TaxTMI Updates e-Newsletter
Feb 01,2023

Cancellation of GST registration - non submission of reply as sole ground for cancellation - non speaking order - violation of Article 14 by administrative non application of mind - opportunity to be heard / audi alteram partem - remand for fresh adjudication

Cancellation of GST registration - non submission of reply as sole ground for cancellation - non speaking order - violation of Article 14 by administrative non application of mind - Validity of the order cancelling the petitioner's GST registration which records cancellation solely on account of non submission of a reply and is non speaking. - HELD THAT: - The High Court applied the reasoning in the earlier decisions relied upon by the petitioner and held that an order of cancellation which does not assign reasons and is passed merely because a reply to the show cause notice was not filed cannot survive scrutiny. Such non speaking administrative orders, passed prima facie without application of mind, engage the equality and fairness principles under Article 14 and are liable to be set aside. Following the judgments cited (including Technosum India Pvt. Ltd. and the antecedent authority referred to therein), the court found merit in the challenge to the cancellation order dated 16.09.2019 and the appellate dismissal dated 22.12.2022 which proceeded on the same non speaking basis.

The cancellation order dated 16.09.2019 and the appellate order dated 22.12.2022 are set aside on the stated grounds.

Opportunity to be heard / audi alteram partem - remand for fresh adjudication - Relief and consequential procedure to be followed after setting aside the cancellation and appellate orders. - HELD THAT: - The court permitted the petitioner to file the reply to the show cause notice and to place before the authority a certified copy of the present order and of the judgment in Writ Tax No.145 of 2022 within three weeks. On such appearance the respondents are directed to consider the reply and proceed to pass a fresh reasoned order in accordance with law. The matter is thus remanded to the concerned authority for fresh adjudication after affording the petitioner an opportunity of hearing.

Petitioner allowed three weeks to appear with reply; respondents to pass a fresh, reasoned order after hearing the petitioner.

Final Conclusion: Writ petition allowed; impugned cancellation and appellate orders set aside and matter remitted for fresh adjudication after the petitioner files a reply and is afforded an opportunity to be heard within the time directed.

Classification of supply as inter-state or intra-state - adjustment of wrongly paid tax under Section 19 of the Integrated Goods and Services Tax Act, 2017 - no interest payable on such adjustment under Section 77 of the Central Goods and Services Tax Act, 2017 - petitioner's representation to the Central Board of Indirect Taxes and Customs for clarification - stay of recovery of tax demand pending adjudication

Adjustment of wrongly paid tax under Section 19 of the Integrated Goods and Services Tax Act, 2017 - no interest payable on such adjustment under Section 77 of the Central Goods and Services Tax Act, 2017 - Legal position that wrongly paid tax can be adjusted and that no interest is payable in respect of such transactions as stated under the relevant GST provisions. - HELD THAT: - The Court recorded the statutory position that, in terms of the Integrated Goods and Services Tax Act, 2017, an amount of tax wrongly paid can be adjusted and, in terms of the Central Goods and Services Tax Act, 2017, no interest is payable in relation to such transaction. This legal position was noted by the Court in the context of the dispute about whether supplies of mobile recharge and DTH vouchers to recipients located in other States are inter-state or intra-state supplies. The Court treated these statutory principles as applicable to the factual controversy before it and relied on them in directing interim relief. [Paras 2]

The statutory principles permitting adjustment of wrongly paid tax and excluding interest on such adjustments were accepted and applied in the context of the dispute.

Classification of supply as inter-state or intra-state - petitioner's representation to the Central Board of Indirect Taxes and Customs for clarification - stay of recovery of tax demand pending adjudication - The question whether supply of mobile recharge coupons and DTH vouchers to recipients located in other States is inter-state or intra-state was remitted for consideration by the Board, and recovery of the impugned demand was stayed pending that consideration. - HELD THAT: - The petitioner had made a representation to the Central Board of Indirect Taxes and Customs dated 7 September 2017 seeking clarification on whether such supplies to recipients in other States constitute inter-state supply. The representation remained pending. The Court directed that the Board shall consider the petitioner's representation and issue appropriate directions within three months. In view of the payment of the tax by the petitioner and the existence of the pending representation, the Court ordered that recovery of the demand issued by the State shall remain stayed until the next date of hearing. The Court did not adjudicate the substantive classification question on merits; instead it directed administrative consideration by the Board and granted interim protection against recovery. [Paras 3, 4, 5]

The matter is remitted to the Board for consideration of the petitioner's representation within three months; recovery of the demand is stayed until the next date of hearing.

Final Conclusion: The Court noted the statutory position on adjustment and interest, directed the Central Board of Indirect Taxes and Customs to consider the petitioner's representation within three months, and stayed recovery of the tax demand until the next date of hearing.

Penalty under Section 129(1)(b) of the CGST Act, 2017 - detention of goods in transit and validity of detention order - e-way bill generated by a non-existent/bogus supplier - mismatch between declared place of dispatch and actual place of loading - suspension of GST registration following physical verification - use of bogus transactions to claim inadmissible input tax credit (ITC)

Penalty under Section 129(1)(b) of the CGST Act, 2017 - e-way bill generated by a non-existent/bogus supplier - mismatch between declared place of dispatch and actual place of loading - suspension of GST registration following physical verification - use of bogus transactions to claim inadmissible input tax credit (ITC) - Validity of the detention order and penalty imposed under Section 129(1)(b) where goods in transit carried an e-way bill from a supplier found to be non-existent and registered address did not correspond to actual loading place. - HELD THAT: - The Court recorded and relied upon the concurrent factual findings of the taxing authorities that the selling dealer was registered at an address from which no business was being conducted, that physical verification established the absence of the firm at the registered premises and that the GST registration was suspended. The e-way bill declared dispatch from the registered address but the driver's statement and inspection revealed loading from an undeclared place some distance away. The authorities also found, on scrutiny of records for 2021-22, that the seller was not conducting genuine sale and purchase and that the transactions were contrived to pass on inadmissible ITC. Notices issued to the parties remained unanswered and the assessing authority recorded the absence of evidence, including banking transactions, to substantiate the declared supplies. In these circumstances the Court held that an e-way bill generated by a non bona fide supplier and used to transit goods from an undisclosed place does not protect the recipient or the vehicle-occupants from action under the statute, and that the detention order and consequent penalty were justified on the material led by the authorities.

The orders of detention and penalty imposed by the authorities, and the appellate order upholding them, are not interfered with.

Final Conclusion: Writ petition dismissed; the Court upheld the detention and penalty imposed in view of the findings that the seller was a non existent/bogus firm, the e way bill misrepresented the place of dispatch, and the transactions were used to claim inadmissible ITC.

Show-cause notice - principles of natural justice - failure to specify charges - mandatory particulars in notice under Section 73(1) of the JGST Act - quashing of proceedings for procedural infirmity - availability of alternate remedy and writ jurisdiction - remand for fresh adjudication

Show-cause notice - failure to specify charges - mandatory particulars in notice under Section 73(1) of the JGST Act - principles of natural justice - Impugned show-cause notice dated 07.01.2022 was defective for being in a pro forma format without striking out irrelevant particulars and for not clearly spelling out the contraventions alleged. - HELD THAT: - The Court found on perusal that the show-cause notice was issued in a format without striking out irrelevant portions and thus failed to state clearly the contraventions the petitioner was required to answer. Relying on precedent, the Court reiterated that a show-cause notice must inform the noticee of specific charges so as to afford an opportunity to deny guilt and mount a defence; vague or unintelligible allegations lead to denial of a fair opportunity and violate principles of natural justice. Because the notice did not comply with the statutory and procedural requirements for a proper show-cause under Section 73(1), it was held to be legally infirm. [Paras 5, 6, 7]

Show-cause notice dated 07.01.2022 quashed for procedural defect and non-compliance with natural justice.

Quashing of proceedings for procedural infirmity - DRC-01/DRC-07 summary orders - remand for fresh adjudication - Summary of show-cause (Form DRC-01) dated 07.01.2022 and summary order in DRC-07 dated 09.02.2022 were set aside where there was no proper adjudication and the procedural requirements had not been followed. - HELD THAT: - The Court observed that the Deputy Commissioner proceeded to issue the summary order (DRC-07) without any adjudication order and that the DRC-01 served as a mere summary. Since the foundational show-cause notice itself was defective and no proper opportunity was afforded or adjudication recorded, the consequential summary documents could not stand. In view of these procedural infirmities, the Court quashed the DRC-01 and DRC-07 and remitted the matter for fresh consideration, directing that a fresh show-cause notice be issued and the proceedings be conducted strictly in accordance with law and principles of natural justice. [Paras 5, 7, 8]

Form DRC-01 (07.01.2022) and DRC-07 (09.02.2022) set aside; matter remitted for fresh proceedings from issuance of a valid show-cause notice.

Availability of alternate remedy and writ jurisdiction - principles of natural justice - Existence of an alternative statutory remedy did not bar exercise of writ jurisdiction because the challenge raised procedural defects amounting to denial of natural justice. - HELD THAT: - The Court considered the respondents' contention that the petitioner had an alternate remedy under the statute. However, where the impugned proceedings suffered from fundamental procedural infirmity - namely, a defective notice that denied a fair opportunity to defend - the Court found the alternative remedy unsuitable to cure the violation of natural justice. Accordingly, the writ petition was entertained and decided on procedural grounds without addressing merits of the tax demand. [Paras 4, 8]

Writ petition maintainable despite availability of statutory remedy because of procedural violation and denial of natural justice.

Final Conclusion: The show-cause notice dated 07.01.2022, the summary in Form DRC-01 of the same date, and the summary order in DRC-07 dated 09.02.2022 are quashed for procedural non-compliance and violation of natural justice; the matter is remitted to the Deputy Commissioner, Deoghar, to issue a fresh show-cause notice and proceed afresh in accordance with law, the Court not having examined the merits of the tax demand.

Challenge to vires of Rule 86A - blocking of electronic credit ledger - right to be informed of reasons for administrative action - opportunity of hearing - requirement of a speaking order - remand for fresh consideration by authority

Challenge to vires of Rule 86A - Prayer for declaration that Rule 86A is ultra vires was withdrawn and struck off. - HELD THAT: - The appellant expressly relinquished the relief seeking declaration of invalidity of Rule 86A. Having recorded that concession, the Court struck off the prayer for declaration and did not adjudicate the constitutional validity of Rule 86A on merits. The decision follows the appellant's recorded withdrawal of that challenge and the Court's acceptance of the concession. [Paras 5]

Prayer for declaration of Rule 86A as ultra vires is struck off pursuant to the appellant's concession.

Blocking of electronic credit ledger - right to be informed of reasons for administrative action - opportunity of hearing - requirement of a speaking order - remand for fresh consideration by authority - Order blocking the appellant's electronic credit ledger to be subjected to fresh administrative consideration after furnishing reasons, opportunity to object, and personal hearing, culminating in a speaking order within prescribed timelines. - HELD THAT: - The Court declined to grant immediate restoration of input tax credit because the appellant had not been informed of the reasons which prompted the blocking of the electronic credit ledger. To protect both the appellant's rights and the revenue interest, the Court directed the appropriate authority to communicate, within ten days of receipt of the order copy, the reasons for the blocking and the identity of the authority who passed the order. Thereafter the appellant may file objections within seven days, and the authority must afford a personal hearing to the appellant or an authorised representative and pronounce a reasoned (speaking) order on merits and in accordance with law. The Court prescribed an overall timeline for expedition-personal hearing followed by a speaking order preferably within two weeks from conclusion of the hearing-while leaving the substantive decision to the administrative authority on fresh consideration. [Paras 6]

Directed communication of reasons within ten days, right to file objections within seven days, right to personal hearing, and requirement that the authority pass a speaking order on merits expeditiously, preferably within two weeks of conclusion of hearing.

Final Conclusion: The writ petition and intra-Court appeal are disposed of by recording the appellant's withdrawal of the challenge to Rule 86A and directing the relevant authority to furnish reasons for blocking the electronic credit ledger, permit objections and a personal hearing, and thereafter pass a speaking order on merits within the prescribed timelines.

Disallowance of expenditure under section 37(1) - estimation of income by application of derived profit rates - genuineness of trade creditors and additions on bogus credits - remand for fresh adjudication on quantification and opportunity to be heard - overlap and interaction between disallowance u/s 37(1) and disallowances under section 40A(3) / section 40(a)(ia) - admissibility and probative value of statements/retractions and cross-examination

Disallowance of expenditure under section 37(1) - genuineness of expenditure - Validity of the disallowance of transport expenditure made by the AO for AY 2012-13 (aggregate disallowance Rs.654.87 lacs) and correctness of the CIT(A)'s deletion/estimation approach. - HELD THAT: - The Tribunal examined the material on record (absence of creditor confirmations, inability to serve notices, self-cheque payments, unnumbered/unverified bills, implausible credit periods, and comparative cost data) and found the assessee failed to discharge the burden of proof under section 37(1). The first appellate authority's approach of treating the matter as mere estimation and substituting its own profit-rate based computation was held to be de hors the facts and unsupported by the record. The AO's specific disallowance under section 37(1) was found to be reasonable in quantum in the facts of the case and consistent with corroborative comparators and contemporaneous documents (including minutes with the buyer and sample transport bills). The Tribunal also observed that separate disallowance under section 40A(3) / section 40(a)(ia) would be an alternative ground but must not result in double disallowance and would be considered only if the section 37(1) disallowance is disturbed in further proceedings.

Disallowance of transport expenditure for AY 2012-13 sustained and CIT(A)'s deletion/vitiated estimation set aside; AO's disallowance under section 37(1) is restored (subject to consequences if reversed on further appeal).

Disallowance of expenditure under section 37(1) - verifiability of labour payments - Validity of the disallowance of labour expenditure (breaking, sorting, screening) for AY 2012-13 (AO disallowed Rs.20 lacs; CIT(A) restricted to Rs.2 lacs). - HELD THAT: - The assessee failed to produce contemporaneous primary records (wages register) during assessment and produced incomplete records belatedly; payments were through unverifiable self-made vouchers and inconsistencies in bases claimed for computation persisted. In view of the assessee's failure to prove the amount as wholly and exclusively incurred for business and the reasonableness of the AO's estimate, the Tribunal found the AO's quantified disallowance justified on the facts.

AO's disallowance of labour expenditure is upheld (disallowance at the sum effected by the AO confirmed).

Estimation of income by application of derived profit rates - single integrated business v. separate profit centres - Correct approach and rates to estimate income for AY 2013-14 where books were not produced: whether transport & loading receipts constitute a separate business and applicable profit rates. - HELD THAT: - The Tribunal held that mining and transportation receipts arise from one integrated mining business and are not shown to be separate independent businesses. Nevertheless, on evaluating year-on-year changes in realizations and costs and the comparable case, the Tribunal accepted a pragmatic split for estimation: retain a near-base net profit rate for mining and apply a lower rate to transport/loading receipts because of changed cost/realization dynamics in AY 2013-14. The CIT(A)'s method of applying a separate 8% rate without any basis and of mis-applying derived results was set aside; after examining the comparables and contemporaneous figures the Tribunal concluded that applying a 32% rate on mining receipts (marginally lower than the 33.05% base) and 8% on transport and loading receipts for AY 2013-14 was reasonable in the facts.

Revenue appeal allowed in part: for AY 2013-14 the Tribunal approves estimation by applying 32% to mining receipts and 8% to transport & loading receipts; CIT(A)'s contrary approach set aside.

Genuineness of trade creditors and additions on bogus credits - admissibility and probative value of statements/retractions and cross-examination - Whether trade-creditor balances shown in the assessee's books for AY 2014-15 (aggregate Rs.189.62 lacs for 10 creditors notified) are genuine or liable to be added back as bogus credits. - HELD THAT: - The AO served notices under section 133(6) on identified creditors; many were not found at stated addresses; two deponents (summoned under section 131) deposed they had not done transport work for the assessee and had no dues. The assessee filed confirmations and later retraction affidavits; Tribunal admitted the assessee's retractions as additional evidence but found them to be managed and uncorroborated. Macro inconsistencies (decline in sales with sharp increase in creditor balances and transport costs, implausible credit periods, lack of independent creditor records, confirmations furnished by assessee himself in identical format) led the Tribunal to conclude substantial part of the creditor claims are not genuine. The AO's restriction of addition to year-end outstanding was noted as inconsistent with finding of non-genuineness and the Tribunal quantified and confirmed disallowance for the creditors where no payments were made while directing limited remand for others.

Part confirmed: disallowance in respect of the eight creditors (no payments during year) confirmed (corresponding amount confirmed); for two creditors where part payments were made the matter is remitted to the AO for fresh consideration after affording the assessee opportunity to be heard and to explain why disallowance should be confined to year-end outstanding; retraction affidavits treated as unreliable and of no merit to negate AO's findings.

Addition under section 41(1)(b) - remission of liability and evidentiary onus - Validity of addition under section 41(1)(b) of Rs.15.82 lacs (two creditors Rajesh Tipa & wife) for AY 2014-15 based on creditor's denial recorded under section 131. - HELD THAT: - The AO recorded denial statements under oath; the assessee later procured retraction affidavits which lacked corroboration and appeared managed. The Tribunal found the original sworn statements of the creditors to have evidentiary value, that retractions were unsubstantiated and that the inference of remission or non-existence of liability was available on the record. Given the factual findings and absence of reliable contrary proof by the assessee, the Tribunal did not accept the revenue's challenge to the CIT(A)'s order on this ground.

Deletion of the section 41(1)(b) addition by the CIT(A) in respect of these two creditors sustained; Revenue's grievance on this point fails (subject to consequences if the primary disallowance for AY 2012-13 is reversed on further appeal).

Ad hoc / estimated disallowances under section 37(1) - Validity of AO's 5% ad-hoc disallowances in respect of breaking/sorting/screening, poclain and loader expenses for AY 2014-15. - HELD THAT: - The AO found deficiencies in supporting records (self-made vouchers, missing wage registers, inability to verify identities and work records), and made small percentage disallowances as an estimate of inflation/overstatement. The assessee failed to satisfactorily rebut these findings. The Tribunal reiterated that allowance under section 37(1) requires proof of being wholly and exclusively for business and that in the facts the AO's estimate was reasonable.

AO's 5% disallowances in respect of breaking/sorting/screening, poclain and loader expenses for AY 2014-15 are upheld.

Penalty/interest and deductibility - Whether interest/penalty component under sales-tax law is deductible for AY 2012-13 as business expenditure. - HELD THAT: - Penalty is not deductible as it arises from infraction of law; the assessee did not produce evidence before the CIT(A) to substantiate the precise breakup. The Tribunal relied on the tax-audit report figure for the relevant year and treated the non-deductible penalty portion accordingly.

Disallowance in respect of penalty component confirmed to the extent supported by the tax-audit report (penalty disallowance confirmed as determined by the Tribunal); balance allowed.

Final Conclusion: The Tribunal, after examining evidence, comparables and year-on-year operational data, restored the AO's principal disallowance of transport expenditure for AY 2012-13 under section 37(1); upheld specified labour and other ad-hoc disallowances; set aside the CIT(A)'s flawed estimation approach but directed a reasoned estimation for AY 2013-14 by applying 32% to mining receipts and 8% to transport/loading receipts; confirmed substantial additions for non-genuine creditors in AY 2014-15 while remanding limited issues (two creditors where part payments occurred) to the AO for fresh consideration after affording the assessee opportunity to be heard; and decided ancillary issues (deletion under section 41(1)(b) in one set of facts, penalty non-deductibility) in accordance with the factual findings recorded.

Reassessment proceedings under Section 148A of the Income Tax Act, 1961 - Requirement to furnish relevant information to the assessee before reopening - Right to personal hearing before initiation of reassessment - Obligation to pass a speaking order - Redaction of third-party information

Reassessment proceedings under Section 148A of the Income Tax Act, 1961 - Requirement to furnish relevant information to the assessee before reopening - Validity of the order passed under Section 148A(d) and the consequent notice under Section 148 initiating reassessment - HELD THAT: - The Court found that the order under Section 148A(d) was issued without furnishing to the petitioner the material showing how income chargeable to tax had allegedly escaped assessment. The impugned order merely recorded that the assessee had not established creditworthiness or source of investment, without disclosing the information or material on which the AO relied. In view of this absence of material supplied to the assessee and the lack of articulated justification for reopening, the Court set aside the order and directed that the Assessing Officer shall undertake a de novo exercise from the stage at which the notice under Section 148A(b) is positioned. The remand requires the AO to furnish relevant information (with appropriate redactions of third party data), afford the assessee opportunity to respond, and thereafter proceed in accordance with law. [Paras 13]

Order under Section 148A(d) set aside and reassessment proceedings remitted for de novo consideration from the stage of Section 148A(b), with directions to furnish relevant information and allow the assessee to respond.

Right to personal hearing - Obligation to pass a speaking order - Redaction of third-party information - Procedural safeguards to be observed by the Assessing Officer on remand - HELD THAT: - The Court directed that before proceeding further the AO must (a) furnish the relevant information concerning the petitioner after redacting third party information, (b) grant personal hearing to the petitioner or his authorised representative (including by video conferencing), (c) permit the petitioner to cooperate and furnish information in response to the crystallised allegations, and (d) thereafter pass a speaking order, a copy of which shall be supplied to the petitioner. The Court emphasised that if the AO's subsequent order is adverse, the assessee shall have liberty to seek appropriate remedies under law. [Paras 13]

AO to furnish redacted relevant information, afford personal hearing, permit the assessee to respond, and pass a speaking order on remand.

Final Conclusion: Writ petition disposed by setting aside the order under Section 148A(d) for AY 2015-16 and remitting the matter to the Assessing Officer to proceed de novo from the stage of the Section 148A(b) notice, subject to directions to furnish redacted information, grant hearing, permit response, and pass a speaking order; liberty reserved for the assessee to avail remedies if adversely affected.

Search and seizure powers under Section 132 - territorial jurisdiction under Section 120 - proviso to Section 132 permitting non jurisdictional search of locations - Section 132(1A) authorisation for additional locations discovered during search - scope and effect of Notification No. S.O.2914(E) dated 13.11.2014

Search and seizure powers under Section 132 - territorial jurisdiction under Section 120 - proviso to Section 132 permitting non jurisdictional search of locations - scope and effect of Notification No. S.O.2914(E) dated 13.11.2014 - Legality of the search and seizure conducted at the petitioner's residence and office by officers from Bangalore who were not the jurisdictional officers of the assessee - HELD THAT: - The Court held that the scheme of the Act contemplates exercise of powers by the income tax authority having jurisdiction over the assessee, as mandated by Section 120, which makes territoriality a primary criterion. Section 132 contains limited, specific exceptions permitting a non jurisdictional officer to act in respect of a location falling within his territorial control only where the proviso to Section 132 applies (i.e., the officer has reason to believe that delay in obtaining authorisation from the officer having jurisdiction would prejudice the revenue) and such reasons are recorded. Section 132(1A) likewise permits extension of search to additional locations discovered during search proceedings, again notwithstanding Section 120, but only in respect of locations. The Notification No. S.O.2914(E) dated 13.11.2014, relied upon by the Revenue, effects extension of territorial jurisdiction of specified Directors/Principal Directors/Directors General for purposes of search and related powers; it operates qua territory/places and does not, by itself, confer a general power to search an assessee who falls under the jurisdiction of another assessing officer. Applying these principles to the facts, the Court found that searches are statutorily required to be conducted by the jurisdictional officers of the assessee except where the narrowly drawn exceptions in Section 132 (and Section 132(1A)) as to locations are satisfied. The warrant of authorisation in Form 45 issued in the name of the petitioner by the Deputy Director in Bengaluru did not meet the statutory scheme permitting a non jurisdictional officer to search the person/ premises of an assessee who falls under another jurisdiction, and therefore the search and consequent proceedings were declared illegal. [Paras 17, 18, 28, 29, 30]

Search and seizure conducted at the petitioner's residence and office on 30.08.2017 by the Bangalore officers was illegal; declaration issued and writ petition allowed.

Final Conclusion: The court declared the search conducted on 30.08.2017 and subsequent proceedings illegal because, on the statutory scheme, searches must be conducted by the jurisdictional officers of the assessee except where the limited location based exceptions in Section 132 (including Section 132(1A)) apply; the Notification S.O.2914(E) extends territorial authority qua places but does not authorize searching an assessee outside the officer's jurisdiction in the absence of the statutory conditions, and therefore the petition is allowed.

Revisionary jurisdiction under section 263 - Two views possible doctrine - Notional rent under section 23 - Binding effect of coordinate bench/tribunal precedent

Revisionary jurisdiction under section 263 - Two views possible doctrine - Notional rent under section 23 - Whether the Principal Commissioner of Income Tax rightly exercised powers under section 263 to revise the Assessing Officer's order for not making addition of notional rent in respect of unsold flats held as stock-in-trade for AY 2017-18. - HELD THAT: - The Assessing Officer, after specific enquiry during scrutiny, declined to make an addition of notional rent in respect of vacant unsold flats carried as closing stock, applying the view of the Mumbai Bench in Osho Developers vs. ACIT which held that annual letting value of flats held as stock-in-trade cannot be taxed under the head 'house property'. The PCIT reached a contrary conclusion by following the decision in CIT vs. Ansal Housing Finance & Leasing Company Ltd. The Tribunal held that where two views are reasonably possible and the Assessing Officer has adopted one such view supported by precedent of the jurisdictional Tribunal, the PCIT cannot, in exercise of revisional jurisdiction under section 263, substitute his opinion merely because he prefers a different view. Applying that settled principle, the PCIT in the present case attempted to supplant the Assessing Officer's view with its own contrary view and thereby exceeded the limits of revisional power. [Paras 5, 6, 7]

The exercise of revisionary jurisdiction by the PCIT was not justified; the impugned order is quashed and the assessee's appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, quashed the PCIT's order under section 263 for AY 2017-18, and held that the PCIT exceeded jurisdiction by substituting his view where the Assessing Officer had legitimately adopted a view supported by tribunal precedent regarding non-taxability of notional rent on unsold flats held as stock-in-trade.

Deduction under section 36(1)(viii) for long-term housing finance - interpretation of "development of housing in India" vis-a -vis "purchase and construction of housing" - long term finance defined as loan or advance for not less than five years - capital receipts - entrance fees and unclaimed/deleted liabilities not taxable as income - cessation of liability and write off not constituting income

Capital receipts - entrance fees and unclaimed/deleted liabilities not taxable as income - cessation of liability and write off not constituting income - Taxability of amounts credited to reserve account comprising entrance fees and write off of DD payable to sundry creditors - HELD THAT: - The Tribunal found that entrance or subscription fees received from members are capital in nature and do not form part of the assessee's revenue receipts. Similarly, the mere write off of old balances of DD payable to sundry creditors, effected by crediting the amount to Profit & Loss account, did not constitute a cessation of liability giving rise to income. The Tribunal therefore held that such receipts and write offs cannot be taxed as income and directed the Assessing Officer to allow the ground of appeal relating to the amount transferred to the capital reserve account. The Tribunal also noted that raising this point before it for the first time was permissible and applied the principle in National Thermal Power Co. Ltd. vs. CIT to allow the claim despite it not being pressed at the first appellate stage. [Paras 9, 10]

Addition of amount credited to reserve on account of entrance fees and write offs set aside and allowed in favour of the assessee.

Deduction under section 36(1)(viii) for long-term housing finance - interpretation of "development of housing in India" vis-a -vis "purchase and construction of housing" - long term finance defined as loan or advance for not less than five years - Allowability of deduction under section 36(1)(viii) for interest income from loans advanced for purchase and construction of houses - HELD THAT: - The Tribunal accepted that the appellant is a specified entity within the meaning of the relevant Explanation and that the loans advanced for purchase and construction of houses fall within the statutory concept of "long term finance" (defined as loans or advances for a period of not less than five years). The Tribunal rejected any perceived distinction between the phrase "development of housing in India" and loans for "purchase & construction of housing in India for residential purposes", holding that the appellant's claim squarely falls within the exemption under section 36(1)(viii). Consequently the deduction was allowed. [Paras 11]

Deduction under section 36(1)(viii) in respect of interest on long term housing loans allowed.

Final Conclusion: The Tribunal allowed the appeal for AY 2013 14: the addition relating to amounts credited to reserve (entrance fees and write offs) was deleted, and the claim for deduction under section 36(1)(viii) in respect of long term housing loans was allowed.

Royalty as consideration for the use or right to use industrial, commercial or scientific equipment - taxation of income from operation of ships under the special provision for shipping operations (section 44B) - time charter - distinction between hire/use of vessel and carriage of goods - control/possession test for characterisation of payments as use/right to use equipment - distinguishing precedent of Poompuhar (Madras High Court) on time charter payments

Royalty as consideration for the use or right to use industrial, commercial or scientific equipment - time charter - distinction between hire/use of vessel and carriage of goods - taxation of income from operation of ships under the special provision for shipping operations (section 44B) - Characterisation of amounts received on a time charter of the vessel - whether taxable as 'royalty' under the definition in Explanation 2 (clause (iva)) to section 9(1)(vi) or as shipping income taxable under the special provision (section 44B). - HELD THAT: - The Tribunal examined the time charter agreement and held that the receipts were not pure hire for the 'use or right to use' the ship as equipment within clause (iva) but were payments related to carriage operations and freight determined by load and voyage performance. The agreement placed on the owner continuing obligations for crew, maintenance, certificates and insurances, exposed the owner to liabilities for underperformance, dead freight and off hire adjustments, and linked payments to cargo loaded and voyage costs rather than an unconditional fixed hire unaffected by lay up or non employment. Those features showed that the owner retained operational and economic control and that remuneration depended on carriage performance; consequently the essential element of leasing out equipment (a transfer of use/right to use conferring economic exploitation independent of carriage) was absent. On this basis the Tribunal found the decision in Poompuhar (Madras High Court) distinguishable on facts where an unconditional time based hire existed and held that the payments in the present contract fell within shipping operations and were properly offered under the special provision for shipping (section 44B). The Tribunal therefore concluded that the receipts did not constitute 'royalty' under clause (iva) to Explanation 2 to section 9(1)(vi) and were taxable as income from the operation of ships under section 44B. [Paras 15, 16, 18, 22, 23]

The receipts from the time charter were not 'royalty' under section 9(1)(vi) Explanation 2(clause (iva)) but constituted income from carriage/operation of ships and were taxable under section 44B; the assessee's appeal is allowed.

Final Conclusion: On the facts of the time charter agreement before it the Tribunal reversed the authorities, held that the payments were for carriage/operation of the vessel (taxable under the special shipping provision) and not 'royalty' within Explanation 2(iva) to section 9(1)(vi), and allowed the appeal for AY 2019-20.

Leave India Notice - No Objection Certificate under Form 30B - Form 30A undertaking - Income tax compliance for foreigner staying more than 182 days - extension of exit permit

No Objection Certificate under Form 30B - Form 30A undertaking - Income tax compliance for foreigner staying more than 182 days - Direction to the Income Tax Department to consider and issue Form 30B on production of requisite documents and employer's Form 30A undertaking. - HELD THAT: - The Court recorded that the employer has submitted a Form 30A undertaking to the Commissioner of Income Tax undertaking any tax liability on behalf of the petitioner and that issuance of Form 30B (NOC) has been delayed. The Income Tax Department informed the Court that if the company appears or furnishes requisite documents relating to the company and the petitioner, the NOC under Form 30B would be issued expeditiously. In view of these facts the Court directed that the company's official together with the petitioner shall appear before the Income Tax Department at the specified office on 7th February, 2023 and submit whatever documents or undertakings are required, and that Form 30B shall be issued within two weeks thereafter. [Paras 8, 9, 10, 11, 12]

Company and petitioner to appear before the Income Tax Department on 7th February, 2023, submit required documents/undertakings, and the Income Tax Department to issue Form 30B within two weeks.

Leave India Notice - extension of exit permit - Short extension of the petitioner's exit permission to enable obtaining Form 30B and leaving India. - HELD THAT: - The Leave India Notice required the petitioner to obtain Form 30B and to leave India within 15 days. Recognising the delay in issuance of the NOC tied to the absence of PAN and pending compliance by the employer, the Court granted a limited extension of the petitioner's exit clearance to enable compliance and issuance of Form 30B, and connected the duration of the extension to the time required for the Income Tax Department to issue the NOC after submission of documents. [Paras 13, 14]

Exit clearance/permit extended until 15th March, 2023 to enable the petitioner to obtain Form 30B and leave India; petition disposed of subject to compliance.

Final Conclusion: The petition is disposed of by directing the petitioner and his employer to appear before the Income Tax Department on 7th February, 2023 and submit required documents so that Form 30B is issued within two weeks; the petitioner's exit clearance is extended until 15th March, 2023 to enable him to obtain the NOC and leave India, with liberty to approach the Court.

Tax deduction at source under Section 194H - stay of demand pending appeal - assessee in default - liability for tax under Section 191

Stay of demand pending appeal - tax deduction at source under Section 194H - Direction to the Commissioner of Income Tax (Appeals) to dispose of six appeals in which written submissions have been filed and to stay the impugned order pending disposal. - HELD THAT: - The High Court found that six of the eight appeals before the CIT(A) were ripe for decision and that the central question-whether the cost of free samples constituted commission/brokerage attracting tax deduction under Section 194H-was common to all appeals. The Court noted that the Revenue could not point to any provision permitting immediate enforcement of the withholding-tax demand against the petitioner in the face of pending appellate proceedings. Although the Court refrained from expressing any final view on the merits of the applicability of Section 194H, it concluded that the appropriate course was to direct the CIT(A) to decide the appeals on the merits and to keep the impugned order dated 16.12.2022 stayed pending such disposal. The petitioner was recognised as potentially an "assessee in default" only to the extent the Act prescribes consequences, and the primary liability for tax remained a matter for determination under the statute and on appeal. [Paras 15, 17, 18]

CIT(A) directed to dispose the six appeals in which written submissions have been filed; the order dated 16.12.2022 shall remain stayed pending disposal.

Tax deduction at source under Section 194H - liability for tax under Section 191 - Procedure directed for the two appeals where written submissions had not been filed: issuance of notice, filing of submissions, and disposal timeline. - HELD THAT: - The Court directed that the CIT(A) issue notice in the remaining two appeals within five days and required the petitioner to file written submissions within two weeks of receipt of notice. The Court observed that the decision in the six ripe appeals would govern these remaining matters and therefore mandated that the CIT(A) dispose of all eight appeals within eight weeks. The Court made clear that it was not determining the substantive question whether free samples amounted to commission or brokerage, and that, at most, consequences provided by the Act (including treatment as an assessee in default) could follow unless otherwise determined on appeal. The directions are procedural and intended to secure expeditious adjudication by the appellate authority. [Paras 16]

CIT(A) to issue notice in the two outstanding appeals within five days, petitioner to file written submissions within two weeks of notice, and all eight appeals to be disposed within eight weeks.

Stay of demand pending appeal - Interim consequence of the Court's directions on the impugned order. - HELD THAT: - Pending disposal of the appeals by the CIT(A) as directed, the Court ordered that the impugned order of 16.12.2022 (which had granted stay subject to payment of 15% of the demand) shall remain stayed. The Court emphasised that once the CIT(A) passes orders, the petitioner's fate will be governed by those appellate orders and the petitioner retains the statutory right to challenge any adverse decision as per law. [Paras 17, 19]

The order dated 16.12.2022 shall remain stayed until the CIT(A) disposes the appeals; petitioner retains liberty to seek further remedy as per law after CIT(A)'s decision.

Final Conclusion: Writ petitions disposed by directing the CIT(A) to expeditiously decide the eight pending appeals (six already with written submissions and two after issuance of notice and filing of submissions) within eight weeks; the impugned order dated 16.12.2022 is stayed pending disposal; no final view expressed on the merits and parties may pursue statutory remedies thereafter.

Addition based on third party diary entries and statements of a Hawala operator - Requirement of corroborative evidence for attributing unexplained cash credits to the assessee - Weight and admissibility of statements of third parties in reopening proceedings - Reopening of assessment on the basis of third party information - Right to cross examination of a third party whose statement forms basis of reopening - Deletion of additions where only reasonable probability exists without substantive corroboration

Addition based on third party diary entries and statements of a Hawala operator - Requirement of corroborative evidence for attributing unexplained cash credits to the assessee - Weight and admissibility of statements of third parties in reopening proceedings - Deletion of addition of unexplained cash credits made on the basis of diary entries and statement of son of a deceased Hawala operator for A.Y. 2010-11. - HELD THAT: - The Tribunal considered that the reopening and subsequent addition rested solely on diary entries and the statement of the son of Late Shri Chhotalal V. Doshi, a Hawala operator, who admitted that he had inscribed names on the diary on instructions of his father and did not possess independent evidence identifying depositors or corroborating that the amounts belonged to the assessee. The authorities below accepted a 'reasonable probability' from those entries to make the addition. The Tribunal, applying the ratio of co ordinate decisions cited, held that in absence of substantive or corroborative evidence linking the deposited amounts to the assessee, additions based merely on third party entries and uncorroborated oral statements are not sustainable. Consequently the addition was deleted for A.Y. 2010-11. [Paras 3, 4]

Addition in respect of unexplained cash credits for A.Y. 2010-11 deleted for want of corroborative evidence.

Reopening of assessment on the basis of third party information - Right to cross examination of a third party whose statement forms basis of reopening - Deletion of additions where only reasonable probability exists without substantive corroboration - Application of the finding in A.Y. 2010-11 to the remaining appeals (A.Y. 2008-09 and A.Y. 2011-12) and final disposal of all three appeals. - HELD THAT: - The Tribunal applied the reasoning and outcome reached in respect of A.Y. 2010-11 mutatis mutandis to the other two appeals, noting that the Revenue had likewise failed to bring forward corroborative material for those years and that the additions were founded on the same species of evidence. There is no remand; the Tribunal concluded that identical defective evidentiary basis warranted deletion of the additions in the remaining appeals as well. [Paras 5, 6]

The decision for A.Y. 2010-11 is applied mutatis mutandis and the appeals for A.Y. 2008-09 and A.Y. 2011-12 are allowed; all additions deleted.

Final Conclusion: All three appeals are allowed and the additions made by the authorities for A.Y. 2008 09, A.Y. 2010 11 and A.Y. 2011 12 are deleted for lack of substantive corroborative evidence linking the unexplained cash credits to the assessee.

Interest on enhanced compensation under Section 28 of the Land Acquisition Act - accretion to value and part of enhanced compensation/consideration - taxability as interest under the head 'income from other sources' vs treatment as compensation - exemption under Section 10(37) of the Income Tax Act - year of taxability - receipt basis versus apportionment/accrual

Interest on enhanced compensation under Section 28 of the Land Acquisition Act - accretion to value and part of enhanced compensation/consideration - taxability as interest under the head 'income from other sources' vs treatment as compensation - exemption under Section 10(37) of the Income Tax Act - Whether interest awarded under Section 28 on enhanced compensation is chargeable as interest taxable under Section 56(2)(viii) or is an accretion to the enhanced compensation and hence to be treated as compensation falling within the exemption under Section 10(37). - HELD THAT: - The Tribunal examined the character of interest awarded under Section 28 and applied the ratio of the Supreme Court in Ghanshyam (HUF) and subsequent Supreme Court decisions including Govindbhai Mamaiya and Chet Ram (HUF). Those decisions distinguish interest under Section 28 from interest under Section 34, holding that interest under Section 28 operates as an accretion to the value of the land and forms part of enhanced compensation or consideration. Consequently, such interest partakes the character of compensation under the Land Acquisition Act and the Income-tax Act's scheme for taxing compensation. Where the enhanced compensation is exempt under Section 10(37), the element of interest awarded under Section 28-being an accretion to that enhanced compensation-cannot be separately taxed as income from other sources under Section 56(2)(viii). The Tribunal therefore rejected the revenue's treatment of the Section 28 interest as taxable interest and held it to be part of exempt compensation.

Interest awarded under Section 28 is an accretion to enhanced compensation and, insofar as that compensation is exempt under Section 10(37), the interest is not taxable separately as income from other sources.

Year of taxability - receipt basis versus apportionment/accrual - interest on enhanced compensation under Section 28 of the Land Acquisition Act - Whether interest on enhanced compensation under Section 28 is taxable in the year of receipt or requires apportionment across earlier years on accrual basis. - HELD THAT: - Relying on the reasoning in Ghanshyam (HUF) and its reaffirmation in later Supreme Court decisions, the Tribunal held that interest awarded under Section 28 is to be tested on a receipt basis for tax purposes. The Supreme Court clarified that interest under Section 28 is part of enhanced compensation and, where applicable, the year of taxability is the year of receipt; spreading or proportionate allocation over earlier years on an accrual basis is not permissible for such interest.

Interest under Section 28, being part of enhanced compensation, is to be taxed (if taxable) in the year of receipt and not by apportionment over prior years.

Final Conclusion: The Tribunal allowed the appeals: interest awarded under Section 28 of the Land Acquisition Act is an accretion to enhanced compensation and, being part of compensation exempt under Section 10(37), is not taxable separately as interest; additionally, the year of taxability for such Section 28 interest is the year of receipt.

Denovo assessment - Principles of natural justice - Reopening of assessment under section 147 - Ex parte assessment - Effect of proceedings pending before the Settlement Commission on connected assessments

Denovo assessment - Principles of natural justice - Ex parte assessment - Effect of proceedings pending before the Settlement Commission on connected assessments - Whether the appeals should be restored to the file of the Assessing Officer for de novo assessment in view of ex parte assessments and related proceedings pending before the Settlement Commission - HELD THAT: - The Tribunal noted that the assessments under challenge were reopened under section 147 following search proceedings and consequentially framed ex parte under section 144 r.w.s.147. The assessees did not respond to notices during reassessment proceedings and the Assessing Officer made additions treating investments as unexplained. The CIT(A) also proceeded ex parte and declined the request to keep appellate proceedings in abeyance pending the Settlement Commission's proceedings in the related company, rejecting the contention that any Settlement Commission order would be conclusive on the issue. Taking the totality of circumstances, including that the assessments and the first appellate order were ex parte and that the related matter before the Settlement Commission may have bearing on the issue, the Tribunal concluded that, in the interest of justice, the matters ought to be reconsidered afresh. The Tribunal therefore restored the appeals for de novo adjudication, directing the Assessing Officer to provide adequate opportunity of hearing and permitting the assessees to file necessary evidence in support of their claims. The Tribunal did not decide the correctness of the additions on merits but remitted the matter for fresh consideration in accordance with law.

Appeals restored to the file of the Assessing Officer for de novo assessment; Assessing Officer to afford adequate opportunity of hearing and permit filing of evidence; grounds allowed for statistical purpose.

Final Conclusion: Appeals allowed for statistical purposes and restored for de novo assessment; Assessing Officer directed to provide opportunity of hearing and consider evidence afresh; no adjudication on the merits of the additions in this order.

Bogus long-term capital gains - accommodation entries - incriminating material found during search - addition under Section 68 - addition by way of unexplained expenditure/commission - telescoping/subsumption of income - protective addition converted to substantive addition - gross profit addition on unaccounted sales

Incriminating material found during search - bogus long-term capital gains - accommodation entries - Whether there was incriminating material found during search to justify additions for alleged bogus long term capital gains - HELD THAT: - The Tribunal examined the material gathered prior to and during the search (including statements of exit/providers, statements of the assessee recorded under section 132(4), SEBI orders, trading data and corroborative enquiries) and the assessee's own admissions describing the modus operandi, the persons involved and commission paid. The Bench held that such material constituted incriminating material for the purposes of proceedings under section 153A and supported taxation of the non genuine long term capital gains; consequently the assessee's cross objection that no incriminating material existed was rejected and dismissed. The Tribunal therefore sustained the legal conclusion that the additions were based on material found in the course of search. [Paras 33, 34]

Cross objection challenging absence of incriminating material dismissed; material found during search held sufficient to sustain additions on account of bogus long term capital gains.

Addition under Section 68 - gross profit addition on unaccounted sales - telescoping/subsumption of income - protective addition converted to substantive addition - Whether the deletions of additions in the hands of individuals could be maintained by subsuming (telescoping) those additions into a much smaller gross profit addition made in the hands of Hazel Mercantile Ltd - HELD THAT: - The Tribunal found that the CIT(A) deleted substantial additions in the hands of individuals by treating the income as subsumed in a gross profit addition of a much smaller amount in Hazel Mercantile Ltd and by converting protective additions in the company into substantive additions. The Tribunal observed a clear quantitative and year wise mismatch between the amounts of alleged bogus long term capital gains in the hands of individuals and the gross profit addition upheld in the company; it further noted absence of reasoned year wise findings or working demonstrating how the large quantum of alleged bogus LTCG was subsumed in the comparatively meagre gross profit addition. For these reasons the Tribunal held the CIT(A)'s approach unsustainable and set aside the CIT(A)'s telescoping conclusion, remanding the matter to the CIT(A) to give clear, reasoned, year wise findings explaining how the alleged subsumption is effected and inviting further submissions from the assessee. [Paras 28, 30, 31, 35, 49]

Revenue's appeals allowed for statistical purposes and the matter remanded to the CIT(A) to give detailed, year wise reasoned findings explaining and justifying any telescoping/subsumption of the alleged bogus LTCG into the gross profit addition of Hazel Mercantile Ltd; assessee to be permitted to file submissions within 90 days.

Addition under Section 68 - addition by way of unexplained expenditure/commission - gross profit addition on unaccounted sales - Whether specific additions and disallowances made in the assessment of Hazel Mercantile Ltd (including confirmation of gross profit addition on unaccounted sales, disallowances under rule 8D/section 14A and business promotion expense disallowance, and addition of certain seized document related payment) were sustainable - HELD THAT: - On merits the Tribunal upheld the finding that the long term capital gains shown by Hazel Mercantile Ltd were non genuine and taxable, and that commission/expenditure relating to obtaining such gains was correctly assessed. The Tribunal also considered the AO's computation of unaccounted sales and the resultant 5% gross profit addition; although the CIT(A) attempted to subsume the LTCG addition into that gross profit addition, the Tribunal remanded that telescoping issue (see separate issue). Separate assessment issues were decided: disallowance under section 14A/rule 8D was examined and reduced by the CIT(A) with no infirmity found by the Tribunal; disallowance of business promotion expenses was confirmed for lack of particulars; and the Rs.50 lakh addition based on seized papers (applying section 292C reasoning) was held to be sustainable and was confirmed. [Paras 46, 50, 51, 52, 53]

Additions and disallowances in Hazel Mercantile Ltd were largely sustained on merits; specific limited adjustments by the CIT(A) on section 14A were upheld, business promotion disallowance confirmed, and the Rs.50 lakh addition relating to seized documents affirmed; the broader question of subsuming LTCG into the gross profit addition was remanded.

Final Conclusion: The Tribunal held that there was sufficient incriminating material found during search to uphold additions for non genuine long term capital gains and dismissed the assessee's cross objections on that point; however, the CIT(A)'s decision to delete substantial additions in the hands of individuals by telescoping them into a comparatively small gross profit addition in Hazel Mercantile Ltd was set aside and remanded to the CIT(A) for detailed, year wise reasoned findings explaining and justifying any subsumption, with liberty to the assessee to file submissions; other specific assessment adjustments (section 14A/rule 8D, business promotion disallowance, and the Rs.50 lakh seized document addition) were dealt with and largely sustained as noted.

Reliance on third party statements - verification of sales through statutory returns - application of section 68 (unexplained cash receipts) - section 40A(3) disallowance for cash payments - requirement of documentary evidence to rebut vendor's statement

Reliance on third party statements - verification of sales through statutory returns - application of section 68 (unexplained cash receipts) - Addition of Rs.10,50,532/- (confirmed by authorities below as unexplained cash receipts) restored to Assessing Officer for verification - HELD THAT: - The authorities below treated the difference between sales recorded by the assessee and purchases recorded by M/s Haryana Traders as unexplained cash receipts and confirmed an addition under section 68. The Tribunal noted the assessee's contention that the sales were reflected in statutory returns (excise/VAT) and supported by documentary evidence, and observed that the Assessing Officer must verify the correctness of the assessee's claim and the filing of the relevant returns and supporting records. Consequently the Tribunal did not decide the addition on merits but restored the issue to the file of the Assessing Officer for verification of the assessee's records and statutory returns relating to the transactions in question; the ground is allowed for statistical purposes and remitted for fresh verification rather than finally adjudicated by the Tribunal. [Paras 7]

Remitted to the Assessing Officer for verification of the assessee's claim and supporting statutory returns; addition not finally adjudicated by the Tribunal.

Section 40A(3) disallowance for cash payments - requirement of documentary evidence to rebut vendor's statement - Disallowance under Section 40A(3) in respect of payment to M/s Vasu Steels confirmed - HELD THAT: - The Assessing Officer and the CIT(A) found that the assessee had made a cash payment totalling the claimed amount to the supplier on a single date and that the assessee failed to produce documentary evidence to show payments were made on different dates to keep each payment below the monetary threshold. The Tribunal recorded that the assessee did not rebut the finding of the lower authorities by filing contrary evidence. In absence of such evidence, the Tribunal saw no reason to interfere with the factual finding and confirmed the disallowance under section 40A(3). [Paras 10, 11]

Addition under Section 40A(3) confirmed; appellant's ground rejected.

Final Conclusion: The appeal is partly allowed: the challenge to the addition treated as unexplained cash receipts is remitted to the Assessing Officer for verification of the assessee's statutory returns and supporting records; the disallowance under Section 40A(3) is upheld for lack of contrary evidence, and other grounds do not persuade the Tribunal.

Penalty under Section 271(1)(c) for concealment of income or furnishing inaccurate particulars - validity of penal notice - failure to strike off the irrelevant charge vitiates penalty proceedings - penalty proceedings must stand on their own and be initiated by a statutory notice specifying the charge - ambiguity in a penal notice to be construed strictly and in favour of the assessee

Validity of penal notice - failure to strike off the irrelevant charge vitiates penalty proceedings - penalty under Section 271(1)(c) for concealment of income or furnishing inaccurate particulars - ambiguity in a penal notice to be construed strictly and in favour of the assessee - Levy of penalty under Section 271(1)(c) quashed because the penalty notice did not strike off the alternative charge and was therefore ambiguous and invalid - HELD THAT: - The Tribunal examined whether the AO's penalty notice, which failed to indicate distinctly whether the charge was for concealment of income or for furnishing inaccurate particulars, was valid. Relying on the principle that penalty provisions must be strictly construed and that penalty proceedings must be properly initiated by a statutory notice which informs the assessee of the grounds of the penalty, the Tribunal accepted the reasoning of the Bombay High Court in Mohd Farhan A Shaikh (paras 180-182 reproduced) that an omnibus or ambiguous notice suffers from vagueness and cannot be cured by reference to assessment records. Applying that principle to the facts, the Tribunal found that the AO did not strike off the inapplicable limb of Section 271(1)(c) in the notice, thereby leaving the charge ambiguous. Because the statutory notice did not clearly state the charge, the penalty proceedings could not stand and had to be quashed. [Paras 7, 8]

The order of the CIT(A) confirming the penalty is set aside and the penalty notice is quashed; the appeal is allowed in favour of the assessee.

Final Conclusion: The Tribunal allowed the appeal, quashed the penalty proceedings under Section 271(1)(c) because the penalty notice was ambiguous for not striking off the irrelevant charge, and set aside the CIT(A)'s order confirming the penalty.

Revision under section 263 of the Income tax Act - Assessment order being erroneous and prejudicial to the interests of Revenue - Inadequacy of enquiry versus lack of enquiry - Two plausible views doctrine in assessment - Allowability of deduction under section 80P - Scrutiny of demonetisation period cash deposits

Revision under section 263 of the Income tax Act - Assessment order being erroneous and prejudicial to the interests of Revenue - Inadequacy of enquiry versus lack of enquiry - Two plausible views doctrine in assessment - Allowability of deduction under section 80P - Scrutiny of demonetisation period cash deposits - Validity of the Principal Commissioner of Income Tax's invocation of power under section 263 to revise the assessment for AY 2017-18 - HELD THAT: - The Appellate Tribunal found that the Assessing Officer issued detailed notice under section 142(1) seeking particulars relating to business activities, bank accounts, cash deposits during the demonetisation period, computation, loan receipts/repayments and supporting documents, and the assessee furnished written submissions and documentary evidence in response. The Tribunal held that the record demonstrates that inquiries called for by the AO covered the matters on which the PCIT based his revision and that there was no absence of inquiry; accordingly the situation did not amount to a lack of inquiry but at most an adequacy question. On the substantive points (deduction under section 80P and characterization of certain interest and other receipts), the AO had taken one of the plausible views available in law after considering the assessee's evidence; given divergent judicial views on the allowability of 80P in respect of interest from co operative banks, the AO's conclusion fell within the ambit of a plausible view. Applying the principle that jurisdiction under section 263 cannot be exercised merely because another view is possible (as reiterated from apex court precedent), the Tribunal concluded that the PCIT erred in treating the assessment as erroneous and prejudicial and therefore the exercise of revisionary power under section 263 was not in accordance with law. [Paras 11, 13, 14, 15]

The exercise of jurisdiction under section 263 was set aside and the appeal of the assessee allowed.

Final Conclusion: The Tribunal held that the Assessing Officer had made sufficient inquiry and taken a plausible view on disputed matters (including deduction under section 80P and treatment of demonetisation period cash deposits), therefore the Principal Commissioner's invocation of section 263 was not justified and the revision was quashed; appeal allowed.

Liability of nominee directors - deemed liability of persons for company offences - exercise of Section 140 in respect of directors - scope of 'director' under Companies Act - prosecution of nominee/independent directors requires evidence of participation - continuing export obligation under EPCG Scheme

Liability of nominee directors - deemed liability of persons for company offences - scope of 'director' under Companies Act - Nominee directors are not automatically liable under Section 140 for offences committed by a company prior to their appointment unless it is established that they were in charge of the conduct of the business at the time the offence was committed. - HELD THAT: - The Court held that the wide definition of 'director' in Section 2(13) of the Companies Act cannot be read so as to automatically attract liability under Section 140 in respect of acts committed before a person became a director. Liability under Section 140 requires a factual foundation that the person was in charge of the conduct of the company's business when the offence occurred. The adjudicatory or prosecuting authority must therefore establish that a nominee director had control or management responsibility at the relevant time before proceeding against them. The Court relied on the statutory distinction drawn in the Companies Act and on administrative guidance emphasizing that prosecution of nominee or independent directors must be supported by evidence of active participation, knowledge, or consent in the acts of omission or commission. [Paras 14, 15, 19, 20, 21]

Nominee directors cannot be held liable under Section 140 without proof that they were in charge of the company's affairs when the offence was committed.

Prosecution of nominee/independent directors requires evidence of participation - protection of nominee directors appointed to oversee financial restructuring - continuing export obligation under EPCG Scheme - The impugned order fixing liability on the petitioners (nominee directors appointed by creditor banks after the alleged default) was unjustified and is set aside. - HELD THAT: - The Court noted that the petitioners were appointed as nominee directors pursuant to a Corporate Debt Restructuring and their role was limited to oversight of the company's financial obligations. The alleged EPCG licence non-compliance related to events and obligations that crystallized prior to their appointment. Given their focused mandate and absence of any show cause notice or evidence implicating them in the relevant acts, it would be improper to ascribe liability under Section 140. The Court further recorded that the respondents had, in effect, excluded several of the petitioners from recovery proceedings and communicated that directors appearing in the IEC database remained liable unless deleted on request; this factual position reinforced that continuing proceedings against the present petitioners were unsustainable. In consequence, the writ petitions were allowed and the impugned order set aside. [Paras 23, 24, 25, 26, 27]

Writ petitions allowed; impugned order against the petitioners set aside.

Final Conclusion: The High Court held that nominee directors appointed after the commission of the alleged offence cannot be proceeded against under Section 140 absent evidence that they were in charge of the company's conduct at the relevant time; applying this principle, the Court allowed the writ petitions and set aside the impugned order against the petitioners.

Refund under Section 27 of the Customs Act, 1962 - Refund under Section 26A(1) and non-application of Section 26A(3) to goods destroyed before clearance - Limitation and saving proviso under Section 27(1B)(c) - Final assessment as the triggering event for limitation

Refund under Section 26A(1) and non-application of Section 26A(3) to goods destroyed before clearance - Whether rejection of the refund claim on the ground that it was barred by Section 26A(3) was in order. - HELD THAT: - The Tribunal held that Section 26A(1) applies only where all its cumulative conditions (identification, no drawback claim, export/abandonment/destruction or rendering commercially valueless) are satisfied. Sub section (3) disallows refunds under sub section (1) in respect of perishable or shelf expired goods. Those provisions operate within the framework of Section 26A(1) and are not a free standing code to be applied where goods are not cleared for home consumption. Where the authorities ordered destruction and final clearance for home consumption could never occur, the scheme of Section 26A was inapplicable; hence reliance on Section 26A(3) to reject a claim made under Section 27 was incorrect. The Tribunal therefore found the First Appellate Authority erred in upholding rejection solely on Section 26A(3). [Paras 8]

Rejection of the refund claim by applying Section 26A(3) was incorrect and cannot sustain.

Refund under Section 27 of the Customs Act, 1962 - Limitation and saving proviso under Section 27(1B)(c) - Final assessment as the triggering event for limitation - Whether the refund claim was time barred under Section 27 having regard to provisional payment and absence of final assessment. - HELD THAT: - Section 27 prescribes a one year limitation but contains the saving proviso in sub section (1B). Where duty was paid provisionally, clause (c) to sub section (1B) makes the limitation operate from the date of adjustment of duty after final assessment. The record showed provisional payment and that no final assessment order had been passed by the Revenue. Consequently, the limitation period had not yet commenced and the authorities erred in rejecting the refund claim before a final assessment was effected. [Paras 9, 10]

The refund claim was not time barred as final assessment had not been made; rejection prior to final assessment was premature.

Final Conclusion: The impugned order rejecting the refund claim is set aside. The appeal is allowed and the matter is remitted for consideration consistent with this judgment, with consequential benefits, if any, as per law.

Sanction by the Central Government before filing a winding up petition - opportunity of making representations and principles of natural justice in grant of sanction - reliance on SFIO investigation report as basis for winding up in public interest - precedential effect and finality of an Appellate Tribunal three Member Bench decision upheld by the Supreme Court

Sanction by the Central Government before filing a winding up petition - opportunity of making representations and principles of natural justice in grant of sanction - precedential effect and finality of an Appellate Tribunal three Member Bench decision upheld by the Supreme Court - Validity of the impugned NCLT order dismissing the winding up petition against the company and whether this Appeal is maintainable in view of identical earlier decisions. - HELD THAT: - The Appellate Tribunal examined the challenge to the NCLT order which had dismissed the winding up petition inter alia on the ground that the second proviso to the relevant provision regarding sanction had not been complied with, that specific allegations against the company were lacking in the SFIO material, and that the company was under new management and functioning as a going concern. The Tribunal held that the facts of the present case are identical to those considered by a three Member Bench of this Appellate Tribunal in Registrar of Companies v. Apoorva Leasing Finance & Investment Co. Ltd., a decision which was subsequently the subject matter of Supereme Court proceedings that resulted in dismissal on limitation grounds without entering into merits; the Appellate Tribunal accordingly treated that three Member Bench decision as binding and final for present purposes. Given the identity of facts and the precedent, the Tribunal found no ground to interfere with the NCLT's dismissal of the petition and dismissed the Appeal. The Tribunal thereby affirmed the requirement that sanctioning authority must apply mind and adhere to principles of natural justice while granting sanction and that where a binding appellate precedent disposes of identical legal contentions, the same governs the matter before it. [Paras 12]

Appeal dismissed as lacking merit; NCLT order upheld in view of identical earlier three Member Bench decision and its finality.

Final Conclusion: The Appellate Tribunal dismissed the appeal against the NCLT order dismissing the winding up petition, holding that the facts are identical to a prior three Member Bench decision (now having attained finality), and therefore there was no merit to interfere with the NCLT's order.

Sanction of Central Government - principles of audi alteram partem / natural justice - identical facts and application of precedent - finality of judgment

Sanction of Central Government - principles of audi alteram partem / natural justice - Whether the winding up petition against the respondent could be maintained in view of the sanction accorded by the Central Government and compliance with principles of natural justice. - HELD THAT: - The Tribunal considered whether the Registrar of Companies had valid sanction from the Central Government to file the winding up petition and whether the sanctioning process complied with the safeguards intended to protect companies from frivolous proceedings. The Appellate Tribunal relied on the earlier three Member Bench decision in Registrar of Companies v. Apoorva Leasing Finance & Investment Co. Ltd., which had held that the sanctioning authority must apply its mind, identify the allegations and documents on which it relies, and afford the company a reasonable opportunity to make representations before sanction is granted. That earlier decision found the sanction defective for want of an adequate consideration of the company's representations and principles of natural justice. Applying the same principle to the present case, and having found the facts to be identical to the earlier matter, this Bench found no grounds to interfere with the NCLT order dismissing the petition on the sanction issue. [Paras 12]

The appeal is without merit on the question of sanction and is dismissed.

Identical facts and application of precedent - finality of judgment - Whether the present appeal is maintainable or deserves to be allowed in view of the earlier Appellate Tribunal decision and subsequent proceedings in the Supreme Court. - HELD THAT: - The Bench examined whether the present matter was distinguishable from the earlier three Member Bench decision in the Apoorva case. Having concluded that the facts are the same and identical, the Tribunal applied that precedent. The Tribunal also noted that the Apoorva line of decisions has attained finality in the sense that the Appellate Tribunal's order was not successfully impeached in a manner that would revive the Registrar's case here; the Supreme Court's dismissal of the related civil appeal was on the ground of limitation and the NCLAT's findings regarding violation of natural justice were not left operative so as to afford a different outcome in the present appeal. On this basis the Tribunal found no merit in entertaining the present appeal. [Paras 12]

The appeal is dismissed as being covered by the earlier finalised decision and on account of identical facts.

Final Conclusion: The Company Appeal is dismissed; the Appellate Tribunal upheld the NCLT's dismissal of the winding up petition, applying the earlier three Member Bench precedent concerning defective sanction and finding the present case factually identical.

Maintainability of application under Section 60(5)(c), 66 and 67 of the Insolvency and Bankruptcy Code - locus of an operational creditor to invoke proceedings under Section 66 - powers and duties of the liquidator under Section 35 - prejudice caused by premature adjudicatory observations - clarification and expungement of judicial observations - scope of a tribunal's order when deciding a limited-purpose application

Prejudice caused by premature adjudicatory observations - scope of a tribunal's order when deciding a limited-purpose application - Whether the Adjudicating Authority erred in making conclusive observations on the maintainability and locus of I.A. No. 287 of 2018 while deciding I.A. No. 85 of 2019 which was listed only for grant of travel permission. - HELD THAT: - The Tribunal found that I.A. No. 85 of 2019 related solely to a limited prayer for permission to travel abroad and was allowed in its operative part without adjudicating I.A. No. 287 of 2018. Despite I.A. No. 287 not being listed, the Adjudicating Authority recorded observations in paragraphs 14, 17 and 18 of its Order dated 14.02.2019 concerning the maintainability of I.A. No. 287 and the locus of the appellant. Such observations were rendered without hearing the parties on I.A. No. 287 and therefore had the capacity to prejudice the applicant's rights in the pending proceedings. The Appellate Tribunal held that when an application is not before the court for consideration, extraneous findings on its maintainability or merits are inappropriate and unfair, and travel beyond the limited scope of I.A. No. 85 of 2019 was impermissible. Consequently the impugned order rejecting I.A. No. 156 of 2019 proceeded on a misconception that I.A. No. 287 had been dismissed, whereas it remained pending, and this vitiated the Adjudicating Authority's approach. [Paras 12, 13, 14, 15]

Observations in paragraphs 14, 17 and 18 of the Order dated 14.02.2019 were premature and prejudicial; the Adjudicating Authority erred in venturing beyond the limited issue before it.

Clarification and expungement of judicial observations - maintainability of application under Section 60(5)(c), 66 and 67 of the Insolvency and Bankruptcy Code - locus of an operational creditor to invoke proceedings under Section 66 - powers and duties of the liquidator under Section 35 - Whether I.A. No. 156 of 2019 seeking clarification/expungement of the adverse observations in the Order dated 14.02.2019 was maintainable and whether those observations ought to be expunged. - HELD THAT: - The Appellate Tribunal examined the substance of I.A. No. 156 of 2019 and the context in which paragraphs 14, 17 and 18 of the earlier order were made. While recognizing the statutory scheme that applications under Section 60(5)(c), 66 and 67 are ordinarily the province of the resolution professional or liquidator, the Tribunal emphasised that such a legal position cannot be established by preliminary observations made in unrelated proceedings without hearing. Given that I.A. No. 287 remained pending and that the adverse observations were recorded without opportunity to the appellant to be heard on maintainability, the Tribunal held that expungement of those observations was appropriate to remove the prejudice caused. Accordingly the Tribunal allowed I.A. No. 156 of 2019 and expunged paragraphs 14, 17 and 18 from the Order dated 14.02.2019. [Paras 11, 16, 17]

I.A. No. 156 of 2019 is allowed; paragraphs 14, 17 and 18 of the Order dated 14.02.2019 are expunged.

Final Conclusion: The appeal is allowed; the impugned order dated 05.05.2022 is set aside, I.A. No. 156 of 2019 is allowed and paragraphs 14, 17 and 18 of the Order dated 14.02.2019 are expunged. No order as to costs.

Operational debt - default - sanctioned rehabilitation scheme under SICA - jurisdiction of NCLT under IBC in relation to SICA schemes - effect of notification dated 24.05.2017 - liberty to file under section 33(3) of IBC - exclusion of limitation period during SICA proceedings

Liberty to file under section 33(3) of IBC - effect of notification dated 24.05.2017 - jurisdiction of NCLT under IBC in relation to SICA schemes - Liberty granted by the Adjudicating Authority to operational creditors to file application under section 33(3) of the IBC was erroneous. - HELD THAT: - The Tribunal relied on its earlier three member decision in Pramod Kumar Pathak which, following the Supreme Court in Spartek Ceramics India Ltd., held that the Central Government notification dated 24.05.2017 travels beyond the scope of the 'removal of difficulties' provision and cannot confer jurisdiction under IBC to reopen or execute schemes sanctioned under SICA. In light of those precedents, matters relating to execution/implementation of a previously sanctioned rehabilitation scheme under SICA are not amenable to proceedings under Part II of the IBC, and therefore the Adjudicating Authority erred in granting liberty to file under section 33(3). The Impugned Order failed to notice the law laid down by the Supreme Court in Spartek Ceramics India Ltd. and related NCLAT decisions, and on that basis the liberty given is set aside. [Paras 16, 17, 18]

Liberty to file application under section 33(3) of the IBC was erroneously granted and is set aside.

Operational debt - default - sanctioned rehabilitation scheme under SICA - exclusion of limitation period during SICA proceedings - The appellants have not established that the amounts claimed by ex workers constitute an operational debt in default attributable to the corporate debtor and therefore the section 9 application was not maintainable. - HELD THAT: - The Tribunal examined the supervisory and implementation history of the sanctioned rehabilitation scheme and the steps taken to make payments to ex workers. It relied on the High Court of Rajasthan's findings and on the report of retired Justice N.N. Mathur, showing monitoring and payments made under governmental supervision. Public notices inviting workers to collect payments and contemporaneous steps by the corporate debtor and State authorities demonstrate ongoing efforts to pay dues. The appellants did not show that they sought or obtained any BIFR/AAIFR permission where required, nor did they disclose actions taken under the care taker mechanism; therefore there is no clear establishment of a continuing default by APPL. Given the disputed state of payments and the evidence of bona fide attempts to discharge liabilities, the essential requirement for admission of a section 9 petition-an operational debt due and in default by the corporate debtor-was not satisfied. Consequently the Adjudicating Authority's finding of maintainability of the section 9 application was set aside and the Impugned Order was quashed. [Paras 22, 24, 27]

Section 9 application failed for want of established operational debt/default; Impugned Order is set aside.

Final Conclusion: The appeals are allowed: the Impugned Order is set aside in its entirety - the liberty to file under section 33(3) was wrongly granted and the section 9 application failed for lack of established operational debt/default; no order as to costs.

Offences under the Prevention of Money Laundering Act, 2002 - Section 45(1) PML Act - bail test - Scheduled offence - Assistance in layering of proceeds - evidentiary nexus - Risk of absconding and tampering with evidence

Section 45(1) PML Act - bail test - Assistance in layering of proceeds - evidentiary nexus - Risk of absconding and tampering with evidence - Application for grant of bail to the petitioner accused under the PML Act. - HELD THAT: - The court considered the prosecution case that the petitioner assisted other accused in opening and operating bank accounts used for layering funds alleged to be proceeds of crime, and that his statement was recorded under Section 50 of the PML Act corroborating involvement. The respondent relied on disclosures and material in the complaint to show the petitioner's participation in layering funds and operation of accounts through which proceeds were moved outside the country, and urged risk of absconding, evidence tampering and difficulty in securing trial participation. The court applied the twin conditions prescribed by Section 45(1) of the PML Act and found that the petitioner failed to demonstrate any contrary material to rebut the prosecution case or to negate the statutory concerns. Having regard to the prosecution material and the statutory bail test in the PML Act, the court was not satisfied to relax custody and therefore declined to grant bail.

Bail petition dismissed; petitioner remand continued.

Final Conclusion: The petition for bail under the PML Act was refused after applying Section 45(1) PML Act; the court found the prosecution material and statutory considerations outweighed the petitioner's submissions and dismissed the criminal original petition.

Quantified - eligibility under SVLDRS for cases under enquiry, investigation or audit - written communication as quantification - natural justice in SVLDRS proceedings - effect of issuance of Form SVLDRS-2/SVLDRS-2A on entitlement to relief

Quantified - written communication as quantification - eligibility under SVLDRS for cases under enquiry, investigation or audit - Whether the amount communicated by the petitioner to DGGSTI on 23 March 2018 constituted a 'quantified' duty payable before 30 June 2019 and therefore rendered the petitioner eligible under the SVLDR Scheme in the category of enquiry, investigation or audit. - HELD THAT: - The Court held that 'quantified' under Section 121(r) means a written communication of the amount of duty payable and includes a letter intimating duty demand or duty liability admitted by the person during enquiry, investigation or audit. Prior decisions of this Court and the Board's circular/FAQs were followed to the effect that quantification need not await adjudication or issuance of a show-cause notice. On the facts, the petitioner furnished on 23 March 2018 (and again on 11 June 2018) details of cenvat credit and ascertained the tax and interest amounts to DGGSTI before 30 June 2019; that communication amounted to a written quantification of duty payable. Consequently the petitioner fell within the category eligible to file a declaration under the Scheme for cases under enquiry, investigation or audit. [Paras 54, 55, 56, 58, 62]

The communication dated 23 March 2018 (and related correspondence) constituted quantification before 30 June 2019 and the petitioner was eligible under the SVLDR Scheme in the enquiry/investigation/audit category.

Effect of issuance of Form SVLDRS-2/SVLDRS-2A on entitlement to relief - natural justice in SVLDRS proceedings - Whether the Designated Committee could validly reject the petitioner's SVLDRS-1 declaration after issuing Form SVLDRS-2 (and receiving SVLDRS-2A) and whether the rejection was vitiated by failure to communicate and by breach of natural justice. - HELD THAT: - The Court observed that issuance of Form SVLDRS-2 and the petitioner's submission of Form SVLDRS-2A and related follow-up communications evidenced that the processing of the declaration had proceeded and that the portal continued to show 'Agreed by Taxpayer'. Although the Board had permitted manual rejection where portal functionality was lacking, the Designated Committee's rejection recorded on file on 20 March 2020 was not communicated to the petitioner until 17 February 2022. The investigating agency's communication of 27 February 2020 (that the tax was not quantified) post-dated the Designated Committee's request for clarification (personal hearing fixed 22 January 2020), and the authorities did not explain this sequencing or show that the petitioner was afforded an opportunity to deal with the DGGI communication. In these circumstances, and having found that quantification had already occurred before the cut-off date, the Court concluded that the rejection and subsequent show-cause notice were unsustainable. [Paras 62, 63, 64, 65, 66]

The rejection of the declaration (dated nil March 2020) and the Show Cause Notice dated 21 June 2021 were quashed and set aside for being unsustainable in the circumstances, including lack of communication and breach of fair procedure.

Natural justice in SVLDRS proceedings - effect of issuance of Form SVLDRS-2/SVLDRS-2A on entitlement to relief - What remedial direction should follow upon quashing the rejection and show-cause notice? - HELD THAT: - Having quashed the rejection and the show-cause notice, the Court directed that the Respondents constitute the Designated Committee to reconsider the petitioner's SVLDRS-1 declaration in light of the fact that Form SVLDRS-2 had been issued and Form SVLDRS-2A filed. The Committee is to give the petitioner a reasonable opportunity of hearing and thereafter issue Form SVLDRS-3 and Form SVLDRS-4 as may be appropriate. A timetable of eight weeks from uploading of the order was imposed for completion of this exercise. [Paras 66, 68]

Respondents directed to reconvene the Designated Committee, afford hearing, and issue Form SVLDRS-3 and Form SVLDRS-4 within eight weeks; petition allowed and earlier communications set aside.

Final Conclusion: The petition succeeds. The Court holds that the petitioner's written communications to DGGSTI prior to 30 June 2019 constituted quantification for SVLDRS eligibility; the Designated Committee's rejection and the subsequent show-cause notice are quashed for being unsustainable and procedurally defective; the matter is remitted to the Designated Committee to consider the declaration afresh after giving the petitioner a reasonable hearing and to issue Forms SVLDRS-3 and SVLDRS-4 within eight weeks.

Binding precedent - judicial indiscipline - quash and set aside - remand for fresh consideration - departmental acceptance of tribunal decision on monetary grounds

Binding precedent - judicial indiscipline - quash and set aside - Whether the impugned order could be sustained when the Commissioner declined to follow a binding Tribunal decision. - HELD THAT: - The Court recorded that the Commissioner in the impugned order treated the Tribunal decision in Go Bindas Entertainment Pvt. Ltd. as not binding on the ground that the Department had accepted that decision on monetary grounds and not on merits. Respondents have since taken instructions and accepted that the view taken by the Commissioner was erroneous and that the Tribunal decision must be kept in mind and not ignored. In view of the respondents' concession that the Commissioner erred in declining to follow the Tribunal's decision, the impugned order cannot be sustained. The appropriate course adopted by the Court is to quash and set aside the impugned order in light of that concession and the requirement that the Tribunal's decision be considered.

Impugned order quashed and set aside because the Commissioner erred in ignoring the Tribunal's decision; the respondents conceded the error.

Remand for fresh consideration - departmental acceptance of tribunal decision on monetary grounds - Disposition of the underlying proceedings after quashing the impugned order. - HELD THAT: - Having quashed the impugned order, the Court restored the proceedings to the file of the Commissioner for fresh decision. The Commissioner is directed to decide the matter in accordance with law and in light of the Court's observation that the Tribunal decision in Go Bindas Entertainment Pvt. Ltd. must be kept in mind and not ignored, notwithstanding any prior departmental acceptance on monetary grounds. The remit is for reconsideration and decision afresh applying the correct legal position.

Proceedings restored to the Commissioner for fresh decision in accordance with law and mindful of the Tribunal decision; matter remanded for reconsideration.

Final Conclusion: Writ petition allowed: impugned order dated 29 January 2021 is quashed and set aside; proceedings are restored to the Commissioner for fresh decision in light of the Tribunal decision referred to and the respondents' concession.

Requirement to record discernible reasons for administrative action - obligation to provide meaningful remarks in Form SVLDRS-3 - statutory opportunity of being heard under the Sabka Vishwas Scheme - Section 127 procedure of estimate, hearing and statement - quash and remand for reasons and administrative compliance

Obligation to provide meaningful remarks in Form SVLDRS-3 - statutory opportunity of being heard under the Sabka Vishwas Scheme - requirement to record discernible reasons for administrative action - Designated Committee must furnish discernible reasons in the Remarks column of Form SVLDRS-3 or by a separate reasoned order when issuing a statement under the Scheme; blank or cryptic remarks are impermissible. - HELD THAT: - The Scheme contemplates that when an estimate is issued under Section 127 and thereafter a final statement (Form SVLDRS-3) is issued, the declarant must be in a position to understand why the declarant's contentions were not accepted, so that the statutory opportunity of being heard is meaningful. The Remarks column in SVLDRS-3, even if brief, must indicate discernible reasons; failure to populate it or the use of cryptic language defeats the purpose of the hearing provision and abdicates the Designated Committee's obligation. The Court did not require a judicial-style elaborate judgment but held that the statutory scheme requires reasons sufficient to make the decision intelligible and challengeable. Where issuance of Form SVLDRS-3 with reasons is not feasible, a separate order giving reasons will suffice. The Court therefore set aside the impugned communications and directed remedial action to ensure administrative compliance within a fixed timeframe. [Paras 6, 7, 8, 9]

Impugned SVLDRS-3 communications quashed; Respondents directed to issue Form SVLDRS-3 with the Remarks column containing discernible reasons or to issue a separate reasoned order, failing which the declarants may challenge the same; compliance ordered within eight weeks.

Final Conclusion: Writ petitions allowed to the limited extent of quashing the impugned SVLDRS-3 communications for failure to provide discernible reasons; respondents directed to furnish reasons in Form SVLDRS-3 or by a separate order within eight weeks, after which petitioners may seek appropriate remedies.

Exemption for conservancy services provided to government under Notification No.25/2012 - reimbursement not amounting to consideration for service - business auxiliary service - provision of service on behalf of the client - supply of tangible goods service - possession and effective control test - rent-a-cab service - scope and 'business of giving vehicles on hire'

Exemption for conservancy services provided to government under Notification No.25/2012 - reimbursement not amounting to consideration for service - business auxiliary service - provision of service on behalf of the client - Whether services rendered by the appellant (soil conservation and land reclamation) to the State Government attract service tax as business auxiliary service or are exempt under Notification No.25/2012, and whether amounts received as government grants constitute taxable consideration. - HELD THAT: - The Tribunal found that the appellant is a public sector undertaking created to assist the Government of Gujarat in soil conservation and land reclamation, activities that fall within the concept of "conservancy" and are covered by the entries in the Twelfth Schedule. In consequence, services rendered by the appellant are specifically covered by Notification No.25/2012 - ST (Sr. No.25) and are therefore exempt from service tax with effect from 20.06.2012. The Tribunal further noted that the sums received from the Government are in the nature of reimbursement of actual expenditure incurred for providing the service; such receipts do not constitute consideration for a taxable service. Applying the definition of "business auxiliary service" did not alter this conclusion because the Government, as client, is not engaged in business in a manner that would render the activities taxable and because the statutory exemption applies. For these reasons the demand under business auxiliary service was set aside. [Paras 4]

Demand under business auxiliary service set aside; services held exempt under Notification No.25/2012 and amounts received treated as reimbursement not taxable consideration.

Supply of tangible goods service - possession and effective control test - Whether lease/letting out of bulldozers/dumpers by the appellant constitutes supply of tangible goods service liable to service tax. - HELD THAT: - The Tribunal observed that neither the show cause notice nor the impugned order furnished any grounds or evidence to substantiate that physical possession and effective control of the equipment were retained by the appellant rather than transferred to the lessees. The appellant produced that the equipment was leased out, operated by the lessee, and that contract terms prevented transfer or subletting by the lessee, indicating transfer of possession. In absence of material to show retention of possession and effective control by the appellant, the charge of supply of tangible goods service could not be sustained and the demand was set aside. [Paras 5]

Demand under supply of tangible goods service set aside for lack of evidence that possession and effective control were retained by the appellant.

Rent-a-cab service - scope and 'business of giving vehicles on hire' - Whether amounts recovered from employees for private use of official vehicles constitute taxable rent-a-cab service. - HELD THAT: - The Tribunal accepted the appellant's contention that the vehicles were provided to employees in terms of employment benefits and not as part of a business of giving vehicles on hire to the public. Recoveries from employees for personal use were found to arise under the employment agreement and did not reflect a service-provider/service-recipient relationship of a rent-a-cab operator. Consequently, the demand under the rent-a-cab head was unsustainable and was set aside. [Paras 6]

Demand under rent-a-cab service set aside; recoveries from employees held not to amount to rent-a-cab service.

Final Conclusion: The impugned order is set aside in respect of demands under business auxiliary service, supply of tangible goods service and rent-a-cab service; the appeal is allowed and the demands are quashed.

Cenvat credit admissibility - proportionate Cenvat credit - Rule 6(3A) intimation requirement - procedural lapse condonable - failure to produce original invoices - Rule 5A(2) non-production of documents - Rule 9 documentary proof - remand for verification of records - opportunity of hearing

Failure to produce original invoices - Rule 5A(2) non-production of documents - Rule 9 documentary proof - remand for verification of records - opportunity of hearing - Whether recovery of Cenvat credit and penalties could be sustained without verification of original input-service invoices and records - HELD THAT: - The Tribunal found that the adjudicating authority's conclusion rested on the allegation that the appellant failed to produce original input-service invoices and had submitted selected photocopies, thereby breaching Rule 5A(2) of the Service Tax Rules and the documentary requirements of Rule 9 of the Cenvat Credit Rules. The Bench observed the appellant's case that original invoices are maintained at respective regional offices and that photocopies and soft-copy registers were furnished during audit; the show cause did not allege any discrepancy in amounts or double-claiming. In view of these factual assertions and the Department's opportunity to verify records, the Tribunal held that the matter required fresh verification of the invoices, documents and the Cenvat credit register by the adjudicating authority. Accordingly the impugned order was set aside and the matter remanded for factual verification and fresh adjudication after affording a reasonable opportunity of hearing to the appellant. [Paras 4, 6]

Impugned order set aside and matter remanded to the adjudicating authority for verification of invoices/documents and fresh decision after giving opportunity of hearing.

Proportionate Cenvat credit - Rule 6(3A) intimation requirement - procedural lapse condonable - Whether omission to give prior intimation under Rule 6(3A) disentitles the assessee to proportionate Cenvat credit - HELD THAT: - The Tribunal examined the requirement of Rule 6 governing availment of proportionate Cenvat credit where the provider renders both taxable and exempted services, and noted that the appellants had followed the mechanics of computing and availing proportionate credit albeit without the formal intimation under Rule 6(3A). The Bench expressed a prima facie view that the intimation requirement is procedural; denial of the substantive right to credit for such procedural lapse would be unjustified. Consequently, the question of admissibility of proportionate credit in the absence of prior intimation was remitted to the adjudicating authority for fresh consideration, permitting the parties to place evidence and submissions on record. [Paras 5, 6]

Admissibility of proportionate Cenvat credit remanded to the adjudicating authority for fresh decision; procedural lapse of non-intimation treated as condonable on prima facie view.

Final Conclusion: Impugned adjudication set aside; appeal allowed by way of remand to the adjudicating authority to verify Cenvat records and invoices, and to decide afresh the admissibility of proportionate Cenvat credit after affording a reasonable opportunity of hearing; all issues left open.

Fraud vitiates everything - Penalty under Rule 26 of the Central Excise Rules, 2002 - Possession and 'in any other manner deal' - constructive possession in law - Demand and recovery under Section 11A of the Central Excise Act, 1944 - Prospective effect of penal amendment (Rule 26(2) effective 01.03.2007) - Admissibility and probative value of statements and handwriting expert report in departmental proceedings

Demand and recovery under Section 11A of the Central Excise Act, 1944 - Actual beneficiary of an erroneously paid rebate - Findings that the appellants were actual beneficiaries of the erroneously sanctioned rebate and that demands under Section 11A are sustainable - HELD THAT: - The Tribunal accepted the adjudicating authority's factual conclusions that the three merchant exporters were fictitious and that Noticees No. 9 and 10 (the appellants) along with co-conspirators managed creation and presentation of fabricated rebate claims and ultimately received the benefit. On that basis it held that the amounts (erroneously paid as rebate in the names of the merchant exporters) were in reality received by the appellants and other beneficiaries and accordingly the liability for demand and recovery under Section 11A to recover the rebate amount is confirmable against them jointly or severally. The finding rests on documentary evidence, statements of participants in the transactions and tracing of funds, not on the merchant exporters' nominal identity alone. [Paras 103, 109]

Demand and recovery against the appellants under Section 11A are upheld and the amounts deposited by them are liable to be adjusted against the demands.

Penalty under Rule 26 of the Central Excise Rules, 2002 - Possession and 'in any other manner deal' - constructive possession in law - Penalty under pre-amendment Rule 26(1) can be imposed on persons who, though not in physical custody of goods, were concerned in dealing with excisable goods in law; penalties on appellants under Rule 26/27 are sustainable - HELD THAT: - The Tribunal analysed the scope of Rule 26 as then existing and applied precedent interpreting comparable provisions (including Sachidananda Banerjee/Sitaram Agarwal and related tribunal and High Court decisions) to conclude that the statutory phrases such as 'acquires possession of' or 'in any other manner deals with' are wide and include constructive or legal possession and other forms of involvement where prior arrangement, agreement or active participation in the scheme is shown. Having found that the appellants were integral to fabrication, submission and encashment of rebate claims and that documents and fund flows established their role, the Tribunal held that they fell within Rule 26(1) and/or Rule 27 and therefore personal penalties were attractable even though no physical movement of goods by them was proved. The Tribunal rejected the narrower interpretation urged by appellants as distinguishable on facts. [Paras 104, 105, 109]

Penalties under Rule 26 (and Rule 27 where applicable) as imposed in the adjudication order are sustained.

Prospective effect of penal amendment (Rule 26(2) effective 01.03.2007) - Whether amendment created a new offence or merely clarified existing law - Amendment inserting Rule 26(2) (w.e.f. 01.03.2007) does not need to be invoked to sustain penalties in this case; the pre-amendment Rule 26(1) attracted penalty and the amendment was not required to be applied retrospectively - HELD THAT: - Appellants contended that handling of documents without physical dealing was penalised only by Rule 26(2) inserted w.e.f. 01.03.2007 and could not be applied retrospectively to conduct in 2005-06. The Tribunal held that the fraudulent conduct fell within the offences created by Section 9 of the Act and within the ambit of pre-amendment Rule 26(1), which (properly interpreted) reached persons who were concerned in dealing with excisable goods in law. Accordingly, the decision affirmed penalty under the existing rule (Rule 26(1)) and treated the 2007 amendment as not creating a wholly new offence that was essential to sustain liability in the present facts; therefore the contention of inapplicability of Rule 26(1) before 01.03.2007 was rejected on the facts. [Paras 4, 105]

The challenge based on prospective operation of Rule 26(2) fails because the pre-amendment Rule 26(1) was held sufficient to attract penalty for the appellants' conduct.

Admissibility and probative value of statements and handwriting expert report in departmental proceedings - Reliance on corroborated confessional statements and expert opinion in administrative adjudication - Statements of co participants and the handwriting expert's report, when corroborated by documentary and other material, are admissible and probative in departmental adjudication and supported the findings against appellants - HELD THAT: - The Tribunal noted that the adjudicating authority did not base its conclusion solely on the handwriting report but considered the totality of evidence including statements of intermediaries, bank-account tracing and documentary sequences. It accepted the principle (as applied in departmental proceedings) that statements signed before a gazetted officer and documents may be admitted and accorded statutory presumptions where applicable; hence the confessional or corroborative statements and the expert report, in conjunction with other evidence, were properly relied upon to establish involvement. The Tribunal therefore rejected appellants' complaints that reliance on such material was impermissible or that non-supply of the expert report vitiated the order. [Paras 4, 88]

The evidentiary reliance on statements and the handwriting expert's conclusion, taken with corroborating material, was legitimate and supports confirmation of findings and penalties.

Final Conclusion: The appeals are dismissed. The Tribunal upheld the adjudicator's findings that the appellants were beneficiaries of fraudulent rebate claims, confirmed demand and recovery under Section 11A, sustained penalties under Rule 26/27 of the Central Excise Rules, 2002 (as applicable prior to the 2007 amendment), accepted the evidentiary material relied upon and declined to grant any leniency.

Remand for fresh adjudication - Quantification of proportionate Cenvat credit - Reversal of Cenvat credit under Rule 6 of the Cenvat Credit Rules, 2004 - Effect of completion certificate/BUC on classification of output as non-service - Followance of High Court decision pending Special Leave Petition before the Supreme Court - Limitation on seeking quashing of a remand direction without filing an appeal or cross-objection

Quantification of proportionate Cenvat credit - Remand for fresh adjudication - Remand to the original adjudicating authority for quantification of the proportionate Cenvat credit and related consequences was upheld and ordered. - HELD THAT: - The Commissioner (Appeals) had remanded the matter to the adjudicating authority for the limited purpose of quantifying the proportionate Cenvat credit (paragraph 13). The Tribunal observed that the Commissioner (Appeals) remitted the matter only for requantification and that the respondent, having not challenged the remand by way of an appeal or cross-objection, could not seek quashing of that remand before the Tribunal. The Tribunal therefore rejected the respondent's objection to the remand and confirmed that the matter stands remitted for quantification in accordance with the directions recorded by the Commissioner (Appeals). The Tribunal explicitly left the factual and legal issues open for determination by the adjudicating authority in the remand proceedings. [Paras 6]

Remand for quantification confirmed; respondent's challenge to the remand rejected; matter to be decided by the original adjudicating authority.

Reversal of Cenvat credit under Rule 6 of the Cenvat Credit Rules, 2004 - Effect of completion certificate/BUC on classification of output as non-service - Followance of High Court decision pending Special Leave Petition before the Supreme Court - The matter was remanded to the original adjudicating authority to decide afresh in the light of the outcome of departmental appeals pending before the Supreme Court, with no opinion expressed on the merits. - HELD THAT: - The revenue challenged the Commissioner (Appeals) decision which had applied the Gujarat High Court decision in M/s Alembic Ltd. concerning the characterisation of sale after receipt of completion certificate as non-service and the consequent inapplicability of Rule 6 in certain circumstances. Noting that departmental appeals including a Special Leave Petition were pending before the Supreme Court, the Tribunal considered it appropriate to remit the entire matter to the original adjudicating authority for fresh adjudication after giving effect to the outcome of those departmental appeals. The Tribunal expressly refrained from expressing any view on the merits of the substantive issues (including the applicability of Rule 6 and the effect of BUC), thereby keeping all issues open for reconsideration by the adjudicating authority. [Paras 6, 7]

Appeal allowed by way of remand to enable the original adjudicating authority to decide the matter afresh in the light of the outcome of departmental appeals before the Supreme Court; no opinion expressed on merits.

Final Conclusion: The Tribunal allowed the revenue appeal by remanding the matter to the original adjudicating authority for fresh adjudication - limitedly for quantification of proportionate Cenvat credit and generally to decide all issues afresh in light of the outcome of departmental appeals pending before the Supreme Court - while declining to express any view on the merits; the stay application was declared infructuous and disposed of.

Interest on delayed refund under Section 30(4) of the Delhi Sales Tax Act, 1975 - Refund of pre-deposit made as condition for filing appeal - Writ jurisdiction despite availability of alternate remedy - Revenue inaction and delay does not defeat claim for interest where refund claim filed

Interest on delayed refund under Section 30(4) of the Delhi Sales Tax Act, 1975 - entitlement to interest on the refunded pre-deposit from the ninetieth day after the refund application under Section 30(4) - HELD THAT: - The Court held that irrespective of whether the pre-deposit is characterised as tax or as a condition for maintaining the appeal, the petitioner was entitled to refund and, if the refund was not made within ninety days of the claim, to interest as prescribed by Section 30(4). The Court observed that even accepting the respondents' contention that the amount was tax, Section 30(4) entitles the claimant to simple interest at the prescribed rates where refund is not made within the statutory period. The petitioner, however, limited its claim to interest from the ninetieth day after filing the refund application dated 18.05.2012, and the Court directed payment of interest at the rates specified in Section 30(4) from that date until payment, to be made within four weeks. [Paras 6, 7, 14]

Directed payment of interest on the refunded amount at rates specified in Section 30(4), computed from the ninetieth day after 18.05.2012 until payment.

Refund of pre-deposit made as condition for filing appeal - refundability of the pre-deposit made as condition for entertaining the appeal - HELD THAT: - The Court noted that the First Appellate Authority set aside the assessment and directed refund of the amount deposited as stay in appeal. The respondents accepted liability to refund the sum but failed to process the refund for years; the Court emphasised that where the appellant succeeds, the pre-deposit is required to be refunded forthwith as directed by the appellate order and the respondents were under an obligation to refund once the appeal was allowed. [Paras 3, 6]

The pre-deposit directed to be refunded by the appellate authority is refundable and respondents were liable to refund it.

Writ jurisdiction despite availability of alternate remedy - Revenue inaction and delay does not defeat claim for interest where refund claim filed - maintenance of writ petition despite existence of alternate remedy and effect of petitioner's alleged inaction - HELD THAT: - The Court rejected the respondents' contention that the petition should be dismissed because an alternate remedy existed, observing that the petitioner had pursued the authorities and had obtained a prior writ direction; consequently, it was not inappropriate to exercise writ jurisdiction. On the contention of inordinate delay by the petitioner, the Court found the inaction to be largely on the part of the respondents who failed to process the filed refund application (Form DVAT 21 dated 18.05.2012) and subsequent representations, and therefore the petitioner could not be penalised for the revenue's failure to act. [Paras 9, 11, 12]

Refused to relegate the petitioner to alternate remedy and held that the respondents' inaction did not bar the claim; writ petition entertained.

Final Conclusion: The petition is allowed: the respondents are directed to pay interest on the refunded sum at the rates specified under Section 30(4) of the Delhi Sales Tax Act, 1975, computed from the ninetieth day after the refund application dated 18.05.2012 until payment, and to make the payment within four weeks.

Refund of central sales tax collected by seller where buyer produces C-form - issuance and effect of C-form for inter-State sale after introduction of GST - liability of assessing authority to refund tax deposited by seller on production of C-form - writ relief directing adjudication and sanction of refund - seller's inability to claim refund in presence of buyer's entitlement (unjust enrichment consideration)

Refund of central sales tax collected by seller where buyer produces C-form - issuance and effect of C-form for inter-State sale after introduction of GST - liability of assessing authority to refund tax deposited by seller on production of C-form - Petitioner's entitlement to refund of CST paid (collected by the seller and deposited with the State) on inter-State purchase of regasified LNG upon production of C-forms. - HELD THAT: - The Court accepted the petitioner's case that the purchases of regasified LNG were inter-State transactions for which C-forms were subsequently issued by the Uttar Pradesh and Haryana VAT authorities following clarification in earlier decisions. Reliance was placed on the decision in Carpo Power Limited and this Court's earlier decision in J.K. Cement Ltd., where the High Court directed processing of refund claims when sellers had collected tax but buyers produced valid C-forms. The learned Additional Government Pleader conceded that the petitioner had furnished all necessary documents and that assessment proceedings for A.Y. 2017-18 were complete. In view of these facts and binding judicial precedents, the authority was directed to process and sanction the refund of the tax amount collected from the petitioner and deposited by the seller in accordance with law. [Paras 8, 9, 10]

Refund claim to be processed and sanctioned by the respondents in accordance with law; respondents directed to issue the refund order within four weeks.

Writ relief directing adjudication and sanction of refund - seller's inability to claim refund in presence of buyer's entitlement (unjust enrichment consideration) - Direction to adjudicate and the entitlement (or otherwise) of the seller to claim refund in respect of the same tax amount. - HELD THAT: - The Court issued a writ-direction to the respondents to decide and sanction the petitioner's refund application forthwith, observing that under the specific facts the seller (M/s. Petronet LNG Ltd.) would not be entitled to claim the refund. The Court noted the principle applied in J.K. Cement Ltd. that where the buyer produces requisite declarations and the seller has merely collected and deposited the tax, the assessing authority is obliged to refund the tax to the buyer and the seller cannot claim the same amount. Given the concession that all documents were furnished and assessments are complete, the respondents were commanded to comply within the stipulated period. [Paras 9, 10]

Respondents directed to adjudicate and sanction the refund within four weeks; M/s. Petronet LNG Ltd. held not entitled to claim the refund on the facts before the Court.

Final Conclusion: Rule made absolute; respondents directed to process and grant the petitioner's refund of the CST amount collected from the petitioner and deposited by the seller in accordance with law, within four weeks of receipt of this order; seller not entitled to the refund on the facts presented.

Purchase tax - exemption under Section 5(3) of the Central Sales Tax Act, 1956 - inextricable link / penultimate sale doctrine - same goods theory - Article 286 of the Constitution - Section 7-A of the Tamil Nadu General Sales Tax Act, 1959

Purchase tax - Section 7-A of the Tamil Nadu General Sales Tax Act, 1959 - exemption under Section 5(3) of the Central Sales Tax Act, 1956 - inextricable link / penultimate sale doctrine - Article 286 of the Constitution - Whether the petitioner is entitled to exemption from payment of purchase tax under Section 7 A of the TNGST Act by invoking Section 5(3) of the CST Act in respect of purchases of raw hides and skins which were later processed and exported. - HELD THAT: - The Court examined Article 286 and Sections 5(1), 5(2) and particularly the non obstante provision in Section 5(3) of the CST Act which deems the last sale or purchase preceding export to be in the course of export if it was after, and for the purpose of, an export agreement or order. The statutory mechanism for exemption of the penultimate sale is by Form H/declared export order and an inextricable link between the local/inter state sale or purchase and the eventual export must be established. Applying the test in Azad Coach Builders (P) Ltd., the Court held that exemption under Section 5(3) is available only where there is an inseverable link between the penultimate sale/purchase and the export and the identity of the goods is such that the penultimate sale is truly for export. In the present facts the petitioner purchased raw hides without tax but converted them into dressed hides and skins before export, thereby altering the character of the goods. The petitioner failed to establish the requisite inextricable link or that the goods exported were the same goods as purchased. Consequently, the petitioner is not entitled to claim exemption from purchase tax under Section 7 A by reliance on Section 5(3) of the CST Act. [Paras 34, 35, 48, 53, 54]

Exemption under Section 5(3) of the CST Act does not relieve the petitioner from purchase tax under Section 7 A of the TNGST Act because the goods underwent change in character and the petitioner failed to establish an inextricable link between the purchase and the export.

Same goods theory - inextricable link / penultimate sale doctrine - Azad Coach Builders (P) Ltd. - Whether the Second Respondent's order should be remitted to the Assessing Officer for fresh consideration in the light of the Supreme Court decision in Azad Coach Builders (P) Ltd. - HELD THAT: - The Court considered the scope of the Azad Coach Builders decision and explained that it did not eliminate the 'same goods' test but clarified when the penultimate sale doctrine applies. Azad Coach Builders was held to be fact specific where the penultimate sale (sale of bus bodies) remained linked to export because of the sequence and nature of transactions. By contrast, in the present case the petitioner transformed raw hides into dressed hides before export and had local sales, and there were no records establishing a pre existing export order or Form H linking the purchases to export. A selective reading of Azad Coach Builders to justify remand was not permissible. The Court therefore declined to remit the matter to the Assessing Officer for reconsideration on that ground. [Paras 44, 46, 50, 51, 52]

No remand; Azad Coach Builders does not warrant fresh consideration here because the facts show change in character of goods and absence of evidence establishing the requisite link to export.

Final Conclusion: The Writ Petition is dismissed. The petitioner is not entitled to exemption from purchase tax under Section 7 A of the TNGST Act by invoking Section 5(3) of the CST Act because the goods were transformed before export and no inextricable link to a pre existing export order was established; relief seeking remand in the light of Azad Coach Builders is declined.