TaxTMI Updates e-Newsletter
Jan 09,2023

Refund of unutilised input tax credit - zero-rated supply - registered person treated by single GSTIN - Rule 89(4) of the CGST Rules intra vires - claim for refund to be made at end of the tax period - supplementary refund claim after grant of original refund not permissible - rule-making power under Section 164 and delegated legislation - prescribed form and manner of filing refund claims

Rule 89(4) of the CGST Rules intra vires - rule-making power under Section 164 and delegated legislation - Validity of Rule 89(4) of the Central/State GST Rules - HELD THAT: - The Court held that Rule 89(4) is intra vires and was framed in conformity with the rule-making power conferred under Section 164 of the CGST Act. The judgment emphasises that refund provisions and any proportionate formulae for attribution and refund fall within the legislative scheme and delegated rule-making, and that courts should not substitute their policy judgment for that of the legislature or its delegate. Reliance was placed on higher authority establishing that formulae in delegated fiscal rules are permissible unless they are ambiguous, unworkable or produce absurd results; no such defect was found in Rule 89(4). Consequently, the Court declined to read down or strike down Rule 89(4). [Paras 10]

Rule 89(4) is intra vires and will not be read down or struck down.

Registered person treated by single GSTIN - refund of unutilised input tax credit - supplementary refund claim after grant of original refund not permissible - claim for refund to be made at end of the tax period - Whether petitioner could claim supplementary/unit-wise refund after claiming and being granted refund on consolidated basis under a single GSTIN - HELD THAT: - The Court found that where multiple units operate under a single/common GSTIN by choice and have filed consolidated returns, they constitute one "registered person" for purposes of claiming refund. Section 54 and the definition of "registered person" were construed together with Rule 89(4) to conclude that the refund entitlement must be determined with reference to the registered person (GSTIN) and the tax period; the petitioner, having claimed and accepted refund computed on consolidated figures, could not thereafter seek a supplementary refund by recomputing entitlements unit-wise. The Court observed that there is no statutory provision permitting reopening of an original refund decision to grant an additional supplementary claim based on the same tax periods and transactions presented in a different manner. [Paras 5, 6, 10]

Petitioner cannot insist on unit-wise supplementary refund after claiming and being granted refund on consolidated basis under a single GSTIN; supplementary claims for the same periods/transactions are not maintainable.

Prescribed form and manner of filing refund claims - requirement of filing refund in prescribed manner - alternative remedy under Section 107 - Legality of returning manually-filed supplementary refund applications and availability of alternative remedy / personal hearing - HELD THAT: - The Court held that returning the manually filed supplementary applications was justified on multiple grounds including the absence of statutory basis for supplementary unit-wise claims after an original consolidated refund had been granted and the requirement to file refund claims in the prescribed manner. The Court noted that the petitioner was offered opportunity of personal hearing (and notices were issued) but did not avail the same; additionally, the decision to return the applications could be challenged before the appellate mechanism under Section 107 of the GST Act. Given these circumstances and the plausibility of the reasons recorded by the Assistant Commissioner, the High Court refrained from exercising extraordinary writ jurisdiction under Article 226 to interfere with the administrative action. [Paras 2, 7, 9, 10]

Return of the manual supplementary refund applications was sustainable on the recorded reasons; writ relief is not warranted where alternative remedies and opportunities of hearing exist.

Final Conclusion: Writ petitions dismissed. Rule 89(4) is upheld as intra vires; petitioner, having claimed and accepted refund on consolidated figures under a single GSTIN, cannot seek supplementary unit-wise refunds for the same periods; the authority's return of the manually filed supplementary applications was held to be plausible and amenable to challenge through available statutory remedies, hence no exercise of extraordinary writ jurisdiction was warranted.

Service of notice in certain circumstances - making order available on the common portal - alternative methods of service

Service of notice in certain circumstances - making order available on the common portal - alternative methods of service - Service effected by making the order available on the common portal under Section 169(1) of the TN-G&ST Act constitutes a valid mode of service and is an alternative to service by registered post/speed post/courier with acknowledgement. - HELD THAT: - Section 169(1) prescribes that any decision, order, summons, notice or other communication shall be served by one of the methods listed therein. The language of sub section (1) demonstrates that the methods are alternative and not conjunctive. One of the methods specifically provided is service by making the order available on the common portal. The respondent placed the impugned order on the common portal on the same date as the order. There is no dispute about this fact. Given that the statutory provision contemplates service by any one of the listed modes, availability on the common portal satisfies the statutory requirement of service. Consequently, there is no infirmity in the impugned order on the ground that it was not sent by registered post/speed post/courier. [Paras 7, 8, 11]

The service of the impugned order by making it available on the common portal is valid; the writ petition is dismissed.

Final Conclusion: The writ petition challenging the impugned TN G&ST order on the sole ground of defective service fails as the order was validly served by uploading it on the common portal; petition dismissed with no order as to costs.

Definition of Government, Union territory and local authority under Section 2 - recipient of supply under Section 2(93) - scope and binding effect of advance ruling under Sections 97, 98 and 103 - classification of corporations versus governmental authority/entity

Definition of Government, Union territory and local authority under Section 2 - Legal meaning of the expressions "Central Government", "State Government", "Union Territory" and "Local Authority" for the purpose of notifications granting concessional GST rates. - HELD THAT: - The Authority examined the statutory definitions in Section 2 of the CGST Act and related notifications. It held that the terms "Government", "Union territory" and "local authority" are defined in Section 2 and allied provisions, and that departments functioning directly under the Central/State/Union Territory governments in their own capacity fall within the respective Government for the purposes of the Act. Conversely, corporations cannot be treated as Central or State Government merely by reference; their classification depends on whether they meet the statutory criteria (for example, those for "governmental authority" or "government entity") as set out in the Act and relevant notification clauses, subject to fulfilment of prescribed conditions.

The expressions are to be understood as defined in Section 2; departments directly under governments form part of the respective Government, whereas corporations are not automatically Government and must satisfy statutory criteria to be treated as a governmental authority/entity.

Recipient of supply under Section 2(93) - Who is the service recipient where an organisation awards a contract but acts on behalf of or at the behest of a government ministry/department. - HELD THAT: - Relying on Section 2(93) of the CGST Act, the Authority explained that the "recipient" is the person liable to pay consideration for the supply; where no consideration is payable, it is the person to whom the service is rendered or made available. The statutory definition also includes an agent acting on behalf of the recipient. Applying this principle, where an organisation is the contractual counterparty and is liable to pay (or receives the service), that organisation is the recipient; if the government is the person to whom the service is rendered or who bears the consideration, the government will be the recipient. The determination therefore depends on the contract and who is liable to pay or is actually provided the service.

The recipient is the person liable to pay the consideration or, if no consideration, the person to whom the service is rendered; contractual position and liability to pay determine whether the organisation or the government is the recipient.

Scope and binding effect of advance ruling under Sections 97, 98 and 103 - classification of corporations versus governmental authority/entity - Whether the Authority may pronounce an advance ruling classifying the listed entities (NBCC, EPI, CPWD, MAHAGENCO, ESIC, Ministry of AYUSH, IIM, Rajasthan Cricket Association) as Central/State/Union Territory/local authority/governmental authority/government entity. - HELD THAT: - The Authority observed that the matters on which advance rulings may be sought are enumerated in Section 97(2) and that rulings are binding only on the applicant and the concerned officers as per Section 103. It further noted that classification of entities whose functional and incorporation details lie outside the Authority's jurisdiction, and which require incorporation, financial and commercial particulars to reach a conclusive view, do not fall within the competence of this Authority in the present proceedings. Without incorporation certificates and detailed financial/commercial records, the Authority cannot determine whether the entities meet the statutory thresholds (such as 90% government participation) to be treated as "governmental authority" or "government entity".

The Authority is not in a position to rule on the classification of the listed entities as Central/State/Union Territory/local authority/governmental authority/government entity in the absence of requisite incorporation and financial/commercial details and because such classification (functional outside the State jurisdiction) is beyond the scope of the advance ruling in this proceeding.

Final Conclusion: The Authority ruled that the statutory definitions in Section 2 govern the meaning of "Central Government", "State Government", "Union Territory" and "Local Authority"; the recipient of supply is determined by Section 2(93) (liable to pay or person to whom service is rendered); and the Authority declined to classify the listed entities in this advance ruling for want of jurisdictional scope and absence of incorporation/financial details.

Magistrate's duty to record satisfaction before authorising remand - Arnesh Kumar principles - custodial detention only to aid investigation - grant of bail is the rule and refusal is the exception - economic offences do not attract a blanket bar to bail - reason to believe for arrest under CGST vis-a -vis recording of reasons under Cr.P.C. - statements recorded under Section 70 of the CGST Act admissible in evidence

Magistrate's duty to record satisfaction before authorising remand - Arnesh Kumar principles - Validity of the order dated 15.12.2022 extending judicial remand of the accused - HELD THAT: - The court examined the remand order to test whether the Magistrate applied her mind as required by Arnesh Kumar and recorded independent satisfaction for further detention. The ACMM relied on the prosecution's report and proceeded on the premise that only a prima facie case needed to be shown, without demonstrating consideration of the nature of evidence or necessity of custody for collection of further evidence. The remand order therefore did not reflect compliance with the Arnesh Kumar mandate that the Magistrate must appreciate whether grounds for extension of detention exist and must not mechanically or routinely extend remand. [Paras 13]

Extension of remand was not in accordance with the requirement that the Magistrate record independent satisfaction as mandated in Arnesh Kumar.

Custodial detention only to aid investigation - grant of bail is the rule and refusal is the exception - economic offences do not attract a blanket bar to bail - statements recorded under Section 70 of the CGST Act admissible in evidence - reason to believe for arrest under CGST vis-a -vis recording of reasons under Cr.P.C. - Whether the accused should be released on bail pending trial - HELD THAT: - On the material before the court the investigation qua the accused was shown to be largely complete: statements of relevant witnesses (including transporters) had been recorded and documents seized. The court applied the principle that custody is justified only to aid investigation and cannot be used for pre-trial punishment. The fact that the offence is economic or involves substantial alleged loss does not by itself preclude bail; each case must be decided on its facts. Concerns that the accused might influence witnesses were addressed by imposing reasonable restrictions rather than continuing custodial detention. Having found no necessity for further custodial interrogation, the court concluded that bail should be granted subject to stringent conditions. [Paras 14, 18]

Accused admitted to bail on furnishing bond and sureties and subject to specified conditions; custodial detention not required for further investigation.

Final Conclusion: The court held that the remand extension did not comply with the requirement that the Magistrate record independent satisfaction (Arnesh Kumar) and, finding that further custody was not necessary to aid investigation, granted bail to the accused on conditions and security.

Liability to pay tax under the Interest-Tax Act, 1974 - interest component included in the hire-purchase instalments paid under the hire-purchase agreement - Assessees are non-banking finance and leasing companies registered with the Reserve Bank of India -Some of the appellants – assessees have been reclassified as hire-purchase finance companies. It is not disputed that the appellants – assessees are credit institutions within the meaning of Section 2(5-A) of the Act - contention of the appellants – assessees is that under a hire-purchase agreement, they hire out a vehicle to the customer and receive hire-purchase instalments, and not interest on loans and advances - distinguish between financial lease and operating lease - HELD THAT:- We are dealing with and interpreting Section 2(7) of the Act, which has been interpreted in two decisions, that is, in the case of Sahara India Savings and Investment Corporation Limited [2009 (11) TMI 25 - SUPREME COURT] and State Bank of Patiala Through General Manager [2015 (11) TMI 869 - SUPREME COURT] which have given a very limited and restricted meaning to Section 2(7) of the Act as interest directly arising “on” loans and advances, and not any other interest, be it interest earned on investment or interest payable on delayed payment of the discounted bill of exchange.

Findings of fact generally recorded by the ITAT are treated as conclusive. The High Court can interfere with the findings of fact while deciding a substantial question of law when the findings are not supported by the material on record, so as to be treated as perverse. See Karnataka Board of Wakf v. Anjuman-E-Ismail Madris-Un-Niswan, [1999 (8) TMI 1018 - SUPREME COURT] and C. Doddanarayana Reddy (Dead) By Legal Representatives and Others v. C. Jayarama Reddy (Dead) By Legal Representatives and Others [2020 (2) TMI 1676 - SUPREME COURT]

For this, however, the High Court must frame a separate substantial question of law and only then interfere with the findings of fact by the ITAT, while applying the strict parameters. In the present case, the High Court did not frame a specific substantial question of law and thus, the interference with the findings of fact is unwarranted. This is not to say that the tax authorities are not entitled to examine the surrounding facts and circumstances to ascertain the true character and nature of the transaction, regardless of the nomenclature given by the parties.

Given the aforesaid legal position, we may have even remanded the matter to the assessing officer for fresh adjudication and to re-examine all the transactions in light of the aforesaid ratio and reasoning, keeping in mind the dictum laid in Sahara India Savings and Investment Corporation Limited (supra) and State Bank of Patiala Through General Manager (supra) to rule out cases where camouflage or subterfuge has been adopted to avoid payment of interest tax. This would have entailed not only looking at the documents but also several other factors, which would have meant getting information and ascertainment of facts in detail from the assessee and the hirer. However, at this distinct point of time, we do not think that it would be appropriate to pass an order of remand. It is to be also noted that the Act has ceased to operate with effect from 31st March 2000.

We allow the present appeals and set aside the impugned judgments. The additions made by the assessing officer are set aside and the orders passed by the ITAT deleting the additions in the case of the appellant – M/s. Muthoot Leasing and Finance Limited and other cases are upheld.

Requirement of a reasoned speaking order by an appellate tribunal - judicial review for non-application of mind in quasi judicial orders - remand for fresh consideration with substantial questions of law left open - exercise of appellate jurisdiction under section 260A of the Income tax Act, 1961

Requirement of a reasoned speaking order by an appellate tribunal - judicial review for non-application of mind in quasi judicial orders - Validity of the Income Tax Appellate Tribunal's order which adopted lower authority's findings verbatim and failed to record or apply its own mind. - HELD THAT: - The High Court found that the Tribunal's order, though lengthy, adopted the findings of the Commissioner (Appeals) verbatim, reproduced directions given by the lower authority and failed to record the submissions made before it. The Tribunal repeatedly relied on the CIT(A)'s order as if reproducing it and in several places simply affirmed by stating that rival submissions were examined without any independent reasoning. Extracts from the impugned order (including paragraph 11 and the verbatim adoption noted in paragraphs 55 and 73-79) demonstrate that the Tribunal did not discharge its duty as the last fact finding authority to apply its own mind and furnish independent reasons. Such non speaking treatment renders the order legally unsustainable and amenable to being set aside on judicial review. [Paras 75, 76, 77, 78, 79]

The Tribunal's order is set aside for being non reasoned and perverse for failure to apply its mind; it cannot stand.

Remand for fresh consideration with substantial questions of law left open - exercise of appellate jurisdiction under section 260A of the Income tax Act, 1961 - Disposition of the appeals and the manner in which outstanding substantial questions of law are to be treated following setting aside of the Tribunal's order. - HELD THAT: - Given the infirmity in the Tribunal's order, the Court allowed the appeals (filed by the revenue and the assessee), set aside the impugned order in its entirety and remanded the matters to the Tribunal for fresh consideration. The admitted substantial questions of law (including those framed at admission) were expressly left open for the Tribunal to decide afresh. The Court directed that the Tribunal shall decide all grounds raised by both parties on merits and not decline re examination on the ground that rehearing would amount to review.

Appeals allowed; impugned Tribunal order set aside and remanded for fresh consideration with substantial questions of law left open for decision by the Tribunal.

Final Conclusion: The appeals are allowed; the Income Tax Appellate Tribunal's order is set aside for failure to record independent reasons and apply its mind; the matters are remanded to the Tribunal for fresh consideration of all grounds and the substantial questions of law admitted at the High Court remain open.

Depreciation as plant - Capital expenditure versus revenue expenditure - Stock exchange membership as a capital asset - Remand for de novo consideration by the Assessing Officer - Right to personal hearing for the assessee's authorised representative

Depreciation as plant - Capital expenditure versus revenue expenditure - Stock exchange membership as a capital asset - The Tribunal correctly directed the Assessing Officer to consider the assessee's claim for depreciation on the stock exchange membership (development fee) in view of the Special Bench holding that the payment is capital in nature, and there is no substantial question of law warranting interference. - HELD THAT: - The Court recorded that the Assessing Officer originally treated the payment as revenue expenditure, while the Special Bench of the Tribunal held the development fee paid for admission to the Stock Exchange to be capital in nature. The assessee had advanced, as an alternate plea before the Commissioner (Appeals), that if treated as capital, the membership should qualify as a "plant" for depreciation; the CIT(A) rejected that plea. The Tribunal, however, accepted the alternate plea and restricted its direction to consideration of depreciation, restoring the matter to the Assessing Officer for adjudication in accordance with law. Revenue did not prefer any appeal against the Special Bench decision or the Tribunal's order; accordingly the High Court declined to re-examine conflicting authorities cited by the parties. Given the Special Bench finding in favour of capital treatment and the Tribunal's limited direction, the Court found no substantial question of law to entertain and affirmed the Tribunal's order that the Assessing Officer consider the claim for depreciation in accordance with the provisions of the Act.

Tribunal's direction to the Assessing Officer to consider the depreciation claim in light of the Special Bench's finding of capital nature is affirmed; no substantial question of law is made out.

Remand for de novo consideration by the Assessing Officer - Right to personal hearing for the assessee's authorised representative - The matter is remitted to the Assessing Officer for fresh adjudication on the depreciation claim, with directions to afford personal hearing to the authorised representative and to decide in accordance with law. - HELD THAT: - Because the Assessing Officer had not previously considered the alternate plea of depreciation (the assessee having earlier characterised the payment as revenue), the Tribunal restored the issue for fresh consideration. The High Court endorsed that course, directing the Assessing Officer to verify the claim and to afford an opportunity of personal hearing to the authorised representative, who may place all decisions relied upon. The Court further directed that the proceedings be heard at the earliest and, given the assessment year involved, preferably be concluded within twelve weeks from receipt of the order's service copy.

Issue remanded to the Assessing Officer for de novo consideration of the depreciation claim with an opportunity of personal hearing to the authorised representative and a direction to conclude proceedings preferably within twelve weeks.

Final Conclusion: The Tribunal's order directing the Assessing Officer to consider the assessee's claim for depreciation on the stock exchange membership (held capital by the Special Bench) is affirmed; the matter is remanded to the Assessing Officer for fresh adjudication and personal hearing, to be completed preferably within twelve weeks.

Reopening of assessment - reason to believe versus reason to suspect - Notice under Section 148 - quashing in absence of supply of material - Supply of documents forming basis of reasons to believe - principle of natural justice - Maintainability of writ against notice under Section 148 and order disposing objections - Quashing of consequential reassessment where foundational notice is invalid

Maintainability of writ against notice under Section 148 and order disposing objections - Statutory remedy against assessment versus extraordinary writ jurisdiction - Writ petition is maintainable to challenge the notice under Section 148 and the order disposing of objections despite existence of statutory appeal against the subsequent reassessment order. - HELD THAT: - The Court held that where no statutory remedy exists to challenge the notice under Section 148 or the order disposing of objections thereto, the writ jurisdiction under Article 226 is available. Although a statutory appeal exists against an assessment order, that principle does not bar a writ challenge to an antecedent notice or order which furnished the foundation for the assessment. The Court observed that if the notice or the order disposing of objections is quashed, any assessment based thereon would necessarily fall; the High Court had permitted amendment to challenge the reassessment and directed that any reassessment remain subject to the writ petition. Prior decisions restricting writ challenges to assessment orders do not prevent a writ against a foundational notice or objection order where no alternate remedy is provided. [Paras 10, 11, 13, 14, 15]

The preliminary objection that the petitioner must pursue statutory remedies against the reassessment is rejected and the writ petition is maintainable insofar as it challenges the notice under Section 148 and the order disposing of objections.

Reopening of assessment - reason to believe versus reason to suspect - Supply of documents forming basis of reasons to believe - principle of natural justice - Quashing of notice under Section 148 and consequential reassessment - Non-supply to the assessee of material referred to in the reasons to believe (including investigation report, statement recorded under Section 132(4) and entries in books of a third party) vitiates the reopening proceedings and warrants quashing of the notice, the order dismissing objections, and the consequential reassessment. - HELD THAT: - The Court emphasised that a 'reason to believe' is a mandatory condition for reopening and must not be equated to mere suspicion; where the reasons to believe refer to other documents or investigation material, those documents or relevant portions must be furnished so the noticee can effectively object. Reliance was placed on precedents and guidelines which require enclosure of documents referenced in reasons to believe. Here the reasons expressly referred to information from the Investigation Wing, the statement of a person recorded under Section 132(4) and entries in the books of a third party, none of which were supplied. While sufficiency of material for forming belief is distinct from the duty to supply that material, the failure to supply is a breach of natural justice and, following High Court precedents, is sufficient to vitiate the reopening. The Court also noted that a Section 132(4) statement can be used in assessment only if corroborated by relevant search material, not as standalone trigger. In consequence, the impugned notice and the order dismissing objections were held to be invalid and the assessment based thereon could not stand. [Paras 26, 28, 31, 33, 34]

The failure to supply the documents and material referred to in the reasons to believe vitiates the reopening; the notice dated 30.03.2021, the order dated 18.08.2021 dismissing objections, and the consequential assessment dated 29.03.2022 are quashed, with liberty to the Revenue to undertake reassessment in accordance with law.

Final Conclusion: The writ petition is allowed: the notice under Section 148 and the order disposing of objections are quashed for non-supply of material forming the basis of the reasons to believe, and the consequential reassessment and proceedings are set aside; liberty is granted to the Revenue to proceed afresh in accordance with law.

Reopening of assessment - reason to believe - sham transactions and commercial reality - change of opinion - reassessment jurisdiction under Section 147/148 of the Act

Reopening of assessment - reason to believe - reassessment jurisdiction under Section 147/148 of the Act - Validity of reopening of assessment for AY 2009-10 - HELD THAT: - The Tribunal found, and this Court accepts, that when the notice for reopening was issued on 31-03-2016 the Assessing Officer did not have the appraisal report or any foundational material on which to form a "reason to believe" that income had escaped assessment. The absence of the appraisal report at the material time meant the statutory precondition for initiating reassessment under the relevant provisions was not satisfied. The Tribunal therefore held that the reassessment order dated 29-12-2016 was without jurisdiction and a nullity. The factual findings of the Tribunal on this point were not successfully challenged before this Court.

Reopening for AY 2009-10 held invalid; reassessment order set aside.

Reopening of assessment - sham transactions and commercial reality - change of opinion - Validity of reopening of assessment for AY 2012-13 and related factual conclusions - HELD THAT: - The Tribunal examined the material before the Assessing Officer and concluded there was no tangible evidence linking the assessee to the alleged orchestrated trading; the appraisal report only gave rise to a "reason to suspect" and rested on preponderance of probabilities. The AO did not complete the preliminary enquiries needed to establish a live nexus showing escapement of income, and the reopening amounted to a change of opinion without any new tangible material or change in underlying facts. The Tribunal therefore found the initiation of reassessment to suffer from legal infirmity. The High Court records that these factual findings stand unchallenged before it and accepts the Tribunal's conclusions.

Reopening for AY 2012-13 held legally infirm; reassessment invalid on the recorded facts.

Final Conclusion: The High Court finds no substantial question of law arises; the revenue's appeal is dismissed and the application for stay is closed.

Reopening of assessment on ground of change of opinion - requirement of fresh tangible material for reopening under section 147 - validity of notice under section 148 - taxability under section 56(2)(vii)(b) where consideration is received from non-resident - scope of scrutiny assessment and finality where Assessing Officer accepted explanations

Reopening of assessment on ground of change of opinion - requirement of fresh tangible material for reopening under section 147 - validity of notice under section 148 - scope of scrutiny assessment and finality where Assessing Officer accepted explanations - Validity of the notice under Section 148 and reopening under Section 147 in respect of A.Y. 2016-17 - HELD THAT: - The Court held that the reassessment proceedings initiated by issuance of notice under Section 148 stand vitiated because they are founded on a mere change of opinion. Records demonstrate that during scrutiny the Assessing Officer had called for specific particulars about share capital, share premium and valuation method; the assessee furnished detailed replies, valuation certificates and confirmations showing shares were issued to non-resident shareholders and explaining the method adopted. The assessment order dated 15.12.2019 records no addition on this issue, reflecting that the Assessing Officer had considered and accepted the explanation. No fresh tangible material, distinct from what was available during assessment, has been brought to the authority's notice to justify reopening. Applying the settled principle that reopening cannot be on mere change of opinion and requires tangible material linked to formation of belief, the Court found the notice under Section 148 and the order disposing objections to be unsustainable and quashed them.

Notice dated 20.03.2021 under Section 148 and the order dated 16.11.2021 disposing objections quashed for being based on mere change of opinion and for lack of fresh tangible material.

Taxability under section 56(2)(vii)(b) where consideration is received from non-resident - scope of scrutiny assessment and finality where Assessing Officer accepted explanations - Whether the alleged excess premium could be taxed under Section 56(2)(vii)(b) having regard to facts that consideration was received from non-resident shareholders - HELD THAT: - The Court noted that the assessee had specifically explained during assessment proceedings that the shares were issued to non-resident shareholders who did not file ITRs in India, and that Rule 11U/11UA and Section 79 were not applicable. Those explanations, together with valuation material, were considered during scrutiny and no addition under Section 56(2)(vii)(b) was made in the assessment order. Since the purported chargeability under Section 56(2)(vii)(b) was based on the same material already examined and explained, and the provision was shown to be inapplicable on the factual matrix of non-resident recipients, the Court treated the attempt to reopen on that ground as unsupported by fresh tangible material and as amounting to change of opinion.

Reopening to tax alleged excess share premium under Section 56(2)(vii)(b) was unsustainable where the assessee had already explained non-applicability in respect of non-resident recipients and no new material justified reassessment.

Final Conclusion: Special Civil Application allowed; the notice dated 20.03.2021 and the order dated 16.11.2021 are quashed and set aside for want of fresh tangible material and because reopening was made on a mere change of opinion; rule made absolute and no order as to costs.

Interim relief - permission to file paper return - electronic return - ultra vires challenge to Rule 12 of the Income Tax Rules, 1962 - compliance of return with the Income Tax Act and Rules

Interim relief - permission to file paper return - electronic return - Grant of interim permission to the petitioner to file paper return for the assessment year 2022-23 by 31st December, 2022 - HELD THAT: - The Court, exercising its interlocutory jurisdiction, granted ad-interim relief permitting the petitioner to file a paper return for AY 2022-23 before 31st December, 2022, subject to further orders at the stage of admission or thereafter. The order records that identical relief had earlier been granted to the petitioner for prior assessment years and keeps all contentions of the parties open. The Court did not adjudicate on the merits of the petition at this stage and confined itself to granting time-limited interim relief while leaving substantive issues for determination at admission or on merits.

Petitioner permitted to file paper return for AY 2022-23 by 31st December, 2022, subject to further orders; all contentions reserved.

Ultra vires challenge to Rule 12 of the Income Tax Rules, 1962 - compliance of return with the Income Tax Act and Rules - Substantive challenge to Rule 12 and question whether the paper return would comply with the Act and Rules is deferred for adjudication - HELD THAT: - The Court expressly declined to decide at the interlocutory stage whether Rule 12 is ultra vires the Income Tax Act and the Constitution, or whether the paper return proposed to be filed by the petitioner complies with statutory requirements. Those questions are retained for consideration at the stage of admission of the writ petition or thereafter. The Court issued notice to the Attorney General insofar as the primary relief is concerned and directed the respondents to file a reply within a stipulated timeframe, thereby preserving the issues for final disposal rather than deciding them on the present interim application.

Contentions on the vires of Rule 12 and compliance of the paper return with law are kept open for adjudication at admission or on merits; procedural directions given for pleadings and notice to Attorney General.

Final Conclusion: Interim order: petitioner allowed to file paper return for AY 2022-23 by 31st December, 2022; substantive questions on the vires of Rule 12 and legal compliance of the paper return are reserved for consideration on admission or merits; respondents to file reply within four weeks and rejoinder within two weeks; notice to Attorney General issued.

Writ jurisdiction under Article 226 - Direct Tax Vivad Se Vishvas Act, 2020 - declarations and deposit procedure (Form No.3) - Equitable exercise of constitutional jurisdiction to enable payment for availing statutory benefit - Non-application of Section 119(2)(b) for extension of time - administrative limitation - Extension of statutory timelines on account of COVID and by Supreme Court orders - Acceptance of deposit with interest as alternative relief

Writ jurisdiction under Article 226 - Direct Tax Vivad Se Vishvas Act, 2020 - declarations and deposit procedure (Form No.3) - Non-application of Section 119(2)(b) for extension of time - administrative limitation - Impugned communication dated 25.08.2022 declining extension for deposit under the DVSV Act was set aside and relief granted under Article 226 to permit payment despite the CBDT's conclusion on Section 119(2)(b). - HELD THAT: - The court found that the petitioner became aware of the Form No.3 intimation requiring deposit only on 11.03.2022 and had already made substantial payment earlier. Although CBDT correctly concluded that powers under Section 119(2)(b) could not be exercised to extend the statutory timeline, the High Court exercised its constitutional power under Article 226 to grant equitable relief. The court noted intervening extensions issued by CBDT and Supreme Court orders extending timelines due to COVID, the petitioner's partial compliance by depositing a major portion of the tax, and delays attributable in part to the petitioner's authorised agent and to the respondents' delay in responding to the extension request. On this composite factual background the court set aside paragraph 2 of the impugned order and permitted acceptance of payment to enable the petitioner to avail the DVSV scheme. [Paras 14, 15, 16, 18, 19]

Paragraph 2 of the impugned order dated 25.08.2022 is set aside and the court, invoking Article 226, permits the petitioner to deposit the balance tax to avail benefits under the DVSV Act.

Acceptance of deposit with interest as alternative relief - Requirement to deposit balance tax to avail DVSV benefit - Extension of statutory timelines on account of COVID and by Supreme Court orders - Direction issued to respondents to accept the balance amount with interest at 9% from 01.04.2021 if tendered within the period granted by the court. - HELD THAT: - The court determined the appropriate consequential relief: the respondents are directed to accept the amount shown in Form No.3 together with interest at 9% from 01.04.2021 until deposit. The court quantified the procedural window - four weeks from receipt of the judgment - for making the payment, noting closure of the designated portal and imposing no further conditions. The direction is premised on the petitioner's prior substantial compliance and the court's equitable exercise to permit availing the statutory scheme despite administrative refusal to grant extension under Section 119(2)(b). [Paras 20, 21, 22, 23]

Respondents to accept the balance payable shown in Form No.3 with interest at 9% from 01.04.2021, if tendered within four weeks from receipt of the judgment.

Final Conclusion: The High Court, exercising jurisdiction under Article 226, set aside part of the CBDT communication of 25.08.2022 and directed respondents to accept the balance deposit shown in Form No.3 with interest at 9% from 01.04.2021 if paid within four weeks of receipt of the judgment, thereby enabling the petitioner to avail the benefits of the DVSV Act despite the administrative refusal to extend time under Section 119(2)(b).

Maximum marginal rate - association of persons - society registered under the Societies Registration Act, 1860 - taxation of gross receipts versus taxable surplus - processing under Section 143(1) - appellate authority's duty to decide pleaded alternate grounds

Maximum marginal rate - association of persons - society registered under the Societies Registration Act, 1860 - Whether the maximum marginal rate could be applied to the appellant where it was constituted as a society registered under the Societies Registration Act, 1860, despite the return indicating status as AOP/BOI. - HELD THAT: - The court found on the record that the appellant was registered as a society on 10.02.1978. Section 167B applies the maximum marginal rate to an association of persons or body of individuals other than a society registered under the Societies Registration Act, 1860. Because the appellant is a society within the exclusion contained in Section 167B, the maximum marginal rate could not lawfully be imposed. Although the return listed the appellant's status as AOP/BOI, the appellate authorities (CIT(A) and the Tribunal) failed to address the specific ground that the appellant was a registered society and thus improperly upheld taxation at the maximum marginal rate. The court therefore decided this question in favour of the appellant. [Paras 8, 9, 10, 16]

Maximum marginal rate not applicable to the appellant as it is a society registered under the Societies Registration Act, 1860; question decided for the appellant.

Taxation of gross receipts versus taxable surplus - processing under Section 143(1) - appellate authority's duty to decide pleaded alternate grounds - Whether the assessing authority/CPC and the appellate fora were correct in treating gross receipts as taxable income without allowing corresponding expenses and whether processing under Section 143(1) required further scrutiny when doubts existed. - HELD THAT: - The appellant specifically pleaded before the CIT(A) and the Tribunal that only the surplus (gross receipts less deductible expenses) was taxable and not the entire gross receipts. The court noted that in the subsequent Assessment Year the CPC adjusted taxable income by allowing expenses against receipts, demonstrating that surplus, not gross receipts, was the correct taxable base. Because the return was processed under Section 143(1), any doubts should have prompted scrutiny; instead, the CPC assessed gross receipts as taxable income and the CIT(A) and the Tribunal failed to address the appellant's specific alternate ground. The appellate authorities thus side-stepped a determinative contention which remained unrebutted. For these reasons the court found in favour of the appellant on this issue and set aside the impugned orders. [Paras 12, 13, 14, 15, 16]

Gross receipts cannot be taxed without allowing corresponding deductible expenses where pleaded; processing under Section 143(1) required further scrutiny and the CIT(A) and Tribunal erred in failing to decide the pleaded alternate ground; question decided for the appellant.

Final Conclusion: The questions of law framed are answered in favour of the appellant. The orders of the Tribunal and the CIT(A) are set aside; the appeal is disposed of accordingly.

Obligation to furnish material in possession to the noticee - opportunity to be heard before passing a speaking order - quashing of order under Section 148A(d) and notice under Section 148 where statutory procedure not complied with - remand to assessing officer for fresh consideration after supply of material - procedural defect in party array of a dissolved firm and waiver where ex partners appear - allegation of accommodation entries as basis for reopening

Obligation to furnish material in possession to the noticee - opportunity to be heard before passing a speaking order - Assessing officer was required to furnish the material in his possession to the noticee (the ex partners) and afford them an opportunity to be heard before passing any order under Section 148A(d). - HELD THAT: - The Court held that where proceedings under Section 148A are initiated, the material relied upon by the assessing officer must be placed before the noticee so that the noticee can respond before a conclusive order is passed. In the present case the assessing officer had not supplied the material relied upon concerning the allegation of accommodation entries, and therefore deprived the noticees of the opportunity to meet the material. The court recorded that in such circumstances the material should have been furnished to the noticee (in this case the partners) and an opportunity given to have their say before a speaking order is passed. [Paras 12, 15]

Material in possession of the assessing officer must be furnished to the partners and they must be afforded an opportunity to place their say before any speaking order is passed.

Quashing of order under Section 148A(d) and notice under Section 148 where statutory procedure not complied with - remand to assessing officer for fresh consideration after supply of material - The order dated 30.07.2022 under Section 148A(d) and the notice dated 30.07.2022 under Section 148 were set aside and the matter was remanded to the assessing officer for fresh consideration after furnishing of material to the partners. - HELD THAT: - Finding that the statutory procedure implicit in Section 148A had not been complied with because the material relied upon was not furnished to the noticees, the Court set aside the impugned order and notice. The partners (or their authorised representatives) were directed to appear before the assessing officer on the specified date, the assessing officer was directed to furnish the material in his possession and afford an opportunity to be heard, and thereafter to pass a speaking order. The Court did not decide the case on merits and expressly preserved the partners' right to advance all contentions and to pursue appropriate remedies against any adverse order. [Paras 13, 14, 15, 16]

Impugned order and notice set aside; matter remanded to the assessing officer to furnish material, hear the partners and pass a speaking order, with liberty to the partners to challenge any adverse outcome.

Procedural defect in party array of a dissolved firm and waiver where ex partners appear - The defect arising from filing the petition in the name of the dissolved partnership firm instead of the individual (former) partners was ignored by the Court because the affidavits were sworn by the ex partners who appeared and acted in the proceedings. - HELD THAT: - Although the petition was technically filed in the name of the dissolved firm, the affidavits were sworn by the ex partners who claimed to be the partners of the dissolved firm. The Court exercised discretion to overlook this formal defect in party array in view of the presence and participation of the former partners, treating the defect as curable and not a ground to refuse relief on procedural technicality. [Paras 10, 11]

Formal defect in array of parties ignored; proceedings allowed to continue with the ex partners as the effective noticees.

Final Conclusion: The Court set aside the order under Section 148A(d) and the Section 148 notice dated 30.07.2022 for FY 2013-2014 (AY 2014-2015), directed the assessing officer to furnish the material to the ex partners, afford them an opportunity to be heard and thereafter pass a speaking order; the procedural defect of filing in the name of the dissolved firm was waived in view of the appearance of the ex partners.

Condonation of delay - limitation - Tax Appeal - exclusion of limitation due to COVID-19 - bona fide prosecution of appeal

Condonation of delay - Tax Appeal - limitation - exclusion of limitation due to COVID-19 - bona fide prosecution of appeal - Delay of 1018 days in preferring the Tax Appeal against the Income Tax Appellate Tribunal order dated 6.12.2016 was to be condoned. - HELD THAT: - The Revenue sought condonation of delay in filing a Tax Appeal against the Tribunal's judgment dated 6.12.2016 in ITA No. 1520/AHD/2013 for Assessment Year 2008-2009. The record showed the Tribunal's order was received on 31.3.2017 and the review application was filed on 19.4.2017 and disposed of on 6.7.2021; the department thereafter obtained approval to file the appeal and transmitted papers to the senior standing counsel. The period when the papers were being processed coincided with the COVID-19 pandemic, and the Supreme Court's order of 10.1.2022 excluding the period 15.3.2020 to 28.2.2022 for reckoning limitation was relied upon. The court found that the Revenue had been pursuing remedies bona fide and that the delay was attributable to reasons beyond its control, including pandemic-related effects and the sequence of proceedings (review, disposal, administrative approval). On these grounds the court held that sufficient cause was made out to condone the delay and allowed the application. [Paras 6, 7]

Delay of 1018 days is condoned and the application is allowed.

Final Conclusion: The application for condonation of delay in filing the Tax Appeal against the ITAT order for Assessment Year 2008-2009 is allowed; the delay is held to be sufficiently explained (including COVID-19 exclusion and bona fide pursuit of remedies) and is condoned.

Deduction under section 35E - year of commercial production - operation relating to prospecting - Deduction under section 37(1) - capital expenditure versus revenue expenditure - outsourcing of prospecting activities - Depreciation under section 32 - lease transaction versus financial arrangement - ownership and usage test for depreciation - double taxation / double jeopardy doctrine

Deduction under section 35E - year of commercial production - operation relating to prospecting - Claim for deduction under section 35E for amounts paid to the Commissioner of Geology and Mining for prospecting activities - HELD THAT: - The Court upheld the concurrent factual findings of the authorities below that section 35E permits deduction only in the year of commercial production and any one or more of the four years immediately preceding that year, and that commercial production by the assessee commenced in financial year 2018-2019. The claimed expenditure, though in the nature of operations relating to prospecting, was not incurred in the year of commercial production or within the four years preceding it for the assessment years 2003-2004 to 2006-2007. Consequently the appellant was not entitled to the one tenth instalment deduction under section 35E for the years under consideration. [Paras 12, 13]

Concurrent factual findings that commercial production had not commenced for the years in question were affirmed; deduction under section 35E for the years 2003-2004 to 2006-2007 is not allowable.

Deduction under section 37(1) - capital expenditure versus revenue expenditure - outsourcing of prospecting activities - Alternative claim for allowance of the entire expenditure under section 37(1) - HELD THAT: - The Court held that the assessee's alternative claim under section 37(1) requires prima facie consideration because the authorities below rejected the claim solely on the basis that the expenditure was treated as capital in nature under section 35E and because prospecting operations had been outsourced. Given these contentions, the Court admitted the substantial question of law (question no.2) for consideration rather than finally deciding it, indicating that the correctness of denying relief under section 37(1) on the recorded facts must be examined. [Paras 14, 16]

Substantial question of law on the alternative claim under section 37(1) is admitted for consideration by the Court; the question is not finally decided in this order.

Depreciation under section 32 - lease transaction versus financial arrangement - ownership and usage test for depreciation - double taxation / double jeopardy doctrine - Claim for depreciation on leased assets where the lease was treated as a financing transaction - HELD THAT: - The Court sustained the concurrent findings of the Tribunal and CIT(A) that the lease back arrangement with Gujarat Electricity Board bore the characteristics of a financial transaction rather than an operating lease: significant interest like receipts, a five year term reflecting economic life, nominal residual value, transfer of risks and rewards to the lessee and practical impossibility of re vesting the asset in the lessor. Applying the ownership and usage test under section 32, the Court held that neither ownership nor requisite usage for claiming depreciation was established. The Court also noted the doctrine against double taxation, observing that the authorities below prevented double adverse treatment by ensuring the receipt was not taxed as business income while depreciation was disallowed; on these concurrent findings no question of law arises. [Paras 17, 18, 20, 21]

Concurrent factual conclusion that the transaction was in substance a financial arrangement justified disallowance of depreciation; the Tribunal's order is affirmed and no substantial question of law arises on this issue.

Final Conclusion: Appeals dismissed insofar as questions 1 and 3 are concerned; question 2 (alternative claim under section 37(1)) admitted as a substantial question of law for consideration by this Court.

Deduction of interest under section 24(b) - Second proviso to section 24(b) restricting deduction to two lakh rupees - Deemed let-out property and self-occupied property under section 23(2) - Commercial property as distinct from residential property for purposes of section 23(2) and section 24 - Carry forward of loss under section 71B

Commercial property as distinct from residential property for purposes of section 23(2) and section 24 - Deduction of interest under section 24(b) - Second proviso to section 24(b) restricting deduction to two lakh rupees - Whether the property was commercial (not residential) and thereby whether the restriction in the second proviso to section 24(b) applied, affecting deductibility of interest. - HELD THAT: - The Tribunal found on the admitted record, including the registered agreement, that the disputed unit was to be used as an IT office under the IT Park policy and therefore constituted a commercial property. Section 23(2) relates to houses occupied by the owner for residence and thus does not encompass commercial premises. Consequently the second proviso to section 24(b), which limits interest deduction in respect of the property referred to in section 23(2), is not attracted. The Tribunal also noted consistency in the treatment of the property as let out in the assessment orders for other years. On these bases the AO's restriction of interest to the limit in the second proviso was held to be incorrect and the entire interest paid for acquisition of the property was directed to be allowed as a deduction under section 24(b). [Paras 11]

The property is commercial and the second proviso to section 24(b) does not apply; the full interest paid for acquisition of the property is allowable under section 24(b).

Carry forward of loss under section 71B - Deduction of interest under section 24(b) - Whether the unadjusted loss under the head 'Income from House Property' is eligible to be carried forward. - HELD THAT: - Having held that the entire interest paid is allowable under section 24(b), the Tribunal concluded that the resulting loss under the head 'Income from House Property' which was not set off against other income in the relevant year must be permitted to be carried forward in accordance with section 71B. The carry forward was denied by the intimation only because interest had been restricted; with that restriction removed the denial could not stand. [Paras 11]

The balance loss under the head 'Income from House Property' which was not set off in the year is to be allowed to be carried forward as per section 71B.

Final Conclusion: The appeal is allowed: the disputed property is held to be commercial (not within section 23(2)), the second proviso to section 24(b) does not apply and the full interest paid is deductible under section 24(b); consequentially the unadjusted loss from house property is to be carried forward under section 71B.

Penalty under section 270A of the Income-tax Act - deduction under section 80P(2)(d) of the Income-tax Act - under-reporting and misreporting of income - mandatory imposition of penalty where assessment issue not challenged on merits

Penalty under section 270A of the Income-tax Act - deduction under section 80P(2)(d) of the Income-tax Act - under-reporting and misreporting of income - Whether penalty under section 270A could be imposed where the assessee had not claimed deduction under section 80P(2)(d) in respect of interest income and there was thus no under-reporting or misreporting. - HELD THAT: - The Tribunal examined the computation of the statement of income filed with the return and found that the assessee had not claimed deduction under section 80P(2)(d) in respect of the interest received from RECL. Because the purported deduction was not claimed, the addition made by the Assessing Officer did not translate into under-reporting or misreporting by the assessee. The CIT(A)'s view that penalty under section 270A was mandatory because the issue on merits was not challenged was considered immaterial where the foundational requirement for invoking penalty-under-reporting or misreporting-was absent. In these circumstances, imposition of penalty under section 270A could not be sustained. [Paras 6, 7]

Penalty under section 270A set aside as no deduction under section 80P(2)(d) was claimed and hence there was no under-reporting or misreporting.

Final Conclusion: The appeal is allowed and the penalty imposed under section 270A of the Income-tax Act is set aside.

Application of Section 68 (treatment of unexplained credits in books as assessee's income) - Application of Section 69A (treatment of undisclosed cash deposits in bank as unexplained income) - Allowance of unexplained/unrecorded professional expenses against undisclosed professional receipts - Taxability of undisclosed bank interest credited to an undisclosed bank account

Application of Section 69A (treatment of undisclosed cash deposits in bank as unexplained income) - Application of Section 68 (treatment of unexplained credits in books as assessee's income) - Additions of cash deposits in an undisclosed bank account and cash credits shown in capital account were sustained as undisclosed professional receipts and brought to tax. - HELD THAT: - The Tribunal upheld the findings of the AO and the CIT(A) that cash deposits of Rs. 31,65,836/- in an undisclosed bank account (after bank charges) and cash credits of Rs. 12,00,000/- (from wife), Rs. 19,50,000/- (gifts from relatives) and Rs. 2,00,000/- (claimed agricultural income) credited to capital account could not be satisfactorily explained by the assessee. The AO invoked the deeming fiction of Section 69A in respect of the undisclosed bank deposits and Section 68 in respect of unexplained credits in the books; the lower authorities' conclusions that these sums represented undisclosed professional receipts were affirmed since the assessee failed to establish creditworthiness, genuineness or ownership/receipt relevant to the agricultural claim, and the deposits were not offered to tax. The Tribunal noted that the department did not challenge the part-relief granted by the CIT(A), and the treatment of these receipts as undisclosed professional income was not contested by the assessee before the Tribunal. For these reasons the additions were sustained. [Paras 3, 4, 6]

Additions treating the undisclosed bank deposits and unexplained cash credits as undisclosed professional receipts under Section 69A and Section 68 were upheld.

Allowance of unexplained/unrecorded professional expenses against undisclosed professional receipts - Whether undisclosed professional receipts should attract a 60% deduction for expenses (as claimed) instead of 40% allowed by the CIT(A). - HELD THAT: - The Tribunal examined the assessee's books, bank statements and balance-sheet entries and observed that declared expenses had already been set off against declared professional receipts and that substantial cash credits in the capital account had been fully utilised for purchases, investments and advances during the year. The CIT(A) applied the ratio of declared expenses vis-a -vis declared professional receipts and allowed 40% deduction in respect of the undisclosed receipts; the Tribunal found this allowance to be liberal and reasonable. The assessee failed to establish availability of funds or produce evidence for the additional unrecorded expenses it claimed (including post-year payments purportedly relating to the year), and the onus to substantiate such expenses lay on the assessee. Given lack of proof and absence of cash availability beyond limited withdrawals, the Tribunal declined to increase the deduction to 60% and dismissed the appeal on this facet. [Paras 4, 6]

The CIT(A)'s allowance of 40% deduction against the undisclosed professional receipts was upheld; the claim for 60% deduction was rejected.

Taxability of undisclosed bank interest credited to an undisclosed bank account - Whether interest credited to the undisclosed bank account, not declared in the return, is taxable. - HELD THAT: - The Tribunal found that interest of Rs. 58,498/- was credited to the assessee's undisclosed bank account and was not offered to tax in the return. As the bank account pertained to the assessee and the interest was not declared, the AO added the amount to the assessee's income; the CIT(A) sustained that addition and the Tribunal found no infirmity in the decision to tax the undisclosed bank interest. The addition was therefore affirmed. [Paras 3, 4, 6]

Addition of undisclosed bank interest to the assessee's income was upheld.

Final Conclusion: The Tribunal dismissed the assessee's appeal for AY 2011-2012, upholding the AO's and CIT(A)'s treatment of the relevant cash credits and deposits as undisclosed professional receipts (Section 68/69A), sustaining the addition of undisclosed bank interest, and affirming the CIT(A)'s grant of 40% deduction against the undisclosed receipts while rejecting the assessee's claim for a higher deduction.

Rectificatory jurisdiction of the Tribunal under Section 59 of the Companies Act, 2013 - summary nature of rectification proceedings - exclusive regulatory jurisdiction of SEBI over alleged violations of SEBI (SAST) Regulations and SEBI (PIT) Regulations - necessity of ex ante scrutiny, inquiry and adjudication by the sectoral regulator - prohibition on parallel jurisdiction in respect of regulatory matters

Rectificatory jurisdiction of the Tribunal under Section 59 of the Companies Act, 2013 - summary nature of rectification proceedings - Scope and ambit of the Tribunal's rectificatory jurisdiction under Section 59 (formerly Section 111A of the 1956 Act). - HELD THAT: - The Court held that the rectificatory power conferred by Section 59 is summary in nature and confined to corrections that are evident and do not require serious inquiry. The jurisdiction does not permit adjudication of disputes involving contested facts, title or other substantive civil rights under the guise of rectification. Earlier decisions such as Ammonia Supplies (interpreting the predecessor provision) were applied to emphasise that where a claim seeks substantive adjudication beyond simple rectification, the Tribunal should decline jurisdiction and direct parties to the appropriate forum. The statutory protection of the right to hold and transfer securities further underscores the limited character of rectificatory relief. [Paras 18, 19, 21, 24, 25]

The Tribunal's attempt to declare the acquisitions null and void and to grant substantive reliefs (including buyback) exceeded the limited, summary rectificatory jurisdiction under Section 59 and was misconceived.

Exclusive regulatory jurisdiction of SEBI over alleged violations of SEBI (SAST) Regulations and SEBI (PIT) Regulations - necessity of ex ante scrutiny, inquiry and adjudication by the sectoral regulator - prohibition on parallel jurisdiction in respect of regulatory matters - Appropriate forum for inquiry and adjudication of alleged violations of the SEBI (SAST) Regulations, 1997 and SEBI (PIT) Regulations, 1992. - HELD THAT: - The Court held that transactions and alleged breaches falling squarely within the regulatory scheme established by the SEBI Act and the Regulations must be subjected to the SEBI's ex ante scrutiny, investigation and adjudicatory process. The SEBI framework provides comprehensive provisions for detection, inquiry, investigation, opportunity to the person, and restitutionary or penal orders; it therefore cannot be short circuited by invoking the Tribunal's rectificatory jurisdiction. Where the regulatory scheme applies, the regulator's real time supervisory and adjudicatory role cannot be bypassed by parallel proceedings before the Tribunal. [Paras 32, 34, 35, 37, 38]

Alleged violations of the SEBI (SAST) and SEBI (PIT) Regulations are to be examined and adjudicated by SEBI; the Tribunal lacks jurisdiction to undertake primary determination of such regulatory violations.

Final Conclusion: The National Company Law Tribunal exceeded its limited rectificatory jurisdiction by adjudicating alleged violations of SEBI Regulations and directing substantive relief; SEBI is the appropriate forum to investigate and determine breaches of the SEBI (SAST) and SEBI (PIT) Regulations. The Appellate Tribunal's order setting aside the Tribunal's judgment is upheld and the appeal is dismissed.

Jurisdiction to call for production of documents - bench's power under NCLT Rules 39 and 43 to require further evidence - powers of summoning, examination and production of documents under Section 424(2) of the Companies Act, 2013 - admissibility of documentary and electronic evidence - principle of natural justice and cross-examination

Jurisdiction to call for production of documents - bench's power under NCLT Rules 39 and 43 to require further evidence - admissibility of documentary and electronic evidence - Validity of the Adjudicating Authority's directions calling for production of documents and further evidence in I.A. No. 203/JPR/2022 - HELD THAT: - The Tribunal examined the scope of the Adjudicating Authority's powers under the NCLT Rules, 2016 (notably Rules 39 and 43) and concluded that the Bench may require parties to produce further documentary or other evidence before passing orders, both to satisfy itself as to the truth of allegations and to ascertain information necessary to decide the petition or application. The Court also noted the authority to admit documentary and electronic records as evidence. The Appellate Tribunal further observed that similar powers to summon, examine on oath and require discovery exist under Section 424(2) of the Companies Act, 2013, which reinforces the Adjudicating Authority's competence to call for and examine documents and persons. Given the admitted doubts about the veracity of a large claim supported by assignment deeds allegedly on inadequate stamp paper and minimal consideration, the directions to produce documents fell within the Adjudicating Authority's jurisdiction and were not beyond its powers. [Paras 7, 8, 10, 11]

Adjudicating Authority rightly possessed and exercised jurisdiction to call for documents and evidence; those directions do not exceed its powers.

Powers of summoning, examination and production of documents under Section 424(2) of the Companies Act, 2013 - principle of natural justice and cross-examination - Whether the Adjudicating Authority's direction for personal appearance of the directors of the appellant was impermissible - HELD THAT: - The Tribunal noted that the impugned order had directed personal appearance on the next date of hearing. As the next date has passed and the appellant subsequently appeared and participated, the Appellate Tribunal found no need to test the correctness of that specific direction. The Court observed that if the directors face difficulty in personal appearance, they may seek exemption for personal appearance from the Adjudicating Authority, which may be considered on appropriate grounds. The observations preserve the Bench's power to require personal attendance while recognising procedural avenues to seek exemption. [Paras 12]

No interference with the direction for personal appearance; parties may seek exemption from the Adjudicating Authority if necessary.

Jurisdiction to call for production of documents - bench's power under NCLT Rules 39 and 43 to require further evidence - Status of I.A. No. 203/JPR/2022 and consequences of documents produced after the impugned order - HELD THAT: - The Tribunal recorded that several documents called for pursuant to the impugned order have been filed and that the Interim Resolution Professional has placed a report on record. The Appellate Tribunal expressly refrained from adjudicating the merits of the appellant's substantive claim, noting that the I.A. filed by the appellant remains pending for consideration. The Court left the pending application to be decided by the Adjudicating Authority in the ordinary course, and indicated that if the appellant faces difficulty producing any particular document it may move the Adjudicating Authority for exemption with reasons. [Paras 12, 13]

I.A. No. 203/JPR/2022 remains pending; the Adjudicating Authority to consider the application and documents filed, and decide on any exemption applications.

Final Conclusion: The Appeal is dismissed. The Appellating Tribunal held that the Adjudicating Authority had jurisdiction to call for documents and evidence under the NCLT Rules and Section 424(2) of the Companies Act, 2013; the merits of the appellant's claim were not decided and the application remains pending before the Adjudicating Authority, which shall consider the documents filed and any exemption applications in due course.

Fraudulent or malicious initiation of insolvency proceedings - Admission of corporate insolvency application despite debt and default where application is filed with malicious intent - Suspension of initiation of CIRP during the prohibited period under Section 10A - applicability to defaults prior to 25.03.2020

Fraudulent or malicious initiation of insolvency proceedings - Admission of corporate insolvency application despite debt and default where application is filed with malicious intent - Whether the Adjudicating Authority was justified in allowing Applications under the provision penalising fraudulent or malicious initiation of proceedings and rejecting the Corporate Debtor's Section 10 application on the ground that it was filed with malicious and fraudulent intent. - HELD THAT: - The Tribunal upheld the Adjudicating Authority's conclusion that the Section 10 petition was instituted fraudulently and with malicious intent for purposes other than resolution of insolvency. The Court accepted the applicants' pleadings and material (including MCA records, sequence of resignations, transposition of a former director as a claimed financial creditor, numerous pending litigations and an FIR) as establishing that the corporate applicant had not come to the forum with clean hands. The judgment reasons that Section 65 is part of the same statutory scheme as Section 10 and, where initiation is fraudulent or malicious, the Adjudicating Authority may decline to admit a Section 10 application and impose penalty; consequently, admission is not mandatory merely because debt and default exist. The Court relied on authorities and the equitable principle denying relief to those who act without clean hands to support rejection of the Section 10 application on the findings of mala fide conduct. [Paras 12, 26, 33, 34, 37]

The Adjudicating Authority did not err in allowing the Applications under the provision addressing fraudulent or malicious initiation and in rejecting the Section 10 petition on the ground of malicious and fraudulent initiation for purposes other than resolution of insolvency.

Admission of corporate insolvency application despite debt and default where application is filed with malicious intent - Whether proof of debt and default obliges admission of a Section 10 application notwithstanding findings of fraudulent or malicious initiation. - HELD THAT: - The Tribunal held that although Sections 7 and 10 require existence of debt and default for admission, those requirements do not override the consequence of a finding under the provision penalising fraudulent or malicious initiation. The statutory scheme must be read together; where Section 65 conditions are fulfilled, a Section 10 application can be rejected even if debt and default are proved. The Court thus refused to treat the existence of debt and default as an absolute bar to rejecting a petition founded on malicious intent and lack of clean hands. [Paras 15, 16]

Debt and default, though necessary for admission, do not compel admission where the application is held to have been filed fraudulently or with malicious intent; the Adjudicating Authority may reject the Section 10 application in such circumstances.

Suspension of initiation of CIRP during the prohibited period under Section 10A - applicability to defaults prior to 25.03.2020 - Whether the corporate debtor's Section 10 application was barred by the statutory suspension of initiation of CIRP for defaults arising on or after 25.03.2020 (the prohibited period). - HELD THAT: - The Tribunal examined the demand notices and the material placed in the Section 10 application and found that demand notices antecedent to 25.03.2020 (26.02.2020 and 18.03.2020), and calculations of dues covering periods prior to that date, established that the default occurred before 25.03.2020. The Explanation to the suspension provision excludes defaults committed before 25.03.2020. The Court rejected the contention that issuance of a final demand notice on 24.12.2020 converted the date of default to fall within the prohibited period, holding that a later reiteration of demand does not erase an antecedent default. The Tribunal also held that invoking other statutory remedies (e.g., under the Uttar Pradesh Acts) did not render the Section 10 filing premature. [Paras 18, 19, 20]

Section 10A was not attracted because the default was committed prior to 25.03.2020; therefore the Section 10 application was not barred by the suspension provision.

Final Conclusion: The Adjudicating Authority's order allowing the Applications under the provision addressing fraudulent or malicious initiation, imposing penalty, and rejecting the Corporate Debtor's Section 10 petition was upheld; the statutory suspension of filings during the prohibited period did not apply as the default pre-dated 25.03.2020. The appeal is dismissed.

Enforcement of security interest under Section 13(2) of the SARFAESI Act - invocation of personal guarantee - applicability of the Limitation Act to guarantee claims - requirement of creditor to take recovery steps before initiation of CIRP against a guarantor under Section 94 of the IBC

Enforcement of security interest under Section 13(2) of the SARFAESI Act - invocation of personal guarantee - Whether the notice dated 04.10.2013 under Section 13(2) of the SARFAESI Act amounted to invocation of the Appellant's personal guarantee and constituted a default sufficient to admit an application under Section 94 of the IBC. - HELD THAT: - The notice of 04.10.2013, addressed to the borrower and several guarantors, was a statutory notice for enforcing the mortgage security and identified the guarantors as jointly and severally liable. However, the Adjudicating Authority and the Resolution Professional noted, and the Bank expressly stated in its reply, that no subsequent step was taken to invoke the personal guarantee or to recover amounts from the Appellant after sale of the mortgaged property. The Court accepted that while the notice asked guarantors to discharge liabilities, mere issuance of a Section 13(2) notice for enforcement of security interest does not, by itself, constitute invocation of the personal guarantee for recovery proceedings. Having regard to the Bank's categorical position that the guarantee was not invoked and no recovery steps were taken against the Appellant, the foundational allegation of an invoked guarantee was lacking. [Paras 6, 7, 8, 11]

The Section 13(2) notice did not amount to invocation of the Appellant's personal guarantee for purposes of admitting the Section 94 application.

Applicability of the Limitation Act to guarantee claims - requirement of creditor to take recovery steps before initiation of CIRP against a guarantor under Section 94 of the IBC - Whether, in the absence of steps by the creditor to invoke the guarantee and in light of limitation considerations, the Section 94 application to initiate CIRP against the guarantor could be admitted. - HELD THAT: - The Resolution Professional recorded that after the 2013 notice no other notice was issued to the personal guarantor and observed the relevance of the Limitation Act: the cause of action to enforce a guarantee accrues on breach and must be enforced within the limitation period applicable to guarantee claims. The Bank's uncontested case that it had not sought recovery from the Appellant and that the mortgaged asset had been sold with only part realisation supported the view that the claimed default was historical and no active invocation of the guarantee had occurred. Given that nearly nine years had elapsed since the 2013 notice and no recovery steps were taken, the Appellant's foundational material for commencing CIRP under Section 94 was insufficient. The Court therefore upheld the Adjudicating Authority's acceptance of the RP's report and its conclusion rejecting admission. [Paras 9, 10, 11, 12]

The Section 94 application was rightly rejected as the creditor had not invoked the guarantee or taken recovery steps and limitation and procedural deficiencies rendered the application insufficient for admitting CIRP against the guarantor.

Final Conclusion: The National Company Law Appellate Tribunal affirmed the Adjudicating Authority's order rejecting the Section 94 application: the Section 13(2) notice did not amount to invocation of the personal guarantee and, in the absence of steps by the creditor and having regard to limitation and procedural defects, the application to initiate CIRP against the guarantor was not maintainable. Appeal dismissed; no costs.

Impossibility of performance / legal impossibility - statutory moratorium under the Insolvency and Bankruptcy Code and resulting legal impediment to payment - remedial relief despite expiry of a declaratory scheme period - limits of Article 226 - court cannot extend a statutory scheme but may grant remedial measures - continuation/manual processing by Designated Committee pursuant to departmental directions

Impossibility of performance / legal impossibility - statutory moratorium under the Insolvency and Bankruptcy Code and resulting legal impediment to payment - remedial relief despite expiry of a declaratory scheme period - Whether the appellant, who was prevented by the IBC moratorium from making payment within the Scheme's prescribed period, could be denied the benefit of the Scheme or punished for non-payment occurring during the moratorium. - HELD THAT: - The Court found that the appellant had applied within the Scheme's application period and had been issued Form No.3 within the Scheme's validity, but was statutorily barred from making payment during the IBC moratorium which continued until the NCLT approved the resolution plan. Relying on established principles that no one can be compelled to do the impossible and that a party should not be left remediless, the Court held that a legal impediment (the moratorium) made performance impossible and the appellant could not be penalised for non-payment occasioned by that statutory bar. The Court therefore treated the situation as one warranting remedial relief rather than strict forfeiture of Scheme benefits where the failure to pay within the extended COVID-19 timeline was caused by operation of law and not by negligence or deliberate default. [Paras 6, 7, 8, 9]

The appellant could not be denied the benefit of the Scheme for non-payment during the moratorium; remedial relief was justified as the failure to deposit was caused by a legal impossibility.

Limits of Article 226 - court cannot extend a statutory scheme but may grant remedial measures - remedial relief despite expiry of a declaratory scheme period - Whether the High Court, in exercise of its writ jurisdiction, could extend the Scheme or otherwise provide relief to the appellant who missed the payment deadline due to the moratorium. - HELD THAT: - The Court recognised the general principle that a High Court cannot, by writ, extend the duration of a statutory scheme. However, it distinguished that principle from the present factual context: this was not a case of extending the Scheme itself but of granting remedial relief to a party who had complied with application formalities and was prevented by a statutory moratorium from performing a mandatory act within the Scheme's timetable. The Court held that while extension of the Scheme is beyond the High Court's power, the court may grant appropriate remedial measures in extraordinary cases where strict application would lead to injustice. [Paras 8, 9]

Although courts cannot extend a statutory scheme, remedial measures could be granted here because the appellant's inability to pay was legally compelled by the IBC moratorium.

Continuation/manual processing by Designated Committee pursuant to departmental directions - remedial relief despite expiry of a declaratory scheme period - Whether the absence or dissolution of the Designated Committee after the Scheme's closure was a valid ground to refuse relief to an applicant whose Form No.1 and Form No.3 were issued within the Scheme period. - HELD THAT: - The Court observed that the CBEC had issued instructions permitting manual processing of declarations where courts had set aside rejections after the Scheme's closure and that Designated Committees or departmental officers continued to process matters manually in response to judicial orders. Consequently, the departmental position that no Designated Committee existed could not be treated as an absolute bar to providing relief where the applicant had complied with the Scheme and payment was prevented by the moratorium; manual or departmental processing could be used to effect the remedial outcome. [Paras 2, 8, 9]

Non-availability of a standing Designated Committee after 30.06.2020 did not preclude relief because departmental directions allowed manual processing to implement court orders remanding matters to the Department.

Final Conclusion: The appeal is allowed: because the appellant had applied within the Scheme and was prevented by the IBC moratorium from making payment, the appellant should not be deprived of Scheme benefits; payment already made is to be appropriated as settlement under the Scheme and a discharge certificate issued. No order as to costs.

Refund of service tax paid on cancelled booking - non-provision of service upon cancellation - Service Tax Rules: Rule 66E(b) - taxability on amount received towards booking before completion certificate - Point of Taxation Rules not applicable where no service - invalid retention of tax absent authority of law (Article 265)

Refund of service tax paid on cancelled booking - non-provision of service upon cancellation - Service Tax Rules: Rule 66E(b) - taxability on amount received towards booking before completion certificate - Point of Taxation Rules not applicable where no service - invalid retention of tax absent authority of law (Article 265) - Entitlement to refund of service tax collected and deposited where a flat booking was cancelled and the consideration along with the service tax was returned to the buyer. - HELD THAT: - The Tribunal held that service tax can only be levied where a taxable service has been provided; if no service is rendered the amount collected and deposited as tax becomes merely a deposit which the department is not authorised to retain. The appellant collected service tax on advance booking but, upon cancellation, refunded the consideration and the service tax to the buyer, thereby terminating the service contract. Under Rule 66E(b) of the Service Tax Rules, 1994, construction service is taxable on amounts received towards booking before issuance of completion certificate, but where the booking is cancelled and the consideration returned, no service remains provided and refund becomes admissible. Consequently the Point of Taxation Rules cannot be invoked to deny refund because their application presupposes that a service was provided. Retention of the tax by the department in such circumstances violates the principle under Article 265 that no tax shall be levied or collected except by authority of law; absent a taxable service the department has no authority to keep the amount. [Paras 5, 6, 7]

The appellant is entitled to refund of the service tax collected and deposited in respect of the cancelled bookings; the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal and directed that the service tax collected in respect of the cancelled flat bookings, which was returned to the buyer, is refundable to the appellant as no taxable service was provided and the department cannot retain the amount.

Refund claim by SEZ unit - admissibility of invoices as evidence - invoices addressed to other units and proof of supply - remand for fresh decision on evidence - event management and sponsorship service classification

Refund claim by SEZ unit - invoices addressed to other units and proof of supply - admissibility of invoices as evidence - Whether the Adjudicating Authority should decide admissibility of the invoices and other evidence relied upon by the appellant for the portion of the refund claim rejected on the ground that invoices were addressed to other units - HELD THAT: - The Tribunal found that the authorities below recorded rejection of a major portion of the refund claim on the ground that invoices were issued in the names/addresses of other units and held there was no evidence that services were supplied to the SEZ unit. The appellant had produced screenshots and documentary material (annexed at pages 43-53 of the appeal paperbook) purportedly establishing that the invoices pertain to the SEZ unit. The Tribunal observed that it cannot verify those materials at this stage and that, if such evidence was placed before the authorities below, those authorities were obliged to state a finding accepting or rejecting that evidence. As the lower authorities failed to give any finding on that plea/evidence, the Tribunal declined to decide the merits and remanded the issue to the Adjudicating Authority for fresh consideration confined to the refund claimed in this appeal and for recording a clear finding about the admissibility and probative value of the evidence produced by the appellant (pages 43-53). [Paras 4]

Remanded to the Adjudicating Authority to decide afresh the admissibility and effect of the invoices/evidence relied upon by the appellant and to record findings thereon.

Event management and sponsorship service classification - remand for fresh decision on evidence - Adjudication of the claim relating to event management and sponsorship services involved in the refund claim - HELD THAT: - The Tribunal noted that, in addition to the invoices issue, there is a discrete head relating to event management and sponsorship service involving a portion of the rejected claim. The appellant sought allowance of that part of the claim and the Tribunal directed that the Adjudicating Authority should decide this issue on merits as part of the remand, after affording the appellant an opportunity to produce and rely upon relevant evidence. [Paras 4]

Remanded to the Adjudicating Authority to examine and decide the admissibility and merit of the claim relating to event management and sponsorship services.

Refund claim by SEZ unit - Disposition of the small invoice amount rejected as time barred by the first appellate authority - HELD THAT: - The Tribunal recorded the learned Counsel's concession that he was not contesting the amount that pertains to one invoice which was rejected as time barred by the first appellate authority. No further adjudication was required in respect of that invoice as the appellant did not contest it. [Paras 4]

No relief in respect of the invoice found time barred; the appellant did not contest that amount.

Final Conclusion: The appeal is allowed by way of remand. The matter is directed to be placed before the Adjudicating Authority which shall afford the appellant an opportunity to produce all evidence, decide the admissibility and merit of the invoices/evidence (including pages 43-53 of the paperbook) relating to the refund claimed for April, 2017, to June, 2017, and determine the event management/sponsorship service claim; the amount conceded as time barred remains uncontested.

Inclusion of value of goods supplied free of cost in taxable value of services - computation of gross amount charged for valuation of taxable service under Section 67 of the Finance Act, 1994 - value of goods/materials provided free of charge not part of gross amount charged as held in Bhayana Builders - binding effect of Supreme Court affirmation of Tribunal larger bench decision

Inclusion of value of goods supplied free of cost in taxable value of services - computation of gross amount charged for valuation of taxable service under Section 67 of the Finance Act, 1994 - value of goods/materials provided free of charge not part of gross amount charged as held in Bhayana Builders - Value of diesel and explosives supplied free of cost by the service recipient to the appellant for provision of mining services is not includable in the taxable value of the mining services. - HELD THAT: - The Tribunal examined whether the cost of consumables (diesel and explosives) supplied free by the service recipient to the service provider must be included in the gross amount charged for valuation of mining services. The Supreme Court's decision in Bhayana Builders, which affirmed the Larger Bench of the Tribunal, construed the expression "the gross amount charged by the service provider for such service provided or to be provided by him" and held that goods/materials provided free of charge by the service recipient are not to be included in the gross amount because no price is charged by the service provider for such goods. That principle was found to be directly applicable to the present case where the allegation was inclusion of the cost of free supplies in the taxable service value. The Commissioner erred in attempting to distinguish Bhayana Builders on the ground that it concerned construction services and that mining services did not have abatement provisions; the Tribunal held that such distinction was not tenable once the Supreme Court had laid down the legal principle on valuation under Section 67. Consequently the impugned order confirming tax demand on the basis of including the cost of free supplies was set aside and the appeals allowed. [Paras 10, 11, 12, 13, 14]

The cost of diesel and explosives supplied free by the recipient is not includable in the gross value of mining services; the Commissioner's order is set aside and the appeals are allowed.

Final Conclusion: The Tribunal allowed the appeals, setting aside the Commissioner's order dated 18.11.2016, holding that the value of goods supplied free of cost by the service recipient (diesel and explosives) is not includable in the taxable value of the mining services in view of the Supreme Court's decision in Bhayana Builders.

Limitation for refund claims under Section 11B(1) - principles of unjust enrichment - proviso to Section 11B(2) empowering payment to applicant where refund relatable to duty-paid inputs - admissibility of Chartered Accountant's certificate and affidavit as evidence for non-passing of incidence

Limitation for refund claims under Section 11B(1) - Refund claim of Rs.2,17,946/- was filed within the prescribed limitation and its rejection on limitation grounds was incorrect. - HELD THAT: - The appellant produced speed post receipts and tracking details establishing delivery of the refund application in June 2017. The Form-R filed on 25.2.2019 expressly stated that an earlier consequential refund application was pending and referred to the earlier filing. The authorities below rejected the earlier filing on a clerical ground (wrong pin code) and by reading only the covering letter, but the Track Order Status confirms delivery to the specified departmental offices on 30.6.2017. On these facts the Tribunal finds that the refund claim for the said amount was lodged within limitation and the rejection on limitation grounds cannot stand. [Paras 6]

Refund claim of Rs.2,17,946/- held to have been filed within limitation; rejection on limitation grounds set aside.

Principles of unjust enrichment - proviso to Section 11B(2) empowering payment to applicant where refund relatable to duty-paid inputs - admissibility of Chartered Accountant's certificate and affidavit as evidence for non-passing of incidence - Transfer of the sanctioned refund of Rs.8,32,383/- to the Consumer Welfare Fund on the ground of unjust enrichment was not justified; refund payable to the appellant under the proviso to Section 11B(2). - HELD THAT: - The adjudicating notice only concerned the limitation issue; the contention to transfer the sanctioned amount to the Fund was raised for the first time during adjudication and thus was beyond the show cause notice. It is not disputed that the credit in issue related to capital goods and that such credit was held admissible. The proviso to Section 11B(2) permits payment to the applicant where the refund is relatable to credit of duty paid on excisable goods used as inputs in accordance with rules or notifications. The appellant produced a Chartered Accountant's certificate (based on books of accounts and related documents) and an affidavit stating that the incidence of the amounts paid was not passed on to consumers. No statutory format for such certificate is prescribed and, absent any contrary proof by the department, the certificate and affidavit cannot be discarded merely because the authority found the format unsatisfactory. On these grounds the plea against unjust enrichment succeeds and the amount should be paid to the appellant rather than credited to the Fund. [Paras 7]

Transfer of sanctioned refund to the Consumer Welfare Fund set aside; refund of Rs.8,32,383/- to be paid to the appellant under the proviso to Section 11B(2), the claim of unjust enrichment not established.

Final Conclusion: The appeal is allowed; the adjudicating order rejecting part of the refund on limitation and transferring the sanctioned refund to the Consumer Welfare Fund is set aside - the claim for Rs.2,17,946/- is held within limitation and the balance sanctioned refund is to be paid to the appellant rather than credited to the Fund.

Remand for de novo adjudication - commonality of facts and law - binding effect of Tribunal's prior decision - setting aside impugned orders - opportunity of personal hearing

Remand for de novo adjudication - commonality of facts and law - binding effect of Tribunal's prior decision - Whether the impugned adjudication orders should be set aside and the matters remanded for fresh adjudication in light of a prior CESTAT decision addressing the same facts and legal issues. - HELD THAT: - The Tribunal found that the allegations, facts and legal issues in the present proceedings are prima facie common with those considered by this Tribunal in its order dated 20.06.2022. Given that the earlier Tribunal decision involved both factual and legal determinations, the matter required reconsideration by the adjudicating authority taking cognizance of that decision. Consequently, the Tribunal set aside the impugned orders and directed a fresh adjudication (de novo) by the Commissioner so that liability may be reassessed in light of the prior Tribunal order. The remand contemplates reconsideration of the issues on merits by the adjudicating authority rather than mere mechanical confirmation of earlier findings.

Impugned orders set aside; appeals allowed by way of remand to the Adjudicating Authority for fresh adjudication in light of the Tribunal's prior order dated 20.06.2022.

Opportunity of personal hearing - setting aside impugned orders - Whether appellants must be afforded an opportunity of personal hearing before the adjudicating authority on remand. - HELD THAT: - The Tribunal expressly directed that on remand the Adjudicating Authority shall pass fresh orders after providing sufficient opportunity of personal hearing to the appellants. The requirement is integral to ensuring that facts and arguments are reconsidered afresh and that natural justice is observed during the de novo adjudication ordered by the Tribunal.

Adjudicating Authority to afford sufficient opportunity of personal hearing to the appellants before passing fresh orders on remand.

Final Conclusion: The impugned orders are set aside and the appeals are allowed by way of remand to the Adjudicating Authority for fresh adjudication in light of this Tribunal's earlier decision; the appellants must be given sufficient opportunity of personal hearing before fresh orders are passed.

Assessment under Section 43 of the Orissa Value Added Tax Act, 2004 - reopening of assessment - objective opinion by the Sales Tax Officer - reassessment on the basis of AG (Audit) objection - setting aside assessment

Reopening of assessment - objective opinion by the Sales Tax Officer - reassessment on the basis of AG (Audit) objection - setting aside assessment - Validity of reassessment completed under Section 43 of the OVAT Act for the period 1st April, 2012 to 31st March, 2014 where the Assessing Officer reopened assessment relying on the objection of AG (Audit) without recording an independent objective opinion. - HELD THAT: - The Court held that reopening of assessment cannot be mechanically based on the objection of the audit party; the Sales Tax Officer must form and record an independent, objective opinion before initiating reassessment. This legal position, as explained in Indure Ltd. v. Commissioner of Sales Tax, applies to the corresponding provision in the OVAT Act. The JCST found from the assessment record that the AO simply accepted the AG (Audit) objection without forming or recording satisfaction of escapement of taxable turnover. Given that remittance to the STO for fresh hearing would not alter the factual position-namely the absence of any independent objective recording by the STO-the Tribunal's and JCST's orders remanding the matter were inadequate. Consequently, the reassessment completed under Section 43 was set aside because the statutory precondition of a recorded independent satisfaction was not complied with. [Paras 10, 11, 12, 13]

The reassessment under Section 43 for the period 1st April, 2012 to 31st March, 2014 is set aside because the Assessing Officer reopened the assessment solely on the AG (Audit) objection without forming or recording an independent objective opinion; remand would serve no purpose.

Final Conclusion: Revision petition allowed; the orders of the Tribunal and the JCST and the corresponding reassessment under Section 43 for the tax period 1st April, 2012 to 31st March, 2014 are set aside in favour of the dealer.

Classification of goods in tax schedules - specific entry overriding a general entry - strict construction of a taxing statute - taxation of residual/unspecified goods under the rate schedule - treatment of accessories, parts and components vis-a -vis main article - imposition of penalty under Section 42(5) of the OVAT Act - limited applicability of precedents rendered under different statutory schemes

Classification of goods in tax schedules - specific entry overriding a general entry - taxation of residual/unspecified goods under the rate schedule - Tyres, tubes and flaps supplied with tractor-trolley are not covered by Entry 119 of Part-II of Schedule B and are taxable under the residuary entries of Part-III at the higher rate. - HELD THAT: - The Court found that Entry 119 of Part-II expressly carves out and excludes "tyres, tubes and flaps" from the words "Tractors, threshers, harvesters and attachments and parts thereof". Applying the established principle that a specific entry prevails over a general entry and construing a taxing statute strictly in its popular commercial meaning, the excluded items cannot be read into the antecedent phrase. Earlier decisions treating automobile tyres and tubes as separate taxable entries and authority holding that specific entries govern when there is an apparent conflict were followed. Consequently, in absence of a specific entry covering those items within Entry 119, tyres, tubes and flaps fall under the unspecified/residual entries attracting the higher rates specified in Part-III (i.e., the rates applicable up to 31.03.2011 and the revised rate thereafter). The Court rejected the dealer's submission that tyres and tubes, being necessary for the saleable assembled tractor-trolley, should be taxed at the lower rate applicable to tractors and trailers. [Paras 6, 8]

The Tribunal was correct to treat tyres, tubes and flaps as taxable separately under the residuary entry at the higher rates; the question is answered in favour of the Revenue and against the dealer.

Imposition of penalty under Section 42(5) of the OVAT Act - automaticity of penalty consequent to audit assessment - distinction between discretionary and non-discretionary penalties - Confirmation of penalty under Section 42(5) consequent to the audit assessment is legally correct and not vitiated by lack of discretion in the assessing authority to reduce it. - HELD THAT: - The Court relied on its earlier precedents affirming the constitutional validity of Section 42(5) and the statutory language which mandates that an amount equal to twice the tax assessed under Section 42(3) or (4) shall be imposed by way of penalty. The provision leaves no discretion with the assessing officer to quantify a lesser penalty once an audit assessment under Section 42(4) is completed. The assessment in the present cases resulted from an Audit Visit Report and was made under Section 42(4); therefore the consequent penalty under Section 42(5) follows automatically. The Court distinguished penalties under other sections (e.g., Section 43(2)) where discretion exists, and held that further opportunity to reconsider quantification would be futile given the statutory scheme. [Paras 7, 13, 14]

The Tribunal correctly confirmed the penalty imposed under Section 42(5); the question is answered in favour of the Revenue and against the dealer.

Limited applicability of precedents rendered under different statutory schemes - principle of fitting precedent facts to present case - Reliance on precedents decided under different statutory provisions (including Union of India v. Rajasthan Spinning & Weaving Mills and authorities applying Central Excise law) did not justify displacing the mandatory penalty under Section 42(5) or altering classification here. - HELD THAT: - The Court observed that precedents must be applied by examining factual and statutory fit; decisions rendered under different statutory schemes and language cannot be blindly extended. The authority relied on by the petitioner arose in different contexts and under different statutory language; consequently that line of decisions does not assist the dealer in negating the mandatory effect of Section 42(5) or in re-classifying the goods. The Court cited authorities cautioning against unexamined transplantation of precedents and confirmed its prior rulings which interpret Section 42(5) as mandatory. [Paras 7, 8]

The Tribunal was correct in not allowing the petitioner to rely on those decisions; the question is answered in favour of the Revenue and against the petitioner.

Final Conclusion: Both revision petitions are dismissed. The court upheld the Tribunal's classification of tyres, tubes and flaps as taxable under the residuary entries at the higher rates for the periods in issue, and affirmed the imposition of penalty under Section 42(5) of the OVAT Act; reliance on decisions from different statutory contexts was rejected.

Issuance of 'C' declaration forms under sub sections (3) and (4) of Section 8 of the Central Sales Tax Act, 1956 - concessional rate of tax on inter state purchases subject to furnishing of 'C' forms - scope of administrative scrutiny at the stage of issuance of 'C' forms - requirement of registration and prescribed payment/production formalities for issuance of 'C' forms - withdrawal of online facility for obtaining 'C' forms and route of application to jurisdictional authority

Issuance of 'C' declaration forms under sub sections (3) and (4) of Section 8 of the Central Sales Tax Act, 1956 - scope of administrative scrutiny at the stage of issuance of 'C' forms - requirement of registration and prescribed payment/production formalities for issuance of 'C' forms - Respondents were directed to issue 17 'C' declaration forms to the petitioner for the specified periods. - HELD THAT: - The Court found the explanation offered by the assessing authority insufficient to withhold 'C' forms where there was no allegation of short deposit of tax or suppression/misstatement by the petitioner. The Court applied the principle that at the stage of issuance of 'C' declaration forms the authority is not required to conduct a full enquiry into the nature of the transaction; the preliminary examination is confined to whether the applicant is a registered dealer, whether the goods fall within the registration and whether prescribed formalities for obtaining the forms have been complied with, and that such formalities have been relaxed in practice. The Court relied on its earlier decision in A.P.Gas Power Corporation Ltd. v. Assistant Commercial Tax Officer as laying down that detailed inquiry need not precede issuance, and noted that this approach has been followed by other High Courts, including in Tata Steel Limited v. State of Jharkhand . In the facts before it the petitioner had paid taxes regularly, there was no arrear or charge of wrongdoing, and the denial of 'C' forms based on the administrative withdrawal of online facility and alleged non production of lorry receipts was not a sufficient ground to refuse the forms. [Paras 8, 9, 10, 11]

Respondents directed to issue the 17 'C' forms to the petitioner for 2016-17 and 2017-18 (01.04.2017 to 30.06.2017) within fifteen days of receipt of the order.

Final Conclusion: Writ petition allowed by directing issuance of the 17 'C' declaration forms for the periods 2016-17 and 2017-18 (01.04.2017 to 30.06.2017) within fifteen days; no order as to costs.

Priority of secured creditors under Section 26E of the SARFAESI Act - overriding effect of the non-obstante clause in Section 24 of the MSMED Act - no repugnancy between the MSMED Act and the SARFAESI Act on the question of priority - limited role of the District Magistrate under Section 14 of the SARFAESI Act as assistance and not adjudication - remedy before the Debts Recovery Tribunal under Section 17 of the SARFAESI Act

Priority of secured creditors under Section 26E of the SARFAESI Act - overriding effect of the non-obstante clause in Section 24 of the MSMED Act - no repugnancy between the MSMED Act and the SARFAESI Act on the question of priority - Whether recoveries under the MSMED Act prevail over recoveries under the SARFAESI Act on the question of priority. - HELD THAT: - The Court held that Sections 15 to 23 of the MSMED Act provide a special adjudicatory mechanism for delayed payments but do not confer an express priority of payment over secured creditors or governmental dues. By contrast, Section 26E of the SARFAESI Act (inserted in 2016) contains an explicit non-obstante clause declaring that, after registration of a security interest, debts due to a secured creditor shall be paid in priority over other debts and over revenue taxes and cesses, subject to the IBC. Where two statutes contain competing non-obstante provisions, the later statute insofar as it is inconsistent will prevail. Given the specific and later-enacted priority provision in Section 26E, the Court found no repugnancy that would warrant subordinating the SARFAESI priority to the MSMED scheme; permitting the MSMED claim to override Section 26E would frustrate the object and purpose of the SARFAESI Act and render Section 26E otiose. Accordingly, recoveries under the SARFAESI Act in respect of secured assets prevail over recoveries under the MSMED Act. [Paras 7, 8, 11]

Recoveries under the SARFAESI Act prevail over recoveries under the MSMED Act insofar as the question of priority is concerned; Section 26E of the SARFAESI Act governs priority.

Limited role of the District Magistrate under Section 14 of the SARFAESI Act as assistance and not adjudication - remedy before the Debts Recovery Tribunal under Section 17 of the SARFAESI Act - Whether the Naib Tehsildar was justified in refusing to take possession of secured assets pursuant to the District Magistrate's order under Section 14 of the SARFAESI Act. - HELD THAT: - The Court observed that Section 14 empowers the District Magistrate or Chief Metropolitan Magistrate to assist a secured creditor in taking possession of secured assets but does not confer jurisdiction to adjudicate disputes between the secured creditor and the debtor. The Naib Tehsildar's refusal to take possession on the ground that a recovery certificate under the MSMED Act was pending was therefore without jurisdiction. The Court noted that any aggrieved person may challenge measures under Section 13(4) or orders under Section 14 before the Debts Recovery Tribunal by invoking the remedy under Section 17, which must be decided in accordance with law. [Paras 10, 11]

The Naib Tehsildar's refusal to take possession pursuant to the Section 14 order was without jurisdiction and liable to be set aside; the aggrieved party may proceed under Section 17 before the DRT.

Final Conclusion: The appeal is allowed; the Division Bench judgment is set aside and the Single Judge's order is restored. It is held that recoveries under the SARFAESI Act with respect to secured assets prevail over recoveries under the MSMED Act on the question of priority, and the Naib Tehsildar's refusal to act under the District Magistrate's Section 14 order was without jurisdiction; respondent remains free to pursue remedy under Section 17 of the SARFAESI Act.