding that no supporting evidence was furnished was incorrect. Having found that the reconciliation and supporting documents were filed and not properly considered, the Tribunal concluded that the lower authorities erred in rejecting the reconciliation without assigning reasons. [Paras 9, 10]

Reconciliation and supporting documents held to have been filed; lower authorities erred in disregarding them.

Final Conclusion: The appeal is allowed: the Tribunal deleted the estimated addition made by the AO for AY 2014-15 after holding that the variation arose from differing tax/accounting computation mechanisms and that the assessee had furnished a reconciliatory statement and supporting documents which were not properly considered by the lower authorities.

Reopening of assessment - reason to believe - scope of reassessment and Explanation 3 to section 147 - roving enquiry doctrine - assessing officer exceeding reasons recorded - disallowance under section 40A(3)

Reopening of assessment - reason to believe - assessing officer exceeding reasons recorded - scope of reassessment and Explanation 3 to section 147 - roving enquiry doctrine - Validity of reassessment for AY 2013-14 where reasons recorded related to unexplained bank credits but AO made an addition by disallowing 10% of purchases under section 40A(3). - HELD THAT: - The Tribunal examined the reasons recorded which focused on unexplained credit entries aggregating to the sum stated in the reasons and the Assessing Officer's stated reason to believe that income chargeable to tax had escaped assessment. During assessment, however, the Assessing Officer made an addition by disallowing 10% of purchases (observed as cash payments) under the provision dealing with disallowance under section 40A(3), a result different from the specific matter set out in the reasons. While Explanation 3 to section 147 permits the AO to assess items which come to his notice during proceedings, the Tribunal followed the principle that the legislature did not intend to permit a blanket power to undertake a roving enquiry and include items not connected with the reasons on which jurisdiction was assumed. Relying on the precedents cited in the order and applying that legal principle, the Tribunal found the reassessment to be beyond the scope of the reasons recorded and therefore bad in law, quashing the reassessment framed for the assessment year. [Paras 9]

Reassessment for AY 2013-14 quashed as the AO proceeded to make an unrelated addition by disallowing purchases contrary to the scope of reasons recorded.

Reopening of assessment - scope of reassessment and Explanation 3 to section 147 - roving enquiry doctrine - Validity of reassessment for AY 2014-15 in light of identical facts and reasoning applied in AY 2013-14. - HELD THAT: - The Tribunal noted that facts and the legal question for AY 2014-15 were identical to AY 2013-14. Applying the same legal principle that Explanation 3 does not empower a Assessing Officer to undertake a roving enquiry beyond the matters forming the reason to believe, the Tribunal respectfully followed the decision in the lead appeal and quashed the reassessment for AY 2014-15 as likewise bad in law. [Paras 10]

Reassessment for AY 2014-15 quashed following the decision in the lead appeal.

Final Conclusion: Both appeals are allowed and the reassessments framed for AY 2013-14 and AY 2014-15 are quashed on the ground that the Assessing Officer exceeded the scope of the reasons recorded by making an unrelated addition, thereby impermissibly undertaking a roving inquiry.

Time-barred assessment under Section 153C - Computation of the block period for Section 153C from the date of receipt of seized material/recording of satisfaction - Recording of satisfaction by the Assessing Officer of the searched person as condition precedent to assume jurisdiction under Section 153C - Effect of Finance Act, 2017 on relevant assessment years (extension to relevant assessment years beyond six years)

Time-barred assessment under Section 153C - Computation of the block period for Section 153C from the date of receipt of seized material/recording of satisfaction - Effect of Finance Act, 2017 on relevant assessment years (extension to relevant assessment years beyond six years) - Validity of assessment completed under Section 153C read with Section 143(3) for AY 2011-12 on grounds of limitation - HELD THAT: - The Tribunal examined whether proceedings under Section 153C could validly be initiated for AY 2011-12. Applying the principle that, for a non-searched person, the relevant block period must be computed from the date on which books of account/documents seized in a search are received by, or the satisfaction is recorded by, the Assessing Officer having jurisdiction over the non-searched person, the Tribunal held that the six-year block is to be reckoned from that date and not from the date of actual search. The Tribunal relied on the ratio of the Hon'ble Supreme Court in Jasjit Singh (as applied in preceding decisions) and subsequent judicial treatment, and observed that where the search was conducted before the Finance Act, 2017 amendment but the satisfaction/receipt occurred later, the extended ten-year concept does not retrospectively enlarge the block for searches made before 01.04.2017; consequently only the six immediately preceding assessment years from the year of deemed receipt/recording of satisfaction are open. In the present facts the material was received/treated as received in the year relevant to AY 2018-19 (date of receipt/recording of satisfaction), and AY 2011-12 falls beyond the six-year block thus rendering the assessment for AY 2011-12 invalid for lack of jurisdiction. The Tribunal quashed the assessment under Section 153C r.w.s. 143(3) as time-barred and did not adjudicate the remaining merits since the foundational assessment itself was set aside. [Paras 7, 8]

Assessment for AY 2011-12 completed under Section 153C r.w.s. 143(3) is quashed as beyond the permissible limitation period.

Final Conclusion: The assessee's appeal is allowed insofar as the assessment for AY 2011-12 under Section 153C r.w.s. 143(3) is quashed as time-barred; consequential grounds were not adjudicated. The Revenue's cross-appeal is dismissed as the impugned assessment has been quashed.

Exemption under section 11 for charitable trusts - application of proviso to section 2(15) on commercial activities - deductibility of provisions for guarantee claims under mercantile system - treatment of provisions as allowable expense - precedent of coordinate bench followed

Exemption under section 11 for charitable trusts - application of proviso to section 2(15) on commercial activities - precedent of coordinate bench followed - Legitimacy of denying the assessee's claim of exemption under section 11 by invoking the proviso to section 2(15). - HELD THAT: - The Tribunal found that the assessee trust, established by the Government of India to provide credit guarantees to micro and small enterprises, pursues activities of advancement of general public utility and does not exhibit a profit motive. Mere charging of guarantee fees does not, without more, bring the activity within the proviso to section 2(15). The Tribunal, following the coordinate bench decision in ITA No.2684/Mum/2022, concluded that the trust's activities are not commercial in nature and therefore the claim of exemption under section 11 is sustainable. The appellate finding under the CIT(A) disallowing exemption was set aside and the ground taken by the assessee was allowed. [Paras 6]

Claim of exemption under section 11 allowed; disallowance under proviso to section 2(15) set aside.

Deductibility of provisions for guarantee claims under mercantile system - treatment of provisions as allowable expense - precedent of coordinate bench followed - Whether the provision for guarantee claims is an allowable deduction or must be treated as a non-allowable provision for expenses. - HELD THAT: - The Tribunal examined the nature of the provision created against outstanding guarantees and the pattern of claims paid. It concluded that the provision is created in accordance with the conservatism principle under the mercantile system of accounting to meet liabilities arising from guarantees and is not merely an inadmissible expense. Relying on the reasoning in the coordinate bench decision in ITA No.2684/Mum/2022 and authorities recognising similar provisions as deductible, the Tribunal directed deletion of the addition made by the assessing officer and allowed the deduction claimed for the provision for guarantee claims. [Paras 10]

Provision for guarantee claims held allowable; addition deleted and deduction allowed.

Final Conclusion: Appeal allowed. The disallowance of exemption under section 11 by invoking the proviso to section 2(15) is set aside and the deduction for provision for guarantee claims is held allowable; the assessing officer is directed to delete the corresponding addition. Other grounds were not pressed or are consequential.

Competency of the issuing officer of a show cause notice - challenge to validity of a show cause notice - quashing of orders for want of competent authority - liberty to file appeal under Section 129-A(1) of the Customs Act - remand for decision of grounds not adverted to by lower authorities - obligation of CESTAT to decide urged grounds

Challenge to validity of a show cause notice - competency of the issuing officer of a show cause notice - Whether the order of the learned Single Judge allowing the writ petition by quashing the show cause notice and impugned orders should be maintained. - HELD THAT: - The Single Judge had quashed the show cause notice and the consequent orders on the ground that the notice was issued by a person who was not competent, relying on the decision in M/s Canon India. The Division Bench recorded the parties' rival contentions, including intervening developments in the Supreme Court and the respondents' concession that the Single Judge's order setting aside the show cause notice insofar as based on Canon requires to be set aside. Having considered submissions, the Division Bench set aside the Single Judge's order dated 29.10.2021 and did not sustain the quashing of the show cause notice and impugned orders on that basis. [Paras 2, 3, 5, 7]

Order dated 29.10.2021 of the Single Judge quashing the show cause notice and impugned orders is set aside.

Liberty to file appeal under Section 129-A(1) of the Customs Act - remand for decision of grounds not adverted to by lower authorities - obligation of CESTAT to decide urged grounds - Disposition of the respondents' unadverted grounds and appropriate forum for their adjudication. - HELD THAT: - The Division Bench noted that several grounds raised by the deceased respondent were not considered by the Additional Commissioner or by the Commissioner (Appeals). Rather than decide those grounds itself, the Court granted the legal representatives of the deceased respondent liberty to file an appeal before the CESTAT under Section 129-A(1) of the Customs Act within two weeks from receipt of the copy of the order. On such filing, the CESTAT is directed to consider and decide the appeal insofar as it relates to grounds urged before, but not adverted to by, the authorities below, in accordance with law. The Court left any request for expedition to the counsel before the CESTAT for its consideration. [Paras 6, 7, 9]

Liberty granted to file appeal before the CESTAT within two weeks; CESTAT to decide the grounds not considered by the authorities below.

Final Conclusion: Writ appeal allowed; the Single Judge's order dated 29.10.2021 is set aside. Liberty granted to the legal representatives of the deceased respondent to file an appeal before the CESTAT under Section 129-A(1) of the Customs Act within two weeks, and the CESTAT is directed to decide the grounds that were not adverted to by the authorities below.

Penalty liability for making or abetting export or import in contravention of the FTDR Act - personal liability of a company director for the company's export obligation - requirement of specific allegations and reasons to fasten personal liability on directors - territorial jurisdiction and forum conveniens in writ petitions challenging administrative orders - effect of corporate liquidation and custody of records on prosecution of directors - inapplicability of statutory vicarious liability under other enactments to FTDR Act proceedings

Personal liability of a company director for the company's export obligation - requirement of specific allegations and reasons to fasten personal liability on directors - Whether the petitioner, as a director of the defaulting company, could be personally penalized under the FTDR Act in the absence of specific findings or allegations as to his duty and deliberate failure to perform it. - HELD THAT: - The Court applied the principle that Section 11(2) of the FTDR Act penalises a person who makes or abets export/import contraventions and therefore personal liability can be imposed only if the authority alleges and demonstrates that the director was under a duty or obligation to ensure fulfilment of export obligations and consciously failed to discharge it. The show-cause notice and the orders addressed to the petitioner were silent on any specific role or obligation of the petitioner; the petitioner had replied that the company was wound up in 1998 and that he was an employee-director with no role in import/export or licence procurement. Reliance was placed on earlier Coordinate Bench decisions which require that the authority must adumbrate reasons for arriving at personal culpability of a director; absent such reasoning the orders cannot be sustained. The impugned penalty order contains no adjudication or reasoning on the petitioner's personal liability and thus cannot stand. [Paras 12, 14, 15, 16, 17]

The penalty cannot be sustained against the petitioner personally; imposition of personal liability was set aside for want of specific allegations and reasons.

Territorial jurisdiction and forum conveniens in writ petitions challenging administrative orders - Whether the Delhi High Court had territorial jurisdiction to entertain the petition challenging the adjudicatory order passed in Mumbai. - HELD THAT: - The Court held that the petition is maintainable in Delhi because a part of the cause of action arises where the appellate order was passed in New Delhi and the respondents had participated earlier in Delhi proceedings, thereby submitting to the jurisdiction. The Court applied the principle in Kusum Ingots that a writ petition is maintainable where any part of the cause of action arises within the High Court's territorial jurisdiction, subject to the court's discretionary power to decline on forum conveniens grounds. The respondents' reliance on forum non conveniens was rejected on the facts: participation before the Court and the appellate order having been passed in Delhi established jurisdiction. [Paras 11]

The Delhi High Court has jurisdiction to entertain the petition; the plea of forum non conveniens is not accepted on the material before the Court.

Penalty liability for making or abetting export or import in contravention of the FTDR Act - effect of corporate liquidation and custody of records on prosecution of directors - inapplicability of statutory vicarious liability under other enactments to FTDR Act proceedings - Whether the petitioner's status as an Executive/whole time director, the company's liquidation and delay in proceedings, or reliance on vicarious liability authorities rendered the petitioner liable. - HELD THAT: - The Court rejected the contention that being an Executive or whole time director automatically attracts liability under the FTDR Act; the authority must still identify a specific duty and its breach. The Standard Chartered Bank decision on vicarious liability under the Negotiable Instruments Act was held inapplicable because that Act contains specific provisions imposing such liability, unlike the FTDR Act. The record showed the company was liquidated in 1998, books and records were with the official liquidator and notices to other directors were returned; the authority failed to explain the long delay in initiating proceedings and did not obtain requisite permissions where necessary. These factual features, combined with absence of any adjudication on personal culpability, undermined imposition of penalty on the petitioner. [Paras 15, 18, 19, 20, 21]

Executive/whole time directorship does not by itself justify personal penalty; Standard Chartered is inapplicable; the penalty as imposed was unsustainable in view of liquidation, absence of records, unexplained delay and lack of adjudication of personal liability.

Final Conclusion: The impugned penalty order insofar as it imposes penalty upon the petitioner is set aside; the writ petition is disposed of accordingly.

Provisional assessment of duty under Section 18 - recovery of duties by notice under Section 28(4) read with Section 124 - simultaneous issuance of show cause notices under Section 18 and Section 28(4) - requirement of prior value assessment before issuance of a Section 28(4) notice - direction permitting issuance of a recovery notice irrespective of statutory limitation

Provisional assessment of duty under Section 18 - simultaneous issuance of show cause notices under Section 18 and Section 28(4) - recovery of duties by notice under Section 28(4) read with Section 124 - Whether a show cause notice under Section 18 and a notice under Section 28(4) read with Section 124 can be issued simultaneously in respect of the same goods where value has not been assessed - HELD THAT: - The Court held that a show cause notice under Section 18 is for provisional assessment of duty and may be issued where the proper officer requires documents, information, tests or further enquiry. A notice under Section 28(4) read with Section 124 is for recovery of duties not levied or paid, short-levied or short-paid or erroneously refunded, based on culpable conduct such as collusion, willful mis-statement or suppression of facts. Where the value of the goods has not yet been assessed (so that provisonal assessment under Section 18 is pending), issuance of a recovery notice under Section 28(4) in respect of those goods is premature because the recovery notice presupposes an assessment of value and duty payable. The Court therefore declined to interfere with the Section 18 notice (which the petitioner must reply to) but found that issuance of the Section 28(4) notice insofar as it related to goods whose value had not been assessed could not stand at this stage. The respondents' contention that both notices are only show cause notices and that action depends on the petitioner's reply was noted, but the Court emphasised that the prerequisites for a valid recovery notice include prior assessment of the value and duty. Consequently, the Section 18 notice remains valid and must be answered; the Section 28(4) notice which related to goods without assessed value was set aside as premature. [Paras 5, 6, 7]

Section 18 show cause notice is maintainable and will proceed; the Section 28(4) notice insofar as it relates to goods whose value has not been assessed is premature and cannot stand at this stage.

Requirement of prior value assessment before issuance of a Section 28(4) notice - direction permitting issuance of a recovery notice irrespective of statutory limitation - Directions as to further proceedings including assessment, time for reply, and authority to issue a Section 28(4) notice after assessment - HELD THAT: - The Court directed that the petitioner be granted six weeks to file its reply to the Section 18 show cause notice (Annexure-M). Thereafter respondent No.2 shall, after considering the reply and hearing the petitioner, pass appropriate orders assessing the value of the imported goods within four weeks from the date of reply. If that assessment warrants issuance of a recovery notice under Section 28(4) read with Section 124, respondent No.3 is permitted to issue such notice within one month thereafter. The Court expressly authorised issuance of the Section 28(4) notice within that period 'irrespective of the limitation that has been prescribed in the Statute', thereby preserving the respondents' right to issue a recovery notice post-assessment and overriding any limitation defence for that limited purpose. The petitioner is given the ordinary right to reply to any Section 28(4) show cause notice that may be issued. [Paras 8, 9]

Petitioner granted six weeks to reply to the Section 18 notice; respondent No.2 to assess value within four weeks of reply; respondent No.3 may issue a Section 28(4) notice within one month thereafter irrespective of statutory limitation; petitioner granted liberty to reply to any such notice.

Final Conclusion: Writ petition disposed of by permitting the Section 18 provisional assessment process to proceed with specified timelines, setting aside the impugned Section 28(4) notice insofar as it was premature, and directing assessment of value followed by issuance of a recovery notice within the stated period (notwithstanding limitation) if warranted.

Interest on delayed refund - refund under section 27A of the Customs Act - date of refund versus date of sanction - payable interest - remand for computation of interest

Interest on delayed refund - refund under section 27A of the Customs Act - date of refund versus date of sanction - payable interest - Appellant entitled to interest under section 27A up to the date of actual refund and not merely up to the date of sanction of the refund order. - HELD THAT: - The Tribunal examined section 27A, which provides for payment of interest where a refund is not made within three months from receipt of the application, and held that the Commissioner (Appeals)'s earlier direction to grant "payable interest" must be read in light of the statutory provision. The Court found no basis for restricting interest to the date of sanction when the statute expressly contemplates interest continuing until the date of refund. Consequently, the Commissioner (Appeals)'s decision to limit interest to the date of sanction was set aside. [Paras 13, 14]

Interest under section 27A is payable up to the date when the refund is actually made to the appellant.

Remand for computation of interest - payable interest - Computation and payment of the additional interest to be remitted to the adjudicating authority for calculation up to the date of refund, with adjustment for interest already paid up to the date of sanction. - HELD THAT: - Although the Tribunal determined the proper legal position on the period for which interest is payable, it remitted the matters to the adjudicating authority to quantify the additional interest due. The adjudicating authority is directed to compute interest up to the actual date of refund, adjust any interest already paid for the period up to the date of sanction, and pay the balance. The Tribunal specified a timeline for compliance. [Paras 15, 16]

Matters remanded to the adjudicating authority to compute and pay the additional interest up to the date of refund (after adjusting amounts already paid), to be done within two months from production of the order.

Final Conclusion: The Commissioner (Appeals) order dated 25.08.2022 is set aside; the appeals are allowed to the extent that interest under section 27A shall run until actual refund, and the adjudicating authority is directed to compute and pay the additional interest (after adjustment) within two months of production of this order.

Surrogate transaction value - similar goods - contemporaneous imports - access to relied documents - opportunity of hearing - remand for verification - application of rule 5 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - validation by reference to parameters in rule 2 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007

Contemporaneous imports - similar goods - surrogate transaction value - access to relied documents - opportunity of hearing - application of rule 5 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - validation by reference to parameters in rule 2 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - remand for verification - Validity of re-assessment of declared value by reference to values of contemporaneous imports without providing the importer access to the relied bills of entry - HELD THAT: - The Tribunal found that the lower authorities relied on values of purportedly contemporaneous imports as surrogate transaction value under the scope of the application of rule 5 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Rule 5 permits adoption of other imports' values only where those imports conform to the definition of similar goods and are susceptible to validation by reference to parameters in rule 2. The appellant did not have access to the details of the relied bills of entry and therefore could not test whether the imports were indeed similar or whether the statutory parameters were satisfied. In the absence of providing the relied documents, the reassessment could not be meaningfully examined for conformity with law. Relying on the reasoning in Dujodwala Products Ltd, the Tribunal held that failure to make available the documents invalidates the re-assessment procedure and requires setting aside the impugned orders. The matter was therefore remanded to the original authority with directions that the relied bills of entry be furnished to the appellant and that an opportunity of hearing be afforded before any fresh re-assessment is made. [Paras 4, 5]

Impugned orders set aside and matter remanded to original authority with directions to provide the relied bills of entry to the appellant and to afford opportunity of hearing before re-assessment.

Final Conclusion: Appeals allowed by way of remand; original orders set aside and matter directed to be reconsidered after providing the relied bills of entry to the appellant and giving opportunity of hearing.

Redemption fine on re-exportation - confiscation with option of re-export subject to redemption fine - recovery of penalty from a person on whom penalty was not imposed - payment under protest preserves right to appeal - unpaid seller's title and right to seek re-export

Payment under protest preserves right to appeal - locus of agent/unpaid seller to file appeal - The appellants had locus to file the appeal because the payment of redemption fine and penalty was made under protest and they were authorised by the unpaid seller. - HELD THAT: - The appellants submitted a contemporaneous letter recording that the redemption fine and penalty were paid under protest and reserving the right to appeal. The Tribunal held that a payment made under protest preserves the right to challenge the levy and that the Commissioner (Appeals) had correctly recognised the appellants' locus, as they were authorised by the unpaid seller and the department accepted that position. Consequently, the department could not dispute maintainability on the ground of voluntary payment. [Paras 11, 12, 14, 15]

Appellants' right to prosecute the appeal is upheld; payment under protest does not oust appellate jurisdiction.

Redemption fine on re-exportation - confiscation with option of re-export subject to redemption fine - Redemption fine for re-export was liable to be assessed in the facts of this case but the quantum imposed on the unpaid seller was excessive and was reduced. - HELD THAT: - While precedents have held that redemption fine is not payable where goods are re-exported, the Supreme Court's decision in Raj Grow Impex recognised that re-export may be permitted only after payment of redemption fine in matters of public interest. Applying that principle, the Tribunal accepted that redemption fine could be imposed in the present statutory context but found that the unpaid seller had not contravened the Customs law and had incurred substantial costs to effect re-export. The adjudicating authority's discretion under the Act to fix the fine had to be exercised judiciously; on the facts, the originally imposed fine was excessive and arbitrary. Exercising appellate power, the Tribunal accordingly reduced the redemption fine to a substantially lower amount in the interests of justice. [Paras 16, 17, 19, 21, 22]

Redemption fine reduced to a token amount (modified to Rs. 5,00,000) as the original quantum was excessive.

Recovery of penalty from a person on whom penalty was not imposed - appropriate forum for refund of wrongly collected sums - Tribunal will not entertain a claim for refund of penalty collected from the unpaid seller where penalty was imposed on the importer; the appellants have liberty to seek remedy before the appropriate forum and the department may recover the amount from the importer. - HELD THAT: - The record showed the penalty had been imposed on the importer and not on the unpaid seller, yet the unpaid seller paid the penalty under protest to secure re-export. The Tribunal acknowledged the appellants' contention that they were constrained to deposit the penalty, but held that the Tribunal lacked jurisdiction to order refund of amounts wrongly collected; the correct remedy is to approach the appropriate court or statutory authority for refund. The Tribunal left open the department's option to recover the penalty from the importer. [Paras 23, 24, 25]

No interference with confirmation of penalty on the importer; appellants granted liberty to seek refund before the appropriate forum and department may recover penalty from the importer.

Final Conclusion: Appeal partly allowed: appellants' locus to appeal recognised; redemption fine reduced to a token amount; confirmation of penalty on the importer left undisturbed with liberty to appellants to seek refund before the competent forum.

Refund and unjust enrichment - refund of redemption fine and penalty - admissibility of Chartered Accountant's certificate as evidence - excess duty charged without authority of law - credit to Consumer Welfare Fund under Section 27(2) of the Customs Act, 1962 - doctrine under Article 265 of the Constitution

Refund and unjust enrichment - refund of redemption fine and penalty - credit to Consumer Welfare Fund under Section 27(2) of the Customs Act, 1962 - Whether the refund sanctioned should have been credited to the Consumer Welfare Fund by invoking the bar of unjust enrichment under Section 27(2) of the Customs Act, 1962 - HELD THAT: - The Commissioner (Appeals) held that Section 27(2) of the Customs Act applies to duty and interest and does not extend to redemption fine and penalty. The impugned order of the original authority which credited the entire sanctioned refund (including redemption fine and penalty) to the Consumer Welfare Fund on the ground of unjust enrichment was set aside. The Commissioner (Appeals) observed that the refund sanctioning authority failed to explain how redemption fine and penalty fall within the scope of Section 27(2), and noted judicial decisions holding that unjust enrichment is not applicable to redemption fine and penalty. On these bases the appellate authority concluded that the transfer to the Consumer Welfare Fund was not sustainable. [Paras 4, 6, 7]

Refund including redemption fine and penalty was not liable to be credited to the Consumer Welfare Fund under Section 27(2); the Commissioner (Appeals) order setting aside such credit is upheld.

Admissibility of Chartered Accountant's certificate as evidence - refund and unjust enrichment - Whether the Chartered Accountant's certificate and accompanying documentary evidence could be relied upon to displace the presumption of burden being passed to customers and thereby defeat the plea of unjust enrichment - HELD THAT: - The Commissioner (Appeals) accepted the Chartered Accountant's certificate as admissible and carrying sanctity, noting that CAs are licensed professionals under the Chartered Accountants Act, 1949. The appellate authority relied on earlier tribunal decisions which recognise a CA's certificate, when genuine and supported by corroborative documents (balance-sheets, calculations), as sufficient to show that the duty was not passed on to customers and therefore to negate unjust enrichment. Where authenticity of the CA certificate was not successfully controverted, the certificate was treated as adequate evidence for refund entitlement. [Paras 4]

The Chartered Accountant's certificate and supporting documents were admissible and sufficient to rebut the unjust enrichment contention; they weighed in favour of allowing the refund.

Excess duty charged without authority of law - doctrine under Article 265 of the Constitution - Whether the duty collected was a duty levied under authority of law or an excess collection that could not be retained by the Department - HELD THAT: - The Commissioner (Appeals found that the duty charged was not a duty in law and had been charged without authority. Relying on precedents and constitutional principle under Article 265, the appellate authority observed that amounts collected without authority cannot be retained by the revenue and must be refunded. The appellate reasoning emphasised that excess collections without legal authority are not saved by limitation provisions and must be returned to the claimant. [Paras 4]

The impugned collections were excess and not duties charged under authority of law; such excess could not be retained by the Department and supported refund relief.

Credit to Consumer Welfare Fund under Section 27(2) of the Customs Act, 1962 - Whether the adjudicating authority's reliance on a draft CBEC circular could sustain the transfer of sanctioned refund to the Consumer Welfare Fund - HELD THAT: - The Commissioner (Appeals) noted that the adjudicating authority relied on a draft circular which had not been issued in final form and found such reliance to be irrelevant. A search revealed no final circular on the subject; accordingly, the draft circular could not justify the original authority's action. This formed part of the appellate reasoning for setting aside the credit to the Consumer Welfare Fund. [Paras 4]

Reliance on the nonissued draft circular was not a valid basis to transfer the sanctioned refund to the Consumer Welfare Fund; that reliance was rejected.

Final Conclusion: The Revenue's appeal is dismissed. The Commissioner (Appeals) order allowing the respondent's refund claim and setting aside the original authority's transfer of the sanctioned refund to the Consumer Welfare Fund is upheld.

Date for determination of rate of duty and tariff valuation of export goods - Let Export Order / order permitting clearance and loading under Section 51 - Entry for export by presentation of shipping bill under Section 50 - Loading prohibited until permission by proper officer under Section 39 / entry inward under Section 31

Date for determination of rate of duty and tariff valuation of export goods - Let Export Order / order permitting clearance and loading under Section 51 - Entry for export by presentation of shipping bill under Section 50 - Effect of post-filing notification on refund of export duty - Whether the exemption by Notification No. 129/2008 dated 07.12.2008 applies to the appellant's export where the shipping bill was filed, assessed and duty paid and Let Export Order issued on 05.12.2008 but actual loading and other formalities occurred on 07.12.2008. - HELD THAT: - The Tribunal applied the statutory rule that the rate of duty and tariff valuation applicable to export goods is the rate in force on the date on which the proper officer makes an order permitting clearance and loading of the goods for exportation under Section 51 read with clause (a) of sub section (1) of Section 16. The facts show the shipping bill was filed, assessed, duty paid and Let Export Order (permission to clear and load) was recorded on 05.12.2008. Reliance was placed on the ratio of earlier authorities including Narayan Bandekar & Sons Pvt. Ltd. and subsequent Tribunal decisions following the same principle. The Tribunal rejected the appellant's contention that the date of physical loading, entry inward under Section 31 or the vessel's departure are the relevant dates for determining applicability of a subsequently issued exemption notification. Even if actual loading occurred on 07.12.2008, the determinative date under the statute is the date of the order permitting clearance and loading (Let Export Order) which in this case was 05.12.2008; consequently the Notification dated 07.12.2008 could not be given retrospective benefit to the export already cleared on 05.12.2008. The Tribunal therefore affirmed the findings of the lower authorities and dismissed the refund claim. [Paras 8, 10, 11]

Benefit of Notification No. 129/2008 dated 07.12.2008 is not available to the appellant because the relevant date for determination of duty was 05.12.2008 when the Let Export Order was issued; appeal dismissed.

Final Conclusion: The Tribunal held that the statutory date for determining the rate of export duty is the date of the order permitting clearance and loading under Section 51 (Let Export Order); as the Let Export Order and duty payment occurred on 05.12.2008, the exemption notified on 07.12.2008 could not be applied and the refund claim was dismissed.

Unjust enrichment - refund of excess CVD - chartered accountant's certificate and balance sheet as evidentiary proof - onus shifting upon production of CA certificate - self-assessment and assessment under protest

Unjust enrichment - chartered accountant's certificate and balance sheet as evidentiary proof - onus shifting upon production of CA certificate - Whether the remand by Commissioner (Appeals) to the adjudicating authority to reconsider the issue of unjust enrichment was sustainable where the assessee produced a Chartered Accountant's certificate and balance sheet entries showing the refund claim as receivable - HELD THAT: - Adjudicating authority had allowed exemption and sanctioned refund after finding the imported goods were manufactured outside India and that no Cenvat credit could be availed, and the appellant had paid duty under protest. For the refund claim the appellant produced a Chartered Accountant's certificate dated 13.02.2017 and the company's balance sheet (financial year 2015-16) showing the claimed amount as 'Customs Duty Deposit Receivable' under long-term loans/advances. The Tribunal relied on its earlier Final Order in M/s. Micromax Informatics Ltd. and the decision of the High Court of Karnataka in Commissioner of Customs v. Apple India Ltd., which hold that production of a CA certificate together with the balance sheet shifts the onus to the department to falsify those documents before drawing a presumption of unjust enrichment. Applying those authorities, the appellate remand to re-examine unjust enrichment was held unsustainable because the department had not discharged its burden to rebut the documentary evidence produced by the appellant. The Tribunal therefore concluded that the finding of the Commissioner (Appeals) directing reconsideration on unjust enrichment could not stand. [Paras 5, 6, 7]

Remand to reconsider unjust enrichment set aside; production of CA certificate and balance sheet shifted onus to department and supported allowance of refund.

Final Conclusion: Appeal allowed; the impugned remand order directing re-examination of unjust enrichment is unsustainable in view of the appellant's production of a Chartered Accountant's certificate and balance-sheet entries, and the refund granted by the adjudicating authority is upheld with consequential relief, if any, in accordance with law.

Classification of roasted areca/betel nuts under Chapter 20 (Heading 2008 19 20) - roasting as a process distinct from drying or moderate heat treatment - HSN Explanatory Notes as a guiding aid for tariff classification - specific tariff entry prevailing over a general entry - Note 3 to Chapter 8 and its scope

Classification of roasted areca/betel nuts under Chapter 20 (Heading 2008 19 20) - roasting as a process distinct from drying or moderate heat treatment - HSN Explanatory Notes as a guiding aid for tariff classification - specific tariff entry prevailing over a general entry - Note 3 to Chapter 8 and its scope - Whether Roasted Areca Nuts (whole, split, cut) are classifiable under CTH 2008 19 20 of Chapter 20 and not under Chapter 8 - HELD THAT: - The Authority examined the nature of the roasting process and the competing scope of Chapter 8 and Chapter 20. Roasting was held to be a severe heat treatment that produces fundamental chemical and physical changes (including reduction of moisture and alteration of tannin/arecoline content and charred appearance), and is therefore distinct from the moderate heat treatments and dehydration contemplated by Note 3 to Chapter 8. The HSN Explanatory Notes to Heading 2008 expressly include dry-roasted, oil-roasted and fat-roasted nuts (including areca/betel nuts) within the scope of Heading 2008. Where a specific HSN entry covers a product, that specific entry prevails over a more general description. The Authority further relied on the established principle that HSN Explanatory Notes are a safe guide for tariff classification and on relevant judicial precedent upholding the guiding value of HSN notes. In light of these considerations, the processes performed on the goods do not bring them within Chapter 8, but instead render them classifiable as "other roasted nuts and seeds" under Heading 2008 19 20 of Chapter 20. [Paras 6, 7, 8, 9]

Roasted areca/betel nuts (whole, split, cut) are classifiable under CTH 2008 19 20 of Chapter 20 and not under Chapter 8.

Final Conclusion: The Authority for Advance Rulings rules that the goods described as Roasted Areca Nuts (whole, split, cut) are classifiable under Tariff Item 2008 19 20 (Other roasted nuts & seeds) of Chapter 20 of the First Schedule to the Customs Tariff Act, 1975.

Interlocutory order - appealability under Section 421 of the Companies Act, 2013 - prematurity and maintainability of appeal - abeyance of AGM outcome subject to subsequent adjudication - preservation of substantive rights for determination on merits

Interlocutory order - appealability under Section 421 of the Companies Act, 2013 - prematurity and maintainability of appeal - abeyance of AGM outcome subject to subsequent adjudication - Whether the impugned order of the Adjudicating Authority permitting the AGM to be held but keeping the outcome on Agenda No.1 in abeyance is an appealable order under Section 421 or is a premature/interlocutory order not admitting appeal. - HELD THAT: - The Tribunal examined the nature and effect of the Adjudicating Authority's order which granted time to respondents to file reply, directed that the AGM be held as scheduled but that the outcome on Agenda No.1 be kept subject to the Tribunal's orders. The order was held to be interlocutory because it did not adjudicate or finally affect any substantive right of the appellant; all objections raised by the appellant (including those invoking procedural provisions such as Section 134) were left open for consideration on merits when the Company Petition is taken up. Permitting the AGM to proceed while keeping the consequential outcome in abeyance does not amount to determination of the appellant's rights and therefore does not render the order appealable under Section 421. As the impugned order is procedural and interlocutory in character, an appeal arising from it is premature. The Tribunal accordingly dismissed the appeal while expressly preserving the appellant's right to agitate the grievances at the appropriate stage in the main Company Petition proceedings.

The impugned order is interlocutory and the appeal is premature and not maintainable; appeal dismissed with liberty to pursue grievances in the main Company Petition.

Final Conclusion: Appeal dismissed as premature because the Adjudicating Authority's order was interlocutory-permitting the AGM while keeping its outcome on Agenda No.1 in abeyance-and did not finally adjudicate the appellant's substantive rights; appellants' rights reserved to be urged in the main petition.

Question of law - jurisdiction under Section 15Z of the Securities and Exchange Board of India Act, 1992 - interference in appellate jurisdiction

Question of law - jurisdiction under Section 15Z of the Securities and Exchange Board of India Act, 1992 - Whether the Supreme Court should exercise its jurisdiction under Section 15Z of the SEBI Act to interfere in the appeals - HELD THAT: - The Court examined the appeals and concluded that no question of law arises which would justify intervention under Section 15Z of the Securities and Exchange Board of India Act, 1992. Having found the absence of any determinative legal issue warranting exercise of its special jurisdiction, the Court declined to interfere with the matters brought before it.

Appeals dismissed for want of a question of law meriting interference under Section 15Z of the SEBI Act; pending applications disposed of.

Final Conclusion: The Supreme Court dismissed the appeals, holding that no question of law was shown to justify interference under Section 15Z of the Securities and Exchange Board of India Act, 1992, and disposed of pending applications.

Calculation of registration fee based on turnover - mandatory interest obligation under Schedule III, Regulation 5 of the Stock Brokers Regulations - discretion to waive or reduce interest - credit for interest on amounts lying in assessee's account

Mandatory interest obligation under Schedule III, Regulation 5 of the Stock Brokers Regulations - discretion to waive or reduce interest - Whether SEBI had discretion to decline charging or to reduce interest on outstanding registration/turnover fee. - HELD THAT: - The Tribunal examined the wording of Regulation 5 of Schedule III to the Stock Brokers Regulations and the direction in this Tribunal's earlier order. The Tribunal held that the regulation mandates charging of interest at 15% p.a. for delayed payment by use of the word 'shall', which cannot be read as permissive. The earlier Tribunal direction that 'SEBI is at liberty to impose simple interest at 15% p.a.' did not confer any discretion to deviate from the prescribed interest rate or to treat the obligation as optional. Charging interest is compensatory for accretion to capital and is not a penal exercise calling for fact sensitive discretionary mitigation. Reliance on precedents about mandatory language and the SEBI's power to charge interest under applicable law supports the conclusion that SEBI correctly computed and demanded interest at the prescribed rate. [Paras 7]

SEBI had no discretion to waive or reduce the interest; interest at 15% p.a. is mandatorily chargeable and the interest liability as computed by SEBI is confirmed.

Credit for interest on amounts lying in assessee's account - Whether the appellant was entitled to be credited with interest on amounts it had deposited with SEBI. - HELD THAT: - The Tribunal considered the appellant's claim for credit of interest on amounts earlier deposited (aggregate deposits and their treatment during the period between the Tribunal's 2006 order and the Supreme Court's 2015 decision). The Tribunal found no merit in the broader claim that SEBI should have credited interest on the aggregate deposits for the entire disputed period, because the Supreme Court upheld SEBI's fee calculation and interest was properly chargeable on outstanding dues. However, it was noted that a specific short period (September 6, 2003 to October 1, 2003) left a demonstrable credit balance of Rs. 74,55,793/- for which no interest had been credited. The Tribunal held that the appellant is entitled to simple interest at 15% p.a. on that credit balance for that period and modified the impugned order accordingly. [Paras 7]

General claim for interest credit is rejected, but appellant is entitled to 15% p.a. simple interest on the specific credit balance for the period September 6, 2003 to October 1, 2003; the impugned order is modified to that extent.

Final Conclusion: The appeal is partly allowed: SEBI's computation of interest at 15% p.a. on outstanding turnover fee is upheld as mandatory under the Regulations, but the impugned order is modified to grant the appellant simple interest at 15% p.a. on the identified credit balance for the period September 6, 2003 to October 1, 2003; otherwise the SEBI demand is confirmed.

Natural justice compliance in administrative/quasi-judicial proceedings - Jurisdiction of FMC under the Forward Contracts (Regulation) Act to inquire into affairs of recognised association and its members - Scope of inspection and incidental powers under the FCRA to protect investor interest - Quasijudicial inquiry under Section 8 of the FCRA and delegation of powers - Legitimacy of payments to related parties and embezzlement by oblique transactions - Backdating of agreements and ex post facto regularisation as indicia of mala fides - Bogus allotment of shares funded by the entity's own monies - Validity of appointments/engagements of consultants without due process - Misappropriation of corporate funds for personal and family expenses

Natural justice compliance in administrative/quasi-judicial proceedings - SEBI complied with the Supreme Court directions and afforded adequate opportunity of hearing to the appellants, permitting the Tribunal to decide the appeal on merits. - HELD THAT: - The Tribunal found that pursuant to the Supreme Court's order dated November 27, 2020, SEBI supplied the documents requested by the appellants and afforded opportunities for crossexamination and written submissions. The appellants did not press any challenge alleging violation of natural justice. The Tribunal noted that earlier orders were set aside on the ground of denial of natural justice, but, having been afforded the directed opportunity, the appellants received adequate natural justice and the appeal could be adjudicated on merits. [Paras 3]

SEBI complied with directions; adequate opportunity given and appeal decided on merits.

Jurisdiction of FMC under the Forward Contracts (Regulation) Act to inquire into affairs of recognised association and its members - Quasijudicial inquiry under Section 8 of the FCRA and delegation of powers - Scope of inspection and incidental powers under the FCRA to protect investor interest - The FMC had jurisdiction under the FCRA to conduct the inquiry into the affairs and management of NMCE and to take necessary action to protect investor interests; delegation to the Director was effective and the inquiry was not vitiated on that ground. - HELD THAT: - The Tribunal analysed Sections 4 and 8 of the FCRA and held that the Commission was vested with wide powers to keep forward markets under observation and to undertake inspection of accounts and documents of recognised associations. The power to inquire into the affairs of an association or its members was held to be within the statutory scheme and incidental powers necessary to protect investor interests were implied. The Tribunal further accepted that the Central Government had delegated relevant powers to the FMC Director by notification dated March 12, 1964, rendering the objection to the authorisation of the inquiry hypertechnical and unsustainable. Prior judicial treatment of jurisdictional objections in earlier High Court and Supreme Court proceedings was noted. [Paras 4]

Challenge to FMC's jurisdiction and to Director's authority to initiate inquiry rejected.

Legitimacy of payments to related parties and embezzlement by oblique transactions - Backdating of agreements and ex post facto regularisation as indicia of mala fides - Payments made by NMCE to ATSPL (a related entity) were not for bona fide software development and amounted to bogus payments/embezzlement; contentions that payments were legitimate or approved were rejected. - HELD THAT: - The Tribunal found undisputed connections between ATSPL and the appellants' family, absence of capacity of ATSPL to perform software development, lack of other clients, absence of requisite registrations, and evidence that ATSPL outsourced actual software work to Mentissa for a small fraction of sums received. The record showed large transfers from ATSPL to various entities and use of exchange margin funds for marketmaking when marketmaking was not permitted. Backdated agreements and questionable stamp paper authenticity supported the conclusion of ex post facto regularisation. The Tribunal also relied on the finding of the Income Tax Settlement Commission regarding embezzlement. [Paras 5]

Payments to ATSPL held to be bogus and intended to misappropriate NMCE funds; grounds 2-5 rejected.

Bogus allotment of shares funded by the entity's own monies - Allotment of shares of NMCE to the appellant (NOL) was bogus, effected by utilisation of NMCE funds without receipt of application money or proper approval. - HELD THAT: - The Tribunal recorded that allotments were effected at various dates but the investigation disclosed that exchange funds (including through ATSPL transactions) were used to acquire shares in the name of the appellant, in breach of Companies Act provisions and without payment of application money. The mechanism showed use of the Exchange's funds for share acquisition, rendering the allotment invalid and not bona fide. [Paras 6]

Allotment of shares to appellant No. 2 held to be bogus; ground No. 6 rejected.

Validity of appointments/engagements of consultants without due process - The engagement of a large number of consultants by the MD of NMCE was irregular, lacking due process, documentation, scope definition and board approvals in most cases. - HELD THAT: - The Tribunal noted that out of 144 consultants only 11 had board approval; the remainder were engaged without identification of need, documentation or defined scope of work, and payments were made without adequate records. Although the MD had authority to engage consultants, the manner of engagement demonstrated malfeasance and absence of due process, justifying rejection of the appellants' contention. [Paras 7]

Appointment and payment to consultants held irregular; ground No. 7 rejected.

Misappropriation of corporate funds for personal and family expenses - Funds of NMCE were misused for personal and family expenses of the MD and his family, and related allegations of misappropriation were upheld. - HELD THAT: - The Tribunal recorded specific instances of expenditure charged to NMCE (foreign travel, household appliances, and vehicle purchases) and noted absence of cogent explanations from the appellants. Vehicles purchased from exchange funds were registered in the appellant's name and used by family members while maintenance expenses were borne by NMCE. The lack of satisfactory justification led to rejection of the appellants' denial. [Paras 8]

Misappropriation findings sustained; ground No. 8 rejected.

Final Conclusion: The appeal is dismissed. The Tribunal upheld SEBI's findings that (i) FMC/SEBI possessed jurisdiction to inquire into the affairs and management of NMCE; (ii) payments to ATSPL were bogus and constituted misappropriation of exchange funds; (iii) share allotment to the appellant was invalid; (iv) multiple consultant engagements were irregular; and (v) exchange funds were used for personal/family expenses. No costs.

Failure to intimate SEBI about number of debenture-holders exceeding permitted limit - penalty under Section 15HB of the SEBI Act for contravention of Debenture Trustees' obligations - Regulation 15(1)(i) of Debenture Trustees Regulations - compliance with Clause 19 of the Code of Conduct under Debenture Trustees Regulations - suppression of BENPOS report / withholding material information

Failure to intimate SEBI about number of debenture-holders exceeding permitted limit - Regulation 15(1)(i) of Debenture Trustees Regulations - penalty under Section 15HB of the SEBI Act for contravention of Debenture Trustees' obligations - Appellant's liability for not reporting to SEBI that the number of debenture-holders exceeded the permitted limit - HELD THAT: - The appellant conceded that it received the BENPOS list from Karvy on April 1, 2014 showing more than the permitted number of investors and did not inform SEBI. The Tribunal treated this concession as admission of the first charge and held that non-intimation of SEBI about the number of debenture-holders amounted to breach of the Debenture Trustees Regulations. On that basis the appellant was held liable to be penalised, but having regard to the circumstances and mitigation pleaded, the Tribunal reduced the penalty imposed by the Adjudicating Officer. [Paras 9, 12]

Liability for failure to inform SEBI established; penalty sustained but reduced to Rs. 5 lakh.

Suppression of BENPOS report / withholding material information - compliance with Clause 19 of the Code of Conduct under Debenture Trustees Regulations - Allegation that the appellant suppressed the correct BENPOS report and thereby withheld material information from SEBI - HELD THAT: - SEBI alleged that the appellant initially furnished an incorrect BENPOS (as on 31.03.2015) and only after reminders submitted the correct BENPOS (as on 31.03.2014). The Tribunal found that the correct BENPOS was submitted within a short period (about 13 days) after SEBI's request of July 17, 2020, and that there was no case that the correct report was never furnished. In view of the chronology and the prompt submission once asked, the Tribunal concluded that the charge of suppression was not made out. [Paras 10, 11, 12]

Charge of suppression of BENPOS report not proved; second charge dismissed.

Final Conclusion: Appeal allowed in part: the penalty imposed for failure to inform SEBI is sustained but reduced to Rs. 5 lakh; the second charge of suppression of the BENPOS report is held not proved and is set aside.

Abuse of process of law - maintenance of repetitive writ petitions - res judicata and issue estoppel - frivolous and vexatious litigation - costs for frivolous litigation

Maintenance of repetitive writ petitions - abuse of process of law - res judicata and issue estoppel - costs for frivolous litigation - Maintainability of the petition in view of earlier identical petitions filed by the petitioners and whether the present petition amounts to abuse of process warranting dismissal with costs - HELD THAT: - The Court found that the petitioners and their counsel had filed earlier writ petitions with identical prayers before this Court and other High Courts and were therefore fully aware of the pendency of earlier proceedings. Although the petition discloses such facts in its averments, the petitioners proceeded to file repeated petitions seeking the same reliefs. The attempt to resist the preliminary objection by invoking the principle that estoppel would not apply was rejected as misconceived. Having regard to the multiplicity of identical petitions and the petitioners' knowledge thereof, the Court concluded that the present petition constituted an abuse of the process of law and could not be permitted to proceed. In consequence, discretionary relief was refused and a penal cost was imposed to deter frivolous repetition of proceedings. The Court did not decide the substantive constitutional challenges to the statutes raised in the petition on merits and took no substantive view on those enactments in this order. [Paras 9, 10]

Petition dismissed as an abuse of the process of law; petitioners directed to pay costs of Rs.1 lac to the High Court Legal Services Committee within one month, failing which recovery procedures as arrears of land revenue to be initiated

Final Conclusion: The writ petition was dismissed as an abuse of process because the petitioners had earlier filed identical petitions; the Court imposed costs of Rs.1 lac to be deposited with the High Court Legal Services Committee and preserved the respondents' liberty to proceed in accordance with law.

Bar under Section 430 of the Companies Act - withdrawal of civil suit - resort to parallel remedies - right to judicial remedy under Article 21 - revival of proceedings - compensatory costs for procedural discrepancy

Bar under Section 430 of the Companies Act - resort to parallel remedies - withdrawal of civil suit - revival of proceedings - Whether dismissal of the company petition on the ground of pendency of a civil suit was justified and whether the company petition should be revived following withdrawal of the civil suit - HELD THAT: - The Adjudicating Authority dismissed the company petition on 10.08.2022 because the appellant had a civil suit pending despite an earlier undertaking to withdraw it, invoking the bar created by Section 430 of the Companies Act against parallel civil proceedings. The appellant had, however, filed a memo for withdrawal of the civil suit and the civil court subsequently dismissed that suit as withdrawn on 13.08.2022. The Tribunal observed that the subsequent dismissal as withdrawn eradicated the embargo that had existed at the time of the NCLT order. Having regard to the appellant's bona fides in seeking withdrawal and the constitutional protection of access to judicial remedies under Article 21, the Tribunal held that a minor procedural lapse should not result in permanent denial of the appellant's statutory remedy under Section 59. Balancing equities, the Tribunal set aside the impugned dismissal and ordered that the company petition be revived and decided on merits, subject to compliance with the costs order.

Impugned order dismissing the company petition is quashed; Company Petition No.106(CHE)/2021 is revived to be decided on merits.

Compensatory costs for procedural discrepancy - Whether the respondents should be awarded costs for being forced to litigate due to the appellant's procedural default - HELD THAT: - The Tribunal recognised that the respondents were put to unnecessary litigation because of the appellant's failure to have the civil suit withdrawn before the NCLT hearing. To balance equities and deter procedural laxity while permitting revival of the petition, the Tribunal directed payment of costs by the appellant to the three respondents. Payment of the prescribed costs and proof of remittance were made a condition precedent for revival of the company petition.

Appellant directed to pay costs to the respondents (specified in the order) and upon proof of payment the company petition shall revive for adjudication on merits.

Final Conclusion: The impugned NCLT order dismissing the company petition is quashed and the petition is restored for adjudication on merits; revival is conditional on the appellant paying the directed costs to the respondents and producing proof of remittance within the stipulated time.

Enlargement on bail for delay in commencement of trial - acceptance of undertakings on oath as part of the record - application of precedent by following paragraphs 25-28 of V. Senthil Balaji - duty of Public Prosecutor to act fairly where delay is occasioned by prosecution - limits on directions by Enforcement Directorate to Public Prosecutor

Enlargement on bail for delay in commencement of trial - application of precedent by following paragraphs 25-28 of V. Senthil Balaji - Appellants to be enlarged on bail because trial is not likely to commence and charges have not been framed, following this Court's decision in V. Senthil Balaji (paras 25-28). - HELD THAT: - The Court noted that the appellants had been in custody for about one year and one month, that charges in the PMLA complaint have not been framed despite numerous witnesses and voluminous documents, and that the trial is not likely to commence. In view of the undertakings furnished by the appellants and applying the principle set out in paragraphs 25 to 28 of V. Senthil Balaji, the Court held that the appellants must be enlarged on bail. The Special Court is directed to enlarge the appellants on bail on appropriate terms and conditions, including adherence to the undertakings furnished by them. The Court also left open the respondent's right to seek cancellation of bail before the Special Court if delay in hearing is caused by any act or omission of the appellants. [Paras 3, 5, 6]

Appeals allowed; Special Court to enlarge appellants on bail on appropriate terms including the undertakings, subject to cancellation proceedings if appellants cause delay.

Acceptance of undertakings on oath as part of the record - Undertakings given by the appellants on specified dates are accepted and made part of the record. - HELD THAT: - The Court recorded that the appellants in the two matters had furnished sworn undertakings dated 6th and 9th December, 2024 respectively. The Court accepted those undertakings and directed that they be made part of the record, treating them as binding conditions attendant to grant of bail. [Paras 4]

Undertakings on oath furnished by the appellants accepted and incorporated in the record.

Duty of Public Prosecutor to act fairly where delay is occasioned by prosecution - limits on directions by Enforcement Directorate to Public Prosecutor - Clarification that Public Prosecutors must act fairly and, where delay is due to the Enforcement Directorate, should not oppose bail; but Public Prosecutors remain entitled to oppose bail if they are not satisfied that delay is caused by ED, and ED cannot direct what the Public Prosecutor ought to do before the Court. - HELD THAT: - Addressing paragraph 7.20 of the Special Court's order, the Supreme Court observed that a Public Prosecutor has a duty to be fair and, when bound by precedent or satisfied that delay in trial is attributable to the Enforcement Directorate, should adopt a corresponding stance. However, the Court clarified that this does not preclude prosecutors from opposing bail when they contend that the delay is not due to ED's conduct. Further, while the Enforcement Directorate or its Director may give factual instructions to a Public Prosecutor, they have no authority to prescribe how the Public Prosecutor should discharge his duties before the Court as an officer of the Court. Consequently paragraph 7.20 is clarified and there is no obligation on the Director of ED to issue the directions contemplated therein. [Paras 8, 9, 10]

Paragraph 7.20 of the Special Court's order stands clarified: Public Prosecutors must act fairly but may oppose bail where appropriate; ED cannot direct prosecutors on how to perform their duties before the Court.

Final Conclusion: The appeals are allowed; appellants to be enlarged on bail on appropriate terms including the accepted undertakings, the Special Court to implement bail subject to cancellation remedies for appellant-caused delay, and the Special Court's observation in paragraph 7.20 is clarified to preserve the Public Prosecutor's duty of fairness while denying any power to ED to direct prosecutorial conduct.

Bona fide purchaser - attachment of proceeds of crime - scheduled offence under the PMLA - criminal conspiracy under Section 120-B IPC - requirement of existence of scheduled offence for invoking PMLA

Bona fide purchaser - attachment of proceeds of crime - Validity of attachment under the PMLA of properties transferred to the petitioner by sale deeds executed before registration of predicate offences - HELD THAT: - The petitioner purchased parcels of land by sale deeds executed between 25-10-2021 and 26-08-2022; those transactions and subsequent Joint Development Agreement pre dated registration of the predicate crimes and the ECIR. The Court accepted that the petitioner is a bona fide purchaser who was not an accused in either the predicate offences or the ECIR proceedings. Applying the principle that purchasers who acquire property before the commission or detection of the scheduled offence cannot be indiscriminately drawn into PMLA attachment proceedings, the Court held that permitting attachment of properties acquired by the petitioner long before initiation of the criminal proceedings would unjustly subject an innocent purchaser to the consequences of a vendor's later indictment. On these facts the impugned order of attachment was unsustainable and liable to be set aside. [Paras 9, 11, 12]

Order of attachment dated 13-07-2024 quashed insofar as it affects the petitioner

Scheduled offence under the PMLA - criminal conspiracy under Section 120-B IPC - requirement of existence of scheduled offence for invoking PMLA - Scope of Section 120-B IPC in bringing offences within the Schedule to the PMLA and its application to the present proceedings - HELD THAT: - Relying on the reasoning in Pavana Dibbur, the Court accepted the proposition that Section 120-B will constitute a scheduled offence under the PMLA only if the alleged conspiracy is to commit an offence already specified in Parts A, B or C of the Schedule. A broad construction that any conspiracy to commit an offence (including offences not in the Schedule or without cross border implications) would convert that conspiracy into a scheduled offence would defeat the legislative scheme and render the Schedule otiose. On the material before the Court there was no basis to treat the petitioner's transactions as forming part of proceeds of any established scheduled offence; consequently the presence of an allegation of conspiracy in other complaints could not, without more, justify continuing attachment proceedings against the petitioner. [Paras 29, 30, 31]

Section 120-B attracts PMLA only when the conspiracy concerns an offence already included in the Schedule; absent such linkage the PMLA proceedings cannot be sustained against the petitioner

Final Conclusion: Writ petition allowed; the Enforcement Directorate order dated 13-07-2024 (ECIR/BGZO/28/2023) is quashed insofar as it relates to the petitioner.

Proceeds of Crime - Scheduled Offence - ECIR as internal document - PMLA as sui generis legislation - Section 3 of PMLA is a standalone offence - Predicate offence requirement under PMLA - Quashment of FIR does not automatically quash ECIR

Quashment of FIR does not automatically quash ECIR - Proceeds of Crime - Whether quashment of the FIR against the petitioner mandates quashing of the ECIR and all consequent PMLA proceedings - HELD THAT: - The Court held that quashing of an FIR does not automatically extinguish ECIR or PMLA proceedings. Mere quashment of a predicate FIR on procedural or jurisdictional grounds, absent adjudication on the substantive merits (such as acquittal or a judicial finding that the property is rightfully owned), is insufficient to render ECIR ineffective. Where ECIR investigation has traced prima facie "proceeds of crime" and statutory complaints under Sections 44 and 45 of PMLA (and supplementary complaints) have been filed, those PMLA proceedings continue independently unless the scheduled offence has been finally negatived on substantive grounds. The Court emphasised a case by case examination of the reasons for quashment; only quashment that entails exoneration on merits or findings negating the property as proceeds of crime would warrant quashing of ECIR. [Paras 32, 36, 38, 40, 42]

Quashment of the FIR qua the petitioner does not automatically warrant quashing of the ECIR; ECIR and PMLA proceedings are not vitiated by the FIR quash in the present facts.

PMLA as sui generis legislation - Section 3 of PMLA is a standalone offence - Predicate offence requirement under PMLA - Whether proceedings under PMLA are independent and whether Section 3 constitutes a standalone offence requiring 'proceeds of crime' to be established - HELD THAT: - The Court reiterated that PMLA is a special, self contained code focused on identifying and dealing with "proceeds of crime". Section 3 penalises processes or activities connected with proceeds of crime and operates as an independent offence: prosecution under Section 3 is triggered only when there exists "proceeds of crime" within the meaning of the Act and the Authorized Officer records reason to believe, supported by tangible evidence, of involvement in processes connected with such proceeds. Consequently, PMLA investigations and civil attachment/confiscation proceedings can proceed independently once a scheduled offence gives rise to identifiable proceeds of crime, subject to the constitutional and statutory safeguards discussed in Vijay Madanlal. [Paras 19, 20, 22, 24, 25]

PMLA proceedings are sui generis and Section 3 is a standalone provision; prosecution under PMLA requires establishment of "proceeds of crime" and a recorded reason to believe supported by evidence.

ECIR as internal document - ECIR as internal document - Whether an ECIR is equivalent to an FIR or is a statutory document whose quashment can be sought on the same footing as an FIR - HELD THAT: - The Court accepted the distinction that ECIR is an internal administrative document of the Enforcement Directorate and is not equivalent to an FIR. Citing the reasoning in Vijay Madanlal and related decisions, the Court observed there is no statutory requirement to record or furnish an ECIR analogous to Section 154 Cr.P.C.; ECIR may give rise to investigation and eventual prosecution under PMLA but, once recorded and investigation proceeds, ECIR becomes an independent administrative record focused on "proceeds of crime." Therefore, ECIR cannot be equated with an FIR and its quashment cannot be mechanically derived from quashing of an FIR. [Paras 26, 27, 28, 29, 30]

ECIR is not the same as an FIR; it is an internal document and does not get automatically quashed because a related FIR is quashed.

Scheduled Offence - Predicate offence requirement under PMLA - Whether the scheduled offence under Section 447 of the Companies Act, 2013 persists so as to sustain ED proceedings against the petitioner - HELD THAT: - The Court noted that the SFIO complaint under the Companies Act (including offences under Section 447) predates the CBI FIR and remains pending; the High Court of Karnataka quashed only the CBI FIR against the petitioner on jurisdictional grounds because SFIO had been entrusted with the same allegations. The SFIO complaint and the chargesheet under Section 447 thus remain on record and constitute a continuing scheduled offence within the meaning of PMLA. Given that the predicate scheduled offence (Section 447) is not quashed on merits, the ED's invocation of PMLA and its subsequent supplementary complaint cannot be said to be vitiated. [Paras 16, 17, 18, 43, 44]

The scheduled offence under Section 447 of the Companies Act remains pending and therefore the ED proceedings are not vitiated by the quashment of the CBI FIR.

Final Conclusion: The writ petitions seeking quashment of the ECIRs are dismissed. The Court held that PMLA proceedings are independent, ECIR is not equivalent to an FIR, and quashment of the CBI FIR on jurisdictional/technical grounds does not automatically invalidate ED's investigations where prima facie proceeds of crime have been traced and a scheduled offence under Section 447 remains pending; the trial court is to proceed uninfluenced by the observations in these petitions.

Determination of taxability of service - appeal lie to Supreme Court under Section 35L of the Central Excise Act, 1944 - appeal not maintainable before High Court under Section 35G of the Central Excise Act, 1944 - nature of the order passed by the Tribunal governs forum of appeal - determination in relation to valuation for purpose of assessment

Determination of taxability of service - appeal lie to Supreme Court under Section 35L of the Central Excise Act, 1944 - appeal not maintainable before High Court under Section 35G of the Central Excise Act, 1944 - nature of the order passed by the Tribunal governs forum of appeal - Whether the appeal under Section 35G before the High Court is maintainable or whether the remedy lies under Section 35L to the Supreme Court on account of questions of taxability/valuation decided by CESTAT. - HELD THAT: - The Court held that the impugned CESTAT order involved the question of taxability (and issues akin to valuation) of the services rendered by the respondent, and where a tribunal's order determines any question relating to taxability, rate of duty or valuation for assessment, the statutory scheme entrusts the appellate jurisdiction to the Supreme Court. The determinative criterion is the nature of the Tribunal's order, not the particular grounds advanced in the High Court appeal. Reliance was placed on the settled line of authorities and previous decisions of this Court which interpret Sections 35G and 35L to exclude from High Court jurisdiction those tribunal orders that decide questions relating to rate, valuation or chargeability; consequently such appeals lie to the Supreme Court under Section 35L(b). Applying that principle to the facts and the impugned orders, the Court concluded that the present appeal is not maintainable before the High Court and must be pursued under Section 35L before the Supreme Court. The appellant was, however, granted liberty to invoke Section 14 of the Limitation Act, 1963 for any period during which the appeal was pending before this Court. [Paras 6, 7, 15, 16]

The appeal under Section 35G is dismissed as not maintainable; liberty granted to the appellant to file an appeal under Section 35L to the Supreme Court and to seek benefit under Section 14 of the Limitation Act, 1963.

Final Conclusion: The High Court dismissed the appeal as not maintainable under Section 35G because the CESTAT's order involved questions of taxability/valuation which must be appealed to the Supreme Court under Section 35L; liberty was given to pursue remedies before the Supreme Court and to seek limitation relief under Section 14 of the Limitation Act, 1963.

Export of services - Intermediary services - Place of provision of services - Cash refund of accumulated Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004 - Definition of intermediary under Rule 2(f) of the Place of Provision of Services Rules, 2012 - CBIC Circular No.159/15/2021-GST dated 20.09.2021

Export of services - Intermediary services - Place of provision of services - Cash refund of accumulated Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004 - Definition of intermediary under Rule 2(f) of the Place of Provision of Services Rules, 2012 - CBIC Circular No.159/15/2021-GST dated 20.09.2021 - Whether the services rendered by the appellant to Microsoft Corp./Microsoft Mobile qualify as export of services and whether the appellant is an intermediary, thereby affecting entitlement to cash refund of accumulated cenvat credit under Rule 5 CCR, 2004. - HELD THAT: - The Tribunal examined the contractual relationship and nature of services rendered by the appellant to its foreign principals and found that the appellant provided software development, customer support and related services on a principal to principal basis directly to Microsoft entities and not as an intermediary arranging or facilitating a supply between third parties. The tribunal relied on the definition of 'intermediary' under Rule 2(f) of the POPS Rules, 2012 and the clarificatory CBIC Circular No.159/15/2021 GST which clarify that an intermediary must arrange or facilitate a main supply between two or more persons and exclude a person who provides the main service on his own account. Applying these principles and consistent precedents cited (including Informatica and other authorities), the Tribunal held that the appellant did not interact contractually with Microsoft's customers and performed the main services itself for Microsoft located outside India; therefore the services are not intermediary services. As the recipient of the services is located abroad and consideration was received in convertible foreign exchange, the place of provision falls outside India and the services qualify as export of services for the purposes of refund under Rule 5 of the Cenvat Credit Rules, 2004. The Tribunal accordingly allowed the refund claims and set aside the impugned orders of the Commissioner (Appeals). [Paras 6, 7, 8]

Appellant's services are not intermediary services and qualify as export of services; impugned orders rejecting cash refund under Rule 5 CCR, 2004 are set aside and appeals are allowed.

Final Conclusion: The Tribunal allowed the appeals, holding that the services rendered by the appellant to Microsoft entities were not intermediary services but exports of services, and directed grant of cash refund of accumulated cenvat credit for the stated periods, setting aside the orders of the Commissioner (Appeals).

Liability for service tax on cleaning activity - extended period of limitation and wilful suppression - packaging activity vis-a -vis manufacture - manpower recruitment or supply agency versus transportation of goods - valuation of taxable service and pure agent principle - reverse charge and Notification No. 30/2012 ST - penalty in absence of fraud or suppression

Liability for service tax on cleaning activity - cum-tax benefit - Whether the appellant is liable to pay service tax on cleaning services provided to Indian Railways and other Central Government departments - HELD THAT: - The Tribunal held that cleaning services provided to rolling stock and to Central Government institutions are taxable services and the appellant is liable to pay service tax for the normal period, although the extended period invoked by the Revenue is unsustainable in the absence of wilful suppression. The Tribunal recognised precedents and factual matrix (services to government/PSUs) and confirmed tax liability for the normal limitation period. As the appellant had not collected tax from recipients, it is entitled to benefit of cum-tax under Section 67(2) as recorded by the adjudicating authority. [Paras 16, 17, 18, 22, 24]

Demand for service tax on cleaning services confirmed for the normal period; extended period demand set aside; appellant entitled to cum-tax benefit

Extended period of limitation and wilful suppression - Whether the extended period of limitation could be invoked against the appellant - HELD THAT: - The Tribunal found no allegation or evidence of wilful mis statement, suppression or intent to evade payment of service tax by the appellant. Reliance was placed on Supreme Court decisions that require deliberate omission or intent to evade for invocation of extended limitation. Since services were supplied to Government/PSUs and similar demands for adjacent periods were later dropped, invocation of extended period was held unsustainable. [Paras 16, 17]

Extended period of limitation not invokable; demands under extended period set aside

Packaging activity vis-a -vis manufacture - Whether the secondary packaging of condoms for M/s HLL Life Care falls within taxable "packaging activity" or amounts to manufacture - HELD THAT: - Applying the definition of "packaging activity" and the statutory concept of manufacture under the Central Excise Act, and having regard to the Circular treating secondary packing as part of excisable product value, the Tribunal concluded that the secondary packing in question is effectively manufacture and beyond the scope of service tax. Consequently, demands made either as "packaging activity" or reclassified as "manpower recruitment or supply agency" in respect of this activity were set aside. [Paras 7, 19, 22]

Demand in respect of secondary packing for HLL Life Care set aside as non service (manufacture)

Manpower recruitment or supply agency versus transportation of goods - reverse charge and Notification No. 30/2012 ST - Whether transportation of documents and goods and liaison work performed for HLL Lifecare amounted to "manpower recruitment or supply agency" services - HELD THAT: - The Tribunal examined the nature of consideration (distance based charges) and contract terms and held that the delivery/transportation and liaison activities do not amount to supply of manpower. Such activities fall under transportation of goods/services for which tax liability is on the recipient under reverse charge. The adjudicating authority's demand characterising these as manpower supply was set aside. The Tribunal also noted that for periods where reverse charge applied and recipients (government/PSUs) discharged tax under Notification No.30/2012 ST, that fact was material in dropping demands. [Paras 8, 21, 23]

Demand as manpower supply for transportation/liaison set aside; tax liability (where applicable) is on recipient under reverse charge and Notification No.30/2012 ST considered

Valuation of taxable service and pure agent principle - Whether service tax is payable on the gross amount including wages paid to employees or whether amounts can be excluded as agent/outsourced payments - HELD THAT: - While the Tribunal accepted the Supreme Court ratio that valuation must be the gross amount charged 'for such service', it held that the question whether salary/statutory payments or other outgoings are excluded from taxable consideration depends on the nature of the contract and whether the appellant acted as a pure agent. The Tribunal directed the adjudicating authority to examine the contracts for each service to determine whether the appellant received amounts as pure agent; if so, such amounts should be excluded in valuation. Accordingly this factual/valuation determination was remanded for de novo adjudication. [Paras 9, 20, 24]

Valuation on gross amount remanded for contract wise examination to apply pure agent principle; adjudicating authority to quantify accordingly

Reverse charge and Notification No. 30/2012 ST - Whether the appellant is eligible for the benefit of Notification No. 30/2012 ST and the extent of liability for the period April 2012 to March 2015 - HELD THAT: - The Tribunal found that for the period April 2012 to March 2015 the appellant, as provider of services to government/PSUs, is eligible for the benefit of Notification No.30/2012 ST. The appellant would be liable to pay only 25% of the total service tax due (supplier's share under partial reverse charge regime applicable then), subject to adjudication. The Tribunal remanded assessment for the period to the adjudicating authority to quantify any short payment after applying the notification and related findings. [Paras 11, 23, 24]

Appellant eligible for Notification No.30/2012 ST for April 2012-March 2015; adjudicating authority to assess and quantify liability (25% supplier share) on remand

Penalty in absence of fraud or suppression - Whether penalties imposed by the adjudicating authority are sustainable - HELD THAT: - Given the Tribunal's finding that there was no wilful suppression or intent to evade duty, and having set aside extended period demands, the imposition of penalties was held unsustainable. The Tribunal set aside penalties imposed by the adjudicating authority. [Paras 10, 17, 22]

Penalties set aside for lack of fraud, collusion or wilful suppression

Remand for quantification and de novo adjudication - Extent and manner of further proceedings required from the adjudicating authority - HELD THAT: - The Tribunal directed remand to the adjudicating authority to (a) quantify service tax liability for cleaning services for the normal period applicable to each show cause notice, (b) examine contracts to determine pure agent exclusions for valuation, and (c) assess short payments for April 2012-March 2015 applying Notification No.30/2012 ST (25% supplier share), giving the appellant a reasonable opportunity of personal hearing and completing de novo adjudication within three months. [Paras 22, 23, 24]

Matters remanded to adjudicating authority for de novo assessment, quantification and application of findings within three months

Final Conclusion: The Tribunal confirmed service tax liability on cleaning services for the normal period but held the Revenue could not invoke the extended period; secondary packing for HLL was held to be manufacture and demands set aside; transportation/liaison activities were not manpower supply and tax (where applicable) is on recipient under reverse charge; valuation issues (gross amount versus pure agent exclusions) and quantification of liabilities (including application of Notification No.30/2012 ST and supplier's 25% share for April 2012-March 2015) were remanded to the adjudicating authority for de novo adjudication; penalties were set aside in absence of wilful suppression.

Admissibility of Cenvat credit where excise duty on final product has been accepted by the Department - Definition of 'manufacture' under Section 2(f) and its application to processes such as cutting/slitting/decoiling - Doctrine of equity/estoppel restraining Revenue from denying credit after accepting duty on final product - Reversal of Cenvat credit under Rule 14 of the Cenvat Credit Rules, 2004

Admissibility of Cenvat credit where excise duty on final product has been accepted by the Department - Definition of 'manufacture' under Section 2(f) and its application to processes such as cutting/slitting/decoiling - Assessee entitled to Cenvat credit of duty paid on inputs despite the contention that the intermediate process (slitting/cutting) did not amount to 'manufacture'. - HELD THAT: - The Court accepted that the process undertaken by the assessee was reduction of width of imported CRGO coils by cutting/slitting. While the Revenue contended that such process does not amount to 'manufacture' as defined in Section 2(f), the Tribunal and this Court followed precedents (including the Gujarat High Court decision in Creative Enterprise and the Bombay High Court/Tribunal authorities) that where the department has accepted payment of excise duty on the cleared final products, the assessee cannot be denied Cenvat credit on inputs used for those clearances. The Court noted that the assessee paid higher excise duty on final products than the credit availed on inputs and that the department never reversed the assessments accepting duty paid on final products. In these circumstances, on principles of equity and to preserve the object of the Cenvat scheme (prevention of double taxation), the admissibility of credit cannot be denied merely because the process might not strictly qualify as 'manufacture'. [Paras 17, 18, 19, 20]

Credit availed by the assessee on the imported CRGO coils is allowable where excise duty on the cleared final products was accepted by the Department.

Doctrine of equity/estoppel restraining Revenue from denying credit after accepting duty on final product - Reversal of Cenvat credit under Rule 14 of the Cenvat Credit Rules, 2004 - Demand for recovery of Cenvat credit under Rule 14 read with section 11AB could not be sustained where the Department had accepted duty on final goods and had not reversed such acceptance. - HELD THAT: - The Court held that the Revenue's call to reverse credit under Rule 14 could not be upheld in view of the Department's prior acceptance of excise duty on the final goods. Citing consistent tribunal and High Court authorities, the Court observed that permitting Revenue to deny previously accepted duty treatment and thereby disallow credit would be contrary to equity and would frustrate the Cenvat mechanism. The Court also noted absence of any departmental action reversing the duty paid on clearance of final products, reinforcing that the demand, interest and penalty challenged could not be sustained. [Paras 19, 20, 21]

The demand for recovery of the allegedly wrongly availed Cenvat credit under Rule 14 read with section 11AB is not maintainable in the facts of the case; Revenue's demand is rejected.

Final Conclusion: The appeal is dismissed; the Tribunal's allowance of Cenvat credit is upheld because the Department had accepted excise duty on the cleared final products and therefore could not, in equity, call for reversal or recovery of the credit under Rule 14/read with section 11AB.

Power to grant exemption from duty of excise - exemption notification - option to forego exemption and pay duty - Modvat/Cenvat credit - retrospective versus prospective operation of an amendment - clarificatory (for removal of doubts) versus substantive amendment

Option to forego exemption and pay duty - Modvat/Cenvat credit - exemption notification - Appellant had the option to forego the unconditional exemption and pay duty on the final products and, having paid duty, was entitled to claim Modvat/Cenvat credit on inputs used in manufacture. - HELD THAT: - The Court observed that Section 5A empowers the Central Government to grant exemptions by notification but does not, by its text, prohibit an assessee from choosing not to avail the exemption and instead paying duty and claiming credit. In the facts, the appellant paid duty on exempted final products and thereby sought to avail credit on inputs, resulting in revenue neutrality; absent the later statutory prohibition, denial of credit would have subjected the appellant to duty despite the exemption notification. The Court therefore held that, prior to the insertion of Clause (1A), the appellant could validly elect to pay duty and claim Modvat/Cenvat credit. [Paras 13, 15, 16]

Answered in favour of the appellant: option to forego exemption and claim Modvat/Cenvat credit is available.

Tribunal's upholding of demand - Modvat/Cenvat credit - revenue neutralization - The Tribunal was not correct in upholding the demand for recovery of Cenvat credit where the assessee had paid duty on the final products and utilized the credit for payment of duty on those products. - HELD THAT: - Given the Court's conclusion that the assessee had an option to pay duty and claim credit, the Tribunal's reliance on the later-inserted Clause (1A) to sustain the demand was misplaced as regards the period in question. The Court noted that the appellant's payment of duty produced revenue neutrality and, absent the substantive prohibition subsequently enacted, recovery of credit was not justified. [Paras 15, 16, 20]

Answered in favour of the appellant: the Tribunal's upholding of the demand was incorrect.

Clarificatory (for removal of doubts) versus substantive amendment - retrospective versus prospective operation of an amendment - Section 5A(1A) - Insertion of Clause (1A) in Section 5A is substantive, not merely clarificatory, and therefore has prospective operation. - HELD THAT: - The Court analysed authorities establishing that an amendment described as 'for removal of doubts' is not automatically retroactive if it effects a substantive change. Relying on the principle that where an amendment changes the law it cannot be presumed retrospective, the Court held that Clause (1A) introduced a prohibition on payment of duty where an absolute exemption existed and thus altered the prior legal position. Consequently, Clause (1A) operates prospectively and does not impair the appellant's earlier entitlement to elect payment and claim credit. [Paras 17, 18, 19, 20]

Answered in favour of the appellant: Section 5A(1A) is substantive and prospective.

Final Conclusion: The appeal is allowed: the assessee could elect to forego the exemption and, having paid duty on exempted final products during 1st March, 2000 to 14th August, 2003, was entitled to Modvat/Cenvat credit; the Tribunal's demand is set aside and the insertion of Section 5A(1A) is held to be substantive with prospective effect.

Classification as fertilizer under ETI 3101 00 99 - classification as plant growth regulator under ETI 3808 93 40 - biostimulant as fertilizer - mode of application (soil versus foliar) not determinative - distinction between plant growth promoter and plant growth regulator - interpretation of Chapter/HSN Notes and Explanatory Notes for tariff classification

Classification as fertilizer under ETI 3101 00 99 - classification as plant growth regulator under ETI 3808 93 40 - biostimulant as fertilizer - interpretation of Chapter/HSN Notes and Explanatory Notes for tariff classification - Siapton 10L and Isabion are classifiable as fertilizers under ETI 3101 00 99 and not as plant growth regulators under ETI 3808 93 40. - HELD THAT: - The Larger Bench examined product composition, technical literature, expert opinions and chemical examiner reports and concluded both products are biostimulants that provide nutrients (amino acids, peptides and macronutrients) and thereby enhance growth, yield and quality. The Bench noted the Ministry of Agriculture treats biostimulants as fertilizers and that the statutory Chapter descriptions and HSN/Explanatory Notes do not distinguish classification on the basis of mode of application. Applying these principles, the Bench found the intrinsic characteristics of Siapton 10L and Isabion align with fertilizers (ETI 3101 00 99) rather than plant growth regulators (ETI 3808 93 40), and therefore the Department's classification as PGR was incorrect. The Division Bench's earlier distinction from Northern Minerals was reversed because the products' characteristics, not application mode, determine classification. [Paras 50, 51, 52]

Siapton 10L and Isabion merit classification under ETI 3101 00 99 as fertilizers (biostimulants) and not under ETI 3808 93 40 as plant growth regulators.

Mode of application (soil versus foliar) not determinative - interpretation of Chapter/HSN Notes and Explanatory Notes for tariff classification - The mode of application (soil application versus foliar application) is not a determinative test for classification under ETI 3101 00 99 or ETI 3808 93 40. - HELD THAT: - The Larger Bench considered chapter descriptions, HSN explanatory notes and authoritative materials (including agricultural textbooks) and observed that both fertilizers and plant growth regulators can be applied to soil or foliage. Watersoluble fertilizers are used in foliar application and fertigation; EU Explanatory Notes also recognise PGRs may be applied to whole plant, parts or soil. Hence reliance on mode of application alone is not a correct test for tariff classification. [Paras 33, 34, 39]

Classification cannot be determined solely by whether a product is applied to soil or sprayed on foliage; mode of application is not a conclusive criterion.

Distinction between plant growth promoter and plant growth regulator - classification as plant growth regulator under ETI 3808 93 40 - A plant growth promoter is not coextensive with a plant growth regulator; a plant growth regulator may inhibit, promote or otherwise alter physiological processes, while a promoter only promotes growth. - HELD THAT: - In answering the reference, the Bench explained that plant growth regulators (PGRs) are organic compounds that modify or control physiological processes in plants and can promote, inhibit or otherwise alter growth. A plant growth promoter, by contrast, only promotes growth and does not necessarily alter physiological processes in the manner of a PGR. The Division Bench's view equating promoters with regulators was held to be incorrect; this distinction informed the classification outcome for the products under consideration. [Paras 8, 52]

A plant growth promoter cannot be equated with a plant growth regulator; the latter has a broader function of altering physiological processes and may promote, inhibit or otherwise modify growth.

Final Conclusion: The impugned orders are set aside and the appeals are allowed: Siapton 10L and Isabion are held to be fertilizers classifiable under ETI 3101 00 99 (biostimulants) and not plant growth regulators under ETI 3808 93 40; mode of application is not determinative and plant growth promoters are not synonymous with plant growth regulators.

Exemption for captive inputs under Notification No.67/95-CE - proviso carve-out for manufacturers of dutiable and exempted final products - Rule 6(6)(vii) of the CENVAT Credit Rules, 2004 - inapplicability of sub-rules (1)-(4) for supplies under International Competitive Bidding - pari materia application of exemption entries between Notifications

Exemption for captive inputs under Notification No.67/95-CE - Rule 6(6)(vii) of the CENVAT Credit Rules, 2004 - inapplicability of sub-rules (1)-(4) for supplies under International Competitive Bidding - pari materia application of exemption entries between Notifications - proviso carve-out for manufacturers of dutiable and exempted final products - Whether central excise duty is leviable on clinker manufactured and captively consumed in manufacture of cement where the final product is cleared under International Competitive Bidding and claimed to be exempt under the relevant notification entry. - HELD THAT: - The Tribunal held that the issue is covered by its earlier decisions, including the appellant's own orders, and is no longer res-integra. The Tribunal applied the exemption scheme of Notification No.67/95-CE which exempts inputs manufactured and used within the factory for manufacture of final products, subject to a proviso; but the proviso contains an exception (clause (vi)) for manufacturers of both dutiable and exempted final products who discharge the obligation under the CENVAT rules. Further, sub-rule (6) of Rule 6 of the CENVAT Credit Rules, 2004 (specifically clause (vii)) renders sub-rules (1)-(4) inapplicable where final products are supplied under International Competitive Bidding and satisfy the condition of customs exemption on import. A conjoint reading of Rule 6(6)(vii) and the proviso to Notification No.67/95-CE leads to the conclusion that the bar in the proviso does not apply to the appellant's claim; the exemption entry in issue is pari materia with earlier notifications relied upon in precedent. Consequently, the demand of duty on intermediate product used captively (clinker) cannot be sustained where the final product was cleared under International Competitive Bidding and the conditions of the cited rules and notifications are met. [Paras 4, 5, 6]

The impugned orders demanding duty on captive clinker are set aside and the appeals are allowed.

Final Conclusion: Following earlier precedents of the Tribunal and applying Rule 6(6)(vii) of the CENVAT Credit Rules conjointly with the proviso and exception in Notification No.67/95-CE, the demand of excise duty on clinker used captively in manufacture of cement cleared under International Competitive Bidding is unsustainable; the impugned orders are set aside and the appeals are allowed.

Eligibility for exemption under Notification No. 89/95-CE (waste, parings and scrap) - treatment of acid oil, fatty acids, gums and waxes as 'waste' arising in the course of manufacture of an exempted product - interpretation of 'goods' and 'excisable goods' after insertion of the explanation to Section 2(d)

Eligibility for exemption under Notification No. 89/95-CE (waste, parings and scrap) - treatment of acid oil, fatty acids, gums and waxes as 'waste' arising in the course of manufacture of an exempted product - interpretation of 'goods' and 'excisable goods' after insertion of the explanation to Section 2(d) - Whether acid oil, fatty acids, gums and waxes generated during refining of crude edible oil qualify as 'waste' entitled to exemption under Notification No. 89/95-CE dated 18.05.1995. - HELD THAT: - The Tribunal considered precedent decisions holding that products such as acid oil, fatty acids, gums and waxes, generated during the process of refining crude edible oil to produce an exempted refined edible oil, can be treated as 'waste' for the purpose of Notification No. 89/95-CE. Although the Revenue relied on the post-amendment explanation to Section 2(d) (which treats as 'goods' any article capable of being bought and sold for consideration), the Tribunal noted that earlier Tribunal decisions, including those cited by the appellant and the Tribunal's own previous orders, have determined the same class of products to be waste arising in the course of manufacture of the exempted product and therefore within the exemption. On that basis, the Tribunal found the issue no longer res integra and followed the earlier decisions, holding that the products in question are eligible for the benefit of Notification No. 89/95-CE. [Paras 11, 12, 13]

Acid oil, fatty acids, gums and waxes generated during refining of crude edible oil are to be treated as 'waste' and are eligible for exemption under Notification No. 89/95-CE; appeal allowed.

Final Conclusion: The appeal is allowed; the clearances of acid oil, fatty acids, gums and waxes for November, 2008 are held to be exempt as 'waste' under Notification No. 89/95-CE and consequential relief, if any, shall follow in accordance with law.

Interest on delayed refund - relevant date for computation of interest - claim for refund under Section 11B - interest under Section 11BB governed by application for refund - refund of amount appropriated as duty - pre deposit/refund under Section 35F and interest under Section 35FF - statutory/notification rate of interest versus judicially awarded rate - precedential scope of Sandvik Asia and subsequent Supreme Court rulings

Interest on delayed refund - relevant date for computation of interest - interest under Section 11BB governed by application for refund - Whether interest on the refunded amount is payable from the date of deposit or from the date three months after filing the refund application. - HELD THAT: - The Tribunal applied the statutory scheme under Section 11B and Section 11BB of the Central Excise Act and relevant precedents. It observed that Section 11B requires a formal application for refund and Section 11BB fixes the starting point for interest on delayed refunds as the expiry of three months from receipt of that application. The impugned order's reliance on the appellant's claim for interest from date of deposit was examined in light of distinctions drawn in law between a refund of duty (governed by Section 11B/11BB) and a pre deposit under Section 35F (governed by Section 35FF). Applying Mafatlal and subsequent authorities, the Tribunal held that where an amount has been appropriated as duty and the refund claim arises under Section 11B, the date for computation of interest is governed by Section 11BB (i.e., three months from filing of the refund application), and not the date of initial deposit made during investigation or adjudication. [Paras 4]

Interest is not payable from the date of deposit; interest entitlement is governed by Section 11BB and begins after three months from receipt of the refund application.

Refund of amount appropriated as duty - claim for refund under Section 11B - pre deposit/refund under Section 35F and interest under Section 35FF - Whether the disputed amount is to be treated as a refund under Section 11B or as a pre deposit attracting Section 35FF. - HELD THAT: - The Tribunal found that the original adjudicating authority had appropriated the amounts against the duty demand, thereby converting the deposited sums into payment of assessed duty. On that basis and following Mafatlal and later decisions, any refund arising upon successful appeal must be claimed and adjudicated under Section 11B. The Tribunal noted that Section 35FF applies only to amounts deposited under Section 35F (statutory pre deposits made to institute appeals) and is a separate code which does not apply where the deposit has been appropriated and treated as duty. Consequently, the statutory machinery and starting point for interest differ depending on whether refund arises under Section 11B or under Section 35FF; in the present facts the refund fell under Section 11B. [Paras 4]

The amount, having been appropriated as duty, is refundable under Section 11B and not under Section 35FF.

Statutory/notification rate of interest versus judicially awarded rate - precedential scope of Sandvik Asia and subsequent Supreme Court rulings - What rate of interest is to be applied to delayed refunds governed by Section 11BB when competing judicial decisions award higher rates (e.g., 12% or 9%). - HELD THAT: - The Tribunal reviewed authorities that awarded interest from date of deposit at rates such as 12% (various Tribunal and High Court decisions invoking Sandvik Asia and related precedent) and later Supreme Court pronouncements (including Willowood/Gujarat Fluoro) which emphasise that where the statute prescribes a rate, that statutory prescription governs; special equitable awards (like higher rates in Sandvik in facts of extreme delay) were fact specific. The Tribunal noted the range of notification rates under different provisions (6% under Section 11BB notification, 15% under Section 11AA notification, etc.) and that judicial awards outside the statutory prescription derive from particular factual matrices. Applying these principles to the present case, and given that the refund claim is governed by Section 11B/11BB, the Tribunal concluded that the appellant could not claim interest from date of deposit at a judicially appointed rate outside the statutory framework; the impugned allowance of interest from deposit/date earlier than three months after filing was not warranted. [Paras 4]

The rate and commencement of interest must be determined by the applicable statutory provisions/notifications and relevant precedents; the appellant is not entitled to interest from date of deposit at a non statutory rate in the facts of this case.

Final Conclusion: The appeal was dismissed. The Tribunal held that the refund claim arising from an amount appropriated as duty is governed by Section 11B and the interest provisions of Section 11BB, which make the date of filing the refund application the relevant trigger (interest accrues after three months from that date); Section 35FF is not attracted on the facts; statutory provisions and notifications determine rate and commencement of interest, and the appellant's claim for interest from date of deposit at a non statutory rate was rejected.

Doctrine of mutuality - power to review for a mistake apparent on the face of the record - reference of questions of law to the High Court under statutory provision - perverse finding based on surmise and conjecture

Power to review for a mistake apparent on the face of the record - Tribunal correctly rejected the review application filed under Section 47 of the Bihar Finance Act, 1981 - HELD THAT: - The Tribunal considered the grounds urged in the review petition, including alleged non-service of notice and errors in appreciation, and found that the matters raised were already considered in its order under review. The Court agreed that the review jurisdiction under Section 47 is confined to correction of mistakes apparent on the face of the record and does not permit rehearing of the matter. The contentions advanced by the appellant amounted to an attempt to re-open and re-hear matters of fact and law which fall outside the restricted scope of review; consequently there was no ground to interfere with the Tribunal's rejection of the review application. [Paras 3]

Review application rejected by the Tribunal was not amenable to interference as it sought rehearing rather than correction of a mistake apparent on the face of the record.

Doctrine of mutuality - perverse finding based on surmise and conjecture - reference of questions of law to the High Court under statutory provision - Questions of law arising from the Tribunal's rejection of the doctrine of mutuality and its factual approach are fit to be referred to the High Court under the statutory procedure - HELD THAT: - On a prima facie reading of the Tribunal's order, the Court identified contested legal questions concerning (a) the correctness of declining application of the doctrine of mutuality to the appellant's transactions; (b) whether the Tribunal's factual findings were perverse because founded on mere surmise and conjecture; and (c) whether the Tribunal was justified in determining proportions of members excluded from mutuality on the basis that certain categories lacked control over the club's affairs. Given the legal significance of the doctrine of mutuality (as discussed with reference to relevant Supreme Court authority) and the apparent existence of questions of law arising from the Tribunal's reasoning and factual appreciation, the Court directed the Tribunal to state a case and refer these specified questions of law to the High Court under the statutory provision enabling such reference. [Paras 9, 10, 11]

Tribunal directed to state the case and make a reference to the High Court on the specified questions of law.

Final Conclusion: The High Court upheld the Tribunal's rejection of the review application as beyond the narrow scope of review and, finding important questions of law arising from the Tribunal's refusal to apply the doctrine of mutuality and its factual approach, directed the Tribunal to state a case and refer those questions to the High Court under the statutory procedure.

Presumption under Section 139 of the Negotiable Instruments Act - presumption of consideration under Section 118(a) of the Negotiable Instruments Act - rebuttal on the preponderance of probabilities - shifting of onus of proof upon raising a probable defence - appellate restraint where two reasonable conclusions are possible in cases of acquittal

Presumption under Section 139 of the Negotiable Instruments Act - presumption of consideration under Section 118(a) of the Negotiable Instruments Act - Execution of the cheque (Ext.P1) by the accused establishes the statutory presumption of consideration in favour of the complainant. - HELD THAT: - The court accepted that Ext.P1 was drawn from the accused's account and that the accused admitted his signature. Applying settled law, once the cheque and signature are established, the statutory presumption under Section 139 (read with Section 118(a)) operates in favour of the holder. The burden therefore shifts to the accused to rebut the presumption by raising a probable defence showing non existence of a legally enforceable debt or liability. The court concluded that the complainant had established the execution of Ext.P1 and thereby attracted the Section 139 presumption. [Paras 11]

The execution of Ext.P1 by the accused attracted the statutory presumption of consideration in favour of the complainant.

Rebuttal on the preponderance of probabilities - shifting of onus of proof upon raising a probable defence - Whether the accused successfully rebutted the presumption by raising a probable defence. - HELD THAT: - The court examined the evidence adduced by the accused: documentary agreements, testimony that the accused's financial dealings were with the complainant's wife, the wife's denial of transactions and signatures, and mediator's evidence supporting the accused's version. Relying on authorities that the accused need only raise a defence that is reasonably probable (standard of preponderance of probabilities), the court found that these circumstances created sufficient doubt about the existence of the consideration for Ext.P1. The accused discharged the initial onus of showing the consideration to be doubtful, thereby shifting the burden back to the complainant, who failed to satisfactorily dispel the suspicious circumstances. Consequently the statutory presumption was held to be rebutted. [Paras 15, 16, 17, 21, 22]

The accused rebutted the statutory presumption by raising a probable defence on the preponderance of probabilities; the presumption stood displaced.

Appellate restraint where two reasonable conclusions are possible in cases of acquittal - Whether the appellate court should interfere with the trial court's acquittal. - HELD THAT: - The court reviewed the principles governing appeals against acquittal, recognising the appellate power to reappreciate evidence but emphasising the double presumption favouring an accused and the rule that where two reasonable conclusions are possible the appellate court should not disturb an acquittal. Given that the trial court's conclusion - that the accused rebutted the presumption and warranted acquittal - was a possible and plausible view of the evidence, the appellate court refrained from interfering with the acquittal. [Paras 23, 24, 25]

No interference with the trial court's acquittal; appeal dismissed.

Final Conclusion: The appellant established execution of the cheque thereby attracting the Section 139 presumption, but the accused adduced material sufficient on the preponderance of probabilities to rebut that presumption; the trial Court's acquittal was a permissible view of the evidence and the appellate Court declined to disturb it, hence the appeal is dismissed.

Existence of an arbitration agreement - scope of judicial reference under Section 11(6A) of the Arbitration and Conciliation Act, 1996 - appointment of sole arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 - effect of approval of resolution plan under Section 31(1) of the Insolvency and Bankruptcy Code, 2016 on pre-existing claims - merits of dispute to be decided by arbitral tribunal - limitation for institution of arbitration application

Existence of an arbitration agreement - scope of judicial reference under Section 11(6A) of the Arbitration and Conciliation Act, 1996 - Arbitration application confined to examination of existence of arbitration agreement and whether the underlying contract contains an arbitration clause applicable to the dispute. - HELD THAT: - The Court confined its inquiry to the existence of an arbitration agreement in terms of Section 11(6A) of the A&C Act, 1996 and the controlling pronouncements of the Supreme Court. The purchase agreement dated 28.07.2014 contains Clause 16(B), an arbitration clause providing for reference to a sole retired District Judge. The existence and applicability of that clause are undisputed on the record. Reliance on the appellate authority holding that the referral Court's task under Section 11(6A) is limited to determining whether the underlying contract contains an arbitration agreement applicable to the dispute was noted and followed. Having found the arbitration clause in Clause 16(B) operative, the Court proceeded to refer the dispute to arbitration rather than adjudicate merits. [Paras 3, 10, 11, 12, 15]

Existence of an arbitration agreement established; Court's scope limited to that question under Section 11(6A).

Appointment of sole arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 - Appointment of a sole arbitrator to adjudicate the dispute between the parties. - HELD THAT: - Having found that the arbitration clause in the purchase agreement is operative and that the dispute has not been resolved amicably, the Court appointed a sole arbitrator to adjudicate the dispute in accordance with the A&C Act, 1996. The Court nominated Hon'ble Mr. Justice Ashok Kumar Gaur (Former Judge of High Court) as sole arbitrator, subject to his declaration under Section 12 regarding independence and impartiality and his consent. Directions were given regarding arbitration fees, registry communication for consent, and the expectation that parties cooperate with timelines for the arbitration proceedings. [Paras 19, 20, 21, 23, 24]

Arbitration application allowed and sole arbitrator appointed; appointment subject to Section 12 declaration and consent.

Effect of approval of resolution plan under Section 31(1) of the Insolvency and Bankruptcy Code, 2016 on pre-existing claims - merits of dispute to be decided by arbitral tribunal - Whether the approved CIRP resolution plan extinguished the applicant's claim is a merits issue to be decided by the arbitral tribunal; the referral Court refrained from adjudicating that question. - HELD THAT: - The respondents urged that approval of the resolution plan by the NCLT extinguished the applicant's claim and therefore arbitration should not proceed. The Court held that this contention goes to the merits of the claim and is not to be decided in the limited inquiry under Section 11(6A). The Court observed that the arbitration application was filed prior to approval of the CIRP plan and that the effect of the NCLT's approval, including application of Sections 31(1) and 32-A of the IBC, 2016 and relevant Supreme Court authority, can be examined and decided by the arbitral tribunal. Consequently, the question whether the claim has been extinguished was left open for the arbitrator to decide. [Paras 5, 6, 8, 14, 17]

Effect of approval of CIRP on the claim not adjudicated by the Court; left to the arbitral tribunal to decide on merits.

Limitation for institution of arbitration application - Arbitration application is within limitation. - HELD THAT: - The Court considered the question of limitation and found that the arbitration application as filed is within the prescribed period. No further limitation issue was adjudicated; other contentions touching merits and quantum were left open for the arbitral tribunal. [Paras 16]

Application held to be within limitation.

Final Conclusion: The petition under Section 11 is allowed: the Court found an operative arbitration agreement in Clause 16(B) of the purchase agreement, confined its inquiry to that question under Section 11(6A), held the arbitration application to be within limitation, declined to decide merits including the effect of the approved CIRP resolution plan (left for the arbitral tribunal), and appointed a sole arbitrator subject to statutory declarations, consent and directions for conduct of the arbitration.