TaxTMI Updates e-Newsletter
Feb 16,2023

Requirement of E-Way bill under Rule 138 - undervaluation of goods to evade statutory compliance - power to detain and assess tax under Section 129(3) of the Central GST Act, 2017 - imposition of IGST and penalty for mis-declaration of value - purpose of E-Way bill to ensure transparency and prevent parallel economy

Requirement of E-Way bill under Rule 138 - undervaluation of goods to evade statutory compliance - purpose of E-Way bill to ensure transparency and prevent parallel economy - Whether the consignments were grossly undervalued to evade the requirement of downloading an E-Way bill and whether action based on fair valuation was justified - HELD THAT: - The Court examined the tax invoices, physical verification and printed MRP on pouches to conclude that the declared values were unrealistically low. The detaining authority calculated the basic value after accounting for MRP, quantities, trade discount and excluding tax/cess and found a substantially higher fair value than shown on the invoices. The Court held that the dispensation of an E-Way bill for consignments below the Rs.50,000 threshold cannot be exploited by deliberately undervaluing large consignments to keep transactions off the web portal. Permitting such conduct would frustrate the statutory purpose of the E-Way bill and the objective of transparency under the GST regime. On the facts, transport of large quantities with negligible declared values and absence of prior portal transactions by the dealer supported the finding of deliberate undervaluation to avoid compliance. [Paras 21, 22, 24, 25, 28]

The Court upheld the finding of gross undervaluation to evade E-Way bill requirement and sustained the consequential action taken by the authorities.

Power to detain and assess tax under Section 129(3) of the Central GST Act, 2017 - imposition of IGST and penalty for mis-declaration of value - Whether the State authorities were entitled to detain the goods and impose IGST and penalty for the mis-declaration found during transit - HELD THAT: - The petitioner challenged the competence of State officers and contended lack of notification under the Integrated GST Act for exercise of powers. The Court, having regard to the material on record and the finding of deliberate undervaluation, held that the detaining authority's action in detaining the goods, levying IGST and imposing penalty was justified. The authorities' assessment on fair valuation and resultant demand was affirmed since the dealer had not discharged the onus of establishing bona fide lower values and had failed to comply with transit documentation requirements in substance. [Paras 7, 13, 18, 26, 27]

The Court declined to interfere with the detention of goods and the imposition of IGST and penalty by the State authorities, affirming the appellate confirmation.

Final Conclusion: Writ petition dismissed; detention of goods, assessment of IGST and penalty upheld on findings of gross undervaluation to evade E-Way bill and statutory compliance.

Movement of goods for provision of service on own account - supply not constituted where there is no transfer of title or stock transfer - requirement of e-way bill and delivery challan on interception of conveyance - detention, release and adjudication procedure on interception of goods in movement - adjudication after opportunity of hearing

Movement of goods for provision of service on own account - supply not constituted where there is no transfer of title or stock transfer - Whether the transportation of the petitioners' own machinery from Arunachal Pradesh to Jammu attracts GST or penalty for supply of goods - HELD THAT: - The Court recorded the petitioners' reliance on Circular No.80/54/2018-GST (clause 13.2) which states that inter-state movement of goods for provision of service on own account by a service provider, not involving transfer of title or stock transfer to a distinct person, does not constitute a supply and would not be liable to GST. The respondents relied on the statutory rules requiring production of invoices/delivery challans on interception. The Court found that there is a factual dispute between the parties as to whether adjudication has been completed and whether the movement in question falls within the exception invoked by the petitioners. The Court did not resolve the substantive question on merits, but directed that the petitioners submit a reply to the show-cause notice within 3 days and that the adjudicating authority decide whether the petitioner is liable to pay any penalty or tax after affording opportunity of hearing within a fortnight thereafter. Accordingly, the question of GST liability for the transportation of the machinery was not finally adjudicated by the Court and stands remanded to the adjudicating authority for fresh consideration and decision on merits.

Remanded for fresh adjudication on merits; petitioners to file reply within 3 days and adjudicating authority to decide after hearing within a fortnight.

Requirement of e-way bill and delivery challan on interception of conveyance - detention, release and adjudication procedure on interception of goods in movement - adjudication after opportunity of hearing - Whether the detention of the trailers and the procedure followed on interception complied with the applicable rules and whether any order of detention was communicated - HELD THAT: - The petitioners contended that the respondents detained the trailers without passing or communicating any order as required under the procedural circular and rules governing interception, detention and release of conveyances. The respondents relied on Rule 138A and Rule 55 of the West Bengal GST Rules to contend that production of invoice/delivery challan and e-way bill is required on interception and that failure to produce delivery challan permits imposition of tax/penalty upon adjudication. The Court found these to be disputed factual and procedural questions. The Court did not make any finding on compliance or non-compliance with the interception/detention procedure; instead it directed the petitioners to submit a reply to the show-cause notice and left it to the adjudicating authority to determine liability and the legality of detention after affording hearing within the prescribed timeframe.

Remanded to the adjudicating authority for verification and adjudication of procedural compliance and legality of detention after giving the petitioners an opportunity of hearing within a fortnight.

Final Conclusion: Writ petition disposed with directions: petitioners to file reply to the show-cause notice within three days; adjudicating authority to adjudicate liability (penalty/tax) and procedural issues after hearing the petitioners or their authorised representative within a fortnight; no order as to costs.

Cancellation of GST registration - show cause notice - consideration of reply to show cause notice - restoration of registration - filing of returns and payment of tax and penalty - intention to facilitate revival of registration

Cancellation of GST registration - show cause notice - consideration of reply to show cause notice - Validity of the order cancelling the petitioner's GST registration where the order records receipt of a reply but does not disclose consideration of its contents. - HELD THAT: - The Court examined the impugned order dated 28.12.2020 and noted that it expressly records reference to a reply dated 24.12.2020 to the Show Cause Notice dated 15.12.2020 (para 5), yet the order contains no indication of the contents of that reply or any discussion of the petitioner's explanation (para 7). The respondent's counter-affidavit is inconsistent, at one place denying any response and elsewhere accepting the petitioner's averment that a reply was filed (para 4), and there is no statement identifying any error in the impugned order (para 6). In these circumstances the Court concluded that the cancellation order is unsustainable because procedural fairness required consideration of the petitioner's response before cancelling registration (para 8). The Court also noted as relevant that the petitioner had filed the returns belatedly and paid the tax and penalty under the Act (para 9). [Paras 5, 6, 7, 8, 9]

The impugned cancellation order is set aside for failure to consider the petitioner's reply; registration is to be restored.

Restoration of registration - filing of returns and payment of tax and penalty - intention to facilitate revival of registration - Relief to be granted following setting aside of the cancellation order. - HELD THAT: - Having set aside the cancellation on the ground that the petitioner's reply was not considered, the Court directed restoration of the petitioner's GST registration (para 13). The Court observed that the petitioner has, in fact, filed the outstanding returns (albeit belatedly) and has paid tax and penalty in accordance with the Act (para 9). The Court referred to judicial observations from other High Courts emphasising that the GST framework and governmental intent favour facilitating revival of registrations rather than permanently debarring assessees from the GST fold (para 10, and citations reproduced), and proceeded to order restoration of the registration (para 13). [Paras 9, 10, 13]

Registration restored and petition allowed.

Final Conclusion: The cancellation order dated 28.12.2020 is set aside for failing to consider the petitioner's reply to the Show Cause Notice; the petitioner's GST registration is restored and the petition is allowed.

Prohibition on simultaneous proceedings under GST - Section 6(2)(b) of the GST Act 2017 - Premature challenge to summons - Duty to consider reply expeditiously and grant personal hearing

Prohibition on simultaneous proceedings under GST - Section 6(2)(b) of the GST Act 2017 - Duty to consider reply expeditiously and grant personal hearing - First respondent to determine whether the subject matter of the summons issued by the first respondent and the proceedings initiated by the second respondent are one and the same and, if so, to cease proposed proceedings in accordance with Section 6(2)(b) of the GST Act 2017. - HELD THAT: - The petition challenging the impugned summons was premature because the first respondent had not yet adjudicated the reply filed by the petitioner. The court directed that the first respondent must consider the petitioner's reply dated 18.01.2023 expeditiously and decide whether the subject matter of the summons and the proceedings initiated by the second respondent coincide. The first respondent is to give the petitioner one further personal hearing before taking a final decision. If the first respondent concludes that the subject matter is identical, it must refrain from initiating proceedings against the petitioner as mandated by Section 6(2)(b) of the GST Act 2017. The court imposed a timeline of four weeks from receipt of the order for the first respondent to complete this exercise. [Paras 6, 7]

Writ petition disposed directing the first respondent to consider the petitioner's reply, grant one personal hearing, and within four weeks decide whether the subject matter is the same; if so, the first respondent must drop proposed proceedings under Section 6(2)(b) of the GST Act 2017.

Final Conclusion: The writ petition is disposed of by directing the first respondent to consider the reply, grant one further personal hearing and, within four weeks, decide whether the subject matter of the central summons and the state proceedings are identical and, if so, to discontinue proposed central proceedings under Section 6(2)(b) of the GST Act 2017; connected W.M.P. closed, no costs.

Detention, seizure and release of goods and conveyances in transit under Section 129 - Validity and extension of E-Way bill - Presumption of intra State delivery where consignment remains in State after expiry of E Way bill - Liability to SGST where goods are found detained within the State - Penalty for contravention of transit provisions

Detention, seizure and release of goods and conveyances in transit under Section 129 - Validity and extension of E-Way bill - Liability to SGST where goods are found detained within the State - Penalty for contravention of transit provisions - Lawfulness of imposition of SGST and penalty under Section 129 where the consignment's E Way bill had expired and the vehicle was detained in the State after suffering a breakdown. - HELD THAT: - The Court found that the consignment was found within the territory of the State after the validity of the E Way bill had expired and that the petitioner did not take steps to extend the E Way bill while the vehicle was detained. In such circumstances, the statutory scheme in Section 129 permits the proper officer to detain or seize goods and to impose tax and penalty; the goods may be treated as deemed delivered within the State when found there after expiry of the E Way bill. The petitioner's payment of IGST and the asserted mechanical breakdown did not preclude the statutory consequences flowing from an expired E Way bill where no extension was obtained and no documentary proof was produced to rebut the presumption relied upon by the authority. The Court therefore held that the authority was lawfully entitled to impose SGST and the penalty under Section 129, and declined to apply the ratios of the earlier cited decisions to the facts of this case.

The imposition of SGST and the penalty under Section 129 was held to be lawful; the writ petition is dismissed.

Final Conclusion: Writ petition dismissed on merits; the authority was lawfully entitled to detain the goods and impose SGST and penalty under Section 129 where the E Way bill had expired and the consignment remained within the State without extension of the E Way bill.

Provisional attachment of property under Section 83 - liability of LLP vis-a -vis partners (joint and several) - application of Section 90 and Section 137 to attach partner's property - acceptance of immovable property in lieu of attached movable property under CBIC guidelines - requirement of unencumbered title and market value at least equal to tax in dispute

Provisional attachment of property under Section 83 - application of Section 90 and Section 137 to attach partner's property - liability of LLP vis-a -vis partners (joint and several) - Validity of provisional attachment of immovable property owned by a partner of an LLP under Section 83 by invoking Sections 90 and 137 - HELD THAT: - The Court examined whether the department could provisionally attach property belonging to a partner of the LLP by invoking Section 90 (and Section 137) read with Section 83. It held that an LLP is a distinct taxable person and that the liability of the firm, when determined, may be joint and several as between the firm and its partners, but a partner of an LLP is not, merely by being a partner, the taxable person against whom provisional attachment under Section 83 can be directly made. Section 90 embodies the principle of partner liability akin to Section 25 of the Partnership Act, but that principle applies once the liability of the taxable person is determined; it does not justify provisional attachment of a partner's personal property in the absence of an assessment fixing liability of the LLP. Section 137 (vicarious liability for offences) was held inapplicable to justify provisional attachment of partner's immovable property under Section 83. Applying the reasoning in Kapurchand Shrimal (as discussed), the Court concluded that respondent No.3 was not justified in provisionally attaching the personal property of a partner under Section 83 by relying on Sections 90 or 137. [Paras 27, 28, 29, 30, 31]

Provisional attachment of immovable property owned by the partner of the LLP under Section 83 by invoking Sections 90 or 137 was unjustified and not permissible.

Acceptance of immovable property in lieu of attached movable property under CBIC guidelines - requirement of unencumbered title and market value at least equal to tax in dispute - Whether the petitioner could substitute offered immovable property for release of provisionally attached fixed deposits and bank accounts under the CBIC guidelines - HELD THAT: - The Court applied CBIC guidelines permitting release of attached movable property where the taxable person offers immovable property in lieu, provided such property is of value not less than the tax in dispute and is free from subsisting charges, encumbrances, and litigation, with title deeds produced. The Court found that the property offered (plots of Maruti Park) was shown to be unencumbered, with property tax paid and free from legal dispute, and that government-approved valuation supported a market value at or above the requisite threshold. In the exercise of its supervisory jurisdiction and on the material produced (including valuation reports and undertaking), the Court directed substitution of the offered immovable property for the provisionally attached fixed deposits and bank accounts, while keeping a specified portion of fixed deposit attachment intact. Conditions were imposed that the petitioner and the owner furnish an undertaking that the property shall not be marketed, mortgaged or subject to future litigation, and that release would follow on receipt of the undertaking and a copy of the order. [Paras 6, 9, 10, 11]

Offered immovable property, being unencumbered and of sufficient market value, was accepted in substitution for the provisionally attached fixed deposits and current accounts except for a specified amount which shall remain attached; release to follow on filing of undertaking and copy of the order.

Final Conclusion: The petition is allowed partially: the provisional attachment of a partner's personal immovable property under Section 83 by invoking Sections 90/137 was held improper; however, the petitioner was permitted to substitute the offered unencumbered immovable property for release of the provisionally attached fixed deposits and bank accounts subject to an undertaking and with a specified portion of attachment to continue.

Entitlement to interest on wrongful retention - directions of a higher court binding on authorities - statutory interest versus restitutionary/compensatory interest - applicability of Sections 54, 56 and 115 of the CGST Act in refund claims - award of interest at an equitable rate as interest of justice

Entitlement to interest on wrongful retention - directions of a higher court binding on authorities - statutory interest versus restitutionary/compensatory interest - applicability of Sections 54, 56 and 115 of the CGST Act in refund claims - Whether the petitioner was entitled to interest on the amounts encashed under bank guarantees from the date of encashment until refund and whether the 3rd respondent erred in rejecting that claim. - HELD THAT: - The Bombay High Court had directed refund of the amounts covered by the encashed bank guarantees together with applicable statutory interest within four weeks, thereby declaring the petitioner entitled to the sum and interest. The 3rd respondent's conclusion that the petitioner was not entitled to interest because Sections 54, 56 or 115 were inapplicable or because no specific statutory provision authorised interest on encashed bank guarantees is unsustainable. The High Court's direction that refund be made with applicable interest is binding and establishes entitlement to accrued interest. Independently, even in absence of a specific statutory provision, the respondents illegally retained funds belonging to the petitioner from encashment until refund; principles of restitution and compensation entitle the petitioner to interest at a reasonable rate for deprivation of use. The 3rd respondent's factual finding that the amount was available to the petitioner during the period is contrary to the record and is set aside. For these reasons the impugned denial of interest is contrary to law and fact and must be quashed. [Paras 9, 10, 11, 12, 13]

The impugned order rejecting the claim for interest is set aside and the petitioner is entitled to interest on the encashed amounts for the period of wrongful retention.

Award of interest at an equitable rate as interest of justice - At what rate and for what period interest should be awarded to the petitioner. - HELD THAT: - Having held that the petitioner is entitled to interest for the period of wrongful retention, the Court determines the appropriate rate as matter of equitable relief. Applying the interest of justice, the Court directs payment of interest at 6% per annum for the period from encashment of the bank guarantees on 29.03.2019 up to refund on 05.01.2022. The respondents are directed to pay such interest expeditiously and within two months from receipt of the order. [Paras 14, 15]

Respondents directed to pay interest at 6% p.a. on the refunded amount for the period 29.03.2019 to 05.01.2022, payable within two months.

Final Conclusion: Petition partly allowed: the impugned order denying interest is set aside; respondents directed to pay interest at 6% p.a. on the amount refunded for the period 29.03.2019 to 05.01.2022, to be paid within two months.

Exemption u/s 11 - income from newspapers, which included advertisement revenue and surplus from its activities in Delhi - interpretation of “charitable objects” under Section 2 (15) - As submitted activity of generating income through advertisement is only incidental and income from advertisement cannot be called part of the main object of the trust but rather necessary for it to attain its charitable objectives - HELD THAT:- Appellate Commissioner, the ITAT and the High Court merely followed the judgment of the Delhi High Court in India Trade Promotion Organisation [2015 (1) TMI 928 - DELHI HIGH COURT] However, the law with regard to interpretation of Section 2 (15) has undergone a change, due to the decision in Ahmedabad Urban Development Authority [2022 (10) TMI 948 - SUPREME COURT]

As a result, this court is of the opinion, that matter should be remitted for fresh consideration of the nature of receipts in the hands of the assessee, in the present case. As a result, the matter requires to be re-examined, and the question as to whether the amounts received by the assessee qualify for exemption, under Section 2 (15) or Section 11 needs to be gone into afresh.

The revenue’s appeal succeeds in part. AO shall examine the documents and relevant papers and render fresh findings on the issue whether respondent is a charitable trust, entitled to exemption of its income.

Reopening of assessment - reason to believe - failure to disclose fully and truly all material facts - change of opinion - sanction under section 151

Reopening of assessment - reason to believe - failure to disclose fully and truly all material facts - Validity of notice issued under section 148 read with section 147 (pre-1.4.2021) insofar as proviso requiring failure to disclose fully and truly all material facts is concerned - HELD THAT: - The Court examined the reasons recorded for reopening and the materials on record and found that the prerequisite in the proviso to section 147 - that action beyond four years is permissible only where the AO has reason to believe that income has escaped assessment due to the assessee's failure to disclose fully and truly all material facts - was not satisfied. The reasons recorded reproduced the audit objection and asserted escapement of income, but did not point to any tangible material or specific undisclosed primary facts which were not placed before the original assessing officer. The basic facts and documentary material relied upon by the petitioner were neither controverted nor shown to have been withheld from the original assessment proceedings. Consequently the record demonstrated reopening was founded on a purported change of opinion rather than on any failure to disclose material facts necessary for assessment. [Paras 23, 24, 25, 26]

Notice under section 148 read with section 147 was invalid and liable to be set aside for failure to satisfy the proviso condition of failure to disclose fully and truly all material facts.

Change of opinion - sanction under section 151 - Whether the reassessment was a permissible exercise of power or amounted to change of opinion and whether requisite sanction under section 151 was placed on record - HELD THAT: - The Court found that the initiation of reassessment was occasioned by an internal audit objection and, as reflected in the departmental affidavit and the reasons recorded, amounted to a change of opinion on issues already examined in the original scrutiny assessment. The reasons did not disclose any fresh tangible material that would vitiate the finality of the original assessment. The sanction under section 151 was not placed on record for the Court's scrutiny. In these circumstances, the reassessment could not be sustained as a legitimate exercise of the extraordinary power to reopen assessments beyond four years. [Paras 8, 23, 24, 26]

Reopening amounted to impermissible change of opinion; absence of record of proper sanction further weighed against validity of reassessment.

Final Conclusion: Writ petition allowed; notice under section 148 read with section 147 (for A.Y. 2015-16) set aside as the reopening was founded on change of opinion and did not satisfy the proviso requirement of failure to disclose fully and truly all material facts; petition made absolute with no order as to costs.

Limitation under Section 153(3) - remand by ITAT under Section 254 - onus on revenue to prove non-receipt of ITAT order - principles of natural justice - refund and release of seized property

Limitation under Section 153(3) - remand by ITAT under Section 254 - onus on revenue to prove non-receipt of ITAT order - Whether the assessing officer's action to give effect to the ITAT order dated 18th February 2010 was time barred and whether the revenue had, in law, received the ITAT order so as to start the limitation under Section 153(3). - HELD THAT: - The Court found that the respondents, as parties to the ITAT proceedings, bore the onus of proving that they had not received the ITAT order dated 18th February 2010 and could not adopt a construction of the words "is received" in Section 153(3) so as to permit indefinite extension of the limitation period. The ITAT is statutorily obliged to send a copy of its order to both the assessee and the Commissioner; consequently the burden lay on the revenue to establish non receipt. The respondents had notice of the order through the petitioner's communications (notably the letter dated 6th March 2018) and, in any event, could and should have sought a copy from the ITAT much earlier than they did. The Court held that a reasonable period must be applied to the respondents' duty to act on the ITAT remand and that the respondents' inaction for the extended period was unreasonable. Having failed to act within a reasonable time after being put on notice, the respondents could not rely on a technical non receipt contention to defeat the operation of the limitation provision. In consequence, the Court directed that the refund claimed by the petitioner be paid with additional interest under Section 244A and that the jewellery seized be released, the direction being founded on the respondents' failure to comply with the remand order within the applicable time frame. [Paras 24, 25, 26, 27, 28]

The respondents were held to have failed in their duty to act on the ITAT order within a reasonable time; they were directed to refund the tax with additional interest and to release the seized jewellery within two weeks.

Final Conclusion: Petition allowed: respondents directed to refund the claimed amount with interest (under section 244A) and to release the seized jewellery within two weeks; petition disposed of with no order as to costs.

Determination of disputed tax under the Direct Tax Vivad se Vishwas Act - giving effect to appellate order for computation of tax payable - inapplicability of administrative FAQ where appellate order fixes legal principle - remand to Assessing Officer for computation consistent with ratio of appellate order

Giving effect to appellate order for computation of tax payable - determination of disputed tax under the Direct Tax Vivad se Vishwas Act - Whether disputed tax for the purpose of Vivad se Vishwas must be computed by giving effect to the Tribunal's order or could be computed on the basis of the original order of the Assessing Officer relying on CBDT FAQ No.7. - HELD THAT: - The Court held that section 2(1)(j)(B) of the Direct Tax Vivad se Vishwas Act requires the amount of tax payable to be determined after giving effect to an appellate forum's order where that order was passed on or before the specified date and the time for filing further appeal had not expired. Where the Tribunal had already decided the substantive legal principle (that additions for alleged bogus purchases be limited to the difference between gross profit rates on genuine and hawala purchases) and only remitted the matter for calculation because necessary details were not readily available, the disputed tax must be computed in accordance with the Tribunal's order. The administrative FAQ (Question No.7 of Circular No.09/2020) relied upon by the authority applies to cases where an appellate authority sets aside an assessment so that the Assessing Officer may carry out fresh examination or where a proper opportunity was not afforded; it does not apply where the appellate forum has decided the substantive issue and remitted only for computation consistent with its ratio. Consequently, the Form No.3 issued based on the FAQ, which reflected tax computed as per the original AO order rather than giving effect to the Tribunal's decision, was unsustainable. [Paras 12, 13, 14]

Form No.3 issued by respondent No.4 was set aside and respondent No.4 was directed to issue a fresh Form No.3 determining disputed tax by giving effect to the Tribunal's order in accordance with section 2(1)(j)(B) of the Act of 2020.

Remand to Assessing Officer for computation consistent with ratio of appellate order - Whether the designated authority should remand or otherwise proceed to compute the disputed tax following the Tribunal's direction and ratio. - HELD THAT: - The Tribunal had remitted the matter to the Assessing Officer to apply the ratio laid down by this Court because specific details necessary for computation were not available on record. The High Court clarified that this remand did not leave the substantive question open; it only required calculation in accordance with the Tribunal's ruling. Therefore the designated authority must calculate the disputed tax by giving effect to the Tribunal's order (applying the gross profit rate difference principle) and issue Form No.3 accordingly. The Court directed the authority to complete this exercise within three months. [Paras 13, 14]

The respondent shall proceed to issue Form No.3 after computing the disputed tax in accordance with the Tribunal's order and the ratio laid down therein, within three months.

Final Conclusion: The writ petition is allowed: the Form No.3 issued on the basis of CBDT FAQ No.7 is set aside and respondent No.4 is directed to compute and issue a fresh Form No.3 determining disputed tax by giving effect to the Tribunal's order under section 2(1)(j)(B) of the Direct Tax Vivad se Vishwas Act; to be done within three months.

Jurisdiction of Assessing Officer - transfer of cases under Section 127 - exercise of jurisdiction in reassessment under Section 148 - reopening of assessment - place of activity/operation - lower deduction certificate under Section 197

Jurisdiction of Assessing Officer - transfer of cases under Section 127 - exercise of jurisdiction in reassessment under Section 148 - Whether the ACIT, International Taxation, Bhubaneswar had jurisdiction to issue notices under Section 148 to Vedanta Resources Ltd. for AYs 2013-14 to 2017-18. - HELD THAT: - The Court found that VRL is a non-resident incorporated in the UK and that its jurisdiction was assigned to the DCIT (International Tax) Circle-1(1)(1), New Delhi. The Department's reliance on an application by VRL for a lower deduction certificate (Form 13) and an order issued in 2020 to infer a place of activity at Jharsuguda was an erroneous factual premise, particularly because the certificate related to a 2020 transaction which was not acted upon and the AYs under reassessment pre-date that transaction. Section 127(2)(a) contemplates transfer of a case to an AO not subordinate to the same Commissioner only after affording the assessee a reasonable opportunity of being heard and after recording reasons; no such transfer order from CIT (IT)-1, New Delhi to the Bhubaneswar AO was produced. Section 120 cannot effect transfer to an AO who is not subordinate to the transferring Commissioner. In the absence of any valid transfer under Section 127, Opposite Party No.1 lacked jurisdiction to issue the impugned Section 148 notices and proceed with reassessment for the specified AYs. [Paras 11, 12, 15, 16, 17]

The impugned notices under Section 148 issued by ACIT, Bhubaneswar were issued without jurisdiction and are unsustainable.

Final Conclusion: The writ petitions are allowed; the notices dated 31st March, 2021 and all consequential proceedings for AYs 2013-14 to 2017-18 issued by Opposite Party No.1 are quashed for want of jurisdiction. This does not preclude the Department from proceeding in accordance with law.

Treatment of capital gains as income from other sources - claim of exemption under Section 54F - pre-agreement receipt of consideration and its relevance to characterisation of income - reliance on non-response to notices issued under Section 133(6) - failure to afford opportunity to the assessee / audi alteram partem - inconsistent treatment of similarly placed taxpayers

Treatment of capital gains as income from other sources - pre-agreement receipt of consideration and its relevance to characterisation of income - claim of exemption under Section 54F - inconsistent treatment of similarly placed taxpayers - Validity of the assessment officer's classification of the petitioner's alleged long term capital gains as income from other sources and refusal to allow deduction under Section 54F - HELD THAT: - The assessment order treated the petitioner's asserted long term capital gains as income from other sources, relying principally on (i) part of the consideration having been received prior to execution of the Share Purchase Agreement and (ii) non-response to notices issued under Section 133(6). The court noted that the very same transaction vis-a -vis a co-shareholder was accepted as capital gains and the claim under Section 54F allowed, despite similar facts regarding pre-agreement receipt. The impugned order does not record that the consequence of non-response to the notices was put to the petitioner, nor does it show that the petitioner was given an opportunity to address the AO's concerns about the timing of receipts and the steps for transfer of shares. In these circumstances the court found the AO's conclusion on classification and denial of deduction cannot be sustained without affording the petitioner an opportunity to be heard and without resolving the apparent inconsistent treatment between similarly placed taxpayers. [Paras 9, 10, 11, 12, 13]

Impugned classification and refusal to allow deduction set aside for non-compliance with principles of fair hearing and in view of inconsistent treatment; matter not finally adjudicated on merits.

Reliance on non-response to notices issued under Section 133(6) - failure to afford opportunity to the assessee / audi alteram partem - Direction for fresh consideration by the Assessing Officer after affording opportunity and issuing notice - HELD THAT: - The court directed that the assessment order be set aside and remanded the matter to the AO to pass a fresh order after giving the petitioner notice indicating date and time of hearing. The court recorded that the AO ought to have put to the petitioner the consequence of non-response by RTPL and ISL to the Section 133(6) notices and afforded the petitioner a chance to have those entities represented or to otherwise meet the AO's concerns. The petitioner was also left free to pursue appropriate remedies after the fresh assessment in accordance with law. [Paras 14, 15]

Assessment order set aside and remitted to AO for fresh adjudication after giving notice and hearing; petitioner permitted to avail remedies thereafter.

Final Conclusion: Writ petition allowed to the extent that the impugned assessment order is set aside and the matter is remitted to the Assessing Officer for fresh consideration after giving the petitioner notice and an opportunity of hearing; consequent liberty granted to the petitioner to pursue remedies as per law.

Stay of demand pending first appeal - pre-condition of payment of percentage of disputed demand for grant of stay - binding nature of CBDT instructions on Assessing Officer - adjustment of refunds against disputed demand - power to refer to Principal CIT/CIT for determining higher or lower quantum - release of refund in excess of prescribed proportion

Stay of demand pending first appeal - pre-condition of payment of percentage of disputed demand for grant of stay - adjustment of refunds against disputed demand - binding nature of CBDT instructions on Assessing Officer - Whether the Assessing Officer could adjust refunds due to the petitioner against the outstanding disputed demand for AY 2012-2013 without applying the CBDT guidelines prescribing standard pre-conditions for grant of stay of demand. - HELD THAT: - The Court found that the petitioner had sought that the demand be kept in abeyance and had filed the appeal on 30.04.2015; the inward stamp and timing established that a stay-related request and the appeal were before the authority contemporaneously (paras 4-6). The CBDT Office Memoranda (Instruction No.1914 as modified by the Office Memoranda dated 29.02.2016 and 31.07.2017) prescribe that, where a demand is disputed before the CIT(A), a stay of the demand shall be granted on payment of a standardized proportion of the disputed demand (initially 15%, later revised to 20%), subject to referral to the Principal CIT/CIT where higher or lower payment is warranted and subject to specified procedural safeguards and timelines (paras 8-8.5). Those guidelines are binding in the sense that field officers are expected to apply them and follow their letter and spirit when an application for stay is made (paras 8.5-8.6, 11). In the present case the Assessing Officer allowed system-generated adjustments of refunds over time amounting to a substantially larger proportion of the disputed demand (approximately 65.43%), without following the prescribed pre-conditions, undertaking, referral mechanism or review steps contemplated by the Board's instructions; the respondent's reliance on automatic CPC adjustment and the suggestion that no stay-application existed was unsustainable in light of the filings and the sequence of events (paras 7, 9-9.2, 12-14). The Court held that the adjustments so made were therefore not in conformity with the CBDT guidelines and amounted to an excessive appropriation of refunds which ought not to have been continued pending adjudication of the appeal. [Paras 9, 11, 12, 13, 14]

The adjustments of refunds amounting to about 65.43% of the disputed demand for AY 2012-2013, made without applying the CBDT guidelines regarding grant of stay and pre-conditions, were not sustainable.

Release of refund in excess of prescribed proportion - power to refer to Principal CIT/CIT for determining higher or lower quantum - What relief should be granted in respect of refunds adjusted in excess of the proportion prescribed by the CBDT guidelines. - HELD THAT: - Applying the Board's standard of permitting stay on payment of a prescribed proportion (20% as per the 31.07.2017 amendment) and noting that the respondent had failed to follow the referral/review mechanism if it considered a higher lump-sum payment warranted, the Court directed that the amount adjusted in excess of 20% of the disputed demand be refunded to the petitioner. The Court quantified the excess (rounded) and ordered that the excess amount be remitted to the petitioner's account within four weeks of receipt of the order. The Court also directed the petitioner to cooperate for early disposal of the appeal and gave the Appellate Authority eight weeks to decide the appeal; failure of the assessee to cooperate would permit the respondent to seek review of the order (paras 13-16). These directions give effect to the Board's scheme by restoring the petitioner to the position contemplated by the guidelines pending final adjudication. [Paras 13, 14, 15, 16]

The respondent is directed to refund the amount adjusted in excess of 20% of the disputed demand for AY 2012-2013 (rounded as directed), to remand the matter for expeditious disposal of the appeal within the specified timeframe, and the petitioner must cooperate in early adjudication.

Final Conclusion: Writ petition allowed: the Court quashed the respondent's refusal to refund the excess amount adjusted beyond the CBDT-prescribed proportion and directed refund of the excess (rounded as stated), ordered remittance within four weeks and directed the CIT(A) to decide the appeal within eight weeks, subject to the assessee's cooperation; respondent may seek review if the assessee does not cooperate.

Reopening of assessment - service of notice - representation by authorized representative - bank deposits treated as business receipts - explanation of source of deposits - deletion of additions for unexplained credits

Reopening of assessment - service of notice - representation by authorized representative - Validity of reopening the assessment and sufficiency of service of notice to the assessee. - HELD THAT: - The Tribunal examined whether the reopening under the reassessment provisions was vitiated by non-service of notice. The record shows the assessing officer recorded reasons, obtained prior approval, dispatched the notice and placed the dispatch register on record. The authorised representative of the assessee attended assessment proceedings, filed vakalatnamas and sought adjournments without raising objection to non-service. In these circumstances the attendance of the authorised representative and the documentation on record negatived the contention of non-service and the reopening was held to be valid. Accordingly the grounds challenging service and reopening were rejected. [Paras 6]

Grounds challenging reopening and service of notice are rejected; reopening held valid.

Bank deposits treated as business receipts - explanation of source of deposits - deletion of additions for unexplained credits - Whether the impugned additions treating bank deposits as business receipts were justified or whether the assessee's explanation and supporting evidence established the source. - HELD THAT: - The Tribunal considered the assessee's evidence offered before authorities below, including documentary material purporting to show the origin of deposits from family sources and sale transactions, and noted the assessing officer and the CIT(A) found the deposits unexplained. The Tribunal found that the lower authorities failed to appreciate the materials on record and had treated the deposits as business receipts contrary to the evidence. On evaluation of the evidence placed before it, the Tribunal accepted that the deposits were explained by the assessee and therefore deleted the additions made by the assessing officer. [Paras 10]

Addition treating bank deposits as business receipts deleted; this ground of the assessee's appeal allowed.

Final Conclusion: The appeal is partly allowed: reopening of assessment and service of notice sustained, but the addition made by treating the bank deposits as business receipts is deleted on the facts and evidence; appeal partly allowed.

Peak credit theory - addition on account of unexplained bank deposits - estimation of income due to non-cooperation

Peak credit theory - addition on account of unexplained bank deposits - Whether the addition on account of cash deposits in bank accounts can be restricted to combined peak credit instead of aggregating all deposits. - HELD THAT: - The Tribunal noted that the Assessing Officer had aggregated all deposits in the bank accounts without considering corresponding withdrawals. The CIT(A) applied the peak credit theory after examining the passbooks and observed credits and corresponding debits indicating rerouting of cash, computed combined peak credit of the two bank accounts at Rs.8,14,238 and deleted the balance of the addition. The Tribunal observed that the CIT(A) had given substantial relief by deleting the larger part of the addition and that the Revenue had not appealed against that deletion. Having considered the material and the relief granted below, the Tribunal found no reason to grant further relief to the assessee and affirmed the CIT(A)'s application of the peak-credit approach and the consequential deletion of the remaining addition. [Paras 7]

Affirmed the CIT(A)'s restriction of the addition to combined peak credit of Rs.8,14,238 and deletion of the balance addition.

Estimation of income due to non-cooperation - peak credit theory - Whether the Assessing Officer's estimated addition of business income should be sustained when peak credit has already been adopted by the appellate authority. - HELD THAT: - The Assessing Officer estimated business income at Rs.5,00,000 on account of the assessee's non-cooperation and large cash deposits. The CIT(A) confirmed that estimate, noting admissions of business activity and lack of returns for the year. The Tribunal, however, observed that the CIT(A) had already granted relief by deleting the bulk of the additions and admitting only the combined peak credit. The Tribunal agreed with the submission that where the peak-credit adjustment has been adopted, there is no justification for a further, separate estimate of business profit based on the same cash transactions. On that basis the Tribunal set aside the order confirming the estimated addition and decided the issue in favour of the assessee. [Paras 11]

Set aside the confirmation of the estimated business-income addition of Rs.5,00,000 and decided the issue in favour of the assessee.

Final Conclusion: The appeal is partly allowed: the Tribunal affirmed the CIT(A)'s limitation of the addition to the combined peak credit in bank accounts and quashed the further estimated addition of business income, deciding the latter in favour of the assessee.

Disallowance of development expenses on estimation basis - requirement of supporting vouchers for claimed development expenses - burden of proof on the assessee to substantiate expenditure - valuation of closing stock on per square metre rate including development charges

Disallowance of development expenses on estimation basis - requirement of supporting vouchers for claimed development expenses - burden of proof on the assessee to substantiate expenditure - Whether the addition of Rs.3,20,000/- disallowing part of claimed development expenses was justified. - HELD THAT: - The Tribunal affirmed the finding of the authorities below that the Assessing Officer made the disallowance by estimation because the assessee failed to produce complete vouchers and supporting evidence for the claimed development charges. The assessee relied on a registered valuer's report and asserted expenditure, but did not furnish documentary proof of the underlying payments. The CIT(A) observed that the valuation report amounted to an uncorroborated estimate and the AO was therefore justified in estimating and disallowing 20% of the claimed amount. Given the absence of primary supporting evidence and the applicable burden on the assessee to substantiate claimed expenses, the Tribunal found no infirmity in sustaining the addition and dismissed the ground. [Paras 9, 10]

Addition of Rs.3,20,000/- sustained; ground dismissed.

Valuation of closing stock on per square metre rate including development charges - Whether the valuation of closing stock at the rates adopted by the Assessing Officer (per square metre including development charges) and the resulting addition of Rs.10,25,844/- were erroneous. - HELD THAT: - The Tribunal noted that the AO valued the closing stock using specific per square metre rates for land and for development charges, and that the assessee did not controvert the lower authorities' findings or produce material to upset those valuations. On the record before it, the Tribunal found no reason to interfere with the AO's and CIT(A)'s valuation approach and the resultant enhancement of closing stock, and therefore dismissed the challenge to the addition. [Paras 11, 13]

Valuation of closing stock upheld; grounds relating to the addition of Rs.10,25,844/- dismissed.

Final Conclusion: The appeal is dismissed; the Tribunal upheld the disallowance of part of the claimed development expenses for want of supporting vouchers and affirmed the valuation-based enhancement of closing stock.

Statutory accumulation under section 11(1)(a) - profits and gains of business incidental to charitable purposes - calculation of accumulation on gross receipts versus net profits - interpretation of income of incidental business under section 11(4A)

Profits and gains of business incidental to charitable purposes - calculation of accumulation on gross receipts versus net profits - interpretation of income of incidental business under section 11(4A) - Whether the amount statutorily allowed to be set apart under section 11(1)(a) for a charitable trust's incidental business (pharmacy) is to be computed on the gross receipts of the business or on its profits and gains. - HELD THAT: - The Tribunal held that the term income of a business qualifying for exemption under section 11 must be read in light of sub-section (4A), which expressly refers to profits and gains of business incidental to the objectives of the trust. A plain reading of section 11(4A) leaves no scope to treat gross receipts/turnover of an incidental business as the income for the purpose of computing the statutory 15% accumulation under section 11(1)(a). The ld.CIT(A)'s conclusion that only the surplus (profits and gains) of the pharmacy business is available to be transferred to the main account for calculation of accumulated income was therefore upheld. Authorities relied upon by the assessee were distinguished on facts and on the precise question decided in those cases, and were not found to govern the present issue concerning what constitutes income of an incidental business for computation of the section 11(1)(a) accumulation. [Paras 8, 9, 12]

The accumulation allowable under section 11(1)(a) in respect of the assessee's pharmacy business is to be computed on the profits and gains of that incidental business and not on its gross receipts; the ld.CIT(A)'s order is upheld.

Final Conclusion: All grounds of the assessee are dismissed and the appeal is dismissed; the statutory 15% accumulation under section 11(1)(a) for the pharmacy business in Asst.Year 2016-17 is to be computed on the profits and gains of the incidental business, not on gross receipts.

Addition under

International transaction - arm's length price - corporate guarantee fee - counter corporate guarantee - transfer pricing adjustment - disallowance under section 14A read with Rule 8D - computation of book profits under section 115JB as a complete code

International transaction - corporate guarantee fee - arm's length price - counter corporate guarantee - transfer pricing adjustment - Whether transfer-pricing adjustment in respect of corporate guarantee furnished by the assessee should be sustained and if so at what rate the guarantee fee should be benchmarked - HELD THAT: - On the facts the Tribunal held that the guarantee furnished by the Indian parent for the step down subsidiary is prima facie an international transaction because it bears on the profits/losses of the parent (the counter guarantee by the wholly owned UK subsidiary is not treated as eliminating the prima facie impact). The Tribunal examined competing rates and, following coordinate authority (Greenply Industries Ltd. and other Tribunal precedents), concluded that the arm's length guarantee commission should be restricted to 0.5% of the outstanding guarantee amount at year end. The higher 2% benchmark applied by the TPO was not sustained; the DRP/TPO factual findings that the transaction is an international transaction were accepted but the quantum was moderated to reflect the established Tribunal practice and comparables discussed in the orders. [Paras 11, 13]

Transfer pricing adjustment on account of corporate guarantee sustained in principle; quantum reduced and directed to be computed at 0.5% of year end outstanding.

Disallowance under section 14A read with Rule 8D - Rule 8D - Whether the disallowance under section 14A read with Rule 8D should be made or the assessee's suo moto disallowance accepted - HELD THAT: - The Tribunal recalled its earlier findings in the assessee's own case for earlier years and the line of authorities requiring the AO to record satisfaction before invoking Rule 8D. Having regard to the identical facts, the longstanding nature of the investments, and that the assessee had made a suo moto disallowance accepted by its auditors, the Tribunal held that the AO was not justified in applying Rule 8D to increase the disallowance. The Tribunal therefore deleted the additional disallowance made by the AO and accepted the assessee's suo moto disallowance for the years under appeal. [Paras 16]

Disallowance under section 14A/Rule 8D deleted; assessee's suo moto disallowance accepted.

Computation of book profits under section 115JB as a complete code - disallowance under section 14A - Whether notional disallowance under section 14A/Rule 8D can be applied in computing book profits under section 115JB - HELD THAT: - The Tribunal followed the jurisdictional High Court and Special Bench precedent that computation under section 115JB is a complete code and does not permit importing the notional disallowance mechanism of section 14A(2)/(3)/Rule 8D into clause (f) of Explanation 1 to section 115JB. On that basis the Tribunal held that the AO could not make the estimated disallowance under section 14A while computing book profits under section 115JB. [Paras 17]

Addition of notional section 14A disallowance to book profits under section 115JB not sustained; grounds allowed.

Recomputation of interest under section 234C - Direction to recompute interest under section 234C where assessee alleged mis computation - HELD THAT: - Assessee pointed out discrepancy between interest computed in submissions and interest shown in the final assessment. The Tribunal, accepting the grievance in principle, directed the Assessing Officer to recompute interest under section 234C and decide in accordance with law. [Paras 19]

Matter remitted to AO to recompute interest under section 234C and decide as per law (allowed for statistical purposes).

Verification of deduction under section 80G - Whether donation claimed as deduction under section 80G should be allowed - HELD THAT: - The assessee claimed deduction subject to the donee obtaining the requisite eligibility certificate. The Tribunal did not decide the claim on merits but set the matter aside to the Assessing Officer to verify the claim and allow it if the requisite documents and eligibility are established. [Paras 23]

Claim remitted to AO for verification of supporting documents and eligibility; if satisfied, deduction to be allowed (allowed for statistical purposes).

Recomputation of tax liability and MAT credit - Direction to rectify computation error in MAT rate/application and adjust MAT credit accordingly - HELD THAT: - Assessee pointed to arithmetic/formatting error in MAT computation (incorrect percentage applied). The Tribunal directed the Assessing Officer to recompute tax liability and available MAT credit and to grant MAT credit in accordance with law. [Paras 24]

Matter remitted to AO to recompute tax liability and MAT credit and grant relief as per law (allowed for statistical purposes).

Final Conclusion: Appeals partly allowed. Transfer pricing adjustment for corporate guarantee sustained in principle but reduced to a 0.5% arm's length guarantee fee to be computed on year end outstanding; disallowance under section 14A/Rule 8D deleted and assessee's suo moto disallowance accepted; notional section 14A disallowance cannot be applied to computation of book profits under section 115JB; and several computational/verification matters (interest under section 234C, deduction under section 80G, and MAT credit/tax computation) are remitted to the Assessing Officer for recomputation or verification in accordance with law.

Foreign tax credit - Form No.67 - Rule 128(9) of the Income tax Rules - Directory versus mandatory procedural requirement - DTAA overrides domestic law - Section 90 read with DTAA

Foreign tax credit - Form No.67 - Rule 128(9) of the Income tax Rules - Directory versus mandatory procedural requirement - DTAA overrides domestic law - Section 90 read with DTAA - Whether non furnishing of Form No.67 before the due date prescribed under section 139(1) disentitles the assessee to claim foreign tax credit. - HELD THAT: - The Tribunal held that Rule 128(9) does not mandate disallowance of foreign tax credit for delay in filing Form No.67. Filing of Form No.67 is a procedural requirement of Rule 128 and is to be treated as directory rather than a substantive, mandatory condition which extinguishes the assessee's right under Section 90 read with the applicable DTAA. The Tribunal applied the reasoning of its coordinate bench in Vinodkumar Lakshmipathi (and the earlier Brinda Ramakrishna decision) that the DTAA entitles a resident to credit for foreign tax paid and that rules prescribing procedure cannot be interpreted to override or nullify treaty based substantive rights. Accordingly, delay in furnishing Form No.67 is not fatal to the claim; the Assessing Officer is directed to allow the foreign tax credit after due verification of the Form 67 filed by the assessee. [Paras 5, 6]

Assessee entitled to foreign tax credit notwithstanding delayed filing of Form No.67; AO directed to give credit as per Form No.67 after due verification and appeals allowed for statistical purposes.

Final Conclusion: Appeals allowed for statistical purposes; Assessing Officer directed to grant foreign tax credit in accordance with the Form No.67 filed (subject to verification); same ratio applied to both appeals.

Deemed dividend under section 2(22)(e) of the Income tax Act, 1961 - presumption under section 292C of the Income tax Act, 1961 - assessment record and opening/closing ledger balance in computation of peak debit - remand for fresh adjudication with opportunity of hearing

Deemed dividend under section 2(22)(e) of the Income tax Act, 1961 - assessment record and opening/closing ledger balance in computation of peak debit - presumption under section 292C of the Income tax Act, 1961 - Whether the addition made as deemed dividend for A.Y. 2011-12 was sustainable or the matter required fresh adjudication in view of earlier assessment adjustments for A.Y. 2010-11. - HELD THAT: - The Assessing Officer invoked the deeming fiction in section 2(22)(e) and worked out a peak debit from the seized pen drive ledger to make an addition. The CIT(A) reversed that addition by treating the pen drive entries as tentative, by accepting certain opening balances and excluding specified transactions, and concluding there was no overdrawal during the year. The Tribunal observed that the CIT(A)'s order does not refer to the assessment order for A.Y. 2010-11 where, according to the Revenue, the entire credit balance had been set off and the resultant working of deemed dividend was accepted by the assessee. Because this factual and adjudicatory posture in A.Y. 2010-11 is material to the correctness of the opening balance and the computation of deemed dividend for A.Y. 2011-12, the Tribunal found it appropriate to remit the issue to the CIT(A). The CIT(A) is directed to adjudicate afresh, giving the assessee an opportunity of hearing and to record a categorical finding whether in A.Y. 2010-11 the credit balance was set off and whether the deemed dividend computation was accepted. [Paras 9]

Issue restored to the file of the learned CIT(A) for fresh adjudication in accordance with law and after giving due opportunity of hearing to the assessee.

Deemed dividend under section 2(22)(e) of the Income tax Act, 1961 - assessment record and opening/closing ledger balance in computation of peak debit - Whether the deletion of deemed dividend for A.Y. 2014-15 should stand or the matter should be remitted for fresh consideration in light of the factual position regarding earlier years. - HELD THAT: - The grounds raised for A.Y. 2014-15 mirror those for A.Y. 2011-12, centring on the correctness of treating an opening credit balance (derived from earlier years) and its effect on the computation of peak debit for determining deemed dividend. Having restored the controverted issue in ITA No.747/Hyd/2020 for fresh adjudication because the CIT(A) did not deal with the A.Y. 2010-11 assessment position, the Tribunal applied the same reasoning to ITA No.748/Hyd/2020 and directed that the matter be remitted to the CIT(A) for reconsideration in the light of the directions given previously. [Paras 11]

Issue restored to the file of the learned CIT(A) for fresh adjudication as directed by the Tribunal.

Final Conclusion: Both appeals by the Revenue are allowed for statistical purposes and the disputed question of whether the opening credit balance (and prior acceptance or set off in A.Y. 2010-11) affects the computation of deemed dividend for A.Y. 2011-12 and A.Y. 2014-15 is remitted to the learned CIT(A) for fresh adjudication after giving the assessee an opportunity of hearing.

Duplication of proceedings - violation of prescribed procedure - regularisation by quantification of duty and penalty - acquiescence and readiness to comply

Duplication of proceedings - violation of prescribed procedure - Second adjudication and the subsequent appellate order were unnecessary and constituted impermissible duplication in view of earlier final orders. - HELD THAT: - The Court found that the cause of action in respect of the EPCG licence had already been addressed by earlier orders dated 30.03.2005 and 10.09.2007. The second original order dated 06.02.2013 and the first appellate order dated 31.03.2015 were therefore procedurally aberrant and unnecessary because the respondents merely needed to communicate the quantification of the outstanding demand to the petitioner rather than initiate a fresh adjudication. Having regard to this duplication and breach of proper procedure, the impugned orders were set aside. [Paras 9, 10, 12]

Impugned orders of 06.02.2013 and 31.03.2015 set aside as violative of procedure and duplicative of earlier final orders.

Regularisation by quantification of duty and penalty - acquiescence and readiness to comply - Respondents directed to quantify the balance demand and the petitioner required to pay the balance after accounting for amounts already remitted under interim order. - HELD THAT: - The Court noted the petitioner had accepted the appellate outcome and had expressed readiness to pay the duty once informed of the quantum; it had complied with the interim condition by remitting 50% of the penalty. The Court therefore directed that a demand be raised for the balance amount, which the petitioner will settle expeditiously, rather than permitting further duplicative adjudicatory proceedings. [Paras 7, 11, 12]

Respondents to raise demand quantifying the balance liability; petitioner to pay the balance expeditiously (after credit for sums already remitted).

Final Conclusion: The writ petition is allowed: the subsequent adjudication and appellate orders (06.02.2013 and 31.03.2015) are set aside as duplicative and procedurally improper; respondents shall quantify the outstanding demand and the petitioner shall pay the balance (having already complied with the interim payment). No costs.

Service of show cause notice - principles of natural justice - mode of service by registered post or speed post with acknowledgement due - deeming provision as to service under Section 153(3) - rebuttable presumption of service

Service of show cause notice - principles of natural justice - Impugned order set aside as passed in violation of principles of natural justice for non-service of the Show Cause Notice. - HELD THAT: - The Court found no material to show that the Show Cause Notice was served in any of the modes prescribed under Section 153(1) of the Customs Act. The petitioner repeatedly informed the respondent of non-receipt and sought a copy of the Show Cause Notice; no copy was furnished. Having affirmed by affidavit non-receipt and having notified the authority prior to the hearings, the petitioner discharged its burden to rebut the presumption of service. In these circumstances the imposition of penalty without affording the petitioner a fair opportunity to contest the allegations violated the principles of natural justice and the penalty imposed on the petitioner was set aside. [Paras 11, 16, 17, 18]

Penalty set aside on ground of violation of natural justice for non-service of Show Cause Notice.

Mode of service by registered post or speed post with acknowledgement due - deeming provision as to service under Section 153(3) - rebuttable presumption of service - Interpretation of Section 153(1)(b) and Section 153(3): service by speed post/registered post must conform to the mode in sub section (1)(b) (i.e., 'with acknowledgement due') and the deeming provision in sub section (3) only fixes timing and is rebuttable. - HELD THAT: - The Court held that Section 153(3) does not itself create a different mode of service; it only prescribes when service is to be deemed to have occurred for communications sent by registered post or speed post. The mode of service remains that prescribed in Section 153(1)(b), which requires service by registered post or speed post 'with acknowledgement due'. The presumption created by Section 153(3) as to receipt is rebuttable, and a party may prove non-receipt. Consequently, communications dispatched by speed post without evidence of acknowledgement due cannot be treated as complying with the mode of service under Section 153(1)(b) merely by invoking the deeming provision of sub section (3). [Paras 12, 13, 14, 15]

Section 153(3) is a deeming provision as to time of service and does not dispense with the requirement of service 'with acknowledgement due' under Section 153(1)(b); the presumption is rebuttable.

Service of show cause notice - rebuttable presumption of service - Order remitted to the respondent to issue a fresh Show Cause Notice and pass an appropriate order after affording the petitioner a full opportunity of hearing. - HELD THAT: - Having set aside the impugned order to the extent it imposed penalty due to violation of natural justice, the Court clarified that the respondent is not precluded from initiating fresh proceedings. The respondent may serve a Show Cause Notice afresh in accordance with Section 153 and may thereafter pass an appropriate order after giving the petitioner sufficient opportunity to be heard. [Paras 19]

Respondent permitted to issue a fresh Show Cause Notice and pass an order after affording opportunity of hearing.

Final Conclusion: The penalty imposed on the petitioner is set aside as the Show Cause Notice was not shown to have been served in the modes prescribed by Section 153; Section 153(3) is a rebuttable deeming provision as to time of service and does not negate the requirement of service 'with acknowledgement due' under Section 153(1)(b). The respondent may issue a fresh Show Cause Notice and pass an order after affording the petitioner a proper opportunity to be heard.

Power to re-fix brand rates - post-audit correction, amendment, addendum or corrigendum to brand rate letters - exercise of recovery powers consequent to erroneous or excess drawback payment - delegation of powers under Rule 7(4) of the Drawback Rules - remand for fresh consideration where jurisdictional question not examined

Power to re-fix brand rates - post-audit correction, amendment, addendum or corrigendum to brand rate letters - delegation of powers under Rule 7(4) of the Drawback Rules - Impugned revisional order was quashed and the revision was remanded for fresh consideration because the Revisional Authority failed to properly examine whether Respondent No.4 had jurisdiction to re-fix brand rates. - HELD THAT: - The High Court found the Revisional Authority's treatment of jurisdiction to be inadequate. The Revisional Authority relied primarily on clause 3(c) of Circular No.83/2003 (and related portions of Circular No.14/2003) to conclude that the Commissioner of Central Excise and officers under his control could rectify mistakes by issuing amendments, addenda or corrigenda to brand rate letters. The Court observed that the Revisional Authority did not examine whether any amendment, addendum or corrigendum had in fact been made, whether post-audit as envisaged had occurred, or whether powers under Rule 7(4) (which the Central Government has not delegated) were engaged. The Revisional Authority also failed to consider the respondents' alternative contention asserting independent power. Because the question of jurisdiction is central and sets precedent for subordinate authorities, the Court held that the Revisional Authority should have scrutinised these aspects before upholding the re-fixation. For these reasons the Revisional Authority's order was set aside and the matter restored for fresh decision on jurisdiction and related questions of power. [Paras 12, 13, 14, 15, 16]

Impugned order quashed and revision restored to Revisional Authority for fresh adjudication of jurisdictional issues regarding re-fixation of brand rates.

Exercise of recovery powers consequent to erroneous or excess drawback payment - remand for fresh consideration where jurisdictional question not examined - Merits of the re-fixation (including whether Rule 16 or other provisions justify recovery or re-fixation) were not finally decided and are remanded for fresh consideration. - HELD THAT: - The Court expressly refrained from deciding the merits of the re-fixation of brand rates. It observed that since the Revisional Authority's order on jurisdiction was set aside, parties are entitled to press contentions both on jurisdiction and on merits before the Revisional Authority. The Court directed that upon remand the Revisional Authority may consider the revision on merits and jurisdiction and, subject to any time-bound duties already undertaken, hear and decide the matter within six weeks from the date the parties appear before it. Thus, the legal and factual questions as to whether the re-fixation was warranted on merits, and whether recovery under Rule 16 or other provisions is appropriate, were left open for fresh adjudication. [Paras 15, 16, 17]

Merits and recovery questions remanded to Revisional Authority for fresh decision; Court did not adjudicate them on merits.

Final Conclusion: The High Court allowed the petition, quashed the revisional order dated 15 September 2020, restored the revision to the Revisional Authority for fresh consideration of jurisdiction and merits (including any question of recovery), and directed that the Revisional Authority decide the matter on the basis of law and facts within six weeks after parties appear before it.

Provisional release of seized imported goods under Section 110A of the Customs Act - seizure under Section 110 and confiscation under Section 111 of the Customs Act - anti-dumping duty determination and producer-specific rates - requirement of speaking order and judicial application of mind in quasi judicial administrative decisions - overseas inquiry for verification of origin and producer identity - security/bond and bank guarantee as condition for provisional release

Provisional release of seized imported goods under Section 110A of the Customs Act - seizure under Section 110 and confiscation under Section 111 of the Customs Act - security/bond and bank guarantee as condition for provisional release - requirement of speaking order and judicial application of mind in quasi judicial administrative decisions - Validity of seizure and provisional release conditions and whether seized goods should be released subject to conditions - HELD THAT: - The Court examined the record including the investigatory material, the designated authority's anti dumping duty table showing a producer specific rate of USD 116/MT for Kingdecor, and communications between the parties. Although the respondents had issued detention and seizure memos under Section 110 and later a seizure memo dated 18.06.2022, the adjudication on provisional release had been effected by communication rather than by a reasoned quasi judicial order. Taking into account that the petitioner had paid anti dumping liability at the Kingdecor rate and that producer identity (KD vs XH series) required overseas verification, the Court held that the operation of the seizure order should be set aside and the goods released on furnishing substantial security. The Court therefore directed release of the goods on the petitioner furnishing a bond covering the value of the goods and additional security as specified, while leaving other contentions open for adjudication. The Court emphasised that provisional release may be conditional, but such measures must reflect application of mind and be accompanied by appropriate security to protect revenue and the adjudicatory process. [Paras 10]

Seizure order under Section 110 set aside and goods to be released upon petitioner furnishing a bond of Rs.25,00,00,000 and complying with specified disclosure and undertaking; other contentions left open.

Overseas inquiry for verification of origin and producer identity - anti-dumping duty determination and producer-specific rates - Requirement and timetable for completion of overseas inquiry into producer identity and related verification - HELD THAT: - The Court noted that the adjudicatory authority had sought overseas inquiries to verify whether the seized consignments were produced by Kingdecor (KD) or by related entities using XH codes and that responses had not yet been received. Given the significance of producer identity to the applicable anti dumping rate and the ongoing investigation, the Court directed that the overseas inquiry be completed within four weeks. The direction was made to enable final adjudication of the seizure and any differential duty/penalty liability once the factual verification is received, thereby balancing the need for prompt resolution with safeguarding the revenue's interest. [Paras 8, 10]

Overseas inquiry to be completed within four weeks to determine producer identity and related import duty implications.

Final Conclusion: The petition is disposed by quashing and setting aside the seizure order; the goods are to be released on the petitioner furnishing the directed bond and making the required disclosures and undertaking, and the overseas inquiry into producer identity shall be completed within four weeks; other contentions are left open for subsequent adjudication.

Absolute confiscation versus redemption of prohibited goods - exercise of discretion under Section 125 of the Customs Act - penalty under Section 112 of the Customs Act - transitional relief under Foreign Trade Policy / Letter of Credit condition - principles of natural justice - requirement of speaking reasons

Absolute confiscation versus redemption of prohibited goods - exercise of discretion under Section 125 of the Customs Act - Whether the goods, rendered prohibited by DGFT Notification dated 26.04.2021, were liable to absolute confiscation or whether the adjudicating authority should have exercised its discretion to permit redemption on payment of fine. - HELD THAT: - The Tribunal found that the adjudicating authority and the first appellate authority accepted absolute confiscation without exploring alternatives or applying the discretionary norms prescribed by law. The Bench emphasised the Supreme Court's direction that discretion under Section 125 must be exercised judiciously by weighing all relevant surrounding factors and implications of exercise of discretion either way. The Tribunal observed that the facts of this case (an MIP-based prohibition) are distinguishable from the facts in Raj Grow Impex LLP (which concerned quantity-restricted imports subject to licensing and actual user conditions) and that precedents permitting redemption in comparable contexts (Atul Automations, Har Govind Das K. Joshi, Alfred Menezes, and related Tribunal authorities) remain applicable. For these reasons the impugned orders that ordered absolute confiscation without adjudication of redemption were set aside and the matter remanded to the adjudicating authority for de novo consideration, requiring a prospective and balanced exercise of discretion which may include offering redemption on payment of an appropriate fine after ascertaining relevant margins and adjustments. [Paras 29, 30, 33, 36]

Impugned orders of absolute confiscation set aside; matter remanded for de novo exercise of discretion under Section 125 with a view to examining redemption as an alternative to absolute confiscation.

Penalty under Section 112 of the Customs Act - mala fide / mens rea requirement for imposition of penalty - Whether personal penalty under Section 112 was justified in the circumstances where shipment and Bill of Lading date coincided with the DGFT notification but steps for export were taken earlier and there was no proof of mala fide. - HELD THAT: - The Tribunal recorded the appellants' case that orders for supply and shipment preparations pre-dated the notification and that there was no demonstrated mens rea or wilful disobedience warranting penal consequences. Noting authorities which have remitted matters for consideration of penalty where bona fide steps were taken prior to policy change, the Bench observed that the adjudicating authority had not properly considered these submissions and had imposed penalty without examining the absence or presence of mala fide. Consequently the Tribunal remanded the matter for fresh adjudication so that the authority may verify facts (including container track records), consider whether penal action is warranted, and apply discretion consistently with the legal requirement to establish culpable intent before imposing penalty. [Paras 23, 34, 36]

Imposition of penalty set aside for fresh adjudication; adjudicating authority to reassess penalty after verifying factual record and determining presence or absence of mala fide.

Principles of natural justice - requirement of speaking reasons - transitional relief under Foreign Trade Policy / Letter of Credit condition - Whether the appeals/orders complied with principles of natural justice and whether transitional benefits under the Foreign Trade Policy (reliant on an irrevocable LC) applied. - HELD THAT: - The Tribunal found that the appellate order did not engage with or refute the appellants' factual submissions and that the authorities failed to give reasons demonstrating application of mind, thereby infringing principles of natural justice as explained in the cited authorities. On the question of transitional relief, the Bench recorded that such relief is available only where shipments are within the validity of an irrevocable LC established prior to imposition of restriction; since no LC backed the supply in this case, transitional benefit could not be claimed. Given the deficiencies in reasoning and the outstanding factual verifications (demurrage, damage to cargo), the Tribunal ordered remand for a reasoned, fresh decision after affording appropriate opportunity and verification. [Paras 23, 32, 35, 36]

Appellate orders set aside for lack of speaking reasons and for failure to apply principles of natural justice; matter remanded for de novo consideration including verification of transitional relief entitlement and factual claims.

Final Conclusion: The appeals are allowed to the extent the impugned orders are set aside and the matters are remitted to the adjudicating authority for de novo consideration: the authority must apply the discretionary power under Section 125 conscientiously (including consideration of redemption as an alternative to absolute confiscation), reassess any penalty in light of absence or presence of mala fide after factual verification, and furnish reasoned decisions after complying with the principles of natural justice.

Customs house agent liability for misclassification - due diligence of CHA - classification of goods and chemical test reports - abatement in attempt to export restricted goods - penalty under Section 114 of the Customs Act

Customs house agent liability for misclassification - due diligence of CHA - classification of goods and chemical test reports - penalty under Section 114 of the Customs Act - Whether penalty imposed under Section 114 on the appellants, a CHA and its manager, for allegedly abetting export of restricted goods by misclassification is sustainable - HELD THAT: - The appellants, acting as the Customs House Agent, had filed shipping bills on the basis of documents and test reports furnished by the exporter. The record contains test reports from Geological and Metallurgical Laboratories and Bangalore Test House indicating the sample as naturally occurring potassium chloride (with descriptions of composition and technical/industrial grade) but not explicitly recorded as Muriate of Potash or 'fertiliser grade'. The departmental chemical analysis later classified the consignment as Muriate of Potash. The Tribunal noted that classification is a complex question for Customs to determine and that there is no evidence of any overt act by the appellants to assist the exporter in procuring or exporting restricted items. In the absence of proof that the CHA knowingly abetted smuggling or engaged in positive conduct to mislead authorities, mere acceptance of client-supplied documents and test reports does not warrant imposition of penalty under Section 114. The Tribunal followed its earlier precedent which held that a CHA cannot be saddled with penalty solely on the ground of failing to exercise due diligence in complex classification issues, and therefore the penalty was not justified on the facts of the case. [Paras 6, 7, 9, 11]

Penalty imposed under Section 114 on the appellants set aside; appeals allowed with consequential relief.

Final Conclusion: The Tribunal set aside the penalties imposed on the Customs House Agent and its manager under Section 114, holding that on the evidence and test reports before them, and absent any overt act or proof of knowingly abetting export of restricted goods, the penalty was not warranted; appeals allowed with consequential relief.

Ultra vires - Power of Tribunal to regulate procedure - Bar Council of India Rules on advocates' dress - Power of High Courts to make rules as to conditions of practice under Section 34 of the Advocates Act - Wearing of Advocates' gown optional - Judicial review of tribunals by High Courts under Articles 226/227

Ultra vires - Power of Tribunal to regulate procedure - Bar Council of India Rules on advocates' dress - Power of High Courts to make rules as to conditions of practice under Section 34 of the Advocates Act - Legality of the NCLT order dated 14.11.2017 imposing mandatory wearing of gown by advocates before the Tribunal. - HELD THAT: - The Tribunal relied on Rule 51 (power to regulate procedure) and on administrative powers of the President under Rule 16(f) to direct wearing of gowns. The Court held that those provisions empower the Tribunal to regulate its procedure and administrative functioning but do not enable the Tribunal to frame or override rules governing advocates' professional dress where those rules have been prescribed by the competent authority. The Bar Council of India Rules and the statutory scheme (Section 34 of the Advocates Act vesting rule making power in High Courts as to conditions of practice) govern the form of dress for advocates. An instruction by the Tribunal that conflicts with the Bar Council rules and goes beyond procedural regulation is ultravires the Act and without authority. Accordingly, the 14.11.2017 instruction is illegal and without jurisdiction. [Paras 11, 12]

The order dated 14.11.2017 is ultravires and is set aside.

Wearing of Advocates' gown optional - Bar Council of India Rules on advocates' dress - Whether wearing of advocates' gown is mandatory before tribunals other than the Supreme Court and High Courts. - HELD THAT: - Having regard to the Bar Council of India Rules (Chapter IV) and the statutory scheme, the Court observed that wearing of the advocates' gown is optional except when appearing in the Supreme Court or High Courts. The Rules explicitly distinguish between forums where gown is mandatory and where it is optional; tribunals fall within the latter category unless a competent rule making authority prescribes otherwise. The Tribunal's attempt to make gown compulsory therefore conflicted with the established statutory/regulatory position. [Paras 5, 6, 12]

Wearing of the advocates' gown is optional before courts other than the Supreme Court and High Courts; it is not mandatorily prescr ibed for tribunals by the NCLT.

Judicial review of tribunals by High Courts under Articles 226/227 - Modification and quashing - Effect of the subsequent NCLT proceeding dated 27.01.2023 and the court's final disposition of the impugned order. - HELD THAT: - The Court took on record the NCLT proceeding of 27.01.2023 which modified the earlier instruction and aligned practice with the Bar Council Rules. Notwithstanding that modification, the High Court proceeded to quash the original impugned order of 14.11.2017 on the legal grounds articulated. The Court noted that tribunals remain amenable to supervisory jurisdiction of the High Court and therefore could adjudicate the challenge and set aside the impugned instruction. [Paras 11, 13]

The subsequent NCLT modification is recorded; in any event the original order of 14.11.2017 is quashed.

Final Conclusion: Writ petition allowed: the NCLT order dated 14.11.2017 imposing mandatory wearing of gown by advocates is ultravires and set aside; wearing of advocates' gown is optional before forums other than the Supreme Court and High Courts; the NCLT's subsequent modification is noted and the impugned order is quashed.

Enforcement of foreign arbitral award - public policy of India - conflict with public interest arising from loan sanction conditions of a bank - inability to present case under section 48(1)(b) - fraud affecting the making of the award - non compliance with tribunal's procedural/discovery order - violation of FEMA/RBI pricing and pledge/transfer norms affecting fundamental policy of Indian law

Enforcement of foreign arbitral award - public policy of India - conflict with public interest arising from loan sanction conditions of a bank - Enforcement of the SIAC foreign award is liable to be refused because giving effect to the Award would conflict with public policy and basic notions of justice by breaching the bank's sanction letter condition restraining change of shareholding/directorship without the bank's prior permission. - HELD THAT: - The Court found that the respondent's board had approved the bank's sanction letter containing a specific undertaking that any change in shareholding/directorship required the bank's prior permission, and that the same sanction letter was considered and approved at the board meeting where the SHA was also placed (board meeting 12.09.2018). The Tribunal recorded parties' submissions but did not give substantive findings protecting the bank's interest; the High Court held that permitting enforcement which effects change of directors/shareholding without KMB's prior approval would undermine public interest because the bank had advanced public funds subject to that undertaking. The Court treated the bank's sanction condition as engaging a public interest dimension that prevails over private shareholder rights under the SHA and concluded that enforcement of the Award in the present form would be contrary to the most basic notions of justice and public policy of India. The Court therefore refused enforcement on that ground. [Paras 34, 35, 36, 37, 38]

Enforcement refused insofar as it effects change of shareholding/directorship in breach of the bank's sanction letter; Award conflicts with public policy and public interest.

Inability to present case under section 48(1)(b) - non compliance with tribunal's procedural/discovery order - The Award is vitiated because the respondent was unable to present its case before the SIAC tribunal as material documents ordered by the tribunal were not produced by the petitioners, invoking section 48(1)(b). - HELD THAT: - The Tribunal's Procedural Order No.2 required production of specific documents and emails. The petitioners did not produce those documents before the SIAC; as a consequence the respondent withdrew its counter claim for lack of evidentiary material at the arbitral hearing. Subsequent discovery in UK proceedings revealed documents and emails that were within the scope of the procedural order and which, if available at the arbitration, could have influenced the Tribunal's findings. Applying the law (including the principles in Vijay Karia and authorities on inability to present a case), the Court concluded that non compliance with the procedural order and the consequent inability of the respondent to adduce the necessary evidence rendered the arbitral proceedings susceptible to challenge under section 48(1)(b). The Court held that the petitioners must suffer the consequences of non production and that the Award is liable to be rejected on this ground. [Paras 45, 46, 49, 50, 51]

Enforcement rejected on the ground that the respondent was unable to present its case because the petitioners failed to produce documents ordered by the tribunal.

Fraud affecting the making of the award - enforcement of arbitral award contrary to Explanation 1(i) to section 48(2) - The Award is unenforceable because it was induced or affected by fraud: material documents and communications were concealed by the petitioners and surfaced only on subsequent discovery, showing a scheme inconsistent with the SHA and relevant to the arbitration. - HELD THAT: - The Court examined the evidence discovered in UK proceedings and the petitioners' failure to produce material documents ordered by SIAC, concluding that concealment of relevant and material facts amounted to fraud in the making of the Award. Relying on the legal principle that fraud need not be narrowly construed and that facts surfacing after an award may demonstrate fraud if they have nexus to the award, the Court held that the Award was induced/affected by fraud and therefore in conflict with the public policy of India as explained in section 48(2) Explanation 1(i). Accordingly, enforcement was refused on the ground of fraud. [Paras 52, 53, 54, 55, 56]

Enforcement rejected because the Award was induced or affected by fraud in its making.

Violation of FEMA/RBI pricing and pledge/transfer norms affecting fundamental policy of Indian law - fundamental policy of Indian law - Enforcement is liable to be rejected because the transaction and valuation mechanism relied upon by the petitioners (including valuation methodology and pledge/transfer of shares of an Indian linked step down subsidiary) implicated potential breaches of FEMA/RBI norms and, coupled with alleged fraud, amounted to a violation of fundamental policy not curable post facto. - HELD THAT: - The Court considered the RBI/FEMA provisions applicable to transfers/pledges of shares in foreign subsidiaries with Indian step down interests and noted a large discrepancy between the petitioners' valuation (multiple method) and a DCF valuation adduced by the respondent's valuer. The Court treated the combined allegations of improper valuation, acquisition of pledged shares without requisite regulatory compliance, and the surrounding fraudulent conduct as rendering the FEMA/RBI concerns non curable and affecting the fundamental policy of Indian law. Given the potential loss to Indian stakeholders and foreign exchange implications, and the Tribunal's failure to address these aspects despite pleadings, the Court concluded that enforcement would be contrary to fundamental policy and public interest. [Paras 58, 64, 66, 68, 71]

Enforcement rejected because the valuation/transfer/pledge process and related regulatory concerns, coupled with alleged fraud, offend the fundamental policy of Indian law.

Final Conclusion: The petition for enforcement of the SIAC foreign arbitral award dated 06.10.2021 is dismissed. The High Court refused enforcement on multiple independent grounds: (i) enforcement would conflict with public policy and public interest by effecting changes in shareholding/directorship in breach of the bank's sanction undertaking; (ii) the respondent was unable to present its case before the SIAC owing to the petitioners' non compliance with the tribunal's procedural discovery order; (iii) the Award was induced or affected by fraud through concealment of material documents; and (iv) valuation and transfer/pledge issues implicating FEMA/RBI norms, coupled with the fraud findings, offend the fundamental policy of Indian law.

Termination of lease and license for non development of allotted land - principles of natural justice in eviction proceedings under public premises law - construction of coterminous allotment letter, license agreement and lease deed - nature of leasehold interest - enjoyment right versus transfer of title - service of notices under the Gujarat Public Premises (Eviction of Unauthorized Occupants) Act, 1972 - residuary jurisdiction of the National Company Law Tribunal under Section 60(5)(c) of the IBC - interaction between liquidation/moratorium under the IBC and external eviction or termination proceedings

Construction of coterminous allotment letter, license agreement and lease deed - termination of lease and license for non development of allotted land - principles of natural justice in eviction proceedings under public premises law - nature of leasehold interest - enjoyment right versus transfer of title - service of notices under the Gujarat Public Premises (Eviction of Unauthorized Occupants) Act, 1972 - Whether termination of the license agreement and lease deed was valid and whether the impugned notices violated principles of natural justice - HELD THAT: - The allotment letter, the license agreement and the lease deed are to be read coterminous, in continuation and conjunction; the lease incorporated the terms of the allotment letter and the license agreement (para 7.1-7.2). The undisputed fact that no development as stipulated in the allotment/license was carried out justified invocation of the contractual termination provisions and the GPP Act; on that ground termination under the impugned order was sustainble (para 7.3). Service of the notices on the company at its registered address and on the property, in accordance with Section 4 of the GPP Act, was adequate; the liquidator having been informed earlier did not render service defective or cause prejudice (para 7.4). The petitioner's contention that a 99 year lease transferred title is misplaced: a lease conveys only the right to enjoy the property and does not transfer title (para 7.5). The court relied on the admitted factual position of non development and held that no prejudice arose from the procedure adopted. [Paras 7]

Termination of the license agreement and lease deed was valid in view of the contractual terms and non development; the notices were lawfully served and there was no breach of principles of natural justice; lease did not transfer title.

Residuary jurisdiction of the National Company Law Tribunal under Section 60(5)(c) of the IBC - interaction between liquidation/moratorium under the IBC and external eviction or termination proceedings - effect of IBC on institution of proceedings against a corporate debtor in liquidation - Whether the NCLT has jurisdiction to entertain the respondent's interlocutory application under Section 60(5)(c) of the IBC and whether the petitioner can invoke IBC protections to restrain the impugned action - HELD THAT: - Section 60(5)(c) confers a wide residuary jurisdiction on the NCLT to decide questions of law or fact arising out of or in relation to insolvency resolution or liquidation (para 7.12-7.13). Authorities relied upon establish that the NCLT's residuary jurisdiction is broad and may be invoked where actions by third parties can affect the insolvency process or the corporate debtor's value as a going concern, subject to the limitation that matters wholly dehors the IBC remain outside its scope (para 7.8-7.9, 7.14). The respondent has already invoked the Tribunal's jurisdiction by filing an interlocutory application before the NCLT and the petitioner is free to contest the issues in that forum; consequently the High Court will not grant the protective relief sought where the NCLT's residuary jurisdiction has been engaged (para 7.8-7.14). The court observed Section 36(4)(a)(iv) (as argued) indicating that assets where title is not transferred may fall outside the liquidation estate, a question for the Tribunal to decide (para 7.11). [Paras 7]

The NCLT's residuary jurisdiction under Section 60(5)(c) is available to adjudicate the questions raised; the respondent's application before the NCLT engages that jurisdiction and the petitioner may raise its contentions there-the High Court declined to interpose.

Final Conclusion: Petition dismissed. The High Court held that the allotment letter, license and lease must be read together and, on the admitted facts of no development, termination under the GPP Act was justified and procedurally valid; the NCLT's residuary jurisdiction under Section 60(5)(c) of the IBC has been invoked and is the appropriate forum to adjudicate related disputes. The parties were directed to maintain status quo until 03.03.2023.

Eligibility under Section 29A read with Section 240A - duty to invite fresh Resolution Applicants and ensure level playing field under CIRP Regulations - judicial review of commercial wisdom of the CoC - maximisation of value and protection of employees' interests as guiding ends of CIRP - power to keep liquidation order in abeyance and direct a fresh solicitation of bids

Eligibility under Section 29A read with Section 240A - judicial review of commercial wisdom of the CoC - Validity of CoC's approval of the Resolution Plan submitted by the appellants and whether the appellants were eligible to submit the plan. - HELD THAT: - The Adjudicating Authority found that the appellants were not eligible to submit the Resolution Plan as per the temporal application of the eligibility provisions and that registration of the corporate debtor as MSME obtained after issuance of the initial Form G could not operate retrospectively to cure ineligibility. The Tribunal agreed that the CoC's decision to approve the plan on 30.12.2021 did not comply with the procedure mandated by the Code and CIRP Regulations because the direction of the Adjudicating Authority dated 28.09.2021 required the Resolution Professional and the CoC to consider whether more Resolution Applicants should be invited. The CoC did not invite other applicants as contemplated, and a rival financial creditor expressly stated continued interest if a fresh EoI were published. On these grounds the Tribunal held that the Adjudicating Authority was justified in disapproving the CoC resolution and rejecting the application for approval of the Resolution Plan, affirming the impugned order insofar as it set aside the CoC approval. [Paras 2, 10, 11, 12]

The CoC approval of the appellants' Resolution Plan was disapproved and I.A. No. 1528/ND/2022 seeking approval of that plan is rejected.

Duty to invite fresh Resolution Applicants and ensure level playing field under CIRP Regulations - power to keep liquidation order in abeyance and direct a fresh solicitation of bids - maximisation of value and protection of employees' interests as guiding ends of CIRP - Whether a further opportunity should be afforded to solicit fresh Resolution Plans before confirming liquidation, and the manner and timeframe for such opportunity. - HELD THAT: - Although the Tribunal upheld the Adjudicating Authority's disapproval of the existing CoC approval, it exercised its supervisory power to avoid liquidation as a first resort. The Tribunal recognised that the Adjudicating Authority's order of 28.09.2021 intended that the RP and CoC deliberate on inviting additional Resolution Applicants. In view of the CoC's omission and the expressed interest of other creditors to submit plans if a fresh EoI were issued, the Tribunal directed that the liquidation order be kept in abeyance and that the Resolution Professional issue a fresh Form G and complete the CIRP process up to the CoC decision within a time-bound period. The Tribunal prescribed a 90-day timeframe to carry the process to the CoC decision and directed filing before the Adjudicating Authority within two weeks if a plan is approved; failing approval within the 90 days, the liquidation order shall revive. [Paras 12, 13, 14, 15]

Liquidation order is kept in abeyance and the RP is directed to issue a fresh Form G and conclude the process within 90 days; if no plan is approved within that period, the liquidation order shall be revived.

Final Conclusion: The Tribunal affirmed the Adjudicating Authority's disapproval of the CoC's approval of the appellants' Resolution Plan and rejected the application for approval; however, it stayed the operation of the liquidation order to permit the Resolution Professional to issue a fresh Form G and complete the CIRP within 90 days, failing which the liquidation direction will be revived.

Conclusiveness of discharge certificate under SVLDRS - non-refundability of amounts paid under SVLDRS-2019 - voluntary compounding scheme and finality - proprietorship as determinant of tax liability

Non-refundability of amounts paid under SVLDRS-2019 - conclusiveness of discharge certificate under SVLDRS - voluntary compounding scheme and finality - Claim for refund of amount deposited under SVLDRS-2019 - HELD THAT: - The petitioner sought refund of the settlement amount paid under the Sabka Vishwas Legacy Dispute Resolution Scheme (SVLDRS-2019) after having availed its benefits. The Court examined the Scheme provisions and relied on the statutory deeming and finality clauses which render a discharge certificate conclusive as to the matters and time periods stated and expressly provide that any amount paid under the Scheme shall not be refundable. Having voluntarily opted for the Scheme, deposited the settlement amount and obtained its benefits, the petitioner cannot, after a lapse of time, claim a refund; the Scheme expressly bars refund and treats the discharge as final except in narrowly prescribed contingencies not shown to apply. The material on record (registration, statements before adjudicating authority, income-tax return and the SVLDRS application) further demonstrates that the petitioner had availed the Scheme knowingly. For these reasons the writ petition seeking refund was not maintainable and no interference under Article 226 was warranted. [Paras 9, 10, 11, 13, 16]

Petition for refund of amount deposited under SVLDRS-2019 dismissed as the Scheme bars refund and the discharge is conclusive.

Proprietorship as determinant of tax liability - voluntary compounding scheme and finality - Petitioner's contention that she is not the proprietor and liability should be fixed on husband in lieu of refund proceedings under Article 226 - HELD THAT: - The Court observed that the dispute as to true ownership of M/s. Creative Media is essentially a private/matrimonial contest between the petitioner and her husband. Documents on record-registration with the Service Tax Department showing the petitioner, her statement before the adjudicating authority, and her income-tax return for Assessment Year 2014-15-indicate she was treated as proprietor for tax purposes. The Court held that allegations of forgery or proprietary dispute are not appropriately resolved in a writ for refund under Article 226, particularly where the petitioner has accepted the compounding Scheme; any remedy against the husband for monies paid should be pursued in an appropriate civil/forum for recovery between the private parties. Consequently, the writ does not afford the requested relief to shift liability to the husband. [Paras 2, 11, 13, 14]

Dispute over proprietorship and claim to recover amounts from husband is a private contest and cannot sustain the writ; petitioner must pursue remedy against husband in appropriate proceedings.

Final Conclusion: Writ petition dismissed: amounts paid under SVLDRS-2019 are not refundable and the petitioner, having voluntarily availed the Scheme and been recorded as proprietor for tax purposes, cannot seek refund under Article 226; any dispute with the husband over proprietorship or recoupment of sums paid must be pursued in appropriate forum.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - mandatory electronic payment in Form SVLDRS-3 - payment "on or before 30th day of June, 2020" (amendment of Rule 7) - Taxation and other Laws (Relaxation Certain Provisions) Ordinance, 2020 - liability for delay caused by bank's failure to effect RTGS/NEFT - penalty recovery by attachment of bank account - issuance of discharge certificate in Form SVLDRS-4

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - payment "on or before 30th day of June, 2020" (amendment of Rule 7) - Effect of the May 14, 2020 amendment to Rule 7 changing the payment timeline for amounts shown in Form SVLDRS-3. - HELD THAT: - The Court held that Rule 7 of the notification prescribing payment "within a period of 30 days from the date of its issue" was validly amended by the notification of May 14, 2020 substituting the words "on or before the 30th day of June, 2020". The amendment must be read into the procedural scheme such that every declarant was obliged to pay the amount indicated in Form SVLDRS-3 on or before 30th June, 2020, and not strictly within 30 days of issuance of the SVLDRS-3 statement. Consequently, failure to pay within 30 days of the statement cannot be the basis for penalty where the amended timeline applied and was complied with by payment on or before 30th June, 2020.

Rule 7 is to be read as requiring payment on or before 30th June, 2020; the respondents cannot invoke the original 30-day requirement to deny scheme relief.

Mandatory electronic payment in Form SVLDRS-3 - liability for delay caused by bank's failure to effect RTGS/NEFT - Whether payment effected by the petitioners on 30th June, 2020 but credited to the authority on 1st July, 2020 due to bank transmission failure attracts penal consequences. - HELD THAT: - The Court emphasised that Rule 7 mandated electronic payment (e.g., RTGS/NEFT) so that amounts are immediately credited. The petitioners deposited the sum on 30th June, 2020 by RTGS through their bank after obtaining an E-Mandate and it was transmitted for credit. The Court concluded that where the declarant duly deposits funds for electronic transfer on the stipulated date, a subsequent failure by the bank to transmit/credit on that date (resulting in actual credit on the next day) cannot be visited with penal consequences on the taxpayer. The obligation to ensure immediate credit lies with the electronic payment mechanism and the remittance process; a delay caused by the bank does not render the declarant liable to penalty under the amended Rule 7 and the relaxation Ordinance context relied upon.

Payment made by the petitioners on 30th June, 2020 by electronic means is to be treated as timely despite actual credit occurring on 1st July, 2020 due to bank failure; petitioners are not liable for penalty on that ground.

Penalty recovery by attachment of bank account - issuance of discharge certificate in Form SVLDRS-4 - Validity of imposition and recovery of penalty by attachment of the petitioners' bank account and entitlement to issuance of Form SVLDRS-4 discharge certificate. - HELD THAT: - Applying the conclusions that the amended payment deadline governed and that the petitioners' electronic payment on 30th June, 2020 was timely, the Court found the respondents' unilateral imposition and recovery of penalty to be illegal. The respondents were directed to accept the deposited amount dated 30th June, 2020 as satisfying the SVLDRS-3 obligation, to issue the discharge certificate in Form SVLDRS-4 settling dues for the specified financial years under the Scheme, and to repay the amount recovered by way of penalty within the time ordered. The order flows from the Court's construction of the Scheme rules and the incidence of bank transmission failure.

Imposition and recovery of the penalty are quashed; respondents directed to issue Form SVLDRS-4 and refund the recovered amount within four weeks.

Final Conclusion: Writ petition allowed: the amended Rule 7 fixing payment "on or before 30th June, 2020" governs; the petitioners' electronic payment made on 30th June, 2020 is to be treated as timely notwithstanding actual credit on 1st July, 2020 due to bank failure; consequent penalty recovery is quashed and the respondents are directed to issue the discharge certificate in Form SVLDRS-4 and refund the recovered amount within four weeks.

Entitlement to interest on pre-deposit - retroactivity of Section 35F/35FF (Finance Act, 2014) - application of CBEC Circular No. 984/8/2014-CX - requirement of protective show cause notice for recovery of erroneous refund - recovery of erroneous refund

Entitlement to interest on pre-deposit - retroactivity of Section 35F/35FF (Finance Act, 2014) - application of CBEC Circular No. 984/8/2014-CX - Whether the appellant was entitled to interest on the sums deposited in January-February 2007 - HELD THAT: - The Tribunal found that the adjudicating authority allowed interest by applying CBEC Circular No. 984/8/2014-CX which was issued with reference to the amended provisions of Section 35F/35FF introduced by the Finance Act, 2014. The deposits in the present case were made suo moto during investigation in January and February 2007, i.e., prior to the enactment of the 2014 amendments. Consequently the amended statutory scheme (and the Circular issued with reference thereto) cannot be applied retrospectively to confer a right to interest on deposits made before those provisions came into force. On this basis the adjudicating authority erred in applying the Circular to the 2007 deposits, and the Commissioner (Appeals) correctly held that the appellant was not entitled to interest under Section 35F. [Paras 4]

The appellant is not entitled to interest on the deposits made in January-February 2007; the grant of interest under Section 35F/35FF (and the Circular) is inapplicable to deposits made prior to the Finance Act, 2014.

Requirement of protective show cause notice for recovery of erroneous refund - recovery of erroneous refund - Whether non-issuance of a protective show cause notice estops the Commissioner (Appeals) from deciding the appeal against sanction of interest - HELD THAT: - The Tribunal observed that the Commissioner (Appeals) was deciding an appeal against an appealable order passed by the adjudicating authority; the question of issuance of a protective show cause notice relates to separate recovery proceedings and does not preclude the Commissioner (Appeals) from adjudicating the appeal. The judgments relied upon by the appellant concern the procedural necessity of protective show cause notices in recovery proceedings and are therefore not apposite where the Revenue had contested the sanction of interest before the appellate authority. Hence non-issuance of a protective show cause notice did not create an estoppel preventing the Commissioner (Appeals) from setting aside the grant of interest. [Paras 4]

Non-issuance of a protective show cause notice did not bar the Commissioner (Appeals) from adjudicating the appeal; recovery proceedings are separate and the absence of such notice does not make the impugned appellate decision unsustainable.

Final Conclusion: The Commissioner (Appeals) correctly held that the appellant was not entitled to interest on the 2007 deposits; the adjudicating authority's sanction of interest based on the 2014 amendments and the CBEC Circular was unsustainable. The impugned order is upheld and the appeal is dismissed.

Refund of accumulated Cenvat Credit under Rule 5 read with Notification No. 27/2012-CE(NT) - export of service - Place of Provision of Service Rules - Rule 3 (location of recipient) - Place of Provision of Service Rules - Rule 4(a) (services in relation to goods made physically available) - intermediary

Refund of accumulated Cenvat Credit under Rule 5 read with Notification No. 27/2012-CE(NT) - export of service - Entitlement to refund of unutilised Cenvat Credit under Rule 5 read with Notification No.27/2012-CE(NT) where Revenue has not initiated proceedings to demand service tax by denying export status - HELD THAT: - Rule 5 ibid provides a specific procedure for refund of accumulated Cenvat Credit in respect of exported goods or services and is not a proceeding to deny Cenvat credit. Where the Revenue, having had opportunity, did not initiate proceedings to demand service tax by denying the export character of the services, it has in effect treated those services as export of service. In such circumstances, the Revenue cannot in the refund proceeding under Rule 5 turn around and deny the export status to defeat the refund claim. The Tribunal relied on earlier decisions following the same principle and accepted the appellant's affidavit that no demand proceedings were initiated. On this ground the appellants' refund claims were held to be maintainable and allowable. [Paras 7]

Refund claims under Rule 5 read with Notification No.27/2012-CE(NT) allowed as Revenue did not initiate service-tax demand denying export status.

Place of Provision of Service Rules - Rule 3 (location of recipient) - Place of Provision of Service Rules - Rule 4(a) (services in relation to goods made physically available) - intermediary - Determination of place of provision of the services provided by the appellant - whether to be governed by Rule 3 or Rule 4(a) of the POPS Rules and whether the appellant is an intermediary - HELD THAT: - The definition of 'intermediary' requires an arrangement involving three or more parties where a person arranges or facilitates the main supply between two or more persons; an activity between only two parties or a supplier providing the main service on its own account is not an intermediary service. The appellant's agreements and factual matrix show it to be an independent contractor providing services on a principal-to-principal basis to overseas group entities, with no authority to bind the recipient or to act as agent. Rule 4(a) applies to performance-based services where goods are required to be made physically available to the service provider; accounting, management reporting, marketing and engineering support services involve data or technical parameters in incorporeal form and do not require physical availability of goods. Accordingly the place of provision for the services in question is the location of the recipient under Rule 3, not Rule 4(a), and therefore the services qualify as export of service. [Paras 6, 8, 9]

Place of provision determined under Rule 3 of the POPS Rules; appellant is not an intermediary; services qualify as export of service.

Final Conclusion: Appeals allowed; refund claims of the appellant upheld with consequential reliefs, the services being held to be exports as place of provision is the location of the recipient under Rule 3 and the appellant not being an intermediary; Revenue cannot deny export status in Rule 5 proceedings where no demand proceedings were initiated.

Refund of service tax on services used for export - one-to-one co-relation - broad co-relation - self-certification/Chartered Accountant's certificate - strict compliance of notification conditions - relief under Notification No.41/2007-S.T. as amended

Refund of service tax on services used for export - one-to-one co-relation - broad co-relation - self-certification/Chartered Accountant's certificate - strict compliance of notification conditions - Entitlement of the appellant to refund of service tax paid on specified services (including GTA, port and testing/analysis services) in relation to export of iron ore fines for the quarter April 2008 to June 2008 under the Notification scheme. - HELD THAT: - The Tribunal examined whether the co-relation requirements under Notification No.41/2007-S.T. as amended must be satisfied by strict one-to-one correspondence between transport/lorry receipts and export invoices or whether a broader correlation and certification suffices. It noted that the goods were bulk cargo aggregated at port prior to preparation of shipping documents and that exporters prepare invoices after loading owing to variable factors. Reliance was placed on Tribunal precedent permitting a broad correlation of evidence of transport and service tax paid with quantities exported. The Board's Circular No.120/01/2010-S.T. was held instructive: by Budget 2009 the scheme was simplified to permit self-certification or Chartered Accountant certification regarding nexus and co-relation, and only basic scrutiny by departmental officers is required. Although the lorry receipts did not mention exporter invoice details, the Revenue did not produce material to establish that no broad correlation could be made, and the departmental practice and precedents support sanctioning refund where broad correlation and certified nexus exist. Applying these principles, the Tribunal found the appellate authority's strict rejection unsustainable and restored the original order granting refund.

The appellate order denying refund is set aside; the Order in Original dated 10.03.2016 allowing the refund is restored and the appeal is allowed with consequential benefits.

Final Conclusion: The appeal is allowed: the Commissioner(Appeals) order rejecting the refund is set aside and the original order granting refund is restored, applying the principle of broad co relation and recognising self/Chartered Accountant certification under the simplified procedure for Notification No.41/2007 S.T.

Penalty for failure to collect or pay service tax under Section 76 - Penalty for failure to furnish prescribed return under Section 77 - Penalty for suppressing or concealing value of taxable service under Section 78 - Effect of confirmation of service tax demand under Section 73(A) as distinct from Section 73(1)

Penalty for failure to collect or pay service tax under Section 76 - Penalty for suppressing or concealing value of taxable service under Section 78 - Effect of confirmation of service tax demand under Section 73(A) as distinct from Section 73(1) - Whether penalties under Sections 76 and 78 can be imposed where the service tax demand is confirmed under Section 73(A). - HELD THAT: - The Tribunal examined the statutory text of Sections 76 and 78 and concluded that the penal consequences contemplated therein apply where demand of service tax is confirmed under Section 73(1) of the Finance Act, 1994. The Tribunal found that confirmation of demand under Section 73(A) does not attract the penal provisions of Sections 76 and 78. Applying that determinative legal principle to the facts, the adjudicating authority correctly refrained from imposing penalties under Sections 76 and 78 when the demand was confirmed under Section 73(A). [Paras 4]

Penalties under Sections 76 and 78 cannot be imposed where the demand is confirmed under Section 73(A); the adjudicating authority correctly did not impose those penalties.

Penalty for failure to furnish prescribed return under Section 77 - Whether penalty under Section 77 is payable for failure to obtain service tax registration, furnish the prescribed return or deposit the service tax collected from customers. - HELD THAT: - The Tribunal observed that the respondent failed to comply with obligations such as obtaining service tax registration and depositing the service tax collected from its customers. Section 77 prescribes penalty for failure to furnish the prescribed return (and related defaults). On the application of that provision to the respondent's admitted non-compliance, the Tribunal held that a penalty under Section 77 was justified and imposed a penalty of Rs.10,000 on the respondent. [Paras 4, 5]

Penalty under Section 77 is attracted by the respondent's failure to comply with registration/return and deposit obligations; penalty of Rs.10,000 imposed.

Final Conclusion: The revenue's appeal is partly allowed: the Tribunal held that Sections 76 and 78 are not attracted where demand is confirmed under Section 73(A), but imposed a penalty under Section 77 of Rs.10,000 on the respondent.

Refund of service tax on cancellation of booking - unjust enrichment - Rule 6(3) of the Service Tax Rules - credit on refund on cancellation - transitional refund under Section 142(3) of the CGST Act - constitutional requirement of taxation under Article 265

Refund of service tax on cancellation of booking - Rule 6(3) of the Service Tax Rules - credit on refund on cancellation - transitional refund under Section 142(3) of the CGST Act - Entitlement to refund of service tax paid on advance bookings cancelled where Cenvat credit could not be taken due to transition to GST - HELD THAT: - The appellant had taken booking advances and paid service tax during the service-tax regime; the bookings were cancelled and the appellant refunded the amounts to buyers with supporting credit notes, ledger entries and bank transfers. Although Rule 6(3) of the Service Tax Rules permits taking credit where the provider issues invoice or has received payment for a service not provided, the appellant could not avail Cenvat credit after transition to GST. Applying the transitional mechanism, the Tribunal held that the appellant is entitled to refund under the transitional provision in Section 142(3) of the CGST Act for service tax paid on cancelled bookings, since the tax stood paid and Cenvat credit was no longer available. The Tribunal relied on the factual demonstration of refunds and concluded that refund must be granted with interest as per rules. [Paras 8]

Refund under Section 142(3) of the CGST Act allowed; adjudicating authority directed to grant refund with interest.

Unjust enrichment - refund of service tax on cancellation of booking - constitutional requirement of taxation under Article 265 - Whether the bar of unjust enrichment prevents refund where the assessee demonstrably refunded the booking amount including service tax to the buyer - HELD THAT: - The adjudicating and appellate authorities had held the claim barred by limitation and by the presumption under Section 12B of the Central Excise Act that tax charged in an invoice is passed on to the buyer. The Tribunal examined the documentary evidence - cancellation agreement, credit notes, ledger entries and bank statements - and found that the appellant had in fact refunded the booking amounts including service tax to the buyers. On that factual basis the Tribunal held that the condition against unjust enrichment is satisfied and the refund is not barred by unjust enrichment. The Tribunal also noted the Board's prior clarification dealing with cancellations in real-estate bookings and observed that retention of tax without liability would conflict with constitutional principles of taxation under Article 265. [Paras 8]

Unjust enrichment bar not attracted; refund allowed.

Final Conclusion: The appeal is allowed; the appellant is entitled to refund of the service-tax amount refunded to buyers, and the adjudicating authority is directed to grant the refund with interest in accordance with law within 45 days.

Liability of a sub-contractor/sub-consultant to pay service tax notwithstanding discharge by the main contractor/consultant - invocation of the first proviso to section 73(1) of the Finance Act - extended period of limitation - disclosure in ST-3 returns and absence of suppression or intent to evade as bar to extended limitation - bona fide doubt arising from conflicting Tribunal/ judicial decisions - bar to invocation of extended limitation

Liability of a sub-contractor/sub-consultant to pay service tax notwithstanding discharge by the main contractor/consultant - reliance on decisions of a Larger Bench resolving conflicting Tribunal views - A sub-consultant is liable to discharge service tax even if the main consultant has discharged the service tax liability. - HELD THAT: - The Tribunal applied the Larger Bench's conclusion that a sub-contractor is liable to pay service tax even where the main contractor has discharged the liability; the reasoning and statutory framework relied upon by the Larger Bench (as recorded) equally apply to a sub-consultant. Consequently, the Principal Commissioner's confirmation of the demand for the normal period does not suffer from illegality. [Paras 6, 7, 8, 9, 10]

Demand confirmed for the services rendered as a sub-consultant; sub-consultant liable to pay service tax despite main consultant having discharged liability.

Invocation of the first proviso to section 73(1) of the Finance Act - extended period of limitation - disclosure in ST-3 returns and absence of suppression or intent to evade as bar to extended limitation - bona fide doubt arising from conflicting Tribunal/ judicial decisions - bar to invocation of extended limitation - The extended period of limitation under the first proviso to section 73(1) of the Finance Act could not be invoked in the present case. - HELD THAT: - The Principal Commissioner found that the assessee had regularly declared taxable and exempted services in ST-3 returns for the relevant periods, demonstrating no suppression of facts or intent to evade tax; further, at the relevant time there were conflicting Tribunal decisions on the liability of sub-contractors/sub-consultants, giving rise to a bona fide doubt. Reliance on Supreme Court authorities recognising that divergent or conflicting decisions give rise to bona fide doubt led to the conclusion that the proviso to section 73(1) could not be invoked. The Tribunal held that this finding is not illegal. [Paras 15, 16, 17, 18, 19]

Invocation of the extended period was denied; demand confined to the normal period (July 2012 to March 2013).

Final Conclusion: Both appeals dismissed: the demand confirmed for the normal period against the assessee (sub-consultant liability upheld) and the Department's appeal against denial of the extended period rejected; the order of the Principal Commissioner is sustained.

Rule 6(3) of Cenvat Credit Rules - trading as exempted service - inputs cleared as such on payment of duty

Rule 6(3) demand - trading as exempted service - duty paid clearances - Demand under Rule 6(3)(i) could not be sustained where, on the very clearance value treated by the department as trading, the appellant had paid excise duty or reversed Cenvat credit on inputs cleared as such, and for a part of the period no Cenvat credit had been availed. - HELD THAT: - The Tribunal found from the year-wise details on record that the clearances forming the basis of the demand had already suffered duty, either as excise duty or by payment of Cenvat amount on removal of inputs as such. For the period specifically noticed, the appellant had not availed Cenvat credit at all. On these facts, the foundation for invoking Rule 6(3)(i) failed, and the lower authorities were not justified in confirming the demand on the mere ground that separate item-wise details were not furnished, when the available details were sufficient to reach the correct conclusion. Verification of the calculation of payment or reversal was, however, left open to the Revenue. [Paras 5]

The demand under Rule 6(3)(i) was held unsustainable, subject to verification of the calculation of duty payment or Cenvat reversal by the Revenue.

Final Conclusion: The Tribunal set aside the impugned order and allowed the appeal, holding that the Rule 6(3)(i) demand was not maintainable in view of the duty paid clearances and non-availment of credit for the part period noticed, while leaving verification of calculations open to the Revenue.

Cenvat credit - used in or in relation to manufacture - non-alienation principle - common registration

Cenvat credit - used in or in relation to manufacture - non-alienation principle - common registration - Admissibility of Cenvat credit on spares and accessories used in Unit-2 to the appellant's Unit-1 which clears the final products. - HELD THAT: - The Tribunal found that the spares and accessories were used in or in relation to the manufacture of excisable goods cleared from Unit-1. Reliance was placed on earlier decisions of the Tribunal and High Court which establish that where capital goods (or parts/spares) are used for manufacture of final products of the registered factory, credit cannot be denied merely because such goods are installed or used in an adjoining or separate unit of the same assessee so long as there is no alienation. The appellant had applied for common registration and received no response from the department; the application shows an attempt to comply with procedural requirements prior to availing credit. In these circumstances, and applying the non-alienation principle and the test of use in or in relation to manufacture, the Tribunal held that denial of Cenvat credit was not justified and the impugned order was set aside.

Cenvat credit on the spares and accessories used in Unit-2 is admissible to Unit-1 because the items were used in or in relation to manufacture of excisable goods cleared from Unit-1 and were not alienated; appeal allowed with consequential relief.

Final Conclusion: The impugned order denying Cenvat credit is set aside and the appeal is allowed; credit is permitted because the spares and accessories were used in or in relation to manufacture of excisable goods cleared from the appellant's Unit-1, and there was no alienation, with the appellant having sought common registration before availing credit.

Mandatory production of Form 8FA on import arrival - genuineness of transportation and evasion of tax - penalty under Section 47(6) of the KVAT Act - penalty under Section 67(1) of the KVAT Act - liberty to invoke alternative penal provision

Mandatory production of Form 8FA on import arrival - penalty under Section 47(6) of the KVAT Act - penalty under Section 67(1) of the KVAT Act - genuineness of transportation and evasion of tax - Tribunal correctly set aside the penalty imposed under Section 47(6) and permitted invocation of Section 67(1) where Form 8FA was not produced but other transport documents were in order. - HELD THAT: - The Court examined the facts and distinguished the cited decision in Joy Alukkas on the ground that, in that case, multiple material defects (tampered delivery notes, incomplete consignee address) justified invocation of the in-transit penalty. In the present case the sole defect was omission of the Form 8FA declaration; invoices, bill of entry and delivery note were otherwise in order and the description 'medical equipment' reasonably encompassed 'electro cardiograph'. The Tribunal found violation of section 46(3)(e) warranting penal consequences but concluded that the specific in-transit penalty under Section 47(6) was not warranted on these facts and thus granted liberty to the assessing authority to invoke the general penal provision under Section 67(1) for offences proved. The High Court held that the Tribunal's approach was justified: the missing Form 8FA and the particulars before the authority did not establish the kind of irregularity that necessitated application of Section 47(6), and therefore setting aside the penalty under Section 47(6) while permitting initiation under Section 67(1) was legally sound.

Penalty under Section 47(6) set aside; assessing authority may invoke Section 67(1) for the offences established.

Final Conclusion: Revision dismissed; Tribunal's order setting aside the Section 47(6) penalty and permitting invocation of Section 67(1) is upheld.

Professional misconduct - other misconduct - disciplinary inquiry under Section 21 of the Chartered Accountants Act, 1949 - reprimand as a disciplinary order - prohibition on solicitation/advertising of professional services - adherence to principles of natural justice in disciplinary proceedings

Disciplinary inquiry under Section 21 of the Chartered Accountants Act, 1949 - adherence to principles of natural justice in disciplinary proceedings - Whether the Disciplinary Committee and the Council conducted the inquiry and decision-making in accordance with Section 21 and the Regulations, observing principles of natural justice. - HELD THAT: - The Court examined the record of the Council and the Disciplinary Committee and concluded that the Council formed a prima facie opinion and referred the matter to the Disciplinary Committee under the scheme of Section 21. The Disciplinary Committee held an inquiry, recorded and cross examined the parties, and submitted a reasoned report. The Council afforded both parties an opportunity to make written representations and to be heard before accepting the Report. The Court found that the procedure mandated by the Act and the Regulations was followed and that principles of natural justice were observed; the findings of the Disciplinary Committee were based on the material before it and did not suffer from perversity or non-consideration of the record. [Paras 9, 11, 12]

Proceedings complied with Section 21 and the Regulations; natural justice was observed and the procedural steps taken by the Disciplinary Committee and the Council were valid.

Professional misconduct - other misconduct - prohibition on solicitation/advertising of professional services - Whether the respondent was guilty of professional misconduct under Clause (6) and (7) of Part I of the First Schedule and of other misconduct under Section 22 read with Section 21 of the Act. - HELD THAT: - On consideration of the complaint, the respondent's written statement and the evidence recorded during inquiry, the Disciplinary Committee found that the respondent's letter to club members went beyond solicitation of votes and amounted to advertising/soliciting professional clients and that he misrepresented proprietorship of the firm. The Council accepted those findings. The Court reviewed the record and held that the findings of guilt were supported by the material before the Disciplinary Committee and that there was no perversity in those conclusions. [Paras 10, 11]

Respondent held guilty of professional misconduct under Clause (6) and (7) of Part I of the First Schedule and of other misconduct under Section 22 read with Section 21.

Reprimand as a disciplinary order - Whether reprimand is an appropriate and proportionate disciplinary sanction in the facts of the case. - HELD THAT: - Having upheld the procedural regularity and the findings of misconduct, the Court considered the Council's resolution recommending reprimand. Weighing the nature of the misconduct as found by the Disciplinary Committee and accepted by the Council, the Court concluded that a reprimand would serve the ends of justice and would be proportionate to the acts of misconduct adjudicated. [Paras 10, 13, 14]

The Court directed that the respondent be reprimanded; the reference under Section 21(6) is disposed of accordingly.

Final Conclusion: The reference is disposed of: the disciplinary proceedings and findings were validly conducted and recorded, the respondent is held guilty of the specified professional and other misconduct, and the Court directs that the respondent be reprimanded as a proportionate disciplinary order.

Exemption for third-party personal information under Section 8(1)(j) of the RTI Act - fiduciary information exemption under Section 8(1)(e) of the RTI Act - third-party hearing requirement under Section 19(4) of the RTI Act - priority of a special law under Section 138 of the Income Tax Act - interim stay of administrative orders by High Court under Article 226

Third-party hearing requirement under Section 19(4) of the RTI Act - Whether the Central Information Commission's order could be sustained despite not giving the third party (Shri Ram Janmabhoomi Teerth Kshetra Trust) a hearing as mandated by Section 19(4) of the RTI Act. - HELD THAT: - The High Court noted that Section 19(4) requires the Central Information Commission to give a reasonable opportunity of being heard to a third party where the appeal relates to information of that third party. The CIC did not issue notice to the Trust before reversing the CPIO and Appellate Authority. The absence of the mandated hearing was treated as a material defect in the CIC's decision and formed a basis for interim relief. The court considered this omission together with other lapses in the CIC's reasoning when assessing the case for a stay. [Paras 9]

CIC's order was stayed on the ground that the mandatory third party hearing under Section 19(4) had not been conducted.

Priority of a special law under Section 138 of the Income Tax Act - exemption for third-party personal information under Section 8(1)(j) of the RTI Act - fiduciary information exemption under Section 8(1)(e) of the RTI Act - Whether the CIC's reversal of the CPIO and Appellate Authority was justifiable when it did not consider applicability of Section 138 of the Income Tax Act or the claimed exemptions under Section 8(1)(e) and 8(1)(j) of the RTI Act. - HELD THAT: - The court observed that the CIC's impugned order does not advert to the CBDT's contention that the information sought pertains to a third party assessee and is governed by Section 138 of the Income Tax Act, a special statute dealing with income tax records. The court further noted that the CPIO and Appellate Authority had relied upon the exemptions for fiduciary information and personal third party information under Section 8(1)(e) and Section 8(1)(j) respectively. The CIC's order reversing those findings was not accompanied by reasoning addressing these statutory provisions. In light of these unaddressed legal contentions, the High Court found a prima facie case in favour of the CPIO for interim protection. [Paras 9]

On an interim basis the CIC's order was stayed because it failed to consider the applicability of Section 138 of the Income Tax Act and the claimed exemptions under Sections 8(1)(e) and 8(1)(j) of the RTI Act.

Interim stay of administrative orders by High Court under Article 226 - Whether interim relief should be granted to the CPIO, CBDT against the CIC's order pending further hearing. - HELD THAT: - Weighing the factors for interim relief, the court found that a prima facie case had been made out by the CPIO given the CIC's failure to hear the third party and to address the special law/exemption arguments. The balance of convenience favoured the CPIO and irreparable injury was likely if the CIC order were to be implemented immediately. Accordingly, the court exercised its power under Article 226 to grant interim relief. [Paras 10]

Impugned CIC order dated 30th November, 2022 is stayed until the next hearing; no coercive steps shall be taken pursuant to that order.

Final Conclusion: The High Court granted interim protection to the CPIO, staying the Central Information Commission's order of 30th November, 2022 on the grounds that the CIC failed to afford the mandatory third party hearing and did not consider the applicability of Section 138 of the Income Tax Act or the claimed RTI exemptions; the stay preserves the status quo until further hearing and bars coercive action pursuant to the CIC order.

Right to information under RTI Act - Section 2(f) definition of information - Section 8(1)(d) exemption - Section 18 inquiry - Section 20 penalty - malafide/non malafide standard for imposition of penalty - inspection of records - jurisdictional limits of the Central Information Commission

Right to information under RTI Act - inspection of records - Section 8(1)(d) exemption - Whether the information furnished by the CPIO in response to the RTI applications was adequate and whether further action was warranted under the RTI Act. - HELD THAT: - The Commission examined the point wise replies furnished by the CPIO and the additional clarifications given at hearing and found that the information made available (including the identification of the jurisdictional CGST/SGST office, the accounting/service codes for services for which the company is registered, and the GST registration number) adequately responded to the queries within the scope of records held by the public authority. The CPIO offered the complainant an opportunity to inspect relevant records at the office. The Respondent also invoked Section 8(1)(d) in denying certain information; in the factual matrix the Commission did not find that the CPIO withheld information malafidely or unreasonably. Consequently, no infirmity was found in the CPIO's replies and no further remedial action was required under the RTI Act with respect to the information requests.

The CPIO's replies are adequate in terms of the RTI Act and no further action is warranted concerning the information requests.

Section 2(f) definition of information - Section 18 inquiry - malafide/non malafide standard for imposition of penalty - Section 20 penalty - Whether an inquiry under Section 18 and initiation of penalty proceedings under Section 20 against the CPIO were justified. - HELD THAT: - The complainant alleged that the CPIO failed to obtain or produce information from a private entity and sought an inquiry and penal action. The Commission applied the established legal standard that penalty under Section 20 is appropriate only where the PIO has acted malafidely, unreasonably, or without reasonable cause in refusing or delaying information. Having considered the record and oral submissions, and in light of precedents cited, the Commission found no cogent material establishing malafide or unreasonable withholding by the CPIO. The Commission therefore declined to initiate an inquiry under Section 18 or to impose penalty under Section 20.

No inquiry under Section 18 and no penalty under Section 20; allegations of malafide withholding not established.

Section 2(f) definition of information - jurisdictional limits of the Central Information Commission - Whether grievances concerning disturbance of easement rights arising from cable laying operations fall within the jurisdiction of the Commission under the RTI Act. - HELD THAT: - The Commission observed that disputes concerning easement rights or other private civil grievances are outside the mandate of the RTI Act and beyond the Commission's jurisdiction. While the RTI framework governs access to information held by public authorities, it does not empower the Commission to adjudicate private disputes between parties. The complainant's grievance about cable laying and disruption to easement rights therefore could not be remedied by the Commission in these proceedings.

Grievances relating to disturbance of easement rights are outside the RTI Act and the Commission's jurisdiction; no relief can be granted on that ground.

Final Conclusion: The Commission finds the CPIO's responses adequate, declines to initiate an inquiry or impose penalty in the absence of malafide or unreasonable conduct, and notes that the complainant's easement grievance is outside the Commission's remit; the complaints are accordingly disposed of.