TaxTMI Updates e-Newsletter
Feb 07,2023

Withholding of IGST refund - Provisional refund of 90% under Section 54(6) of the CGST Act read with Rule 91 of the CGST Rules - Risky exporter framework and verification procedure - Reversal of Input Tax Credit and its effect on refund - No duty on the claimant to verify genuineness of suppliers of suppliers

Withholding of IGST refund - Provisional refund of 90% under Section 54(6) of the CGST Act read with Rule 91 of the CGST Rules - Whether respondents were legally justified in withholding the petitioner's IGST refund and whether the petitioner was entitled to provisional disbursement of 90% of the claimed refund under Section 54(6) read with Rule 91. - HELD THAT: - The Court found that the petitioner had filed shipping bills for exports, was not prosecuted for any offence under the Act or existing law, and had furnished positive verification reports and reversed the wrongly availed Input Tax Credit along with interest and penalty. The statutory scheme mandates grant of provisional refund of 90% upon acknowledgement except in specified exceptional circumstances which were not shown to exist here. The respondents failed to grant the provisional refund despite receipt of positive verification reports and reversal of ITC. Reliance was placed on a similar High Court decision which held that even where supplier verification raised issues, the proviso under Section 54(6) and Rule 91 requires provisional disbursement of 90% pending completion of verification. Applying these principles to the facts, the Court concluded that withholding the refund was not justified and directed issuance/credit of the refund as provided by the statute. [Paras 8, 9, 11]

Petitioner entitled to IGST refund and respondents directed to grant refund in accordance with Section 54(6) read with Rule 91 and to credit the amount to petitioner's account within three weeks from receipt of the order.

Risky exporter framework and verification procedure - No duty on the claimant to verify genuineness of suppliers of suppliers - Reversal of Input Tax Credit and its effect on refund - Whether the petitioner was obliged to verify the genuineness of its suppliers' suppliers up to two levels and whether reversal of ITC precluded grant of refund. - HELD THAT: - The Court observed that neither the CGST Act nor the IGST Act imposes a statutory duty on the claimant to verify the genuineness of suppliers of suppliers; statutory safeguards exist to recover tax if upstream suppliers have defaulted. In the present case the petitioner had proactively reversed the disputed ITC with interest and penalty and obtained positive verification reports from the jurisdictional authorities. Consequently, those procedural or upstream concerns did not justify continued withholding of the petitioner's refund under the statutory proviso. [Paras 8, 9]

Petitioner was not duty-bound to verify suppliers' suppliers; reversal of ITC and positive verification meant there was no valid ground to continue withholding the refund.

Final Conclusion: Writ petition allowed partly; respondents directed to grant and credit the petitioner's IGST refund as prescribed by Section 54(6) of the CGST Act read with Rule 91 of the CGST Rules within three weeks from receipt of copy of this order.

Saving of proceedings under repeal and savings clause (Section 174(2) of the CGST Act) - validity of notifications empowering intelligence officers to issue show cause notices - continuity of subordinate legislation upon repeal by virtue of the General Clauses Act - jurisdictional fact doctrine and maintainability of writ against exercise of jurisdiction - assumption of adjudicatory jurisdiction by Directorate General of GST Intelligence (DGGI)

Saving of proceedings under repeal and savings clause (Section 174(2) of the CGST Act) - continuity of subordinate legislation upon repeal by virtue of the General Clauses Act - validity of notifications empowering intelligence officers to issue show cause notices - assumption of adjudicatory jurisdiction by Directorate General of GST Intelligence (DGGI) - Validity of the DGGI's assumption of jurisdiction to issue show cause notices under the erstwhile Service Tax regime after the transition to GST - HELD THAT: - The Court examined Section 173 (omission of Chapter V of the Finance Act, 1994) and Section 174 of the CGST Act and applied the saving provisions together with the principles in the General Clauses Act. The court observed that Section 174(2) saves investigations, assessments and adjudication and, read purposively and in conjunction with Section 6 of the General Clauses Act, preserves continuity of existing procedure unless a contrary intention appears. The consistent administrative practice of one authority issuing notices and another adjudicating, the Notifications issued under the service tax regime (including Notification No.22/2014 and Notification No.2/2015) and subsequent GST circulars demonstrating continuity of the dual procedure were considered. The Court rejected the contention that omission of Chapter V extinguished the delegated powers exercised via Notifications, noting the proviso to Section 174(2) and the need for seamless continuity of levy and procedure. On this basis the Court held that the assumption of jurisdiction by officials of the DGGI to issue show cause notices is valid. [Paras 74, 99, 103, 105, 106]

Assumption of jurisdiction by officials of the DGGI to issue show cause notices is valid; the impugned proceedings are not vitiated on the ground that those notifications/rules were not expressly saved.

Jurisdictional fact doctrine and maintainability of writ against exercise of jurisdiction - assumption of adjudicatory jurisdiction by Directorate General of GST Intelligence (DGGI) - Maintainability of writ petitions challenging the legal question of DGGI's jurisdiction - HELD THAT: - The Court distinguished challenges that raise pure questions of law from those requiring factual adjudication. Applying the jurisdictional-fact principle, the Court held that the narrow legal issue as to validity of the DGGI's assumption of jurisdiction is a pure question of law, with facts on record and therefore the High Court may entertain writ petitions on that legal issue. Conversely, challenges that depend on factual determinations (e.g., ownership/assignment of copyright, contractual terms, quantification) are premature for writ adjudication and are better left to the statutory adjudicatory process or appeal. Accordingly, the petitions were entertained to the extent of the jurisdictional/legal issue but not on merits requiring factual enquiry. [Paras 45, 46, 50, 51, 58]

Writ petitions are maintainable insofar as they challenge the DGGI's jurisdiction as a pure question of law; challenges on merits and factual questions are not adjudicated in writ and are to be pursued before the statutory fora.

Exemption under Notification No.25/2012 (services by way of temporary transfer or permitting use of copyright) - liability to service tax on transfer of copyright and factual determination of ownership/assignment - limitation and invocation of extended period on suppression - Whether the claim to exemption (under Notification No.25/2012) and other merits (including copyright ownership, assignment, and limitation) could be finally determined in the writ proceedings - HELD THAT: - The Court held that the questions concerning entitlement to exemption under Notification No.25/2012, the existence and terms of assignments of copyright, whether the composers were sole owners, and the applicability of extended limitation periods involve detailed factual and documentary inquiries (contracts, agreements, receipts, remittances and quantification) that are unsuitable for determination in writ proceedings. The Court therefore declined to decide these merits; it left those matters to the statutory adjudicatory authorities and to be litigated in appeal. The Court noted that where primary facts and agreements are not placed before it, a determination would be premature and potentially academic. [Paras 47, 49, 50, 51, 58]

Merits relating to exemption claims, copyright ownership/assignment and limitation are not decided; these issues are left open for determination by the adjudicating authorities and in appeals.

Final Conclusion: The Court upheld the validity of the DGGI and related Notifications to issue show cause notices preserved by Section 174(2) of the CGST Act and by the continuity principles in the General Clauses Act; writs were entertained on that pure legal issue. Questions of entitlement to exemption under Notification No.25/2012, copyright ownership/assignment, and limitation involve factual enquiries and were left to the statutory adjudicatory process (and appeals). Petitioners were given limited reliefs: liberty to pursue statutory appeals within four weeks and, in the case challenging an unresponded show cause notice, to file a response within four weeks.

Integrated Goods and Services Tax liability under reverse charge for imported goods - Application of IGST Notifications 8/2017 and 10/2017 to ocean freight on import - Quashing of show cause notice in view of binding Supreme Court precedent

Integrated Goods and Services Tax liability under reverse charge for imported goods - Application of IGST Notifications 8/2017 and 10/2017 to ocean freight on import - Quashing of show cause notice in view of binding Supreme Court precedent - Impugned show cause notice dated 31 March 2019 seeking recovery of IGST under reverse charge in respect of ocean freight on imported vegetable oils was unsustainable and liable to be quashed. - HELD THAT: - The petitioner challenged a show cause notice alleging failure to discharge IGST under reverse charge on ocean freight for imported inputs during the audit period. The petitioner relied on the Gujarat High Court decision in Mohit Minerals, which has since been affirmed by the Supreme Court in Union of India v. Mohit Minerals Pvt. Ltd. Given that the legal position underpinning the demand has been conclusively settled by the Supreme Court in favour of the petitioner, there was no purpose in permitting further proceedings on the same issue. The High Court therefore exercised its writ jurisdiction to set aside the show cause notice instead of directing further adjudication, while observing that the petitioner may point out the binding decision to the Commissioner in response to the notice.

Writ petition allowed; show cause notice dated 31 March 2019 quashed and set aside.

Final Conclusion: The High Court allowed the petition and quashed the show cause notice dated 31 March 2019 relating to IGST reverse charge on ocean freight for the audit period April 2018 to March 2019, in view of the Supreme Court's decision affirming the Gujarat High Court in Mohit Minerals.

Exemption under Section 10(10C) for compensation on voluntary retirement - Relief under Section 89(1) for salary received in advance/arrears - Compatibility of Section 10(10C) exemption with claim for relief under Section 89 - CBDT clarification on admissibility of Section 89 relief for voluntary retirement scheme payments

Exemption under Section 10(10C) for compensation on voluntary retirement - Relief under Section 89(1) for salary received in advance/arrears - Compatibility of Section 10(10C) exemption with claim for relief under Section 89 - CBDT clarification on admissibility of Section 89 relief for voluntary retirement scheme payments - Petitioner entitled to relief under Section 89(1) of the Income Tax Act in respect of the taxable portion of ex-gratia received on voluntary retirement for Assessment Year 2001-02. - HELD THAT: - The Court examined whether, notwithstanding the grant of exemption under Section 10(10C) to part of the voluntary retirement compensation, the balance treated as taxable salary and claimed as salary received in advance could attract relief under Section 89(1). Subsequent authoritative developments were decisive: the CBDT issued a communication adopting the view that relief under Section 89 is available in respect of payments received under voluntary retirement schemes, and this Court in M.V. Chinna Rao (decided 24.10.2006) interpreted the provisions (including Rule 21A) in favour of the assessee on the same question. Although the first respondent had rejected the petitioner's revision application partly on the ground of delay and upheld the assessing officer's view on merit, the Court held that the substantive legal issue is now settled in favour of the assessee and that the assessment order became subject to the writ petition once the petition was filed and admitted. In consequence, the Court set aside the portions of the assessment and revision orders denying Section 89 relief and directed a refund without interest (interest not directed because the law was unsettled at the relevant time). [Paras 9, 10, 12, 13, 14]

Assessment order dated 09.10.2003 and revision order dated 18.01.2006 are set aside to the extent they deny benefit of Section 89(1); petitioner entitled to relief under Section 89 for AY 2001-02 and respondents directed to refund without interest within three months.

Final Conclusion: Writ petition allowed; orders denying Section 89 relief set aside and quashed to the extent indicated; refund to be made within three months and no interest awarded.

Transfer of shares - registration of transfer by company - instrument of transfer and production of share certificate - capital gains tax liability - equitable right pending registration

Capital gains tax liability - transfer of shares - instrument of transfer and production of share certificate - Assessees liable to capital gains tax for A.Y. 2008-09 despite receipt of consideration in 2007 - HELD THAT: - The Court applied the company law rule that a transfer of shares is not complete for legal purposes until the prescribed instrument of transfer is delivered and the transfer is registered by the company. Although the assessees received substantial advance consideration prior to the relevant previous year, the decisive fact recorded by the Tribunal was that the share certificates were not delivered and registration had not taken place in the previous year relevant to the assessment. Pending registration the transferees had only an equitable right and did not become legal owners. Consequently, the mere receipt of consideration and steps such as board resolutions or permission from KIADB did not effectuate a transfer for capital gains taxation in the earlier year. [Paras 16, 17]

Assessees were not taxable for capital gains in A.Y. 2008-09 on account of non-delivery of share certificates and non-registration of the transfer during the relevant previous year.

Registration of transfer by company - equitable right pending registration - transfer of shares - Year of transfer of shares - whether transfer occurred in 2007 (relevant to A.Y. 2008-09) or in 2013 - HELD THAT: - Relying on established authority and Section 108 of the Companies Act, 1956, the Court accepted the Tribunal's factual finding that the share certificates were not delivered in the earlier year and that the formal share transfer occurred by instruments dated in 2013. The Court emphasised that acts such as management change, correspondence with KIADB, or execution of lease by the company do not substitute for the statutory mode of effecting a share transfer. Thus, in law the transfer took place only upon compliance with the statutory requirement of transfer and registration, which occurred in 2013. [Paras 16, 17]

The transfer of shares occurred in 2013 and not in the earlier year; therefore the Tribunal was justified in reversing the assessing and first appellate authorities on this point.

Final Conclusion: Appeals dismissed; questions of law answered in favour of the assessee and against the Revenue - non-delivery of share certificates and lack of registration in the relevant previous year precluded capital gains taxation in A.Y. 2008-09.

TDS u/s 195 - assessee in default - payroll services rendered by IBM Philippines to the assessee - fees for technical services - permanent establishment - assessee in default under Section 201 - application of DTAA vis-a -vis domestic law (Section 90)

Business profits - fees for technical services - application of DTAA vis-a -vis domestic law (Section 90) - Whether payments by the assessee to IBM Philippines for payroll and related services constituted fees for technical services or were business profits of IBM Philippines. - HELD THAT: - The Tribunal and this Court found as an undisputed factual matrix that IBM India had a contract with P&G India and the work was outsourced to IBM Philippines which acted as a subcontractor performing the assignment described in the India-P&G agreement. IBM Philippines did not render technical services to IBM India but provided payroll, data management and related services in the course of its business and earned profit by rendering those services to P&G India. The DTAA framework and the factual character of the transactions led to treating the receipts as business income of IBM Philippines rather than FTS. The Court also noted that the specific contention that FTS was absent under the India-Philippines Treaty had been taken by Revenue and that the Treaty's treatment, read with the factual finding of no technical service to IBM India, supported the business profits characterisation. [Paras 9, 11, 12, 13]

Payments were business profits of IBM Philippines and not fees for technical services.

Permanent establishment - business profits - Whether the business profits of IBM Philippines were taxable in India despite payments being received from an Indian assessee. - HELD THAT: - Relying on Article 7 of the India-Philippines DTAA, the Court recorded that business profits of an enterprise of a Contracting State are taxable only in that State unless the enterprise carries on business in the other State through a permanent establishment situated therein. It was an admitted fact that IBM Philippines had no permanent establishment in India. Consequently, under the DTAA (and the domestic law read in that context), the business profits of IBM Philippines were taxable only in the Philippines. [Paras 10, 13]

Absent a permanent establishment in India, the receipts of IBM Philippines are taxable in the Philippines and not in India.

Tax deduction at source under Section 195 - assessee in default under Section 201 - Whether the assessee was liable to deduct tax at source under Section 195 and consequently liable as an assessee in default under Section 201. - HELD THAT: - Having concluded that the payments were business profits of IBM Philippines not chargeable to tax in India (in view of the absence of a permanent establishment and the DTAA allocation of taxing rights), the Court held that Section 195 was not attracted. Since no tax was payable under the domestic law read with the DTAA on those receipts, the assessee could not be treated as an assessee in default under Section 201 for failure to deduct TDS. [Paras 13, 14]

Section 195 did not apply and the assessee was not an assessee in default under Section 201 in respect of the payments to IBM Philippines.

Final Conclusion: The appeals by the Revenue are dismissed: the payments by the assessee to IBM Philippines were business profits of IBM Philippines (not FTS), IBM Philippines had no permanent establishment in India so its profits are not taxable in India under the DTAA, and consequently no TDS under Section 195 was attracted and the assessee is not an assessee in default under Section 201.

Reopening of assessment under section 147 of the Income Tax Act, 1961 - notice under section 148 of the Income Tax Act, 1961 - escapement of income chargeable to tax in the hands of the assessee - taxability of surrender value under section 80CCC(2) - deduction under section 80CCC(1) as prerequisite for taxation of surrender value - assignment of policy and receipt by assignee

Reopening of assessment under section 147 of the Income Tax Act, 1961 - escapement of income chargeable to tax in the hands of the assessee - notice under section 148 of the Income Tax Act, 1961 - Validity of reopening assessment for assessment year 2013-14 by issue of notice under Section 148 read with Section 147 on ground of alleged escapement of income. - HELD THAT: - The power to reopen under Section 147 is exercisable only where there is reason to believe that income chargeable to tax has escaped assessment in the hands of the assessee. The reasons supplied relied on information that a pension policy invested by the assessee was surrendered and a surrender amount had been received. However, the material on record showed that the policy had been assigned in an earlier year and the surrender value was received by the assignee, not the petitioner. When no amount was received by the petitioner, there was no occurrence of income in her hands to be assessed. The assessing officer's satisfaction was therefore without foundation as it sought to tax an amount actually received by a third party; consequently the premise for escapement in the hands of the petitioner was absent and reopening was impermissible. [Paras 5, 6]

Impugned notice under Section 148/assessment reopening under Section 147 for AY 2013-14 was unsustainable and set aside.

Taxability of surrender value under section 80CCC(2) - deduction under section 80CCC(1) as prerequisite for taxation of surrender value - assignment of policy and receipt by assignee - Whether the surrender value was taxable in the hands of the petitioner under Section 80CCC(2) when no deduction under Section 80CCC(1) had been claimed by the petitioner and the surrender proceeds were received by an assignee. - HELD THAT: - Section 80CCC(2) deems surrender or pension receipts to be income where an amount standing to the credit of the assessee in respect of which a deduction under Section 80CCC(1) has been allowed is received by the assessee or his nominee. The provision applies where the assessee has claimed the deduction in earlier years; only then would subsequent receipt attract taxation in the assessee's hands. In the present case the petitioner never claimed any deduction under Section 80CCC(1) in respect of the pension policy, nor did the respondent contend that such a deduction had been claimed. Further, the surrender proceeds were received by the assignee to whom the policy had been assigned. On these facts, the statutory precondition for treating the surrender value as the petitioner's income under Section 80CCC(2) was not satisfied. [Paras 5, 6]

Surrender value could not be taxed in the petitioner's hands under Section 80CCC(2) as no deduction under Section 80CCC(1) had been claimed and the proceeds were received by the assignee.

Final Conclusion: Reopening of assessment for AY 2013-14 was unwarranted: there was no escapement of income in the petitioner's hands and the conditions for taxing the surrender value under Section 80CCC(2) were not met. The notice under Section 148 is set aside and the petition is allowed.

Unexplained investment - burden of proof under section 69 - admissions under section 132(4) - valuation at date of search versus date of purchase - creditworthiness and telescoping of income - CBDT Instruction No.1916-permissible family holding of jewellery (seizure guidelines)

Unexplained investment - burden of proof under section 69 - admissions under section 132(4) - valuation at date of search versus date of purchase - creditworthiness and telescoping of income - Whether the addition made by the Revenue treating jewellery as unexplained investment under section 69 and charging tax under section 115BBE was sustainable - HELD THAT: - The Tribunal held that the burden under section 69 is on the assessee to furnish a satisfactory explanation, but the standard is fact-dependent and lower than the civil standard of preponderance. The admission recorded in the husband's statement under section 132(4) cannot be treated as binding on the assessee. The assessee produced purchase bills showing jewellery acquired on 03.08.2009 and disclosed income over many years; the family's declared taxable income over the relevant years demonstrated creditworthiness to have acquired the jewellery from taxed sources. The Valuer's adoption of rates as on the date of search produced a higher valuation than the value at dates of actual purchase; that difference was material and the Revenue authorities ignored evidence of purchase and the assessee's creditworthiness. On the cumulative facts the assessee's explanation regarding acquisition of jewellery was found satisfactory and the addition could not be sustained. [Paras 10, 11, 12]

Impugned addition deleted and the appeal allowed.

Final Conclusion: The Tribunal set aside the addition treating jewellery as unexplained investment for AY 2018-19, accepting the assessee's explanation (including purchase bills and family creditworthiness), holding that the husband's statement under section 132(4) did not bind the assessee and that valuation at date of search could not displace evidence of earlier purchases; the addition was deleted and the appeal allowed.

Revisionary power under section 263 of the Income Tax Act - Explanation 1(c) to section 263(1) - scope of exclusion where appeal is pending - issue-wise exclusion of revisionary jurisdiction - jurisdictional effect of an un-decided appellate order - recognition of capital gains on transfer of retained rights

Explanation 1(c) to section 263(1) - scope of exclusion where appeal is pending - issue-wise exclusion of revisionary jurisdiction - jurisdictional effect of an un-decided appellate order - Validity of the revisionary order under section 263 in presence of a pending appeal and whether Explanation 1(c) ousts the Commissioner's jurisdiction in the facts of this case. - HELD THAT: - The Tribunal held that the assessee's challenge under Explanation 1(c) is without merit. The matters identified in the revisionary order do not overlap with the grievances agitated before the first appellate authority; consequently there is no exclusion of the Commissioner's jurisdiction. Even if overlap were assumed, Explanation 1(c) excludes the Commissioner's powers only as to matters that have been considered and decided in an appellate order; where no appellate order under section 250 has been passed as on the date the proposal under section 263 was communicated or on the date of the impugned revisionary order, the appellate jurisdiction's prior exercise does not operate to oust the Commissioner's power. The exclusion under Explanation 1(c) is issue-wise and depends on the state of the appeal as on the date revision is sought to be exercised. The assessee's pleadings and the material on record do not establish any such issue-wise exclusion of the revisionary jurisdiction in this case. [Paras 4]

Assessee's challenge under Explanation 1(c) to section 263(1) is rejected and the revisionary order is not vitiated on that ground.

Recognition of capital gains on transfer of retained rights - revisionary power under section 263 of the Income Tax Act - Whether the contention that capital gains arose on earlier sale (and thus pertains to a different year) renders the impugned revision for AY 2012-13 misplaced. - HELD THAT: - The Tribunal observed that the grievance in Ground 4 relating to transfer on 04.08.2008 concerns rights extinguished on that date, whereas the assessment and revision for AY 2012-13 relate to the rights retained on 04.08.2008 and subsequently transferred on 15.10.2011. Therefore, the contention that capital gains should have been assessed for an earlier year does not affect the validity of the assessment or the revisionary proceedings for the current year. The point, even if argued as applicable to the assessee's undivided share, would not invalidate the assessment for AY 2012-13 which arises from the later transfer of the retained rights. [Paras 4]

The plea that the assessment for AY 2012-13 is misplaced on account of a prior transfer is without substance and does not invalidate the revision or assessment for the year under consideration.

Prematurity of grounds not decided on merits - revisionary power under section 263 of the Income Tax Act - Whether the other grounds pressed by the assessee before the Tribunal required adjudication on merits. - HELD THAT: - The Tribunal noted that several grounds raised by the assessee challenge the merits of observations made by the Principal Commissioner of Income Tax. Those matters are premature because the revisionary authority has remitted the assessment for fresh consideration and has not finally decided those issues on merits. Consequently, the Tribunal found that no substantive arguments had been advanced before it on those grounds and they did not warrant independent adjudication in the appeal. [Paras 4]

Other grounds asserting merit-based contentions were held premature and were not decided on merits by the Tribunal.

Final Conclusion: The appeal is dismissed; the Tribunal finds no merit in the challenge to the revisionary order under section 263 and holds that the other contentions are premature, with the consequence that the assessee's stay petition is rendered infructuous.

Natural justice - opportunity of hearing - verification of genuineness of activities for 80G(5) compliance - registration under section 12AB and Form 10AB procedure - de novo consideration on remand

Natural justice - opportunity of hearing - registration under section 12AB and Form 10AB procedure - Whether the rejection of the assessee's application in Form 10AB by the learned Commissioner could be sustained without providing a further opportunity to the assessee to respond to the queries raised for verification of activities under section 80G(5). - HELD THAT: - The Tribunal recorded that the learned CIT issued queries through the ITBA portal on 02/08/2022 and again by notice dated 16/09/2022 seeking information to verify the genuineness of the assessee's activities and compliance with conditions of section 80G(5). No submissions were filed by the assessee and the learned CIT rejected the Form 10AB application. Applying the principle of natural justice, the Tribunal found it appropriate to afford the assessee one more opportunity to present its case before the learned CIT. In view of this, the impugned order rejecting the application was set aside and the matter remanded for de novo consideration by the learned CIT in accordance with law, thereby directing fresh verification and decision after giving the assessee an opportunity to be heard. [Paras 5, 6]

Impugned order rejecting the Form 10AB application set aside; matter remanded to the learned CIT for de novo consideration after affording the assessee a further opportunity of hearing.

Final Conclusion: The appeal is allowed for statistical purposes: the rejection under section 12AB r/w section 80G(5)(iii) is set aside and the matter remanded to the learned CIT for fresh consideration after giving the assessee an opportunity to respond.

Natural justice - opportunity to be heard - registration under section 12AB r/w section 80G(5) - rejection of Form 10AB for non-compliance - de novo consideration of application

Natural justice - opportunity to be heard - rejection of Form 10AB for non-compliance - de novo consideration of application - Whether the impugned order rejecting the assessee's Form 10AB should be sustained or set aside and the matter remitted for fresh consideration after affording opportunity of hearing. - HELD THAT: - The learned CIT had issued notices via the ITBA portal requesting the assessee to upload specified information and thereafter granted a further opportunity, but proceeded to reject the Form 10AB application in absence of any submission. The Tribunal held that, in the interest of natural justice, the assessee must be given one more opportunity to present its case before the learned CIT. Consequently, the impugned order was set aside and the matter was directed to be considered de novo by the learned CIT in accordance with law, thereby requiring the authority to afford the assessee a fair hearing and fresh adjudication on the application under the registration scheme governed by section 12AB read with section 80G(5). [Paras 4, 5]

Impugned order rejecting Form 10AB set aside; matter remitted to the learned CIT for de novo consideration after affording the assessee an opportunity of hearing.

Final Conclusion: The appeal is allowed for statistical purposes; the order dated 31/10/2022 is set aside and the application in Form 10AB is to be considered afresh by the learned Commissioner of Income Tax (Exemption) after giving the assessee an opportunity to be heard.

Leviability of penalty under Section 271C for non-deduction of tax at source - Applicability of provisions of Chapter XVII-B (notably Section 194C) to payments of External Development Charges to development authorities/State executing agencies - Payments made to a State through an executing agency treated as payment to the Government and not liable to TDS deduction - Followance of coordinate-bench precedent in adjudication of identical issues

Leviability of penalty under Section 271C for non-deduction of tax at source - Applicability of provisions of Chapter XVII-B (notably Section 194C) to payments of External Development Charges to development authorities/State executing agencies - Payments made to a State through an executing agency treated as payment to the Government and not liable to TDS deduction - Followance of coordinate-bench precedent in adjudication of identical issues - Penalty under Section 271C cannot be sustained for non-deduction of TDS on payments of External Development Charges (EDC) paid to HUDA where such payments are, in substance, payments to the State and Section 194C does not apply. - HELD THAT: - The Tribunal examined whether the assessee committed a default under Chapter XVII-B by not deducting TDS on EDC payments routed to Haryana Urban Development Authority. The Tribunal noted and followed a coordinate-bench view (and departmental clarification) that EDC receipts are collected for and on behalf of the State and that HUDA/HSVP functions as an executing agency; consequently payments made through HUDA to the Directorate of Town & Country Planning are effectively payments to the State. In that factual-legal matrix the provisions of Section 194C (and other Chapter XVII-B obligations relied upon by the Revenue) do not apply to such payments, and therefore there is no default attract ing penalty under Section 271C. The Tribunal expressly followed prior coordinate-bench decisions on identical facts and directed deletion of the penalty accordingly. [Paras 4, 5]

Penalty levied under Section 271C for non-deduction of TDS on EDC payments to HUDA is deleted; appeals allowed.

Final Conclusion: Following coordinate-bench precedent and administrative clarification that EDC payments made via HUDA/HSVP are payments to the State and not subject to Chapter XVII-B withholding obligations, the Tribunal set aside the penalties under Section 271C for the assessment years in dispute and directed the Assessing Officer to delete the penalties.

Forfeiture of advance - section 56(2)(ix) of the Income-tax Act - statement under section 132(4) - contradiction between books of account and recorded statement - remand for verification and fresh enquiry - opportunity of being heard

Condonation of delay - Four days' delay in filing the appeal was condoned. - HELD THAT: - The Tribunal recorded that the delay in filing the appeal was negligible and, with the consent of the Authorized Representative, the condonation petition for four days' delay was allowed. No contested legal principle concerning limitation was elaborated; the order simply exercised discretion to condone the short delay.

Delay of four days in filing the appeal is condoned.

Forfeiture of advance - section 56(2)(ix) of the Income-tax Act - statement under section 132(4) - contradiction between books of account and recorded statement - remand for verification and fresh enquiry - opportunity of being heard - Whether the additions under section 56(2)(ix) based on admission in a statement recorded under section 132(4) and the assessee's books of account should be sustained or require fresh enquiry and verification with the payers. - HELD THAT: - The Tribunal noted that the Managing Director of the assessee had admitted forfeiture of the advances in a statement recorded under section 132(4), and that the assessee's books nonetheless continued to show the amounts as liabilities. The Tribunal observed a clear contradiction between the recorded admission and the accounting treatment, and also recorded that the persons who paid the advances (M/s. Sobha Developers Ltd. and M/s. Elyon Developers Pvt. Ltd.) were not examined and their books not verified. Given these unresolved factual contradictions and the absence of verification from the payers, the Tribunal found it appropriate to remit the matter to the file of the Commissioner of Income Tax (Appeals) for necessary enquiry - including confronting the admission with the concerned parties and reexamination of the factual matrix - and to direct reconsideration of the issue. The Tribunal also noted that the assessee must be afforded a reasonable opportunity of being heard during the remand proceedings. The Tribunal declined to apply the case law relied upon by the assessee, observing those authorities were not factually comparable in light of the specific admission recorded under section 132(4).

The matter is remitted to the CIT(A) for fresh enquiry and verification with the concerned parties and for reconsideration of the addition, with directions to afford the assessee a reasonable opportunity of being heard.

Final Conclusion: The appeal is disposed of by condoning four days' delay and remitting the disputed addition to the CIT(A) for enquiry and verification with the payers and reconsideration in accordance with the observations; the appeal is allowed for statistical purposes.

Bogus purchases - accommodation entries - reopening of assessment on fresh information - income escaping assessment under section 147 - addition limited to profit margin where purchases are treated as bogus but sales are accepted - requirement of enquiry/cross examination of third party declarant - books of account and bank payments not rejected - benchmarked net profit rate to determine taxable income

Reopening of assessment on fresh information - income escaping assessment under section 147 - Validity of reopening of assessment on the basis of information received from Investigation Wing regarding transactions with benami concerns. - HELD THAT: - The Assessing Officer recorded satisfaction to reopen the assessment after receiving specific information from the Investigation Wing indicating that the assessee had dealings with entities providing accommodation entries. The CIT(A) upheld the reopening, observing that the information reached the Assessing Officer only after conclusion of the original proceedings and constituted fresh material justifying reopening rather than a mere change of opinion. The assessee did not press its cross appeal challenging the confirmation of reopening before the Tribunal. Having regard to the fresh and specific nature of the information received and the statutory scheme for reopening where fresh material is available, the Tribunal treated the assessee's challenge as infructuous and did not set aside the reopening.

Reopening of assessment was sustained (CIT(A) confirmation treated as not successfully challenged by the assessee) and the cross appeal on reopening was treated as infructuous.

Bogus purchases - accommodation entries - addition limited to profit margin where purchases are treated as bogus but sales are accepted - books of account and bank payments not rejected - requirement of enquiry/cross examination of third party declarant - benchmarked net profit rate to determine taxable income - Whether the entire purchases could be treated as bogus and added to income where (i) sales corresponding to such purchases were not disputed, (ii) books, stock register and bank payments were on record, and (iii) the allegation arose from third party statements during investigation. - HELD THAT: - The Assessing Officer made a full disallowance of purchases relying on the Investigation Wing's report that the supplier group operated benami concerns. The CIT(A) deleted the addition after noting that the assessee produced purchase invoices, stock records, quantitative tally and bank payments, and that sales were not doubted. The Tribunal applied the principle that where goods purchased are accounted for quantity wise, corresponding sales are verifiable and books/accounts are not rejected, an adjustment to purchases in toto is not justified merely on third party statements. Instead, consistent with precedents and sectoral benchmarks, the Tribunal held that only the profit margin embedded in such purchases should be brought to tax. Considering the diamond trading context and task force benchmark ranges, the Tribunal adopted a 2% net profit benchmark on sales and directed taxation of the difference between the assessee's declared net profit (1.24%) and the benchmark 2% net profit. The Tribunal noted absence of any enquiries by the AO (such as cross examination of third parties) and relied on the audited books and bank evidence in moderating the addition.

Addition deleted insofar as entire purchases were disallowed; instead, income was computed by applying a 2% net profit rate on sales and taxing the difference over the declared 1.24% net profit.

Final Conclusion: Tribunal partly allowed the Revenue's appeals by substituting a limited addition: the assessee's wholesale disallowance of purchases was not sustained where sales, books and bank payments stood unrejected; taxable income was determined by applying a 2% net profit benchmark (taxing the excess over the declared 1.24%). The assessee's cross appeal against confirmation of reopening was treated as infructuous.

Penalty under section 271D - Contravention of section 269SS - Ownership and capacity of taxpayer (individual versus HUF) - Temporal attribution of receipt of a "specified sum" in transfer of immovable property - Registrar's records as evidence of mode and date of receipt - Afterthought documentary evidence to evade penalty

Penalty under section 271D - Contravention of section 269SS - Registrar's records as evidence of mode and date of receipt - Whether penalty under section 271D could be sustained against the assessee for receipt of cash on sale of immovable property in contravention of section 269SS. - HELD THAT: - The Tribunal found on the record that the assessee received Rs. 14,00,000 in cash on the sale of immovable property and did not dispute receipt of that cash. The Assessing Officer relied on data collected from the Sub-Registrar's Office showing the specified dates and amounts and mode of receipt. The Tribunal accepted the Registrar's records as establishing that the full sum was received in cash on the date of sale and rejected the assessee's contention that part of the amount had been received on an earlier date. On these facts the Tribunal held there was a contravention of the prohibition in section 269SS (mode of receipt for specified sums) and, applying the statutory consequence, sustained the levy of penalty under section 271D equal to the amount so accepted in cash. [Paras 3, 5, 9]

Penalty under section 271D sustained as the assessee accepted Rs. 14,00,000 in cash in contravention of section 269SS.

Ownership and capacity of taxpayer (individual versus HUF) - Afterthought documentary evidence to evade penalty - Temporal attribution of receipt of a "specified sum" in transfer of immovable property - Whether penalty was levied on the wrong person because the property was held and sold by the HUF and not by the assessee in his individual capacity. - HELD THAT: - The Tribunal examined the documentary record and noted that the purchase and sale deeds bore the assessee's individual PAN, and that PAN for the HUF was generated only on 03.03.2017, after the date of sale. The HUF's income-tax return was filed on 30.03.2018, also after initiation of penalty proceedings. The Tribunal treated the HUF documents and returns as belated and indicative of an afterthought to avoid penalty. On this basis the Tribunal rejected the claim that the transaction related to the HUF and concluded the sale and receipt were in the assessee's individual capacity. [Paras 3, 8]

Claim that property belonged to HUF and that penalty was leviable on HUF (not on the individual) rejected; penalty properly levied on the individual.

Final Conclusion: The appeal is dismissed; the Tribunal upheld the levy of penalty under section 271D for receipt of Rs. 14,00,000 in cash in contravention of section 269SS, and rejected the contention that the transaction concerned the HUF rather than the assessee in his individual capacity.

Order under section 263 - deceased assessee - legal heir certificate - limitation and appellate authority powers - quashing of revisionary order issued without opportunity to legal heir

Order under section 263 - deceased assessee - quashing of revisionary order issued without opportunity to legal heir - Validity of the order passed under section 263 of the Act after the death of the assessee - HELD THAT: - The Tribunal found that the assessee had died on 12.10.2020 and that the statutory death certificate and consequent legal heir certificate were issued only subsequently (death certificate in early 2021 and legal heir certificate on 28.2.2022). The Assessing Officer and Pr. CIT had no record of the death when the section 263 notice was issued, and the legal heir could not have formally intimated the revenue earlier because the statutory certificates were not then available. The e-filing record shows the legal heir details were uploaded on 21.3.2022 and acted upon promptly by the revenue. Given these facts, the Tribunal held that the revisionary order under section 263 had been passed in the name of a person who was deceased and that, in the circumstances, fault lay with delay in issuance of statutory certificates by the State and not with the revenue or the assessee. The Tribunal concluded that the section 263 order could not stand and quashed it. [Paras 5, 6]

Order under section 263 passed on the deceased assessee quashed; appeal allowed.

Legal heir certificate - limitation and appellate authority powers - restitution/remand for fresh proceedings - Whether the matter should be restored to the file of the Pr. CIT for re-adjudication against the legal heir - HELD THAT: - Revenue suggested remanding the issue to the Pr. CIT to redo proceedings against the legal heir after providing opportunity of being heard. The Tribunal observed that restoration would effectively start fresh proceedings by issuing show-cause notices to the legal heir and re-adjudication, but an appellate authority cannot extend statutory limitation periods. Because the time limits for such proceedings were time-barred, restoration for re-adjudication in the name of the legal heir could not be directed. Accordingly, the Tribunal declined the revenue's prayer for restoration and proceeded to quash the impugned order. [Paras 4, 5]

Prayer to restore the matter for re-adjudication against the legal heir rejected as time-barred; no remand ordered.

Final Conclusion: The Tribunal allowed the appeal, quashed the order passed under section 263 as having been issued in respect of a deceased assessee and refused to remit the matter for fresh proceedings against the legal heir because such restoration would be time-barred and the appellate authority cannot extend limitation.

Deduction under section 36(1)(va) conditional on timely deposit in employees' accounts - employees' contribution constitutes employer's income unless deposited within statutory time - applicability of Supreme Court decision in Checkmate Services Pvt. Ltd.

Deduction under section 36(1)(va) conditional on timely deposit in employees' accounts - employees' contribution constitutes employer's income unless deposited within statutory time - applicability of Supreme Court decision in Checkmate Services Pvt. Ltd. - Disallowance of employer's deduction for delayed deposit of employees' contribution to PF and ESI - HELD THAT: - The Tribunal considered whether amounts representing employees' share of provident fund and ESI can be allowed as deduction where the employer deposited those amounts after the due date prescribed under the respective statutes. The assessing officer disallowed the claim under section 36(1)(va) read with the definition in section 2(24)(x) on account of delayed deposit; the CIT(A) upheld that disallowance. The Tribunal applied the legal principle laid down by the Hon'ble Supreme Court in Checkmate Services Pvt. Ltd., namely that employees' contributions are treated as the employer's income under the Act and the statutory deduction under section 36(1)(va) is available only if the employer deposits the employees' share into the relevant funds by the dates stipulated under the respective enactments. As the assessee undisputedly deposited the employees' contribution after the prescribed due dates, the conditions for allowing the deduction were not satisfied and the disallowance was correctly sustained. [Paras 5, 9, 10]

The disallowance of the delayed deposit of employees' contribution to PF and ESI was upheld and the appeal dismissed.

Final Conclusion: Appeal dismissed; deduction under section 36(1)(va) cannot be allowed for employees' contributions deposited after the statutory due dates, in view of the Supreme Court's decision in Checkmate Services Pvt. Ltd.

Deduction under Section 54B - Deduction under Section 54F - Capital gains account deposit requirement as an enabling/procedural condition - Revision jurisdiction under Section 263 - Rectification under Section 154 and admissibility of additional evidence before CIT(A) - Verification of depreciation claims

Deduction under Section 54B - Capital gains account deposit requirement as an enabling/procedural condition - Assessee's entitlement to deduction under section 54B where proceeds were deposited in the capital gains account belatedly but the replacement agricultural land was purchased within the statutory period. - HELD THAT: - The Tribunal applied the coordinate-bench reasoning that the deposit requirement in the corresponding provision for residential house exemption is an enabling/procedural provision intended to demonstrate the assessee's bona fide intention to invest and cannot defeat the substantive right under the substantive exemption provision. Since the assessee had purchased agricultural land within the stipulated period and produced evidence of such purchase during assessment proceedings-and had in any event deposited the sale proceeds in the capital gains account albeit belatedly-the PCIT's invocation of revision jurisdiction under section 263 to deny the exemption was not justified. The Tribunal therefore held that the PCIT's setting aside of the assessment on this ground was incorrect. [Paras 5]

PCIT's exercise of revision jurisdiction to deny deduction under section 54B quashed; assessee entitled to deduction as purchase within the stipulated period and evidence was on record.

Verification of depreciation claims - Revision jurisdiction under Section 263 - Whether the Assessing Officer's allowance of depreciation on buses without verifying acquisition details warranted exercise of revision jurisdiction under section 263. - HELD THAT: - The PCIT directed verification because the AO had allowed depreciation without calling for or verifying acquisition documents, dates of acquisition and written down values. The Tribunal accepted that factual aspects relating to existence, acquisition dates and valuation of buses require examination and that directing the AO to verify these facts was appropriate. Consequently, the PCIT's direction for de novo consideration on this factual issue was upheld. [Paras 6]

Direction to the AO to examine and verify the depreciation claim on buses upheld; matter remanded for factual verification.

Deduction under Section 54F - Rectification under Section 154 and admissibility of additional evidence before CIT(A) - Admissibility of additional evidence before the CIT(A) and the correctness of rejection of the assessee's claim for deduction under section 54F. - HELD THAT: - The assessee produced additional documents before the CIT(A) in support of the claim under section 54F which the CIT(A) declined to admit. The Tribunal directed that the evidence/documents be admitted, examined and the claim decided afresh in accordance with law. The matter was therefore restored to the file of the Assessing Officer for consideration of the admitted evidence and a fresh decision. [Paras 7]

Claim under section 54F restored to AO; additional evidence to be admitted and the claim re-decided afresh.

Deduction under Section 54B - Quantum of deduction allowable under section 54B where AO granted a lesser amount than claimed by the assessee. - HELD THAT: - The Tribunal observed that the question of the correct quantum of the claim allowed under section 54B required examination by the AO. For that limited purpose the matter was restored to the AO with a direction to examine and determine the correct amount allowable under section 54B in accordance with law. [Paras 8]

Issue as to quantum under section 54B remitted to the AO for limited examination and determination.

Final Conclusion: Appeal against PCIT's order under section 263 partly allowed: denial of deduction under section 54B set aside. PCIT's direction to verify depreciation on buses upheld and remanded to AO. Appeal against the order under section 154 allowed for statistical purposes: claims under sections 54F and the quantum under 54B restored to the AO for admission of evidence and fresh decision.

Entitlement to drawback under Section 74 of the Customs Act, 1962 - time-limit for filing drawback claim under Rule 5(1) of the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995 - power to relax under Rule 7A of the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995 - sufficiency of cause for delay in filing drawback claim - cryptic or non-speaking order requiring quash and remand

Cryptic or non-speaking order requiring quash and remand - entitlement to drawback under Section 74 of the Customs Act, 1962 - Validity of the impugned orders rejecting the petitioner's Rule 7A relaxation requests - HELD THAT: - The Court found that the impugned orders are cryptic and non-speaking because they reject the petitioner's request for relaxation under Rule 7A without addressing or recording reasons in respect of the specific grounds advanced by the petitioner for the delay. The petitioner's satisfaction of statutory requirements for entitlement to drawback under Section 74 was not disputed, and the first respondent failed to consider the written submissions and supporting documents furnished by the petitioner or to apply its mind to the asserted unavoidable circumstances explaining the delay. For these reasons the impugned orders cannot stand and must be quashed so that the matter may be considered on merits by the competent authority. [Paras 7, 9, 10]

Impugned orders dated 24.11.2022 are quashed for being cryptic and non-speaking, and cannot be sustained.

Power to relax under Rule 7A of the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995 - sufficiency of cause for delay in filing drawback claim - time-limit for filing drawback claim under Rule 5(1) of the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995 - Remand for fresh consideration of the petitioner's request for relaxation under Rule 7A and the procedure to be followed by the authority on reconsideration - HELD THAT: - Because the first respondent did not adjudicate the petitioner's pleaded reasons for delay or supply reasons for rejection, the Court remanded the matter for fresh consideration on merits. On remand the authority is directed to give due consideration to the petitioner's written submissions dated 03.11.2022, the supporting documentary material already tendered, and to afford one personal hearing to the petitioner before passing a reasoned order. The authority must apply the statutory test under Rule 7A - whether the exporter failed to comply for reasons beyond its control and whether relaxation is warranted - and record its reasons in writing when accepting or rejecting the plea for exemption from the rules. [Paras 10]

Matter remanded to the first respondent for fresh, reasoned consideration on merits with an opportunity of personal hearing; final order to be passed within eight weeks.

Final Conclusion: The writ petitions are allowed insofar as the impugned orders dated 24.11.2022 are quashed for being cryptic and non-speaking; the matter is remitted to the first respondent to reconsider the petition for relaxation under Rule 7A on merits, after considering the petitioner's written submissions and affording one personal hearing, and to pass a reasoned order within eight weeks.

Obligations of Customs Broker under Regulation 10(n) of CBLR, 2018 - Verification of IEC and GSTIN by Customs Broker - scope - Verification of identity and functioning at declared address - documents, data or information suffices; no obligation of physical inspection - Presumption of genuineness of government issued certificates - Liability of Customs Broker limited to compliance with Regulation 10(n) - Responsibility for fraudulent or incorrect issuance of government registrations rests with issuing officers, not Customs Broker

Obligations of Customs Broker under Regulation 10(n) of CBLR, 2018 - Verification of IEC and GSTIN by Customs Broker - scope - Presumption of genuineness of government issued certificates - Scope and nature of the verification duties cast on a Customs Broker by Regulation 10(n) of CBLR, 2018 - HELD THAT: - Regulation 10(n) requires a Customs Broker to verify correctness of IEC and GSTIN, identity of the client, and functioning of the client at the declared address by using reliable, independent, authentic documents, data or information. Verification of government issued registrations (IEC, GSTIN) is satisfied if the broker satisfies itself that the certificates were issued by the competent officers; the broker is not required to re examine or second guess the correctness of the issuing officers' actions. Section 79 Evidence Act supports presumption of genuineness of government certificates. The obligation to verify identity and functioning can be discharged by independent, reliable and authentic documents, data or information (e.g., PAN, passport, driving licence, bank records, GST/IEC entries) and need not entail physical inspection of premises. Regulation 10(n) does not impose a continuing surveillance duty; once proper verification is completed, subsequent changes in the client's status or address do not automatically render the broker liable unless the broker had knowledge of such change. Reading the regulation to require physical attendance at every client premises would impose an unreasonable and unworkable burden and is not supported by the text of Regulation 10(n). [Paras 10, 11, 12, 13, 23]

Regulation 10(n) is satisfied by verification through reliable, independent and authentic documents, data or information; physical inspection is not mandated and brokers are not obligated to verify the correctness of actions of issuing government officers.

Verification of identity and functioning at declared address - documents, data or information suffices; no obligation of physical inspection - Liability of Customs Broker limited to compliance with Regulation 10(n) - Responsibility for fraudulent or incorrect issuance of government registrations rests with issuing officers, not Customs Broker - Whether the appellant Customs Broker violated Regulation 10(n) on the material before the Tribunal and whether revocation, forfeiture and penalty were justified - HELD THAT: - The inquiry and the relied upon verification reports (RUDs) were examined. Many RUDs were vague, did not name exporters, or recorded conclusions such as 'Non Existent exporter', 'NOC denied' or recommendations to deny IGST refunds without establishing that the exporters were non existent at the time the broker obtained KYC and processed shipping bills. Discrepancies in some KYC documents (e.g., differing addresses across documents, illegible papers) were noted by the Inquiry Officer, but there is no direct evidence on record to show that the exporters did not exist or did not operate from the declared addresses at the time the Shipping Bills were filed, nor that the broker had knowledge of any fraud. Where government registrations (GSTIN/IEC) existed and were not shown to be forged, the broker could reasonably rely on them. Given the nature of the verification obligations as documents/data/information based, the vague and retrospective verification reports did not establish breach of Regulation 10(n) by the appellant. Accordingly, punitive measures including licence revocation, security forfeiture and penalty imposed on the appellant could not be sustained. [Paras 31, 32, 33, 34, 35]

The material on record does not establish violation of Regulation 10(n) by the appellant; the impugned order revoking the broker's licence, forfeiting security and imposing penalty is unsustainable.

Final Conclusion: The Tribunal set aside the impugned order: the revocation of the Customs Broker's licence, forfeiture of security deposit and penalty were quashed and the appeal was allowed, with consequential relief to the appellant.

Effective date of notification - e-publication and digital signature of Gazette notifications - application of section 25(4) of the Customs Act - proviso to section 15(1) - date for determination of rate of duty - amendment to section 25(4) and its effect on effective date

Effective date of notification - e-publication and digital signature of Gazette notifications - application of section 25(4) of the Customs Act - The exemption notification dated 01.03.2018 came into force only on 06.03.2018 when it was digitally signed and e-published in the Official Gazette, and not on its nominal date of issue 01.03.2018. - HELD THAT: - Section 25(4) provides that a notification shall, unless otherwise provided, come into force on the date of its issue by the Central Government for publication in the Official Gazette. With the Government's shift to exclusive e-publishing of Gazette notifications and the procedural requirement that documents be digitally signed before upload, a notification cannot be e-published (and thereby made available to the public) until digitally signed and uploaded. The Guide for Submitting Content for e-Publishing and Ministry instructions demonstrate that digital signing by the nodal officer is a precondition for uploading and e-publication. In the present case the notification dated 01.03.2018 was digitally signed and uploaded only on 06.03.2018; therefore, the notification came into force on 06.03.2018. Prior High Court decisions considering e-publication (including the Gujarat and Andhra Pradesh decisions) and the reasoning in those authorities support treating the date and time of e-publication (following digital signing) as the effective date of the notification under section 25(4). The attempt to treat the nominal date of issue (01.03.2018) as the effective date, despite e-publication occurring later, is not justified. [Paras 21, 22, 23]

The exemption notification dated 01.03.2018 became effective on 06.03.2018 when it was digitally signed and e-published; it did not come into force on 01.03.2018.

Proviso to section 15(1) - date for determination of rate of duty - reassessment of bills of entry - Bills of Entry presented on 01.03.2018 and where vessel entry inwards was granted on 05.03.2018 could not lawfully be reassessed at the enhanced rate specified in the notification that became effective on 06.03.2018; the reassessment to 54% was therefore unsustainable. - HELD THAT: - The relevant date for determining the applicable rate of duty under the proviso to section 15(1) is the date when entry inwards to the vessel was granted (05.03.2018 in this case). On that date the extant notification (as amended up to 17.11.2017) imposed duty at 40%. Because the impugned amendment raising the rate to 54% only came into effect upon e-publication on 06.03.2018, the department could not validly apply the enhanced rate to imports whose determinative date was 05.03.2018. The Deputy Commissioner (Import) and Commissioner (Appeals) were therefore incorrect in upholding reassessment to the higher rate. [Paras 24, 27, 28]

The reassessment of the Bills of Entry to charge duty at 54% is invalid; the imports were liable to duty at the rate in force on 05.03.2018, and the differential duty deposited is refundable with interest.

Final Conclusion: The appeal is allowed. The impugned orders upholding reassessment to the enhanced rate are set aside: the notification dated 01.03.2018 came into force only on 06.03.2018 when digitally signed and e-published, the applicable rate on 05.03.2018 was the earlier rate, and the differential duty deposited shall be refunded with interest.

Refund of Special Additional Duty (SAD) on resale - limitation for refund - subordinate legislation cannot introduce limitation for the first time - accrual of right to claim refund upon resale and payment of VAT/sales tax - verification of unjust enrichment before refund - interest on delayed refund as per rules

Refund of Special Additional Duty (SAD) on resale - limitation for refund - subordinate legislation cannot introduce limitation for the first time - accrual of right to claim refund upon resale and payment of VAT/sales tax - Rejection of refund claim of SAD on the ground of limitation - HELD THAT: - The Tribunal held that the court below erred in rejecting the SAD refund claim as time-barred. Relying on the legal position articulated by the Hon'ble Delhi High Court in Sony India and reiterated in Gulati Sales Corporation, the Tribunal observed that the original Notification No.102/2007-Cus did not prescribe any period of limitation and that limitation cannot be introduced for the first time by subordinate legislation. Further, the right to claim refund of SAD accrues only upon resale of the imported goods and compliance with the condition of payment of appropriate sales tax or VAT on such resale; limitation cannot commence from the date of payment of SAD at import if the right to claim has not yet accrued. Applying these principles to the facts, the Tribunal concluded that the rejection on limitation grounds was contrary to the settled law and therefore unsustainable. [Paras 6, 7, 10]

Rejection of the refund claim on limitation grounds set aside and appeal allowed.

Verification of unjust enrichment before refund - interest on delayed refund as per rules - Direction to the Adjudicating Authority concerning grant of refund and related verification - HELD THAT: - The Tribunal directed that the Adjudicating Authority shall grant the refund of SAD after undertaking verification to ensure there is no unjust enrichment. The authority was also directed to pay interest on the delayed refund in accordance with the applicable rules. The Tribunal specified a time-bound mandate for compliance, while limiting the authority's role to verification of the bar of unjust enrichment and implementation of interest as per law. [Paras 10, 11]

Adjudicating Authority to grant the refund within 45 days after verifying absence of unjust enrichment and to pay interest as per rules.

Final Conclusion: The impugned order rejecting the SAD refund on limitation grounds is set aside; appeal allowed. The Adjudicating Authority is directed to verify absence of unjust enrichment and, if satisfied, grant the refund with interest as per rules within 45 days.

Look Out Circular (LOC) - exceptional cases clause for issuance of LOC - judicial review of executive issuance of LOC - fundamental right of movement/freedom of movement - requirement of contemporaneous inputs/evidence in Column IV - interpretation of 'economic interest' in the LOC policy - authority of bank heads to originate LOCs and limits thereon

Look Out Circular (LOC) - judicial review of executive issuance of LOC - fundamental right of movement/freedom of movement - Validity of the request made by Bank of Baroda (BOB) for issuance of LOC against the petitioner - HELD THAT: - The Court held that the request by BOB for opening an LOC did not satisfy the pre-conditions in the relevant Government memoranda and guidelines and therefore was an arbitrary attempt to curtail the petitioner's fundamental right of movement. The affidavit-in-opposition failed to demonstrate that the Managing Director/Executive Officer had received intelligence inputs or other contemporaneous material showing that the petitioner's departure would be detrimental to sovereignty, security, bilateral relations or the economic interest of India. Mere classification of the corporate account as NPA, pendency of liquidation proceedings, reliance on a forensic audit that was not accepted by the NCLT/NCLAT, or the quantum of debt, without specific, objective supporting inputs, could not justify an LOC. In absence of the exceptional circumstances required by the policy, the request was set aside and quashed. [Paras 62, 63, 64, 65, 66]

The request of BOB dated 29th November, 2021 for issuance of LOC and all consequential steps, if any, are set aside and quashed; writ petition allowed.

Exceptional cases clause for issuance of LOC - requirement of contemporaneous inputs/evidence in Column IV - interpretation of 'economic interest' in the LOC policy - Proper scope and interpretation of the exception permitting LOCs even where no cognizable offence is pending - HELD THAT: - The Court analysed the evolution of the policy (OM dated 27.10.2010 as amended in 2017, 2018 and consolidated 2021 guidelines) and held that the exception permitting LOCs in 'exceptional cases' requires objective, contemporaneous inputs showing that departure would be detrimental to sovereignty, security, bilateral relations, or the strategic/economic interests of India. 'Economic interest' must be read in the larger context of national or bilateral economic or strategic interests (e.g., effects on growth, investments, bilateral trade, financial stability) and not narrowly as an individual bank-borrower dispute. Therefore, invocation of the exception clause demands a well-founded apprehension supported by evidence, not merely allegations of default or the existence of large outstanding debt. [Paras 36, 38, 42, 45]

The exception clause cannot be invoked merely on account of borrower default or NPA status; it requires objective inputs showing detriment to wider national/bilateral/strategic economic interests.

Authority of bank heads to originate LOCs and limits thereon - requirement of contemporaneous inputs/evidence in Column IV - Extent to which Chairman/MD/CEOs of public sector banks may originate LOC requests and the legal limits on that authority - HELD THAT: - While the policy amendments (2017-2018) included heads of public sector banks among authorities who may originate LOC requests, the Court held that such inclusion does not dispense with the foundational prerequisites of the policy. A bank-originated request must still comply with the guidelines, particularly by providing material particulars in Column IV and showing the exceptional circumstances or intelligence inputs on which the request is based. The originating bank cannot substitute ordinary debt-recovery procedures with an LOC; the originator must demonstrate prima facie that the policy's exception criteria are met. [Paras 40, 41, 42, 62]

Inclusion of bank heads as originators does not relax the requirement to produce objective inputs and satisfy the exception clause; banks must provide contemporaneous material supporting the request.

Look Out Circular (LOC) - judicial review of executive issuance of LOC - Effect, if any, of the prior quashing of the lead bank's LOC on BOB's subsequent request - HELD THAT: - The Court noted that the lead bank (PNB) had earlier requested an LOC which was quashed by a coordinate Bench for failure to show exceptional circumstances or provide material particulars. No new material or developments were placed before the Court by BOB to distinguish its request from the earlier quashed request. Given that the lead bank's LOC was set aside and there was no fresh contemporaneous evidence to satisfy the exception clause, BOB's request (being on substantially the same facts and relying on the same forensic audit and returned CBI complaint) could not be sustained. [Paras 46, 50, 59, 60, 65]

Because the lead bank's LOC had been quashed and no fresh material was shown, BOB's similar request could not be sustained and was quashed.

Final Conclusion: The writ petition is allowed: the Bank of Baroda's request dated 29th November, 2021 for issuance of a Look Out Circular against the petitioner, and all consequential steps, are quashed for failure to satisfy the policy's prerequisites and exceptional-case requirements; banks included as originating authorities must still demonstrate objective, contemporaneous inputs justifying an LOC, and judicial review of such executive action is available where personal liberty and freedom of movement are adversely affected.

Condonation of delay - limitation - Section 14 of the Limitation Act, 1963 - sufficient cause / good cause for extension of time - judicial discretion to admit appeal beyond prescribed period - non-filing of supporting affidavit under procedural rules as curable irregularity - principles of natural justice and power to regulate procedure

Condonation of delay - sufficient cause / good cause for extension of time - judicial discretion to admit appeal beyond prescribed period - Condonation of delay of 15 days in filing the company appeal was allowed and the appeal was held to be within limitation after applying permissible exclusions. - HELD THAT: - The Tribunal applied the statutory scheme under the Code and recognised that the Appellate Tribunal has jurisdiction to admit an appeal beyond the prescribed 30 days if a party satisfies it of sufficient cause. Having examined the factual matrix, including the petitioner's pursuit of proceedings before the Adjudicating Authority and the High Court and the doctrine underpinning Section 14 of the Limitation Act, the Tribunal concluded that time spent in bona fide litigation in an inappropriate forum could be excluded. The Tribunal found that, on applying the permissible exclusions, the appeal filed on 13.08.2022 fell within the limitation period and therefore the condonation application is liable to be allowed. The decision reflects exercise of judicial discretion guided by sufficiency of cause and established authorities on exclusion of time spent in bona fide litigious activity. [Paras 22, 23, 24, 25, 30]

IA No. 89 of 2023 is allowed; the appeal is held to be within time after exclusions and the main appeal is to be listed.

Limitation - Section 14 of the Limitation Act, 1963 - Section 14 of the Limitation Act, 1963 applies to exclude time spent in bona fide proceedings before an inappropriate forum and was attracted on the facts of the case. - HELD THAT: - The Tribunal observed that Section 14 is intended to relieve parties who have prosecuted remedies in a wrong or inappropriate forum in good faith. Citing established principles, the Tribunal held that where good faith and bona fide litigious activity are proved, the time taken in such proceedings is to be excluded for computation of limitation. Applying these principles to the petitioner's conduct of proceedings before the NCLT and the High Court, the Tribunal held that the ingredients of Section 14 are satisfied and relevant time must be excluded. [Paras 21, 22, 23, 24, 30]

Time spent in bona fide proceedings before other fora is excluded under Section 14 and, on that basis, the appeal is within limitation.

Non-filing of supporting affidavit under procedural rules as curable irregularity - principles of natural justice and power to regulate procedure - The absence of a supporting affidavit with the interlocutory application as required by Rule 31 of the NCLAT Rules, 2016 was held to be a curable irregularity and not a fatal defect. - HELD THAT: - The Tribunal noted that procedural rules are handmaids of justice and that non-compliance with the requirement of filing a supporting affidavit, while objectionable, does not amount to incurable illegality. Guided by the powers to regulate procedure and principles of natural justice, the Tribunal treated the omission as curable and directed the petitioner to file the supporting affidavit within two weeks to regularise the record. [Paras 27, 28, 29, 31]

Non-filing of the supporting affidavit is curable; petitioner directed to file the affidavit within two weeks.

Final Conclusion: The condonation application is allowed on the basis that Section 14 of the Limitation Act applies to exclude time spent in bona fide proceedings before other fora and the appeal as filed on 13.08.2022 is within time; the procedural omission of a supporting affidavit is curable and the petitioner is directed to file it within two weeks; the main appeal was ordered to be listed for hearing.

Mandatory pre-deposit - appeal dismissed for non-payment of pre-deposit - remand for compliance and hearing on merits - registration as non-assessee and RBI e-payment facility

Mandatory pre-deposit - appeal dismissed for non-payment of pre-deposit - remand for compliance and hearing on merits - Whether the appeal dismissed solely for non-payment of the mandatory pre-deposit should be restored for adjudication on merits upon allowing the petitioner to make the pre-deposit. - HELD THAT: - The Court found that the petitioner, an unregistered dealer/ Government contractor, had not paid the statutory pre-deposit of 7.5% under the amended section 35F of the Central Excise Act, 1944, and that the appeal was dismissed only on that ground. The petitioner stated he was unaware of the mechanism available to unregistered persons to make e-payments and did not intend to avoid the pre-deposit. The respondents placed on record CBIC FAQs indicating that a non-assessee may obtain registration as a 'non-assessee' on ACES and that RBI Instruction No. RBI/2008-09/165 enables banks to accept such payments. In the absence of any finding of deliberate non-compliance and having regard to the availability of the e-payment facility for non-assessee/unregistered persons, the Court exercised its supervisory jurisdiction to set aside the appellate order and remand the matter so that the petitioner may make the mandatory pre-deposit within a limited period and have the appeal heard on merits. The Court explicitly did not decide the merits of the underlying tax demand. [Paras 7, 8]

Impugned order dated 12.02.2021 set aside; petitioner permitted four weeks to make the mandatory pre-deposit and, upon compliance, the appeal shall be heard on merits.

Final Conclusion: Writ petition allowed to the extent that the order dismissing the appeal for non-payment of mandatory pre-deposit is set aside; petitioner granted four weeks to make the pre-deposit (having regard to the registration/non-assessee e-payment facility) and the appeal is remitted for adjudication on merits; merits of the original demand not considered.

Input service - CENVAT credit on sales commission - sales promotion - nexus with manufacture - retrospective explanation - binding nature of departmental circular

Input service - CENVAT credit on sales commission - sales promotion - nexus with manufacture - binding nature of departmental circular - retrospective explanation - Admissibility of CENVAT (input service) credit on sales commission paid to agents for the period 01.04.2011 to 31.03.2015 - HELD THAT: - The Tribunal held that sales commission paid to agents constituted services that directly relate to sale and fall within the concept of sales promotion and therefore qualify as input service. The Board's Circular No. 943/4/2011-CX dated 29.04.2011 expressly clarified that credit is admissible on services of sale of dutiable goods on commission basis, and that clarification is binding on departmental officers. The Explanation inserted in Rule 2(l) of the Cenvat Credit Rules, 2004 by Notification No.2/2016-CE (N.T.) dated 03.02.2016 was treated as declaratory/retrospective, intended to explain and give effect to the meaning of 'sales promotion' within the definition of input service; the Tribunal relied on precedents holding the Explanation to be retrospective. The Tribunal found a direct nexus between commission paid to procure orders and the manufacture/clearance cycle: commission incentivises sales, which in turn drives manufacture, so the credit claimed was properly attributable to inputs for manufacture and clearance up to the place of removal. In light of the Circular, the retrospective Explanation, and the Tribunal/High Court authorities relied upon, the impugned disallowance and penalty could not be sustained. [Paras 6, 7, 8, 9]

The disallowance of CENVAT credit on sales commission and the consequent penalty were set aside and the appellant's claim for input service credit was allowed with consequential relief.

Final Conclusion: The Tribunal allowed the appeal, set aside the impugned order, and held that CENVAT/input service credit on sales commission paid to agents for the period 01.04.2011 to 31.03.2015 is admissible in view of the departmental circular and the retrospective Explanation to Rule 2(l), granting consequential relief as per law.

Definition of manufacture - process incidental or ancillary to manufacture - chargeability of excise duty on segregated scrap/process waste - application of CBEC Circular dated 10.05.2016 - coverage under exemption notification No.27/2011-CE

Definition of manufacture - process incidental or ancillary to manufacture - chargeability of excise duty on segregated scrap/process waste - Segregation of non-lead material from imported lead scrap by manual sorting does not constitute "manufacture" and the segregated plastic and other unwanted material are not liable to central excise duty as produced or manufactured goods. - HELD THAT: - The assessee procured non-duty paid mixed lead scrap and, by manual segregation, removed plastic and other foreign materials before using the cleaned lead scrap for producing lead ingots/rods. Revenue contended that such segregation is a process incidental or ancillary to manufacture under the inclusive definition of "manufacture" and therefore the removed scrap is a manufactured product chargeable to duty. The Tribunal rejected this contention, holding that the manual segregation is a process of separating raw material components and that actual manufacture begins only after segregation when the cleaned lead scrap is fed into the production process. Consequently, the separated plastic and other waste did not come into existence as a result of any manufacturing process carried out by the assessee and therefore do not fall within the charging provision which applies to "excisable goods produced or manufactured" in India. The Tribunal accepted the factual position that no CENVAT credit had been availed on the input scrap and emphasised that mere removal of pre existing foreign material by manual sorting cannot be equated with a process of manufacture. [Paras 11, 13]

Segregation by manual sorting is not manufacture; no excise duty on the segregated plastic and other scrap.

Application of CBEC Circular dated 10.05.2016 - chargeability of excise duty on segregated scrap/process waste - CBEC Circular dated 10.05.2016 does not support charging excise duty in the present factual matrix where no CENVAT credit was availed and segregation was manual prior to any manufacture. - HELD THAT: - The Circular addressed (a) waste arising during the foundry melting process where higher melting point components separate as process waste, and (b) situations where CENVAT credit had been availed on mixed scrap and segregation occurred before feeding into the plant - clarifying that removed unwanted material could not be treated as removal of inputs for credit reversal but that segregated foreign material should, in appropriate cases, be cleared on payment of duty determined on merits. The Tribunal noted that in the present case no CENVAT credit had been taken and that the segregated plastic pre existed in the input scrap and was removed by manual sorting. Therefore, before any question of classifying and charging duty on such material arises, it must be determined whether the charging section of the Act applies; having found that segregation is not manufacture, the Circular does not operate to render the segregated material excisable in these facts. [Paras 12, 13]

The Circular is inapplicable to impose excise duty in the facts of this case.

Final Conclusion: The Commissioner (Appeals) order setting aside the original demand is upheld; Revenue's appeal is dismissed.

Cenvat credit entitlement on production of proper invoices and proof of receipt - inadmissibility of denying credit solely on third party statements where recipient proves receipt - proof by banking channel and transport documents as corroboration of purchase - extended period of limitation not invocable without evidence of suppression or mis statement - buyer need not verify upstream transactions of registered supplier once proper invoice and receipt are proved

Cenvat credit entitlement on production of proper invoices and proof of receipt - proof by banking channel and transport documents as corroboration of purchase - buyer need not verify upstream transactions of registered supplier once proper invoice and receipt are proved - Appellant entitled to Cenvat credit as it produced invoices, transport documents, RG 23A Part I and proof of payment showing receipt and use of inputs in manufacture. - HELD THAT: - The Tribunal found that the appellant produced invoices together with transport documents, entries in the input register, RG 23A Part I and proof of payment through the banking channel which, taken together, demonstrate actual receipt and use of the inputs in relation to manufacture. Statements of third parties about upstream transactions cannot, by themselves, negate the appellant's documentary proof. Reliance was placed on earlier decisions holding that where a purchaser produces a proper cenvatable invoice and evidence of receipt, the buyer is entitled to credit and need not go behind the supplier's upstream dealings. The lower authorities failed to appreciate and consider the appellant's contemporaneous documentary evidence establishing the claim for credit. [Paras 4, 7]

Credit claim sustained and impugned order insofar as it denied cenvat credit set aside.

Extended period of limitation not invocable without evidence of suppression or mis statement - inadmissibility of denying credit solely on third party statements where recipient proves receipt - Extended period of limitation could not be validly invoked in the absence of evidence of suppression or mis statement by the appellant. - HELD THAT: - The appellant contended that the authorities invoked the extended period alleging suppression and mis statements without evidential basis. The Tribunal observed that no material was produced to substantiate suppression or deliberate mis statement by the appellant; rather the appellant had contemporaneous documents proving receipt and payment. In such circumstances, invocation of extended limitation was unsustainable as it lacked supporting evidence on record. [Paras 5, 7]

Invocation of the extended period set aside for lack of evidence; the assessment based on extended limitation was not sustained.

Final Conclusion: The appeal is allowed; the impugned order of the Commissioner (Appeals) dated 21.04.2022 is set aside and the appellant's entitlement to cenvat credit upheld, with the invocation of extended limitation rejected for lack of evidence.

Pre-deposit - pre-deposit quantified as percentage of tax demand (not total demand) - relegation to the First Appellate Authority for adjudication on merits - input tax credit - assessment and appellate proceedings under the VAT/CST regime

Pre-deposit - pre-deposit quantified as percentage of tax demand (not total demand) - relegation to the First Appellate Authority for adjudication on merits - Quashing of the Tribunal order directing payment of 20% pre-deposit and direction to accept pre-deposit at 15% of the tax demand with relegation to the First Appellate Authority. - HELD THAT: - The Court observed that for the subsequent assessment years 2010-11 and 2011-12 the Appellate Authority had permitted pre-deposit at 15% of the tax amount and had granted substantial relief on merits. Relying on parity and in view of delay in final adjudication of the earlier years, the Court declined to decide the merits and intervened only to fix the rate and basis of pre-deposit. The Tribunal's order requiring 20% of the total demand was set aside and replaced by a direction that the petitioner shall deposit 15% of the tax demand (and not 15% of the total amount fixed by the Assessing Officer). The Court directed the First Appellate Authority to accept such pre-deposit and proceed to adjudicate the appeals on merits after giving opportunity in accordance with law. A timeline of four weeks from receipt of copy of the order was fixed for payment of the pre-deposit, failing which consequential orders may follow. [Paras 6, 7, 8]

Impugned order dated 15.06.2015 set aside; petitioner directed to deposit 15% of the tax demand within four weeks and appeals relegated to the First Appellate Authority for fresh adjudication on merits upon acceptance of the pre-deposit.

Final Conclusion: Writ petitions allowed to the extent of quashing the Tribunal's direction for 20% pre-deposit; petitioner to pay 15% of the tax demand within four weeks, the pre-deposit to be accepted by the First Appellate Authority which shall proceed to adjudicate the appeals on merits; observations made are without prejudice to the merits of the matters.

Priority of secured creditor under Section 26E of the SARFAESI Act - auction sale under the SARFAESI Act passes title free from encumbrances - inefficacy of tax/VAT charge to override secured creditor's rights - Sub-Registrar's duty to return a duly registered sale deed

Priority of secured creditor under Section 26E of the SARFAESI Act - inefficacy of tax/VAT charge to override secured creditor's rights - The dues in the nature of sales tax or VAT payable by the original owner cannot claim priority over the dues of the secured creditor whose security interest was enforced under the SARFAESI Act. - HELD THAT: - The court applied the settled principle that a secured creditor, having registered a security interest and enforced it by auction under the SARFAESI Act, holds priority such that revenues, taxes or cesses do not have precedence over the secured debt. Section 26E was held to confirm that after registration of the security interest the secured creditor's claim has primacy over claims of the Crown or State limited to unsecured creditors. Prior Supreme Court decisions were accepted to the effect that State tax dues cannot prevail over a mortgagee or secured creditor. On the facts, the bank was a secured creditor which lawfully auctioned the mortgaged property and issued a registered sale certificate to the petitioners; hence the sales tax/VAT claim of the original owner cannot override the bank's secured rights or the purchaser's title. [Paras 5]

Sales tax/VAT dues of the original owner do not have priority over the secured creditor's dues enforced under the SARFAESI Act; the tax charge cannot defeat the bank's security or the auction purchaser's title.

Auction sale under the SARFAESI Act passes title free from encumbrances - inefficacy of tax/VAT charge to override secured creditor's rights - The communication dated 14.10.2019 by the sales tax authority creating a charge over the property is without efficacy and liable to be set aside. - HELD THAT: - Having concluded that the secured creditor's rights under the SARFAESI Act prevail, the court held that the sales tax authority's attempt to register a charge on the property for the original owner's VAT/sales tax liabilities could not affect the petitioners' title acquired by bank auction and confirmed by registered sale certificate. Consequently, the impugned communication creating the charge could not be sustained and was liable to be quashed. [Paras 6]

The communication of 14.10.2019 creating a charge in favour of the sales tax authority is of no legal effect and is set aside.

Sub-Registrar's duty to return a duly registered sale deed - auction sale under the SARFAESI Act passes title free from encumbrances - The Sub-Registrar was not justified in retaining the registered sale deed and in refusing to return the document to the petitioners. - HELD THAT: - Given that the petitioners had become the owners pursuant to a valid auction and registered sale certificate under the SARFAESI Act, and that the sales tax charge was ineffective, there existed no lawful basis for the Sub-Registrar to withhold the registered sale deed. The court found the Sub-Registrar's order keeping the document pending to be unjustified and interfering with the petitioners' proprietary rights, and therefore set aside that order. [Paras 6]

The Sub-Registrar's order of 6.3.2021 retaining the registered sale deed is quashed and the document must be returned to the petitioners.

Final Conclusion: The petition is allowed: the sales tax authority's communication registering a charge and the Sub-Registrar's order withholding the registered sale deed are set aside, since the auction purchaser's title under the SARFAESI Act and the secured creditor's priority under Section 26E prevail over the sales tax/VAT claim.