TaxTMI Updates e-Newsletter
Feb 07,2022

Confiscation under Section 130 of the GST Act - writ remedy under Article 226 - appeal under Section 107 of the GST Act - relegation to alternative remedy - non-speaking order - provisional release of seized goods and vehicle - inherent power of Appellate Authority to pass interim orders - limitation not to bar entertainment of appeal in such circumstances

Writ remedy under Article 226 - appeal under Section 107 of the GST Act - relegation to alternative remedy - non-speaking order - Maintainability of writ against final order of confiscation and appropriate forum for challenge - HELD THAT: - The Court declined to entertain the writ application attacking the final order of confiscation passed in MOV-11. Although counsel contended the impugned order was non-speaking, the Court observed that the entire evidence would need to be examined and that the proper remedy is an appeal before the Appellate Authority under Section 107 of the Act. Accordingly, the parties were relegated to prefer appropriate appeals, which the Appellate Authority is directed to decide in accordance with law and expeditiously. The Court made no expression of opinion on the merits of the confiscation order. [Paras 5, 6, 7, 8]

Writ dismissed; petitioner relegated to file appeal under Section 107 of the Act and the writ application disposed of without adjudication on merits.

Provisional release of seized goods and vehicle - inherent power of Appellate Authority to pass interim orders - Availability of interim relief pending prosecution of appeals before the Appellate Authority - HELD THAT: - The Court clarified that, pending the filing and disposal of appeals, it is open to the owner of the goods and the owner of the conveyance to make an application to the Appellate Authority for provisional release of the seized goods and vehicle. Noting that Section 107 may not contain an express provision analogous to Sub-section 6 of Section 67, the Court held that the Appellate Authority, as an appellate forum, has inherent power to pass interim orders and may provisionally release the goods and vehicle subject to such terms and conditions as it deems fit. [Paras 7]

Permitted to apply to the Appellate Authority for provisional release; Appellate Authority may grant interim relief subject to conditions.

Limitation not to bar entertainment of appeal in such circumstances - appeal under Section 107 of the GST Act - Whether appeals may be rejected by the Appellate Authority on the ground of limitation - HELD THAT: - The Court directed that the Appellate Authority shall not decline to entertain the appeals on the ground of limitation in the circumstances of this case, observing that the appellants were entitled to seek relief before the High Court and therefore should not be prejudiced in proceeding before the statutory appellate forum. The Court emphasized that the Appeals filed shall be decided strictly on their own merits in accordance with law. [Paras 9]

Appellate Authority shall not refuse to entertain the appeals merely on limitation grounds; appeals to be decided on merits.

Final Conclusion: The writ petition and connected civil application are disposed of by relegation of parties to prefer appeals under Section 107 of the GST Act; the Appellate Authority is directed to consider any applications for provisional release and to decide the appeals expeditiously and on merits, and shall not decline to entertain the appeals on limitation grounds.

Provisional attachment under Section 83 of the Central Goods and Services Tax Act, 2017 - cessation of provisional attachment upon passing of final assessment order - entitlement to consequential reliefs following adjudication - binding precedent of the Hon'ble Supreme Court in Radha Krishan Industries

Provisional attachment under Section 83 of the Central Goods and Services Tax Act, 2017 - cessation of provisional attachment upon passing of final assessment order - binding precedent of the Hon'ble Supreme Court in Radha Krishan Industries - entitlement to consequential reliefs following adjudication - Whether the provisional attachment of the petitioner's bank account ceases to subsist upon passing of the final assessment/order by the Additional Commissioner and whether the petitioner is entitled to consequential reliefs. - HELD THAT: - The Court recorded that the Additional Commissioner has passed the adjudication order pursuant to the Show Cause Notice. Applying the principle laid down by the Hon'ble Supreme Court in Radha Krishan Industries, and consistent with this Court's own earlier order in the same matter, once the final assessment/order is passed under the CGST scheme the earlier provisional attachment effected under Section 83 cannot continue to subsist. The Court held that the petitioner is entitled to seek consequential reliefs flowing from the adjudication order. Relying on the binding precedent, the Court declared that the provisional attachment ceases to exist and comes to an end, and directed respondents to act to lift the attachment without delay. The Court disposed of the writ as nothing substantive remained after this declaration and issued a specific operational direction to inform the bank for lifting the attachment within a stipulated short period. [Paras 8, 9, 10, 11, 12]

Provisional attachment declared to have ceased upon passing of the final assessment/order; petitioner entitled to consequential reliefs and respondents directed to inform the bank to lift the provisional attachment within 48 hours.

Final Conclusion: The Court declared that the provisional attachment effected under Section 83 ceases to subsist upon the passing of the adjudication/order by the Additional Commissioner; the writ petition was disposed as infructuous, respondents were directed to inform the concerned bank to lift the attachment within 48 hours, and there was no order as to costs.

Provisional attachment to protect revenue - Statutory temporal limitation on provisional attachment - Restriction on use of electronic credit ledger - Ceasing effect of restriction after one year - Return of seized goods where no notice issued within six months

Provisional attachment to protect revenue - Statutory temporal limitation on provisional attachment - Restriction on use of electronic credit ledger - Ceasing effect of restriction after one year - Whether the provisional attachment orders and restriction on electronic credit ledger continued to subsist beyond the one year period prescribed by statute - HELD THAT: - The Court examined the orders of provisional attachment dated 23.07.2019 and the subsequent orders dated 24.07.2020 and 27.07.2020 relied upon by the petitioner. Section 83 provides that provisional attachment made to protect revenue shall cease to have effect after the expiry of one year from the date of the order. Rule 86A(3) similarly provides that a restriction on debit of the electronic credit ledger shall cease after one year. The impugned orders dated in July 2019 have therefore outlived the statutory period and, on the material before the Court, no subsisting attachment of the petitioner's bank accounts or of the Input Tax Credit remained as on date. The Court recorded that if the department wishes to proceed further it remains open to do so in accordance with law, but the statutory temporal limits operate to render the earlier attachments ineffective. [Paras 7, 8, 9, 10]

The provisional attachments and the restriction under Rule 86A have ceased to operate after expiry of the one year period; no subsisting attachment of the petitioner's bank accounts or Input Tax Credit exists as on date, subject to the department's right to act lawfully afresh.

Return of seized goods where no notice issued within six months - Whether the laptop and mobile seized from the petitioner must be returned where no notice has been issued within six months of seizure - HELD THAT: - Section 67(7) mandates return of goods seized under sub section (2) where no notice in respect thereof is given within six months of seizure, subject to a possible extension of up to a further six months on sufficient cause. The petitioner's counsel pointed out seizure of a laptop and mobile and that no notice had been issued and the primary six month period had expired. The Court directed that the authority concerned must look into this aspect and deal with return of the seized laptop and mobile in accordance with Section 67(7) and its proviso. [Paras 11, 12]

The authority is obliged to examine and act on return of the seized laptop and mobile in accordance with Section 67(7), as no notice has been issued within six months.

Final Conclusion: Rule made absolute to the extent that the provisional attachments and the restriction on use of electronic credit ledger have ceased after the statutory one year period and that the authority must consider return of the seized laptop and mobile under Section 67(7); the department remains free to take further action in accordance with law.

Pure services - Exemption under Notification No. 12/2017 - Central Tax (Rate) - Function entrusted to a Municipality under Article 243W - Local authority - Inclusive interpretation of the Twelfth Schedule - Agency performance of municipal functions (Section 63A, MCGM Act)

Pure services - Local authority - Function entrusted to a Municipality under Article 243W - Exemption under Notification No. 12/2017 - Central Tax (Rate) - Inclusive interpretation of the Twelfth Schedule - Agency performance of municipal functions (Section 63A, MCGM Act) - Whether comprehensive architectural services supplied by the applicant to MCGM qualify for exemption under Sr. No. 3 of Notification No. 12/2017 - Central Tax (Rate). - HELD THAT: - The Authority examined the three conditions for exemption under Sr. No. 3 of Notification No. 12/2017: (i) that the supply is of pure services, (ii) that the recipient is a Central/State/Union territory/local authority, and (iii) that the services are provided by way of any activity in relation to a function entrusted to a Municipality under Article 243W. The applicant, during hearings, affirmed that no goods are supplied; the Authority found this satisfies the first condition. The Authority also found that MCGM is a local authority under the GST laws, satisfying the second condition. On the third condition, the Authority held that Article 243W authorises the State Legislature to entrust functions to municipalities and that the Twelfth Schedule is illustrative; therefore functions beyond the Twelfth Schedule may be entrusted by state law. Relying on Section 63 of the Brihan Mumbai Municipal Corporation Act, 1888 (which includes establishment/maintenance of museums and laying out/maintenance of parks, gardens or recreation grounds) and Section 63A (permitting discharge of functions through agencies), the Authority concluded that the impugned activities are functions entrusted to MCGM by the State Government and that MCGM may have them performed through an agency (the applicant). On these bases the Authority concluded that all three conditions of Sr. No. 3 are satisfied and that the supply is eligible for exemption under the Notification. [Paras 5]

The comprehensive architectural services supplied by the applicant to MCGM are exempt under Sr. No. 3 of Notification No. 12/2017 - Central Tax (Rate).

Final Conclusion: The Authority ruled that GST exemption under Sr. No. 3 of Notification No. 12/2017 - Central Tax (Rate) applies to the comprehensive architectural services provided by the applicant to the Municipal Corporation of Greater Mumbai for the repairs/restoration and reconstruction for development of the recreation ground cum textile museum, the three statutory conditions for the exemption having been satisfied.

Input tax credit on services received under Reverse Charge Mechanism - restriction on input tax credit for motor vehicles with seating capacity not more than thirteen persons - eligibility of input tax credit for hiring/ renting of motor vehicles with seating capacity exceeding thirteen persons - use in the course or furtherance of business as condition for ITC - notification placing renting of motor vehicles under Reverse Charge Mechanism - Circular clarifying application of RCM and tax rate/ITC option on renting of motor vehicles

Input tax credit on services received under Reverse Charge Mechanism - use in the course or furtherance of business as condition for ITC - eligibility of input tax credit for hiring/ renting of motor vehicles with seating capacity exceeding thirteen persons - restriction on input tax credit for motor vehicles with seating capacity not more than thirteen persons - notification placing renting of motor vehicles under Reverse Charge Mechanism - Circular clarifying application of RCM and tax rate/ITC option on renting of motor vehicles - Applicant is eligible to avail input tax credit on GST paid under reverse charge for hiring buses used to transport employees, but only with effect from 01.02.2019. - HELD THAT: - The Authority found that the inward supply of bus services was used in the course or furtherance of the applicant's taxable outward supply and thus prima facie eligible for ITC under Section 16. The amendment to Section 17(5) effective 01.02.2019 removed the earlier blanket bar and clarified that ITC is not blocked for motor vehicles used for transportation of persons where the approved seating capacity exceeds thirteen persons; the buses in the present case are 49-seater and therefore do not fall within the blocked category. The notifications and Circular concerning placing renting of motor vehicles under RCM establish that the recipient (a body corporate) is liable to discharge GST under RCM where the supplier does not charge GST at 12% with full ITC; those instruments relate to liability and applicable rate but do not negate eligibility for ITC where conditions of Section 16 are met. On these grounds the Authority held that the applicant may claim ITC of GST paid under RCM for the bus hiring, but this entitlement exists only from the effective date of the amendment, i.e., 01.02.2019. [Paras 5]

Eligible to take input tax credit on GST paid under reverse charge for hiring of buses used to transport employees, with effect from 01.02.2019.

Final Conclusion: The Authority answers the question in the affirmative and permits the applicant to claim input tax credit on GST paid under reverse charge for hiring of buses used for employee transportation, subject to the conditions of Chapter V and only with effect from 01.02.2019.

Deemed assessee-in-default - short deduction of tax deducted at source (TDS) - penalty under Section 271C of the Income Tax Act - non-deduction contravention of Section 192 of the Income Tax Act - reasonable cause under Section 273B of the Income Tax Act

Deemed assessee-in-default - short deduction of tax deducted at source (TDS) - Whether the Appellant was rightly treated as a deemed assessee-in-default in respect of alleged short deduction of TDS. - HELD THAT: - The Commissioner of Income Tax (Appeals) recorded that the employees had paid their tax liabilities by way of self-assessment and advance tax and had filed returns, so that no further tax was payable. On that basis the CIT(A) concluded that the Appellant could not be treated as a deemed assessee-in-default to the extent of the alleged short deduction. The Court accepted the CIT(A)'s categorical finding that there was no short deduction of TDS and held that, once there is no short deduction, the question of treating the payer as an assessee-in-default under the deeming provision does not arise. [Paras 6, 7, 8]

The Appellant was not a deemed assessee-in-default in respect of the alleged short deduction of TDS; the CIT(A)'s deletion of that categorisation is upheld and the contrary conclusion cannot be sustained.

Penalty under Section 271C of the Income Tax Act - non-deduction contravention of Section 192 of the Income Tax Act - Whether the penalty under Section 271C could be sustained in the absence of contravention of the obligation to deduct tax at source. - HELD THAT: - The imposition of penalty under Section 271C presupposes the existence of a contravention of the obligation to deduct tax at source. Having accepted the CIT(A)'s finding that the employees had satisfied their tax liabilities and that there was no short deduction, the Court held there was no occasion to treat the Appellant as in default or to sustain the penalty. The orders of the Assessing Officer, and the affirmance by the CIT and ITAT upholding the penalty to that extent, were therefore legally unsustainable. [Paras 7, 8, 9]

The penalty under Section 271C cannot be sustained where there is no contravention of the obligation to deduct tax at source; the penalty is set aside.

Reasonable cause under Section 273B of the Income Tax Act - Whether there existed a reasonable cause under Section 273B justifying non-imposition of penalty or requiring fresh consideration. - HELD THAT: - The Court observed that the AO, CIT(A) and ITAT failed to correctly ascertain the existence and magnitude of any short deduction under the TDS provisions. Because the decisive factual and legal conclusion reached by the CIT(A) was that employees had paid their taxes and no further tax was payable, the premise for imposing penalty did not survive; consequently there was no requirement to sustain or remand on the ground of reasonable cause. The questions framed were answered in favour of the Appellant and against the Department. [Paras 6, 9]

No penalty is sustainable and there is no basis to deny relief under Section 273B in the circumstances; the ITAT and CIT(A) decisions upholding the penalty are set aside to the extent indicated.

Final Conclusion: The appeal is allowed. The Assessing Officer's order imposing penalty insofar as it treated the Appellant as an assessee-in-default for alleged short deduction of TDS and imposed penalty under Section 271C is set aside, the questions of law framed are answered in favour of the Appellant, and there shall be no order as to costs.

Rejection of books of account - best judgment assessment - estimation of income on surmises and conjectures - non-issuance of sale memos as ground for rejecting accounts - acceptance of accounts by excise authority and subsequent judicial acceptance - reasoned material versus suspicion in disallowing accounts

Rejection of books of account - estimation of income on surmises and conjectures - best judgment assessment - Rejection of the Assessees' books of account and estimation of profit by resort to best judgment assessment for AY 1998-99 was legal and proper. - HELD THAT: - The Court found that the Assessing Officer and the Commissioner (Appeals) rejected the books not on the basis of any specific irregularity but on surmises, conjectures and the possibility of suppression or inflation. The Tribunal had accepted the same books for a subsequent year and the Excise Department had not rejected them. Where no material was pointed out to demonstrate improper maintenance of accounts, mere suspicion or low profits cannot justify rejection of accounts or making a best judgment assessment. Accordingly, the rejection and estimation founded on conjecture were held to be impermissible. [Paras 7, 8, 11]

Rejection of the books of account and estimation of profit on the basis of surmises and conjectures is unlawful; impugned orders so rejecting accounts are set aside.

Non-issuance of sale memos as ground for rejecting accounts - acceptance of accounts by excise authority and subsequent judicial acceptance - reasoned material versus suspicion in disallowing accounts - Whether rejection of books of account solely because sale memos were not issued was proper in the facts of these cases. - HELD THAT: - The Court held that expecting issuance or production of sale memos in the context of sale of country liquor to tribal populations was not realistic, and non-production of sale memos alone could not justify discarding complete books of account. The Tribunal had itself accepted the books for AY 2001-02 and the Excise Department had not rejected them; therefore the absence of sale memos, standing alone and without corroborative material, could not validate rejection of accounts. [Paras 7, 8, 10, 11]

Rejection of accounts solely on the ground of non-issuance of sale memos is not justified in the present facts; such rejection is set aside.

Final Conclusion: Both questions of law are answered in favour of the Assessees and against the Department; the impugned orders of the AO, the CIT(A) and the ITAT for AY 1998-99 are set aside and the appeals are allowed, with no order as to costs.

TDS on interest component of compensation awarded by Motor Accidents Claims Tribunal under Clause (ix) of Section 194-A of the Income Tax Act - Obligation of payer to deduct tax at source where aggregate interest in a financial year exceeds the prescribed threshold - Deposited TDS held to be money deposited for and on behalf of the payee - prevention of double payment and unjust enrichment

TDS on interest component of compensation awarded by Motor Accidents Claims Tribunal under Clause (ix) of Section 194-A of the Income Tax Act - Obligation of payer to deduct tax at source where aggregate interest in a financial year exceeds the prescribed threshold - Whether the Insurance Company was obliged to deduct income tax at source from the interest component of the compensation awarded by the Tribunal and whether such deduction complied with Clause (ix) of Section 194-A. - HELD THAT: - The Court examined Clause (ix) of Section 194-A and held that the payer is bound to deduct tax at source on the interest component of compensation awarded by the Motor Accident Claims Tribunal where the amount of such interest, or the aggregate thereof in a financial year, exceeds the statutory threshold. In the present case the interest component exceeded that threshold and, in the absence of PAN details from the payees, the Insurance Company deducted tax at the specified rate and deposited the same with the government. The Court found that the Insurance Company had carried out the statutory mandate and there was no illegality in deducting and depositing the TDS as required by the provision.

The deduction and deposit of TDS by the Insurance Company on the interest component was in accordance with Clause (ix) of Section 194-A and valid.

Deposited TDS held to be money deposited for and on behalf of the payee - prevention of double payment and unjust enrichment - Whether the Tribunal could direct the Insurance Company to deposit again the amount already deducted and deposited as TDS so that it be disbursed to the claimants. - HELD THAT: - The Court noted that the TDS deducted by the Insurance Company had been deposited with the government and Form 16A had been produced. Such deposited tax is held for and on behalf of the payees (claimants). Directing the payer to pay the same amount again to the claimants would amount to double payment and unjust enrichment. The Tribunal's direction to deposit the deducted amount afresh was therefore not legally tenable.

The Tribunal's direction to the Insurance Company to deposit again the amount already deducted and deposited as TDS was erroneous and could not be sustained.

Final Conclusion: Petition allowed; the impugned Tribunal order directing re-deposit of the amount already deducted and deposited as TDS was set aside, and the amount deposited by the Insurance Company with the Tribunal shall be released in its favour together with any interest accrued thereon.

Application of the two year limitation where the statement referred to in Section 200 has been filed - limitation as a fetter on the power to make an order under Section 201 - effect of retrospective amendment to limitation provision on vested rights

Application of the two year limitation where the statement referred to in Section 200 has been filed - Section 201(1A)(3)(i) versus (ii) - Where the assessee had filed the statement referred to in Section 200, the two year limitation (as provided in the pre amendment provision) governs the time for making an order under Section 201. - HELD THAT: - The Tribunal and the CIT(A) recorded as a finding of fact that the assessee had filed the statement referred to in Section 200. The Court applied the pre amendment text of Section 201(1A)(3) to conclude that clause (i) - prescribing two years from the end of the financial year in which the statement was filed - is applicable. The Court reiterated the settled principle that limitation in the Act operates as a fetter on the statutory power to make the impugned order and, therefore, once the two year period expired prior to the amendment, the power to make an order was extinguished. The Court thus held that the assessing officer could not invoke the longer limitation period under clause (ii) where the condition in clause (i) (filing of the statement) was satisfied. [Paras 6, 7]

The pre amendment two year limitation applies and bars the order under Section 201.

Effect of retrospective amendment to limitation provision on vested rights - amendment by Finance Act No.2/2014 and prospective operation - The amendment to Section 201(1A)(3) by Finance Act No.2/2014 could not revive or enlarge the power to make an order where the earlier two year limitation had already expired; the assessee had a vested right. - HELD THAT: - The Court examined the temporal effect of the amendment and held that where the limitation period prescribed by the pre amendment provision had already run out, a right had accrued to the assessee which could not be taken away by subsequent amendment. The amendment, which came into force on 01.10.2014, could not operate retrospectively so as to revive the assessing officer's power once the pre amendment limitation had expired. Applying these principles, the Court concluded that the order dated 30.03.2016 was barred by limitation. [Paras 6, 7, 8]

The amendment could not revive the assessing officer's power; the order is time barred.

Final Conclusion: The appeal is dismissed. The Court affirmed that the pre amendment two year limitation applies where the statement under Section 200 was filed, and that the subsequent amendment could not revive a vested right; accordingly the order under Section 201 dated 30.03.2016 is barred by limitation.

Validity of settlement application under Section 245D(2C) - Preliminary nature of orders under Section 245D(2C) - Examination of record and report and further proceedings under Section 245D(4) - Requirement of opportunity of hearing before declaring application invalid - Judicial restraint where alternative forum and pending proceedings exist

Validity of settlement application under Section 245D(2C) - Requirement of opportunity of hearing before declaring application invalid - Preliminary nature of orders under Section 245D(2C) - The Settlement Commission's order dated 02.02.2018 treating the applications as "not invalid" under Section 245D(2C) is a preliminary validity determination and was properly recorded after receipt of the Pr. CIT's report. - HELD THAT: - The Court examined the statutory scheme whereby, on receipt of the report called for under Section 245D(2B), the Settlement Commission may, within fifteen days, declare an application invalid or, after giving an opportunity of being heard, treat it as not invalid. The impugned order records that prima facie the applicants had fulfilled the conditions of Section 245C including full and true disclosure and that there was nothing adverse to hold the applications invalid; the order also directed further pursuit of the matter for report under Rule 9. The Court therefore treated the order dated 02.02.2018 as a preliminary validity finding under Section 245D(2C) and not a final adjudication on merits, correctly made in the statutory framework which requires subsequent examination under Section 245D(4). [Paras 3, 4, 5]

The order of the Settlement Commission dated 02.02.2018 treating the applications as not invalid under Section 245D(2C) stands as a preliminary validity determination.

Examination of record and report and further proceedings under Section 245D(4) - Judicial restraint where alternative forum and pending proceedings exist - The matter required further consideration under Section 245D(4) and, having regard to subsequent proceedings and available fora, the High Court declined interference with the preliminary order; the petition was dismissed as not maintainable/appropriate for interference. - HELD THAT: - The Court noted that after the preliminary order the Settlement Commission was required to examine records and the Pr. CIT's report under Section 245D(4) and pass such order as it thought fit after hearing parties. The record showed that a later order dated 15.01.2019 (given effect on 14.03.2019) had been passed by the Settlement Commission, which merged the earlier order, and that the petitioners had not challenged that later order. Further, the dispute between the parties also formed part of pending proceedings before the National Company Law Tribunal, indicating existence of an alternative and appropriate forum. In these circumstances the Court exercised restraint and refused to entertain the petition seeking setting aside of the preliminary order. [Paras 5, 6, 7, 8]

Petition dismissed; Court declined to interfere with the Settlement Commission's process and subsequent order, noting availability of alternative forum and pending proceedings.

Final Conclusion: The High Court declined to interfere with the Settlement Commission's preliminary order of 02.02.2018 treating the applications as not invalid and, in view of further proceedings under Section 245D(4), a subsequent order of the Commission and pending proceedings before the NCLT, dismissed the petition. No order as to costs.

Late filing fee under section 234E - fee for default in furnishing statements - prospective operation of tax amendments - application of amended section 200A

Late filing fee under section 234E - prospective operation of tax amendments - application of amended section 200A - Validity of demands for late filing fee under section 234E for assessment years 2012-13 to 2014-15 - HELD THAT: - The court considered the effect of the Finance Act, 2012 which introduced section 234E and the later amendments to section 200A(1) brought into effect from 01.06.2015. Relying on the decision in M/s. Sarala Memorial Hospital v. Union of India and Another, which held that the relevant amendment operates prospectively from 1st June 2015, the court concluded that the statutory scheme did not authorize levy of the late filing fee under section 234E for periods prior to 01.06.2015. Consequently, demands issued for the assessment years 2012-13 to 2014-15 purporting to charge fee under section 234E were held to be without authority and unsustainable. [Paras 5, 6, 7]

Ext.P1 to Ext.P3 intimations demanding late fee under section 234E for assessment years 2012-13 to 2014-15 are quashed.

Final Conclusion: The writ petition is allowed: the demands for payment of late filing fee under section 234E for AYs 2012-13 to 2014-15 are quashed as the amendment operates prospectively with effect from 01.06.2015.

Writ of mandamus - Consideration and disposal of appeals on merits - Delay in disposal of income-tax appeals - Recurring/cascading tax liability - Section 250(6A) of Income Tax Act, 1961

Writ of mandamus - Consideration and disposal of appeals on merits - Delay in disposal of income-tax appeals - Recurring/cascading tax liability - Section 250(6A) of Income Tax Act, 1961 - Direction to the respondent to consider and dispose of the petitioner's income tax appeals on merits within a specified time-frame. - HELD THAT: - The petitioner filed appeals against assessments for the Assessment Years 2013-14, 2014-15 and 2015-16 on 06.07.2016, 04.01.2017 and 22.01.2018 respectively. The disputes relate to disallowance of reimbursements to the petitioner's subsidiary abroad and, according to the petitioner, have a cascading effect on subsequent years and on overall tax liability. The Court, without adjudicating the merits of the appeals, accepted that the issues are recurring and warrant early final disposal to avoid continuing cascading consequences. The respondent sought time to file counter affidavit but the Court found that the appropriate remedy was to direct expeditious consideration and disposal of the pending appeals. Consequently the Court disposed of the writ petitions by directing the respondent to consider the appeals and pass orders on merits and in accordance with law within three months from receipt of the order copy, expressly declining to express any opinion on the substantive merits. [Paras 7, 8]

The respondent is directed to consider the petitioner's appeals for Assessment Years 2013-14, 2014-15 and 2015-16 and to dispose them on merits and in accordance with law within three months from receipt of a copy of the order.

Final Conclusion: Writ petitions disposed by directing the respondent to consider and dispose the appeals for AYs 2013-14, 2014-15 and 2015-16 on merits within three months; no opinion expressed on substantive merits; no costs.

Ex-parte assessment order - principles of natural justice - service by email / inoperative email address - quashing and remand for fresh consideration - opportunity of personal hearing

Ex-parte assessment order - service by email / inoperative email address - principles of natural justice - opportunity of personal hearing - quashing and remand for fresh consideration - Validity of the assessment and related notices issued and acted upon when communications were sent to an email address that had become defunct, and whether the ex parte order violated principles of natural justice. - HELD THAT: - The court found on the material on record that notices and other communications from the respondents were sent to an email address which had become defunct/inoperative, and consequently the petitioner had no knowledge of those communications and no occasion to reply or to produce objections and documents. The inability to respond arose from bonafide reasons and unavoidable circumstances; as a result the respondents proceeded to pass an ex parte assessment order without affording the petitioner a reasonable opportunity of being heard. That procedure offended the principles of natural justice. In these circumstances the impugned assessment order and the related demand and penalty notices were liable to be set aside and the matter remitted to the assessing officer for fresh consideration after giving the petitioner an opportunity to file objections, produce documents and to be heard personally in accordance with law. [Paras 5, 6]

Impugned assessment order and the related demand and penalty notices quashed; matter remitted to the Assessment Officer for fresh consideration after affording the petitioner an opportunity to file objections, produce documents and for personal hearing.

Final Conclusion: Petition allowed; the ex parte assessment order dated 19.04.2021 and the related demand and penalty notices are quashed and the matter is remitted to the assessing authority for reconsideration afresh after giving the petitioner an opportunity to file objections, produce documents and for personal hearing in accordance with law.

Return of seized documents - representation for return of documents - search and seizure under section 132 of the Income Tax Act - retention of true photostat copies - affidavit of undertaking against alteration of documents - power to retain documents for ongoing proceedings

Return of seized documents - representation for return of documents - search and seizure under section 132 of the Income Tax Act - Petitioner entitled to seek return of documents seized during the search on 21.07.2009 by submitting a representation and respondents obliged to consider that representation. - HELD THAT: - The Court recorded that documents, books of account and other material were seized during the search of 21.07.2009 and that the petitioner has made repeated requests for their return. Rather than ordering immediate release, the Court directed a procedural route: the petitioner is granted liberty to submit a representation seeking return of the seized documents and the respondents are directed to take necessary steps to address that representation. This preserves the respondents' duty to consider the claim while providing the petitioner a clear remedy to invoke administrative consideration of return. [Paras 5, 6]

Petitioner permitted to submit a representation for return of seized documents and respondents directed to consider and address that representation.

Retention of true photostat copies - power to retain documents for ongoing proceedings - Respondents may return the seized documents after retaining true photostat copies for the purposes of the proceedings and must do so within a fixed time upon receipt of the representation. - HELD THAT: - Balancing the petitioner's need for the documents for business and the respondents' requirement to preserve material for ongoing proceedings, the Court directed that respondents shall return all seized documents after retaining true photostat copies 'in accordance with law'. The Court imposed a timeline for action, directing respondents to complete the process within three weeks from receipt of the petitioner's representation, thereby providing a concrete mechanism and temporal certainty for compliance. [Paras 5, 6]

On submission of the representation, respondents to retain true photostat copies and return the seized documents within three weeks.

Affidavit of undertaking against alteration of documents - return of seized documents - Return of documents to the petitioner is subject to filing an affidavit undertaking that the documents will not be altered and will be produced when required by the respondents. - HELD THAT: - To safeguard the integrity of evidence while permitting physical return, the Court required the petitioner to file an affidavit undertaking that he shall not change, alter or modify the documents so returned and that he will produce them as and when notified by the respondents. This condition operates as a safeguard enabling release without prejudicing the respondents' ability to rely on the material in ongoing proceedings. [Paras 5, 6]

Return of documents conditioned upon petitioner filing an affidavit undertaking against alteration and agreeing to produce documents when called for.

Final Conclusion: The petition is disposed of by granting the petitioner liberty to submit a representation for return of documents seized on 21.07.2009; upon such representation the respondents shall, within three weeks, return the documents after retaining true photostat copies and subject to the petitioner's affidavit undertaking not to alter the documents and to produce them when required.

Time limit for disposal by the Settlement Commission under Section 245D(4A) - abatement of settlement application by operation of Section 245HA(1)(iv) - limited applicability of Star Television News Ltd. to applications filed before 01.06.2007 - principles of natural justice and reasonable opportunity in adjudicatory proceedings

Time limit for disposal by the Settlement Commission under Section 245D(4A) - abatement of settlement application by operation of Section 245HA(1)(iv) - Validity of the Settlement Commission's order dated 27.05.2016 where the order was passed after the period prescribed by Section 245D(4A) and whether the application abated. - HELD THAT: - The Court examined the dates and limitation framework under Section 245D(4A) and concluded that the period for disposal ran for eighteen months from the end of the month in which the application was made. Having accounted for the period during which an interim stay operated, the last date for disposal was 10.12.2015. The Settlement Commission's final order dated 27.05.2016 was therefore beyond the prescribed limitation. The Court considered the decision in Star Television News Ltd. and held that that ruling applies to applications made before 01.06.2007 and is not apposite to applications filed thereafter. On the facts, the Settlement Commission's order was rendered after the limitation period and the Single Judge correctly treated the effect of the delay in the context of abatement under Section 245HA(1)(iv). [Paras 8, 9, 15]

The Settlement Commission's order dated 27.05.2016 was passed beyond the prescribed period and the Single Judge was right in quashing the order on the legal grounds explained.

Principles of natural justice and reasonable opportunity in adjudicatory proceedings - Whether the learned Single Judge erred in deciding the writ petitions on merits without issuing notice to the Settlement Commission and thereby violating principles of natural justice. - HELD THAT: - The Revenue contended that no reasonable opportunity was given on merits because its objections had been limited to an interim prayer; the Court noted that the Revenue (through its counsel) participated in the proceedings and the matter was argued at length. The Single Judge considered submissions from both sides and proceeded to decide the petitions on merits. There was no jurisdictional error or breach of natural justice in the Single Judge entertaining and deciding the petitions under the circumstances recorded. [Paras 5, 17]

No infirmity for want of notice or violation of natural justice; the Single Judge did not commit a jurisdictional error in hearing and deciding the writ petitions on merits.

Final Conclusion: The writ appeal is dismissed; the order of the Single Judge allowing the writ petitions and quashing the Settlement Commission's orders is affirmed.

Deductibility of employees' contribution to provident fund/ESI under Section 36(1)(va) - payment-based allowance under Section 43B - entitlement to deduction where contribution paid on or before due date for furnishing return under Section 139(1) - prospective application of Finance Act, 2021 amendments to Section 36(1)(va) and Section 43B - binding effect of jurisdictional High Court precedent

Deductibility of employees' contribution to provident fund/ESI under Section 36(1)(va) - payment-based allowance under Section 43B - entitlement to deduction where contribution paid on or before due date for furnishing return under Section 139(1) - binding effect of jurisdictional High Court precedent - Employees' contribution to PF and ESI paid by the assessee before the due date for furnishing the return under Section 139(1) is allowable as a deduction for A.Y. 2019-2020. - HELD THAT: - The Tribunal followed the binding decision of the jurisdictional High Court in Essae Teraoka Pvt. Ltd. v. DCIT, which held that the term "contribution" in clause (b) of Section 43B includes both employer's and employee's contributions and that if such contribution is deposited on or before the due date for furnishing the return under Section 139(1), the employer is entitled to deduction. Applying that precedent to the facts, where the assessee remitted the employees' contribution to PF and ESI prior to the Section 139(1) due date for AY 2019-2020, the Tribunal held the payments satisfy the requirement for allowance and deleted the disallowance made by the Assessing Officer. The Tribunal treated the jurisdictional High Court's ruling as binding and dispositive of the deductibility question in this appeal.

Deduction allowed; disallowance deleted.

Prospective application of Finance Act, 2021 amendments to Section 36(1)(va) and Section 43B - prospective effect of tax amendments - The amendments made by the Finance Act, 2021 to Section 36(1)(va) and Section 43B are not applicable to assessment year 2019-2020. - HELD THAT: - The Tribunal examined whether the Finance Act, 2021 insertions amount to clarificatory retrospective amendments. Relying on authority that a provision said to remove doubts cannot be read as retrospective if it alters the earlier legal position, and on several tribunal decisions to the same effect, the Tribunal concluded that the 2021 amendments alter the law adversely to the assessee and are effective from 01.04.2021 (applicable from A.Y. 2021-22). Consequently, those amendments do not apply to AY 2019-2020 and cannot be invoked to deny the deduction for payments made before the Section 139(1) due date.

Amendments held prospective and inapplicable to AY 2019-2020.

Final Conclusion: Following the jurisdictional High Court precedent, the Tribunal allowed the assessee's claim and deleted the disallowance for late remittance of employees' contribution to PF and ESI for A.Y. 2019-2020; the Finance Act, 2021 amendments to Section 36(1)(va) and Section 43B were held prospective and inapplicable to the assessment year under appeal.

Exemption under section 11 - Registration under section 12AA and its retrospective effect for pending assessment years - Second proviso to section 12A(2) concerning benefit to preceding assessment years where assessment proceedings are pending - Commencement and pendency of assessment proceedings - Assessment proceedings commence with the filing of return - Remand for determination of quantum of exemption

Registration under section 12AA and its retrospective effect for pending assessment years - Second proviso to section 12A(2) concerning benefit to preceding assessment years where assessment proceedings are pending - Commencement and pendency of assessment proceedings - Assessment proceedings commence with the filing of return - Whether registration granted subsequently by CIT(E) under section 12AA operates for the assessment year 2016-17 by virtue of the second proviso to section 12A(2) where assessment proceedings were pending on the date of registration. - HELD THAT: - The Tribunal examined the second proviso to section 12A(2), which confers the benefit of registration to preceding assessment years for which assessment proceedings are pending on the date of registration. The authorities below interpreted 'assessment proceedings' as commencing only upon issuance of notice under section 143(2) and therefore denied exemption since such notice was issued after registration. Relying on the ratio in Auto & Metal Engineers And Ors. v. Union of India & Ors., the Tribunal held that the process of assessment commences with the filing of the return and culminates with issuance of demand notice; issuance of notices and passing of assessment orders are parts of those proceedings. Applying that principle to the facts, the assessee filed its return on 17.01.2017 and registration under section 12AA was granted on 16.05.2017, hence assessment proceedings were pending on the date of registration and the proviso applies. The Tribunal therefore concluded, in principle, that the assessee is eligible for exemption under section 11 for AY 2016-17. [Paras 4, 5]

Registration granted on 16.05.2017 operates for AY 2016-17 as assessment proceedings were pending (having commenced with the filing of return on 17.01.2017); assessee entitled in principle to exemption under section 11.

Remand for determination of quantum of exemption - Examination of claim of exemption on merits - Whether the amount of income entitled to exemption under section 11 for AY 2016-17 should be examined by the Assessing Officer. - HELD THAT: - The AO denied exemption on the threshold by holding registration inapplicable and therefore did not examine quantum of exemption on merits. Having set aside that view, the Tribunal restored the matter to the file of the AO for a fresh examination of the claim of exemption under section 11 on merits, directing that the assessee be given a reasonable opportunity of hearing. This is a remand for determination of the quantum and other merits-related aspects by the AO. [Paras 6]

Matter remanded to the Assessing Officer to examine and determine the amount of exemption under section 11 on merits, after affording the assessee a reasonable opportunity of hearing.

Final Conclusion: Appeal allowed in part: benefit of registration under section 12AA held applicable to AY 2016-17 (registration on 16.05.2017 while assessment proceedings were pending having commenced with filing of return on 17.01.2017); matter remanded to the AO for adjudication of the quantum of exemption under section 11.

Claim for deduction under section 54B - power of appellate authority to entertain fresh or additional claims - assessing officer's limitation to entertain new claims without revised return - inadvertent omission and bonafide belief/change of circumstances

Claim for deduction under section 54B - assessing officer's limitation to entertain new claims without revised return - power of appellate authority to entertain fresh or additional claims - inadvertent omission and bonafide belief/change of circumstances - Whether the Commissioner (Appeals) was within jurisdiction in allowing deduction under section 54B though the claim was not made in the return of income - HELD THAT: - The Tribunal observed that an assessee ordinarily cannot raise a fresh claim for deduction before the Assessing Officer except by filing a revised return, and the Assessing Officer was therefore justified in declining to entertain the claim made simpliciter during assessment proceedings. However, relying on settled precedents the Tribunal held that the appellate authorities have plenary jurisdiction to entertain additional claims or grounds and may permit a new claim where the omission was bona fide or arose from a change of circumstances. In the present case the assessee filed returns under a bona fide belief that the land sale was not chargeable to tax; only after the A.O. held the land to be a capital asset did the claim for reinvestment exemption under section 54B arise. The Tribunal found the omission to claim 54B to be inadvertent and the CIT(A) to have rightly exercised its discretion and jurisdiction in admitting and allowing the claim, directing the A.O. to give effect to the deduction. The Tribunal confined its adjudication to the limited question of jurisdiction to allow the claim before the appellate authority and did not disturb the Assessing Officer's exercise of power at the assessment stage. [Paras 7, 8]

The CIT(Appeals) was within jurisdiction to entertain and allow the assessee's deduction under section 54B though not claimed in the return; the revenue's appeal is dismissed.

Final Conclusion: The Tribunal upheld the CIT(Appeals) order permitting the assessee's deduction under section 54B despite non-claim in the return, ruling that the Assessing Officer could rightly refuse the claim at assessment but the appellate authority properly exercised its jurisdiction and discretion to admit and allow the claim; the revenue's appeal and the assessee's cross-objection are dismissed.

Deductibility of employees' contribution to ESI/PF under section 43B - payment before due date of filing return under section 139(1) - interpretation of Explanation to section 36(1)(va) and Explanation 5 to section 43B - non-retrospective application of Finance Act, 2021 amendments

Deductibility of employees' contribution to ESI/PF under section 43B - payment before due date of filing return under section 139(1) - non-retrospective application of Finance Act, 2021 amendments - Allowability of deduction for employee contribution to ESI paid with a short delay to the statutory authority but before the due date for filing the return of income. - HELD THAT: - The Tribunal applied its earlier decision in M/s. Jana Urban Services For Transformation Pvt. Ltd. v. DCIT, holding that where the employer deposits employees' contribution to PF/ESI after the statutory due date under the social welfare enactments but on or before the due date for furnishing the return under section 139(1) of the Income-tax Act, such payment is eligible for deduction and is not hit by the proviso/explanation relied upon by the Revenue. The Tribunal rejected the Revenue's submission that amendments and explanatory notes introduced by the Finance Act, 2021 could be applied retrospectively; those amendments operate w.e.f. 1/4/2021 and therefore do not affect assessment years prior to that date. Relying on precedents and the textual distinction between obligations under PF/ESI statutes and the concession allowed by the Income-tax provisions, the Tribunal held that no disallowance was warranted where the contribution was paid before the due date of filing the return.

The disallowance made by the revenue in respect of the delayed payment of employees' ESI contribution (paid within the due date for filing return) is set aside and the deduction is allowed.

Final Conclusion: The assessee's appeal is allowed: the employee's ESI contribution paid after the statutory due date under the ESI regime but before the due date for filing the return is deductible for AY 2019-20; the Finance Act, 2021 amendments do not apply retrospectively to deny this deduction.

Allowability of interest on borrowed funds - utilisation of loan for business purpose - onus of proof and verification of utilization - disallowance based on surmise and conjecture - remand for verification and opportunity of hearing

Allowability of interest on borrowed funds - utilisation of loan for business purpose - onus of proof and verification of utilization - disallowance based on surmise and conjecture - Whether interest paid on loan taken by the assessee in his individual capacity is allowable to the proprietorship where authorities concluded the loan was diverted to a partnership without verifying utilisation - HELD THAT: - The Tribunal found that authorities below reached the conclusion of diversion to the partnership firm solely from balance-sheet figures without verifying supporting documents or how the borrowed funds were applied to the proprietorship's business. The Tribunal held that the issue of whether the loan was utilised for the business of M/s. Bright Petroleum requires examination of payments, balance sheets and other relevant documents from the year the loan was taken. A disallowance founded on surmise and conjecture was held to be unsustainable. Consequently the matter was remanded to the Commissioner (Appeals) for verification of utilisation, consideration of the details filed by the assessee, and passing of a detailed order on merits after providing the assessee a proper opportunity of being heard.

Issue remitted to the Commissioner (Appeals) for fresh verification of utilisation of the loan and for adjudication on merits after giving the assessee proper opportunity to produce evidence; appeal allowed for statistical purposes.

Final Conclusion: The Tribunal set aside the disallowance of interest as being based on conjecture, remitted the matter to the Commissioner (Appeals) for verification of utilisation of the loan and a fresh, reasoned decision after affording the assessee an opportunity of hearing; appeal allowed for statistical purposes.

Detention Certificate - liability for demurrage/detention where delay not attributable to the importer - technical glitch in ICEGATE / failure to upload NOC - Bill of Entry (Electronic Integrated Declaration and Paperless Processing) Regulations, 2018 - C.B.E.C. instruction dated 01.12.1976 on issuance of detention certificate - obligation of concerned agencies to transmit Release Orders (RO) electronically

Detention Certificate - technical glitch in ICEGATE / failure to upload NOC - liability for demurrage/detention where delay not attributable to the importer - Entitlement to a Detention Certificate where delay in uploading a No Objection Certificate (NOC) by the concerned department caused detention and demurrage, and the delay was not the importer's fault. - HELD THAT: - The Court found that the system of filing and assessment is electronic and operates through ICEGATE under the 2011 and 2018 Regulations. The Plant Protection, Quarantine and Storage Department had issued the NOC on 14.05.2020 but it was not uploaded on ICEGATE until 25.05.2020 for reasons not attributable to the petitioner. The Court held that an importer cannot be saddled with detention and demurrage costs caused by technical glitches or failures in uploading by a concerned department when no delay on the part of the importer is shown. Accordingly, the respondent's refusal to issue a Detention Certificate on the ground of a technical error was untenable where the record did not indicate any fault by the petitioner. [Paras 19, 20, 21]

The petitioner is entitled to a Detention Certificate for the period of delay caused by the failure to upload the NOC, since the delay was not attributable to the petitioner.

C.B.E.C. instruction dated 01.12.1976 on issuance of detention certificate - Bill of Entry (Electronic Integrated Declaration and Paperless Processing) Regulations, 2018 - obligation of concerned agencies to transmit Release Orders (RO) electronically - Whether the C.B.E.C. instruction of 01.12.1976 on issuance of detention certificates remains applicable in the context of electronic filing and online inter-departmental transmission under the 2018 Regulations. - HELD THAT: - The Court observed that the 1976 circular, though issued in a manual filing era, continues to be relevant and its benefit can be applied mutatis mutandis to the electronic regime. The electronic process envisages transmission of the Bill of Entry details to the concerned agencies and receipt of online Release Orders which are integrated into ICES/ICESGATE. Where a delay in the online transmission/uploading by the concerned agency causes detention, the rationale of the 1976 instruction permitting issuance of detention certificates for Customs-caused delays applies to the present electronic framework. [Paras 15, 16, 22]

The 01.12.1976 C.B.E.C. instruction on issuance of detention certificates is applicable mutatis mutandis to the online Bill of Entry regime; thus the petitioner can claim its benefit where delay was caused by the department's failure in the electronic process.

Final Conclusion: Writ petition allowed; the impugned communication rejecting issuance of a Detention Certificate is quashed and the respondent is directed to issue the Detention Certificate to the petitioner within thirty days of receipt of this order.

Duty drawback - use of imported materials in manufacture for export - Section 75 of the Customs Act, 1962 - non-speaking order - remand for fresh speaking order - Kar Vivad Samadhan Scheme (KVSS) - conversion of DEEC (Advance Licence) shipping bills into drawback shipping bills

Duty drawback - use of imported materials in manufacture for export - Section 75 of the Customs Act, 1962 - conversion of DEEC (Advance Licence) shipping bills into drawback shipping bills - Entitlement to duty drawback under Section 75 in respect of the 69 shipping bills and whether the impugned order correctly applied the statutory test of 'use' of imported materials. - HELD THAT: - The Tribunal observed that Section 75 permits drawback only where imported materials were used in the manufacture of exported goods. The appellant maintained that the exports under the 69 shipping bills (November 1992 to May 1993) were effected using indigenous raw materials and not the imported materials covered by the Advance Licences (some of which bore later dates). The impugned order does not record adequate findings on whether the imported goods were in fact used, nor does it engage with material relied on by the appellant (including an earlier appellate order referred to in the appeal memorandum). Given the absence of clear factual findings on 'use' and the possibility that seizures or prior settlements under KVSS may have affected the appellant's ability to use imported inputs, the Tribunal held that the matter requires fresh consideration and factual verification by the Commissioner with opportunity to the appellant to place relevant material on record. [Paras 7, 9]

Remitted to the Commissioner for a fresh speaking decision on entitlement to drawback under Section 75 after factual determination of whether imported materials were used in the exported goods, and after giving the appellant adequate opportunity.

Duty drawback - Section 75 of the Customs Act, 1962 - non-speaking order - remand for fresh speaking order - Validity of restricting drawback to 50% of FOB value and whether the impugned order is a speaking order. - HELD THAT: - The Tribunal found no legal justification recorded in the impugned order for restricting drawback to 50% of FOB value and held that such an approach is not in accordance with Section 75. The order was characterised as non-speaking because it failed to explain the basis for the 50% limitation and did not address materials and contentions placed by the appellant. For these reasons the Tribunal concluded that the impugned order is unsustainable on account of inadequate reasoning and directed reconsideration by the Commissioner in a speaking order. [Paras 8, 9]

Impugned restriction of drawback to 50% of FOB value set aside as unsupported; order held to be non-speaking and remitted for fresh, reasoned decision.

Final Conclusion: The impugned Order-in-Original is set aside and the appeal is allowed by way of remand; the matter is returned to the Commissioner for a fresh speaking decision on entitlement to drawback under Section 75 (including the question of use of imported materials and any effect of prior KVSS settlement), after affording the appellant adequate opportunity; all other contentions are left open.

Rectification of mistake application - penalty under Section 114 of the Customs Act, 1962 - knowledge of offending goods as prerequisite for imposition of penalty - KYC obligations of customs brokers - customs broker licensing obligations - negligence or lack of vigilance by customs house agents

Rectification of mistake application - RoM application for correction of the Final Order dismissed - HELD THAT: - The application sought rectification of an observation in the Tribunal's Final Order that the appellant had "similarly facilitated the export of about eight consignments". The Tribunal examined the record of the appellant's past dealings, the manner in which KYC documents were received through freight forwarders, and the fact that the appellant had not personally met the exporter or its representatives despite handling prior consignments. On this factual matrix the Tribunal concluded that the impugned observation was supported by the record and there was no demonstrable mistake requiring rectification. The applicant's contentions regarding adequacy of KYC and absence of obligation to physically meet the exporter were considered but did not establish an error in the Final Order.

RoM application dismissed; no error found in the Final Order

Penalty under Section 114 of the Customs Act, 1962 - knowledge of offending goods as prerequisite for imposition of penalty - negligence or lack of vigilance by customs house agents - Findings that element of negligence/lack of vigilance by the customs broker justified penalty reduction rather than complete exoneration affirmed - HELD THAT: - The Tribunal reaffirmed its earlier approach that although the appellants did not make profit from the attempted export of prohibited goods, there was an element of negligence or want of vigilance on the part of the customs broker. The Tribunal noted precedent treating knowledge of offending goods as a pre-requisite for imposition of penalty, but on facts concluded that the appellant's conduct-receiving KYC through intermediaries, never meeting exporter or its representatives-amounted to negligence that facilitated the attempted export. The earlier order reducing the penalty was founded on these factual findings and legal approach; the Review application did not show error in that reasoning.

Tribunal's findings of negligence/vigilance affirmed and no interference warranted

KYC obligations of customs brokers - customs broker licensing obligations - Observation that appellants were duty bound to observe KYC norms and assist compliance with Customs Broker Licensing Regulation, 2013 upheld - HELD THAT: - The Tribunal considered the contention that KYC norms do not mandate personal meeting or inspection of packing and found that, notwithstanding documentary compliance, the appellants had placed reliance on intermediaries and had not obtained documents directly from the exporter. On these facts the Tribunal held that the appellants remained bound to observe KYC norms and assist in compliance with licensing obligations and that their failure in vigilance supported the Final Order's observation.

Observation on duty to observe KYC norms and assist compliance upheld

Final Conclusion: The rectification application is without merit and is dismissed; the Tribunal finds no error in its Final Order and affirms its factual and legal conclusions regarding the customs broker's KYC obligations and the element of negligence that warranted the penalty outcome previously recorded.

Mis-declaration of country of origin - confiscation for goods not corresponding with declared particulars - penalty liability without mens rea and mitigation of redemption fine and penalty - transaction value and inclusion of freight and insurance where sale is on CFR terms - acceptance of authentic foreign commercial documents as basis for Bill of Entry - refund of security deposit and Board circular prohibiting withholding of refund pending appeal without stay

Mis-declaration of country of origin - confiscation for goods not corresponding with declared particulars - penalty liability without mens rea and mitigation of redemption fine and penalty - acceptance of authentic foreign commercial documents as basis for Bill of Entry - Whether the respondents were guilty of mis-declaration of country of origin and whether confiscation and penalties were justified - HELD THAT: - The Tribunal accepted the Commissioner's finding that the vessel's master and crew had manipulated country-of-origin documents, but found no material to show that the respondents or their officers had prior knowledge or intent to mis-declare. The respondents had acted on a Certificate of Origin issued by the Chambers of Commerce and Industry, Abu Dhabi, and the Department did not seek clarification or cancellation from the issuing authority. While Section 111(m) applies to goods not corresponding with declared particulars and does not require proof of mens rea, the absence of mens rea permits reduction of consequential sanctions. Applying these principles, the Tribunal reduced the redemption fine and the penalty to amounts commensurate with the lack of intent, upholding that confiscation liability may arise but penalties and redemption fines must reflect seriousness and culpability. [Paras 11, 12, 13]

Respondents not shown to have had knowledge or intent; confiscation-based consequences can attach under Section 111(m) but redemption fine and penalty reduced in view of absence of mens rea

Transaction value and inclusion of freight and insurance where sale is on CFR terms - acceptance of authentic foreign commercial documents as basis for Bill of Entry - Whether re-determination of value was warranted by treating freight and insurance as notional additions to declared value - HELD THAT: - The Tribunal found the respondents demonstrated the contract price and commercial invoice were on CFR terms to Ennore and produced documentary evidence of actual freight and insurance paid. The modest difference in distance between alleged origins could at best justify a small freight variance, which the supplier could have absorbed in the C&F price. Notional additions (large percentage freight or standard notional insurance) were unwarranted where quantifiable data of actual freight and insurance exist. Consequently the Commissioner's acceptance of the declared transaction value was legally tenable and the proposed differential duty demand was unsustainable. [Paras 14]

No re-determination of value; declared transaction value on CFR terms accepted and demand on notional freight/insurance rejected

Refund of security deposit and Board circular prohibiting withholding of refund pending appeal without stay - Whether the Commissioner (Appeals) was justified in setting aside the Assistant Commissioner's sanction of refund of the security deposit and in withholding the refund while an appeal was pending before the Tribunal - HELD THAT: - The Tribunal relied on the Board's circulars which direct that refunds should not be withheld merely because an appeal has been filed against the order granting relief, unless a stay is obtained. The respondents had deposited security and obtained sanction for refund from the Assistant Commissioner; the Commissioner (Appeals) reversed that order despite the departmental appeal being pending before the Tribunal and without stay. Retention of amounts exceeding what would finally be due was held excessive and contrary to the Board's instructions. Therefore the appeal against the Commissioner (Appeals) order was allowed. [Paras 15, 16]

Order of Commissioner (Appeals) withholding the refund set aside; refund of security deposit allowed with consequential relief as per law

Final Conclusion: Revenue appeal dismissed; redemption fine and penalty reduced to amounts commensurate with absence of mens rea; appeal by the importer against withholding of refund allowed and the impugned order set aside, with consequential relief as per law.

Proper officer - authority of the Directorate of Revenue Intelligence to issue show-cause notice under Section 28 of the Customs Act - invalidity ab initio of proceedings instituted by officers not vested with proper-officer functions - application of the Supreme Court's decision in Canon India to strike down unauthorised notices

Proper officer - authority of the Directorate of Revenue Intelligence to issue show-cause notice under Section 28 of the Customs Act - application of the Supreme Court's decision in Canon India to strike down unauthorised notices - Show-cause notices issued by the Directorate of Revenue Intelligence (DRI) under Section 28 of the Customs Act were not sustainable because officers of DRI are not 'proper officers' empowered to issue such notices. - HELD THAT: - The Tribunal applied the binding ratio of the Supreme Court in Canon India which holds that only a customs officer who has been specifically assigned the functions envisaged by Section 2(34) (the 'proper officer') can issue a notice under Section 28. The Court observed that entrustment of functions to DRI officers as 'proper officers' must be by valid exercise of statutory power, which was absent; consequently, notices issued by the Additional Director General of DRI lacked authority. The Tribunal further relied on subsequent High Court and Tribunal decisions following Canon India and concluded that proceedings initiated by DRI in the present matters are invalid ab initio and cannot sustain. [Paras 7, 10, 11]

The show-cause proceedings and the consequential orders founded on notices issued by DRI are invalid and are set aside.

Final Conclusion: Following the Supreme Court's decision in Canon India and consistent subsequent authorities, the Tribunal held that the DRI lacked authority to issue the impugned show-cause notices under Section 28; the impugned orders were set aside and the appeals allowed with consequential relief.

Proper officer - power of re-assessment (Section 28(4)) - retrospective validation of notices - requirement that reassessment be by the original assessing officer or his successor - invalidity of show cause notice issued by officer not competent to reassess

Invalidity of show cause notice issued by officer not competent to reassess - invalidity of consequential confiscation and penalties - The show cause notice issued by the Commissioner of Customs (Preventive) New Delhi, who had not performed the original assessments, was not competent to initiate proceedings under Section 28 and the consequential orders of reassessment, confiscation and penalties could not be sustained. - HELD THAT: - The Tribunal examined the foundation of the adjudication which rested entirely on a demand under Section 28(4) for alleged mis-declaration of value. Relying on the principle that the power to re-open and reassess an assessment under Section 28 is an administrative review power exercisable by the officer who made the original assessment or his successor, the Tribunal held that a notice issued by an officer who had not been the assessing officer is without jurisdiction. The Tribunal referred to the line of authority culminating in Cannon India which construes the statutory power as vested in 'the' proper officer (i.e., the assessing officer) and not in any other officer even if designated as a proper officer. Since the Commissioner (Preventive) conceded that he had not done the original assessments, the notice and the impugned order confirming differential duty, confiscation and penalties founded on that notice were unsustainable. [Paras 5, 13, 16]

The demand, and the consequent confiscation and penalties based on the impugned order, are set aside.

Retrospective validation of notices - power of re-assessment (Section 28(4)) - requirement that reassessment be by the original assessing officer or his successor - The retrospective amendment contained in Section 28(11) does not negate the principle that reassessment under Section 28(4) must be undertaken by the officer who performed the original assessment (or his successor); the Tribunal applied Cannon India and related authority to determine competence in the present case. - HELD THAT: - The Tribunal acknowledged the insertion of sub-section (11) in Section 28, and that its constitutional validity has been considered in earlier litigation; however, the Tribunal treated the controlling precedent in Cannon India as establishing that where the statute contemplates reassessment by 'the proper officer', that power must be exercised by the officer who carried out the original assessment or his successor. The Tribunal observed that retrospective validation did not permit an officer of a different cadre or department who had not done the original assessment to re-open that assessment. On the conceded factual position that the preventive authority issuing the notice had not done the original assessments, the Tribunal found the Section 28 proceedings unsustainable notwithstanding the amendment. [Paras 8, 11, 12, 13]

Section 28(11)'s existence does not cure the lack of jurisdiction where reassessment is attempted by an officer other than the original assessing officer; accordingly the proceedings fail.

Final Conclusion: The appeal is allowed; the impugned order dated 7.6.2018 confirming reassessment, differential duty, confiscation and penalties is set aside and consequential relief, if any, shall follow.

Recognition of accrued interest as a liability - limitation and extension by part payment - acknowledgement by entries in balance sheet - abandonment by prolonged silence - admissibility of creditor's claim in CIRP

Recognition of accrued interest as a liability - abandonment by prolonged silence - admissibility of creditor's claim in CIRP - Whether the Resolution Professional/Adjudicating Authority was justified in rejecting the interest component of the creditor's claim - HELD THAT: - The Tribunal recorded that the facts admitted before it included (a) absence of recognition of the claimed interest in the audited financial statements of either party, (b) mismatch between the ledger/claim and the corporate debtor's tally/audited data, (c) no booking of interest as an expense by the corporate debtor and no corresponding recognition as income by the creditor, (d) no TDS having been deducted, and (e) an inordinate delay of nine years in recognising the interest. Applying the principle upheld by the Supreme Court in Urvashi Aggarwal that prolonged silence may amount to abandonment, the Tribunal held that those admitted facts justified the Adjudicating Authority's rejection of the interest claim. On this basis the Adjudicating Authority's conclusion that the claimed interest could not be admitted as a liability in the CIRP was affirmed. The Tribunal found no illegality in the Adjudicating Authority's exercise of discretion in rejecting the interest component and therefore declined to interfere. [Paras 18, 19]

The Adjudicating Authority rightly rejected the interest component of the claim; the rejection is affirmed.

Final Conclusion: The appeal is dismissed and the impugned order rejecting the interest component of the claim is affirmed; no interference with the Adjudicating Authority's decision.

Interim moratorium under Section 96(1)(a) of the Insolvency and Bankruptcy Code - Demand Notice in Form B under rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 - Appointment of Resolution Professional under Section 97 of the Insolvency and Bankruptcy Code - Powers and duties of the Resolution Professional under Section 99 of the Insolvency and Bankruptcy Code

Interim moratorium under Section 96(1)(a) of the Insolvency and Bankruptcy Code - Interim moratorium in respect of debts of the personal guarantor commenced on the date of filing of the application and shall cease on the date of admission. - HELD THAT: - The Tribunal recorded that upon filing of the application under Section 95, the interim-moratorium as provided by Section 96(1)(a) becomes effective in relation to all debts of the personal guarantor. During this period pending admission, specified actions are prohibited, including the stay of pending legal proceedings in respect of any debt of the personal guarantor and prohibition on initiation of new legal proceedings by creditors, subject to notified exceptions by the Central Government in consultation with financial sector regulators. The order applies from filing until admission, as stated in the judgment. [Paras 9]

Interim moratorium operates from filing of the application until its admission; listed prohibitions apply during the interim period.

Demand Notice in Form B under rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 - A Demand Notice in Form B under rule 7(1) was issued by the financial creditor to the personal guarantor in respect of the unpaid debt of the corporate debtor. - HELD THAT: - The Tribunal recorded that the Financial Creditor, DBS Bank India Limited, issued a Demand Notice in Form B on 21.01.2021 to the personal guarantor pursuant to rule 7(1) of the Personal Guarantors Rules, in respect of the unpaid debt due from the corporate debtor. The total debt attributable to the personal guarantee as per Part-III of Form C was also recorded in the plaint. These factual findings support the foundation of the application under Section 95. [Paras 7, 8]

Demand Notice in Form B was issued and the claimed debt by way of personal guarantee is recorded in the application.

Appointment of Resolution Professional under Section 97 of the Insolvency and Bankruptcy Code - Ms. Ritu Rastogi is appointed as Resolution Professional for the insolvency resolution process of the personal guarantor. - HELD THAT: - The Tribunal noted the proposal of the Financial Creditor for appointment of Ms. Ritu Rastogi, including her registration details and the absence of disciplinary proceedings against her. Exercising the authority under Section 97, and subject to applicable IBBI Regulations, the Tribunal appointed Ms. Ritu Rastogi as the Resolution Professional for the present application. [Paras 10]

Appointment of Ms. Ritu Rastogi as Resolution Professional is confirmed, subject to relevant IBBI Regulations.

Powers and duties of the Resolution Professional under Section 99 of the Insolvency and Bankruptcy Code - The Resolution Professional shall exercise powers under Section 99 and submit recommendations under Section 99(7) within the time stipulated by the Code. - HELD THAT: - The Tribunal directed that the appointed Resolution Professional shall exercise all powers conferred by Section 99 of the Code, read with applicable rules, and specifically directed her to make written recommendations with reasons for acceptance or rejection of the application within the time contemplated by Section 99. The RP is also required to furnish a copy of the report under sub-section (7) of Section 99 to the Applicant/Creditor upon filing before the Authority. [Paras 11]

Resolution Professional to exercise Section 99 powers and file the report with reasons, providing a copy to the financial creditor.

Service of orders and case management - The Applicant and Registry were directed to serve the order and documents on the Resolution Professional, and the matter was listed for further proceedings on the specified date. - HELD THAT: - To ensure compliance and continuance of the insolvency resolution process, the Tribunal directed immediate service of the order along with the application and documents on the appointed Resolution Professional. The Tribunal also fixed a date for further proceedings to enable the RP's report and subsequent actions in the statutory timeline. [Paras 12, 13]

Order and documents to be served on the Resolution Professional; matter listed for further proceedings on the specified date.

Final Conclusion: The Tribunal recorded issuance of the statutory Demand Notice, held that the interim moratorium in favour of the personal guarantor operates from filing until admission, appointed Ms. Ritu Rastogi as Resolution Professional subject to IBBI Regulations, directed her to exercise Section 99 powers and file recommendations within the prescribed time, ordered immediate service of the order and documents on the RP, and listed the matter for further proceedings.

Pre-existing dispute under Section 5(6) of the Insolvency and Bankruptcy Code - maintainability of application under Section 8 of the Insolvency and Bankruptcy Code - dead on arrival (DoA) return and manufacturer's DoA policy as ground of dispute - rejection of initiation of Corporate Insolvency Resolution Process where a pre-existing dispute exists

Pre-existing dispute under Section 5(6) of the Insolvency and Bankruptcy Code - dead on arrival (DoA) return and manufacturer's DoA policy as ground of dispute - Section 8 demand notice under the Insolvency and Bankruptcy Code - Whether the petition filed under Section 8 of the IBC by the operational creditor is maintainable in view of a pre-existing dispute concerning return of DoA goods and the manufacturer's rejection. - HELD THAT: - The Tribunal considered the reply to the demand notice and documentary material produced by the corporate debtor including an email from the manufacturer dated 22.02.2019 rejecting the DoA claims on the ground that the products were beyond the 12 month period prescribed by the manufacturer's DoA policy. The corporate debtor had relied upon that communication in its response to the demand notice dated 02.08.2019. The Tribunal held that the existence of that correspondence and the manufacturer's adverse finding demonstrates a pre-existing dispute as contemplated by Section 5(6) of the Code. Having found a pre-existing dispute in relation to the quality/returnability of the goods and the claim therefore, the petition under Section 8 could not be maintained. The Tribunal therefore declined to accept the operational creditor's contention that the corporate debtor had admitted the debt such as to oust the dispute; the material produced by the corporate debtor raised a legitimate dispute on the merits prior to the demand notice. [Paras 12, 13, 14]

The application for initiation of Corporate Insolvency Resolution Process is not maintainable and is dismissed.

Final Conclusion: The Tribunal dismissed the Section 8 petition, holding that a pre-existing dispute regarding DoA returns and the manufacturer's rejection existed prior to the demand notice, and therefore CIRP initiation was not maintainable; no order as to costs.

Maintainability and pecuniary jurisdiction - admissibility of electronic evidence under Section 65-B of the Evidence Act - acknowledgment of debt and authority to bind a company - financial creditor and financial debt within the meaning of Section 5(8) of the IBC - requirement of proof of time value of money for classification as financial debt - precedential value of coordinate Tribunal benches and judicial discipline

Maintainability and pecuniary jurisdiction - The application is not maintainable before this Tribunal as the disputed amount falls below the pecuniary threshold applicable to this Bench and the petitioner failed to prove earlier presentation before another Bench prior to the notification raising the threshold. - HELD THAT: - The petition was filed on 10.11.2020 after notification dated 24.03.2020 which raised the Tribunal's pecuniary jurisdiction. The petitioner contended earlier filing before the NCLT Hyderabad Bench and return of that filing, which, if proved, might have preserved the earlier filing date. However, the petitioner failed to produce evidence of such prior presentation and return. In consequence, the disputed amount falls below the pecuniary jurisdiction of this Tribunal as governed by the notification and the application is liable to be rejected on that ground.

Petition dismissed for want of maintainability on pecuniary jurisdiction ground.

Admissibility of electronic evidence under Section 65-B of the Evidence Act - acknowledgment of debt and authority to bind a company - WhatsApp messages relied on by the petitioner were not admissible proof of an acknowledgment of debt by the corporate debtor. - HELD THAT: - The Tribunal applied the binding requirement that electronic records offered in evidence must be accompanied by the certificate mandated by Section 65-B of the Evidence Act as interpreted by the Supreme Court, and held that secondary evidence cannot be admitted otherwise. Further, the messages were attributed to P.V. Narasimha Rao, but the petitioner did not prove that Rao was a director or shareholder with authority to bind the corporate debtor on the date of the messages. Section 20 of the Companies Act (service by electronic mode) does not obviate the Section 65-B certificate requirement for admissibility of electronic evidence. For these reasons the WhatsApp communications could not be accepted as evidentiary acknowledgment of debt.

Electronic WhatsApp messages excluded; they do not constitute admissible acknowledgement binding the company.

Financial creditor and financial debt within the meaning of Section 5(8) of the IBC - requirement of proof of time value of money for classification as financial debt - precedential value of coordinate Tribunal benches and judicial discipline - The petitioner failed to establish that the amount advanced to the corporate debtor constituted a financial debt and that the petitioner is a financial creditor under Section 5(8) of the IBC; the petition must therefore be dismissed on that ground as well. - HELD THAT: - Section 5(8) requires that a debt be disbursed against consideration for the time value of money to qualify as a financial debt. The petitioner did not adduce evidence demonstrating that the amount given to the corporate debtor was a loan or otherwise disbursed for the time value of money. The Tribunal observed that identical petitions earlier filed before the NCLT Hyderabad Bench were dismissed for failure to prove financial debt, and this Tribunal expressed no disagreement with that conclusion. Absent proof that the transaction had the commercial character of borrowing or that interest/time value of money was the consideration, the advance cannot be treated as a financial debt under Section 5(8).

Petition dismissed for failure to establish status as financial creditor and absence of financial debt.

Final Conclusion: The petition seeking initiation of CIRP is dismissed: it is not maintainable before this Bench for want of pecuniary jurisdiction, the electronic WhatsApp messages relied upon are inadmissible and do not constitute acknowledgment by the corporate debtor, and the petitioner has failed to prove that the amount advanced qualifies as a financial debt under Section 5(8) of the IBC.

Grant of bail under Section 45 of the Prevention of Money Laundering Act - twin conditions for bail - stand-alone offence of money laundering - jurisdiction and power under Section 319 Cr.P.C. to summon additional accused - stay of proceedings by the Supreme Court - personal liberty under Articles 14 and 21

Grant of bail under Section 45 of the Prevention of Money Laundering Act - twin conditions for bail - stay of proceedings by the Supreme Court - Whether the petitioner should be released on bail notwithstanding the amended twin conditions in Section 45 of the PML Act and pending adjudication of substantial questions by the Supreme Court - HELD THAT: - The High Court held that because substantial questions regarding the validity/effect of the post-Nikesh amendment to Section 45 and concurrent orders under Section 319 Cr.P.C. remain pending before a larger Bench of the Supreme Court, and an unvacated stay of trial proceedings exists, it is not appropriate at this stage to fetter the petitioner's personal liberty by denying bail. The Court noted divergent views in various courts on the resurrection of the twin conditions and observed that absent a final conclusion by the Supreme Court the rule favouring grant of bail applies. The Court further recorded that the prosecution has not shown any likelihood of the petitioner fleeing or tampering with evidence such as would warrant refusal of bail. In view of these factors the petition was allowed and bail granted subject to specified conditions. [Paras 16, 17, 29, 31, 32]

Bail granted to the petitioner subject to conditions including furnishing bonds/sureties, surrender of passport, reporting requirements and restrictions on travel and tampering with evidence.

Stand-alone offence of money laundering - personal liberty under Articles 14 and 21 - Whether the offence under the PML Act must be treated as independent of the scheduled predicate offence for purposes of granting bail when the same persons are alleged to have committed both offences - HELD THAT: - The Court analysed the distinction between situations where the offender in the scheduled offence is different from the offender in the money laundering offence and situations where the offenders are common. While prior authorities recognise money laundering as a stand alone offence when offenders differ, the Court found that where the same persons are implicated in both the predicate offence and the PML offence and where the trial and connected proceedings (including orders under Section 319 Cr.P.C.) are in flux pending the Supreme Court's determination, the PML provisions cannot be regarded as prima facie independent for the purpose of denying bail. Given the interlinkage and the unvacated stay on concurrent orders, the Court declined to form an objective conclusion that the petitioner had committed the offence under the PML Act. [Paras 13, 15, 22, 23]

On the facts where alleged offences and accused are interlinked and pending higher court adjudication, the Court refused to treat the PML offence as independently justifying denial of bail.

Jurisdiction and power under Section 319 Cr.P.C. to summon additional accused - stay of proceedings by the Supreme Court - Whether the investigating agency can move for commitment of the scheduled offence to the Special Court (under Section 44(c) PML Act) and thereby enable trial on PML charges while concurrent 319 Cr.P.C. orders and appeals stay remain undecided - HELD THAT: - The Court observed that clause (c) of Section 44(1) mandates that where the court which took cognizance of the scheduled offence is different from the Special Court that took cognizance of the PML complaint, the scheduled offence must be committed to the Special Court on application. However, given the unvacated Supreme Court stay of proceedings and unresolved substantial questions about the exercise of power under Section 319 Cr.P.C., the Court held that, prima facie, the authorised officer cannot validly proceed to move for commitment to the Special Court in a manner that would render clause (c) otiose. The observation was limited to the bail application context and without prejudice to the prosecution's right to move the appropriate application and the trial court's right to adjudicate according to law. [Paras 20, 21]

Pending resolution of the Supreme Court proceedings and the existing stay, the prosecution is prima facie precluded from pressing for commitment under Section 44(c) to enable PML trial; this observation is confined to the bail context and does not bar future appropriate applications.

Final Conclusion: The High Court granted bail to the petitioner subject to conditions, holding that in view of pending substantial questions before the Supreme Court, an unvacated stay, the interlinkage between the predicate and PML offences and absence of any material showing risk of flight or tampering, it would be inappropriate to deny bail under the amended Section 45 at this stage; the observations are confined to the bail petition and do not affect trial merits.

Denial of CENVAT credit - refund under Rule 5 of the CENVAT Credit Rules, 2004 - eligibility of input services as creditable inputs - requirement of nexus between input services and output service - binding effect of CBEC D.O.F. No. 334/1/2012-TRU dated 16.03.2012 - remand for re verification and production of documents

Denial of CENVAT credit - eligibility of input services as creditable inputs - Denial of refund of unutilized CENVAT credit in respect of Car Parking Service and Interior Decorator Service was not sustainable and refund claim was to be allowed. - HELD THAT: - The Tribunal noted that in earlier decisions involving the appellant this Bench had allowed CENVAT credit in respect of, inter alia, Car Parking Service and Interior Decorator Service. Having regard to those consistent findings in the appellant's own cases, the rejection of refund qua these services in the impugned order could not be sustained. Consequently the denial of CENVAT credit in respect of Car Parking Service and Interior Decorator Service was set aside and the appellant's claim directed to be allowed. [Paras 5, 6]

Refund claim in respect of Car Parking Service and Interior Decorator Service allowed; impugned denial set aside.

Denial of CENVAT credit - refund under Rule 5 of the CENVAT Credit Rules, 2004 - requirement of nexus between input services and output service - binding effect of CBEC D.O.F. No. 334/1/2012-TRU dated 16.03.2012 - Denial of refund in respect of various input services (including update/research services, IT conference services, forex-related services, bank EEFC charges, consultancy benchmarking services and similar day-to-day business services) was contrary to CBEC guidance abolishing a separate "nexus" requirement and therefore unsustainable. - HELD THAT: - The Tribunal observed that many of the challenged services are essential to the day-to-day business and necessary for provision of output services. The First Appellate Authority had denied refund on the ground of lack of "nexus." However, the CBEC D.O.F. No. 334/1/2012-TRU dated 16.03.2012 dispensed with the separate requirement of demonstrating nexus, and that guideline is binding on adjudicating authorities. Demand for such a nexus was therefore erroneous. For these reasons the Tribunal set aside the impugned denial and allowed the refund claims in respect of the said services, with consequential benefits as per law. [Paras 6, 7]

Denial of refund on the listed input services set aside; refund allowed in light of CBEC guidance removing nexus requirement.

Remand for re verification and production of documents - Claim for refund in respect of water supply services provided by the property manager was remanded to the Adjudicating Authority for consideration upon production of supporting documents. - HELD THAT: - The appellant explained that water supply was provided under a property management agreement and used for maintenance/cleaning of the property, and invoice copies had been filed earlier. As supporting particulars were not fully considered below and the appellant sought opportunity to furnish documents, the Tribunal remanded this issue to the Adjudicating Authority to consider such documents and decide the claim afresh. [Paras 8]

Issue remanded to Adjudicating Authority for consideration of documents and fresh decision.

Remand for re verification and production of documents - Claim in respect of services of the telecom provider (M/s. Bharti Airtel Ltd.) was remanded to the Adjudicating Authority for re verification of documents and correct categorisation of the service. - HELD THAT: - The Tribunal recorded the appellant's contention that the service had been incorrectly categorised by the Adjudicating Authority as an insurance service whereas it was a telecommunication service used for provision of output services, and that relevant invoices/documents had been filed but not considered. As there was no finding on verification, the Tribunal remanded the matter to the Adjudicating Authority to re verify the claim in the light of documents produced or to be produced. [Paras 9]

Issue remanded to Adjudicating Authority for re verification and consideration of documents.

Final Conclusion: The appeal is partly allowed by setting aside the impugned denial of refund in respect of specified input services (including Car Parking and Interior Decorator Services and other business essential services where the nexus requirement was impermissibly applied) and partly remanded to the Adjudicating Authority for re verification and fresh consideration of claims supported by documents; consequential relief, if any, to follow as per law.

Governmental Authority (definition substituted by Notification No.02/2014 ST) - exemption for services to Governmental Authority under Notification No.25/2012-ST - retrospective effect of substituted definition - penalty under Section 78 - penalty under Section 77

Governmental Authority (definition substituted by Notification No.02/2014 ST) - exemption for services to Governmental Authority under Notification No.25/2012-ST - MANIT qualifies as a Governmental Authority for purposes of exemption under Notification No.25/2012-ST after the substituted definition is applied - HELD THAT: - The Tribunal found the question whether MANIT is a Governmental Authority is controlled by the reasoning in Shapoorji Paloonji & Company Pvt. Ltd. Vs. Commissioner of Customs, Central Excise & Service Tax, Patna , where the High Court held that an institute set up by an Act of Parliament or a State Legislature falls within the Governmental Authority definition notwithstanding the other conditions. Applying that authoritative decision to the facts, the Tribunal concluded that MANIT-being established by an Act of Parliament and functioning as a central institute-falls within the substituted definition of Governmental Authority and is entitled to the exemption prescribed in the notification.

MANIT is to be treated as a Governmental Authority for the purposes of the notification and the appellant's services to MANIT attract the exemption.

Retrospective effect of substituted definition - penalty under Section 78 - penalty under Section 77 - The substitution of the definition of Governmental Authority by Notification No.02/2014 ST has retrospective effect and therefore demand and penalties confirmed for April 2013 to Jan. 2014 are not sustainable - HELD THAT: - The Tribunal held that the substituted definition effected by Notification No.02/2014 ST dated 30.01.2014 operates retrospectively insofar as it substitutes the original definition from the date of the original notification, in accordance with rules of interpretation governing substitutions. Because the substituted definition applies retrospectively, the earlier finding of liability for the period April 2013 to January 2014 was erroneous. Consequentially, the confirmation of service tax demand and penalties under the cited provisions for that period could not stand.

The substituted definition is retrospective; the confirmed demand and the penalties for April 2013 to Jan. 2014 are set aside.

Final Conclusion: The appeal is allowed. The impugned order is set aside insofar as it confirmed the service tax demand and penalties for the period April, 2013 to Jan. 2014; the appellant shall receive consequential relief in accordance with law.

Imposition of penalty for suppression or misdeclaration - voluntary deposit of tax before issuance of show-cause notice as defence to penalty - benefit under Section 180 - entitlement to credit of tax deposited

Imposition of penalty for suppression or misdeclaration - voluntary deposit of tax before issuance of show-cause notice as defence to penalty - benefit under Section 180 - Whether penalties under Section 76, 77 and 78 were rightly imposed on the appellant. - HELD THAT: - The Tribunal found that there was no mala fide conduct or suppression of facts by the appellant. The appellant had deposited the tax liability prior to issuance of the show-cause notice and prior to passing of the order-in-original. In these circumstances the appellant was held to be entitled to the statutory benefit invoked (referred to as benefit under Section 180), and therefore penal consequences for suppression or delay were not attracted. Reliance on earlier Board circulars and prior departmental confusion was noted as context showing absence of deliberate evasion, and the fact of bona fide deposit before notice was treated as determinative against imposition of penalty. [Paras 5, 8]

Penalties under Section 76, 77 and 78 set aside.

Entitlement to credit of tax deposited - Whether the appellant is entitled to avail credit of the taxes deposited. - HELD THAT: - The Tribunal recorded that the appellant had deposited the tax and specifically noted the amounts as recorded in the order-in-original and the order-in-appeal. On the facts and in view of the deposit, the appellant was held entitled to credit of the taxes deposited as noticed in the impugned orders. [Paras 9]

Appellant entitled to credit of the taxes deposited.

Final Conclusion: Appeal allowed; penalties set aside and the impugned order modified to recognise entitlement to credit of taxes deposited.

Unjust enrichment - refund of duty - deposit under protest / pre-deposit - shifting and incidence of tax - credit to consumer welfare fund

Unjust enrichment - refund of duty - deposit under protest / pre-deposit - Whether the Appellant's refund claim was barred by the doctrine of unjust enrichment and whether the refund should have been credited to the consumer welfare fund. - HELD THAT: - The Tribunal found that the Commissioner (Appeals) erred in holding that the Appellant failed to overcome the bar of unjust enrichment. The Commissioner's reliance on an expansive reading of the Encyclopaedia Britannica paragraph on shifting and incidence of tax-treating the observation that "most" tax burden is passed to buyers as meaning "all" taxes necessarily shift to consumers-was unsound. The Tribunal accepted the Appellant's contention, supported by relevant High Court decisions, that deposits made during pendency of adjudication or investigation akin to a deposit under protest / pre-deposit satisfy the requirement for refund admissibility and do not automatically attract the doctrine of unjust enrichment. Applying these principles, the Tribunal concluded that the learned Commissioner (Appeals) should not have directed crediting the refund to the consumer welfare fund on the ground of unjust enrichment and that the Appellant was entitled to the refund with interest.

The finding of unjust enrichment was set aside and the refund was held payable to the Appellant.

Credit to consumer welfare fund - refund of duty - Whether the appellate order directing deposit of the refund into the consumer welfare fund should be sustained. - HELD THAT: - Given the Tribunal's conclusion that the doctrine of unjust enrichment did not apply to the Appellant's earlier deposits, the Tribunal held that the direction to credit the refund to the consumer welfare fund was incorrect. The Tribunal therefore modified the impugned order and directed that the refund amount be paid to the Appellant along with interest, observing that the Commissioner (Appeals)'s reasoning for diverting the refund to the fund was based on an erroneous interpretation and inconsistent with precedents treating deposits made during adjudication as not attracting unjust enrichment.

The direction to deposit the refund into the consumer welfare fund was set aside and replaced by a direction to pay the refund with interest to the Appellant.

Final Conclusion: The appeal is allowed; the impugned order directing deposit of the refund into the consumer welfare fund is modified and the refund is directed to be paid to the Appellant with interest within three months.

Condonation of delay - discretion to admit time-barred appeal - substantial question of law - levy of interest and penalty - validity of Rule 8(3A) of the Central Excise Rules, 2002 - appeal under Section 35G of the Central Excise Act, 1944

Condonation of delay - discretion to admit time-barred appeal - appeal under Section 35G of the Central Excise Act, 1944 - Delay of 906 days in filing the appeal was condoned. - HELD THAT: - Although the affidavit in support of the condonation petition did not satisfactorily explain the inordinate delay of 906 days, the Court exercised its discretionary power to condone the delay. The discretion was exercised because the appeal was filed by the revenue under Section 35G and the Court considered that a question of law might arise, and the appellant's counsel agreed that the appeal be heard on merits. For that reason alone the delay was condoned and the application IA NO.GA/1/2021 disposed of.

Delay condoned; IA NO.GA/1/2021 disposed.

Substantial question of law - levy of interest and penalty - No substantial question of law arises in relation to the relief granted by the Commissioner in not levying interest and penalty; the Commissioner's order is confirmed on that ground. - HELD THAT: - The Commissioner had granted relief to the assessee by refraining from levying interest under Section 11AB and penalty under the Rules, while confirming the demand of duty for clearances. The Tribunal did not examine whether the relief from interest and penalty was justified, instead deciding the appeal on the basis that Rule 8(3A) had been struck down by various High Courts. On examination, the High Court found that, on the facts, there is no question of law for consideration concerning the relief afforded by the Commissioner and therefore confirmed the Commissioner's order dated 5.2.2008 on that ground.

Order dated 5.2.2008 of the Commissioner confirmed insofar as relief from levy of interest and penalty; appeal disposed as no question of law arises.

Validity of Rule 8(3A) of the Central Excise Rules, 2002 - pending reference to Hon'ble Supreme Court - The question regarding the validity of Rule 8(3A) is left open and not decided by the High Court. - HELD THAT: - The Tribunal dismissed the revenue's appeal after observing that Rule 8(3A) had been struck down by various High Courts. However, the High Court noted that the matter as to the validity of Rule 8(3A) is pending before the Hon'ble Supreme Court (in the appeal arising from the Indsur Global Ltd. decision) and that a stay has been granted thereon. Consequently, the High Court expressly left the validity of Rule 8(3A) open and did not adjudicate upon it.

Finding on the validity of Rule 8(3A) left open pending the Supreme Court's decision.

Final Conclusion: The High Court, exercising discretion, condoned the 906 day delay to hear the revenue's appeal under Section 35G; on merits it held that no substantial question of law arose regarding the Commissioner's grant of relief from interest and penalty and accordingly confirmed the Commissioner's order and disposed of the appeal, while expressly leaving open the question of the validity of Rule 8(3A) pending the Supreme Court.

Principles of natural justice - reassessment limitation period - invocation of Section 79 for extension to eight years - requirement of separate and independent order under Section 79 - quashing and remand for fresh consideration

Principles of natural justice - invocation of Section 79 for extension to eight years - requirement of separate and independent order under Section 79 - quashing and remand for fresh consideration - Validity of composite proposition notice and simultaneous orders under Section 39 and Section 79 of the KVAT Act and whether reassessment beyond five years could be sustained without a separate Section 79 order after giving opportunity to the assessee. - HELD THAT: - The Court held that the respondents could claim the extended eight year limitation only upon valid invocation of Section 79 by passing a separate and independent order under Section 79 after providing the assessee an opportunity to be heard; only thereafter could proceedings under Section 39 proceed relying on the extended period. The record disclosed that a composite notice invoking both Sections 79 and 39 was issued and that orders under both provisions were passed simultaneously without affording a distinct opportunity in respect of the Section 79 invocation. That procedure violated principles of natural justice and was contrary to the requirement that entitlement to the eight year period arise only after a separate Section 79 order. In view of that procedural defect, the impugned notices and orders could not be sustained; the Court did not express any opinion on the merits of the assessment, but set aside the orders and remitted the matter to the stage of the proposition notices for fresh consideration in accordance with law and after giving the petitioner an opportunity to file objections and to be heard. [Paras 6, 7]

Impugned proposition notices and orders under Sections 39 and 79 quashed; matter remitted to stage of proposition notices for fresh consideration after giving the petitioner opportunity to file objections and obtain personal hearing.

Final Conclusion: Petition allowed; impugned notices and orders quashed and the matter remitted to respondents for fresh consideration in accordance with law, with liberty to the petitioner to file objections and obtain personal hearing within the time frame directed by the Court; no opinion expressed on merits.

Peremptory compliance with sub-section (2) of Section 82 of the Cr.P.C. - Proclamation for person absconding - Publication and modes of service of proclamation - Obligations of the executing officer in proclamation proceedings - Mens rea for offence under Section 174-A IPC - Quashing of proclamation and consequent FIR under inherent powers of the High Court (Section 482 Cr.P.C.)

Peremptory compliance with sub-section (2) of Section 82 of the Cr.P.C. - Publication and modes of service of proclamation - Obligations of the executing officer in proclamation proceedings - Validity of the order declaring the petitioner a proclaimed offender and the consequential direction to register an FIR in light of compliance with the modes of publication prescribed by sub section (2) of Section 82 Cr.P.C. - HELD THAT: - The Court examined whether the executing officer's report and the Magistrate's order complied with the cumulative modes of publication mandated by sub section (2) of Section 82 Cr.P.C. The statute requires conjunctive compliance with clauses (i)(a), (i)(b) and (i)(c) (public reading in a conspicuous place of the town or village of ordinary residence; affixation on the house or a conspicuous place in the town or village; and affixation on the Court-house), with the Court further empowered to direct newspaper publication under sub section (2)(ii). The report relied upon did not disclose that the proclamation was publicly read in a conspicuous place of the town or village where the accused ordinarily resides, although it recorded affixation at the accused's address and at the Court. Because that mandatory mode of service (clause (i)(a)) was not shown to have been effected, the executing officer's report suffered from statutory non compliance. In those circumstances the Magistrate ought to have resorted to the discretionary provision in sub section (2)(ii) and directed publication in a daily newspaper circulating where the accused ordinarily resided before concluding that the requisites for invoking penal consequences under Section 174 A IPC were met. Absent complete compliance or newspaper publication upon the defect, the requisite mens rea for an offence under Section 174 A could not be validly inferred and the order declaring the petitioner a proclaimed offender could not stand. [Paras 6, 7, 8, 9]

The order declaring the petitioner a proclaimed offender was vitiated for failure to show cumulative compliance with sub section (2) of Section 82 Cr.P.C., and the consequent FIR and proceedings based on that order could not be sustained.

Final Conclusion: Petition allowed; the order dated 08.07.2021 declaring the petitioner a proclaimed offender, and FIR No. 503 of 30.11.2021 and subsequent proceedings founded thereon are quashed.