TaxTMI Updates e-Newsletter
Feb 17,2020

Applicability of Goods and Services Tax to contracts executed after enactment - Contractual clause subjecting supplier to GST as applicable from time to time - Tax deduction from bills in light of subsequent change of law

Applicability of Goods and Services Tax to contracts executed after enactment - Contractual clause subjecting supplier to GST as applicable from time to time - Tax deduction from bills in light of subsequent change of law - Whether the petitioner is entitled to restrain the respondent from deducting tax exceeding 2% from his bill in view of the introduction of GST. - HELD THAT: - The Court observed that the GST Act was enacted on 12.04.2017 and came into force on 01.07.2017. The Letter of Acceptance in the tender process was issued on 28.07.2017 and the contract agreement was executed on 13.11.2017, both after the GST regime became operative. The LOA expressly provided that the supplier of goods and/or services would be subject to the GST Act and Rules as applicable from time to time. In these circumstances the petitioner, having quoted his rate prior to the change in law but having entered into contractual relations and received payment after the GST commencement, would be liable to tax in accordance with the GST Act. The petition therefore did not establish entitlement to the relief of restraining the respondent from making deductions in excess of 2%.

Petition dismissed; no relief to restrain deduction beyond 2% as GST applies to the contract and petitioner is liable under the GST Act.

Final Conclusion: The writ petition seeking a restraint on deduction of tax beyond 2% from the petitioner's bills is dismissed because the GST Act was in force before issuance of the LOA and execution of the contract, the contract expressly subjected the supplier to GST as applicable, and the petitioner received payment post-enactment, rendering him liable under the GST regime.

Validity of notices issued in Form GST-MOV-10 - Section 129(6) of the CGST Act, 2017 - Effect of an interim order of the High Court on departmental seizure proceedings - Release of goods on deposit and bank guarantee as compliance with court directions

Validity of notices issued in Form GST-MOV-10 - Section 129(6) of the CGST Act, 2017 - Effect of an interim order of the High Court on departmental seizure proceedings - Release of goods on deposit and bank guarantee as compliance with court directions - Whether the notices dated 05.02.2020 in Form GST MOV 10 issued after the interim order of this Court are legally sustainable. - HELD THAT: - The Court found that the authority misconstrued the interim order dated 10.01.2020 and proceeded solely on the premise of Section 129(6) of the CGST Act, 2017. The interim order had specifically directed deposit of tax and provision of a bank guarantee towards penalty as conditions for release of goods and vehicles; those directions governed the position between the parties. The authority treated the detention date and a 14 day period as permitting issuance of Form GST MOV 10, but the Court observed there was no basis for applying Section 129(6) in the face of the High Court's specific interim directions and that the computation relied upon by the authority was erroneous. Because no other ground supported issuance of the Form GST MOV 10 notices, the notices were found to be without legal foundation and liable to be quashed. [Paras 8, 9, 10, 11, 12]

The Form GST MOV 10 notices dated 05.02.2020 issued against the petitioner are quashed and set aside.

Final Conclusion: The petition is allowed to the extent that the impugned Form GST MOV 10 notices dated 05.02.2020 are quashed; rule made absolute accordingly and direct service is permitted.

Interim stay on recovery - non-obstruction of National Anti Profiteering Authority's suo motu action - directory nature of limitation in Rule 133 of the CGST Rules, 2017

Interim stay on recovery - Interim stay of recovery of the balance amount from the petitioner continued. - HELD THAT: - The Court, having heard the parties, directed continuation of the interim order staying recovery of the remaining amount because the petitioner had deposited a substantial portion of the disputed sum. The continuation of the interim order is limited in scope and is recorded subject to other clarifications given by the Court. The order to continue the stay was interlocutory and made in the context of the deposit already made by the petitioner.

Interim stay continued in favour of the petitioner on the recovery of the balance amount, in view of the deposit already made.

Non-obstruction of National Anti Profiteering Authority's suo motu action - The interim order does not impede the National Anti Profiteering Authority from taking suo motu action in cases where it has initiated proceedings. - HELD THAT: - While staying recovery from the petitioner, the Court expressly clarified that such interlocutory relief shall not operate to prevent the Authority from proceeding with suo motu actions that it has already undertaken. The clarification preserves the Authority's power to act independently of the interim relief granted in these petitions.

Interim order to stay recovery is without prejudice to the Authority's competence to proceed suo motu.

Directory nature of limitation in Rule 133 of the CGST Rules, 2017 - Prima facie view that the six-month period in Rule 133 appears to be directory as no consequence for non-compliance is prescribed in the CGST Act or rules. - HELD THAT: - The Court observed prima facie that the six-month timeline prescribed in Rule 133 - within which the Authority should make an order from the date of receipt of the Directorate General of Anti Profiteering's report - appears to be directory because neither the CGST Act nor the subordinate rules prescribe any consequence for failure to adhere to that period. This observation is recorded as a preliminary view and not as a final adjudication on the legal effect of the time limit.

Court recorded a prima facie view that the six-month period in Rule 133 is directory, noting absence of prescribed consequences for non-adherence.

Final Conclusion: Petitioners' interim relief continued in view of the deposit made; the order is subject to the Authority's ability to pursue suo motu proceedings; and the Court recorded a prima facie view that the six-month timeline in Rule 133 of the CGST Rules, 2017 is directory due to absence of prescribed consequences for non-compliance.

Release of detained goods under Section 129 - determination of ownership/consignee status - evasion of tax liability/modus operandi - locus to invoke writ jurisdiction - alternative remedy by statutory appeal under Section 107

Release of detained goods under Section 129 - determination of ownership/consignee status - evasion of tax liability/modus operandi - Whether the petitioner was entitled to an order for release of the detained goods and vehicle under the provisions of Section 129 - HELD THAT: - The Court examined the material placed on record by the respondents, including statements of the goods-in-charge, Toll Plaza records, GPS information and orders under MOV forms, which indicated a possible modus operandi to evade tax liability and cast doubt on the petitioner's claim of ownership/consignee status despite the E-way bill. Because the ownership/consignee question was disputed on the basis of that material and the respondents' case that delivery had already occurred, the Court held that entitlement to release could not be determined and granted by writ petition at this stage. The Court reasoned that recognition of the petitioner as owner for the purpose of immediate release would pre-empt the competent authority's factual and legal determination and prejudice the department's stance on evasion. The petitioner's failure to file a rejoinder disputing the respondents' material reinforced that the petition seeking release could not be decided on its face value.

Petition for release of goods and vehicle under Section 129 dismissed; entitlement to release left to determination by the competent authority in accordance with law.

Locus to invoke writ jurisdiction - alternative remedy by statutory appeal under Section 107 - Whether the writ petition was maintainable in view of availability of statutory appeal and the petitioner's locus - HELD THAT: - The Court observed that the orders impugned were appealable under the statutory appeal provision and that a remedy under Section 107 was available to the petitioner. Coupled with the disputed factual matrix as to ownership/consignee status, the availability of the alternative statutory remedy militated against interference under Article 226. The Court therefore found that the petitioner had not established a basis for extraordinary writ relief when an efficacious statutory appeal remedy existed and the factual issues required adjudication by the competent authority.

Writ petition not maintainable on account of availability of alternate remedy by appeal and is dismissed.

Final Conclusion: The writ petition seeking release of the detained goods and vehicle is dismissed: entitlement to release and the disputed ownership/consignee question must be determined by the competent authority in accordance with law, and the petitioner may pursue the statutory appeal remedy available under the Act.

Regular bail under Section 439 of the Code of Criminal Procedure - Consideration of nature and gravity of offence - Investigation substantially complete as a factor in bail - Absence of complaint and non-seeking of remand by complainant - Undertaking against transfer or alienation of immovable property pending tax assessment - Conditions to prevent misuse of liberty and ensure cooperation with investigation - Power to modify bail conditions by trial court

Regular bail under Section 439 of the Code of Criminal Procedure - Consideration of nature and gravity of offence - Investigation substantially complete as a factor in bail - Absence of complaint and non-seeking of remand by complainant - Grant of regular bail to the applicant arrested in connection with offences under the Central Goods and Services Tax Act, 2017. - HELD THAT: - The Court considered the nature of the alleged offences and the material on record and found that investigation was almost complete, the applicant had been in custody for about 55 days, no complaint had yet been filed by the complainant and the complainant had not sought any remand. Balancing these factors with the gravity of the alleged offences (with maximum sentence up to five years), the Court exercised its discretion under Section 439 CrPC to enlarge the applicant on bail. The Court recorded that the trial court should not be influenced by the Court's preliminary observations regarding evidence at the bail stage.

Application allowed; applicant enlarged on bail on executing bond and complying with conditions.

Undertaking against transfer or alienation of immovable property pending tax assessment - Conditions to prevent misuse of liberty and ensure cooperation with investigation - Power to modify bail conditions by trial court - Imposition and scope of bail conditions, including an undertaking not to transfer or create third-party rights over immovable properties and obligations to cooperate and attend as required. - HELD THAT: - Bail was made subject to a monetary bond with local sureties and specific conditions intended to prevent misuse of liberty and to secure the investigatory and prosecutorial process. The applicant was required to surrender passport if any, not to leave the State without permission, mark presence with the complainant weekly for two months, furnish and not change residence without permission, and file an undertaking both in Court and with the investigating authority that he will not transfer or alienate his immovable properties and will supply details of such properties until the appropriate authority under the CGST Act ascertains any tax liability. The Court also directed that release is conditional upon the applicant not being wanted in any other offence and preserved the Sessions Judge's power to issue appropriate process or to vary the conditions.

Bail subject to specified bond, sureties and enumerated conditions; breach renders applicant liable to warrant or appropriate action and trial court may modify conditions in accordance with law.

Final Conclusion: The High Court allowed the application for regular bail under Section 439 CrPC and ordered release on bond and sureties subject to enumerated conditions, including a protective undertaking regarding immovable properties and obligations to cooperate; liberty is conditioned and the trial court retains power to modify conditions and proceed if breaches occur.

Interest on delayed payment of tax under Section 50 - Automatic liability to pay interest - Quantification of interest requires arithmetic exercise after considering objections - Bank attachment/garnishee proceedings under Section 79 - Entitlement to have objections considered before unilateral fixation of quantum - Maintainability of writ appeals - Alternate statutory remedy of appeal under Section 107

Interest on delayed payment of tax under Section 50 - Automatic liability to pay interest - Quantification of interest requires arithmetic exercise after considering objections - Liability to pay interest under Section 50 arises automatically, but the quantum of interest must be quantified after considering the assessee's objections and performing the requisite arithmetic exercise. - HELD THAT: - The Court held that sub section (1) of Section 50 fastens an automatic liability on the assessee to pay interest for the period the tax or any part thereof remains unpaid; the use of the phrase 'shall, on his own, pay' demonstrates that the liability itself is not contingent on assessment. However, sub sections (2) and (3) make clear that calculation and quantification involve prescribed methods and factual questions (for example, period of non payment, correctness of input tax credit claims, undue or excess claims under Sections 42(10)/43(10)). Where the assessee disputes the period or quantum, the assessment authority must consider objections and undertake the arithmetic exercise to arrive at the correct quantum; 'automatic' liability does not permit unilateral fixation of amount without considering the assessee's contentions. The Court therefore answered the reference by distinguishing liability (automatic) from quantification (requires decision after hearing and computation). [Paras 27, 28, 29]

Interest liability under Section 50 is automatic in law, but its quantification must be determined by the assessing authority after considering objections and performing the appropriate calculations.

Bank attachment/garnishee proceedings under Section 79 - Entitlement to have objections considered before unilateral fixation of quantum - Maintainability of writ appeals - Alternate statutory remedy of appeal under Section 107 - The writ appeals against orders remitting disputed quantification to the assessing authority were not maintainable and are dismissed because the Single Judge had only directed reconsideration of the objections and computation of the correct quantum. - HELD THAT: - The Court observed that the writ petitioners did not dispute the existence of interest liability but contested the quantum computed by the Revenue and thereby produced worksheets and bank statements showing admitted sums. The Single Judge's order set aside garnishee directions subject to payment of admitted sums and remitted the matter to the assessing authority to consider the petitioners' replies and recompute the liability. Since the impugned orders did not finally determine interest liability and expressly left the Revenue free to pass orders after considering objections (with the statutory appellate remedy under Section 107 available), entertaining intra court appeals was unnecessary. Consequently, the Division Bench's differing views on maintainability were resolved in favour of non entertainment and dismissal of the writ appeals. [Paras 31, 32, 33, 34]

Writ appeals challenging the Single Judge's directions (which remitted computation to the assessing authority and preserved the Revenue's right to decide after considering objections) are not maintainable and are dismissed.

Final Conclusion: The reference is answered by holding that interest under Section 50 is an automatic legal liability, but the assessing authority must quantify that liability after considering the assessee's objections and carrying out the necessary calculations; accordingly, the writ appeals against the Single Judge's orders (which remitted computation to the assessing authority and left the statutory appellate remedy intact) are dismissed.

Pass on benefit of reduction in rate of tax by way of commensurate reduction in prices under Section 171 of the CGST Act, 2017 - classification of goods under HSN 8507 60 00 and its effect on GST rate - scope of anti-profiteering investigation limited to alleged rate reduction complained of

Pass on benefit of reduction in rate of tax by way of commensurate reduction in prices under Section 171 of the CGST Act, 2017 - classification of goods under HSN 8507 60 00 and its effect on GST rate - scope of anti-profiteering investigation limited to alleged rate reduction complained of - Whether the Respondent violated the provisions of Section 171 of the CGST Act, 2017 by not passing on the benefit of reduction in GST rate in respect of the said Power Bank. - HELD THAT: - The Authority examined the DGAP report and the Respondent's submissions and documentary evidence. The Respondent had classified the said Power Bank under HSN 8507 60 00 as "Lithium-ion Batteries", which, by entry at S. No. 376AA of Notification No. 18/2018-Central Tax (Rate) dated 26.07.2018, attracted GST at 18% w.e.f. 26.07.2018. The complaint alleged that Notification No. 24/2018-Central Tax (Rate) dated 31.12.2018 (effective 01.01.2019) reduced the rate from 28% to 18% and that the Respondent had not passed on the benefit. The DGAP and the Authority observed from the evidence (including product screenshots and sample invoices) that the tax rate charged by the Respondent on the product was 18% both before and after 01.01.2019 and that Notification No. 24/2018 had no effect on the tax rate applicable to the product as supplied by the Respondent. The Authority emphasised that the scope of the present investigation was confined to the allegation of non-passing of benefit arising from the specific rate reduction complained of, and not to re-open classification issues already attracting 18% by virtue of Notification No. 18/2018. Given that there was no reduction in the rate of tax applicable to the supplies complained of at the relevant time, the statutory pre-condition for invoking Section 171(1) - namely a reduction in rate of tax or benefit of ITC to be passed on - was absent. Consequently, the anti-profiteering provision was not attracted. [Paras 7, 8, 13, 14]

Application alleging violation of Section 171 of the CGST Act, 2017 is dismissed; no profiteering found.

Final Conclusion: The Authority accepted the DGAP's finding that the said Power Bank was already subject to 18% GST under HSN 8507 60 00 prior to 01.01.2019; since the complained rate-reduction did not apply to the Respondent's supplies, Section 171 was not attracted and the application is dismissed.

Interim stay of impugned order - prima facie case - balance of convenience - maintainability of suo moto proceedings by the National Anti-Profiteering Authority - validity of an order signed by fewer members of a multi-member Authority - time limit for passing orders following receipt of investigation report

Interim stay of impugned order - prima facie case - balance of convenience - Interim stay of the impugned National Anti-Profiteering Authority order dated 10th December, 2019 and suspension of consequential proceedings. - HELD THAT: - The Court, on the material placed before it, held that the petitioners had established a prima facie case and that the balance of convenience favoured grant of interim relief. It noted that a portion of the amount directed to be deposited under the impugned order had already been deposited by the petitioners. In view of these considerations the Court stayed the impugned order in Case No. 70/2019 and ordered that all further proceedings pursuant to that order shall remain stayed until the next date of hearing. The order of interim relief was recorded without adjudicating the substantive merits of the contentions raised (including challenges to the Authority's suo moto exercise of jurisdiction, signatures of members, and the time taken to pass the order), which remain pleaded and to be determined on the merits after pleadings and hearing. [Paras 8, 9]

Stay granted on the impugned NAPA order dated 10th December, 2019 in Case No. 70/2019 and all consequential proceedings stayed until the next hearing.

Final Conclusion: Interim relief granted: the impugned NAPA order (10.12.2019) and all consequential proceedings in Case No. 70/2019 are stayed until the next date; matter listed before the Roster Bench on 20th May, 2020; exemption application allowed subject to exceptions.

Legality of search and seizure - use of seized material against person in possession - unexplained cash credit under Section 68 - burden of proof and chitty receipts - disallowance under Section 40A(3) - payment not proved and principles of attribution - deletion of additions for want of cross-examination - violation of principles of natural justice - HELD THAT:- No good ground to interfere with the impugned judgment passed by the High Court.[2018 (11) TMI 1747 - KERALA HIGH COURT]

The special leave petition is, accordingly, dismissed.

Penalty u/s 158BFA(2) - addition of undisclosed income - Discretionary nature of penalty where undisclosed income is determined on estimate basis - Distinction between estimation of undisclosed income and deliberate suppression of income -

Substantial questions of law answered against the Revenue; the Tribunal's deletion of the penalty under section 158BFA(2) is upheld and the appeal is dismissed by HC [2017 (11) TMI 1875 - ANDHRA PRADESH AND TELANGANA HIGH COURT] - HELD THAT:- In view of the fact that the tax effect in the matter is less than two crores, we see no reason to interfere. The special leave petition is dismissed.

Pending applications, if any, shall also stand disposed of.

Disallowance made u/s. 37(1) on account of penal excise duty debited in P & L Account - whether ITAT was justified in holding that alleged excise demand notice are not penal in nature without appreciating the fact that the same are for penalty demand levied by the Excise Department raised on account of fake export permit? -

High Court [2018 (5) TMI 353 - RAJASTHAN HIGH COURT] dismissed the Revenue's appeal, holding that the authorities below correctly characterized the payment as excise duty/contractual indemnity allowable as a business expenditure under section 37(1); the Explanation to section 37 and a penal characterization under the Rajasthan Excise Act, 1950 did not apply - HELD THAT:- Delay condoned. Leave granted.

Admission of additional evidence by appellate authority - remand report and opportunity to comment - treatment of unexplained share application money under section 68 of the Income Tax Act - accrual of compensation under a collaboration agreement and force majeure - creditworthiness and genuineness of loan transactions - scope of judicial interference with concurrent findings

Admission of additional evidence by appellate authority - remand report and opportunity to comment - Whether the First Appellate Authority and Tribunal erred in admitting and relying upon additional evidence without granting the Assessing Officer an opportunity to comment. - HELD THAT: - The Court found that the assessee had furnished additional information before the CIT(A) and that the CIT(A) supplied that information to the Assessing Officer and sought a remand report. The Assessing Officer, in its remand report, did not object to the additional information but requested it be considered at the time of disposal. The Revenue did not raise objection before the Tribunal that it had been denied an opportunity to comment. The High Court held that the Assessing Officer's failure to object in the remand report amounted to implied consent and that, in those circumstances, the appellate authorities were entitled to consider the additional evidence. The Court emphasised that no specific prejudice or objection was shown which would justify interference with concurrent findings on this procedural plea. [Paras 5, 6, 7]

Plea that additional evidence was improperly admitted is rejected; admission and reliance on the additional evidence stood vindicated by the remand report and absence of objection.

Treatment of unexplained share application money under section 68 of the Income Tax Act - creditworthiness and genuineness of loan transactions - Whether the additions made under section 68 in respect of share capital/premium and certain loan amounts were sustainable. - HELD THAT: - The Tribunal examined the identity, creditworthiness and genuineness of the investing companies and the loan creditor. It recorded that the investing companies were private limited companies with PANs, had filed returns, and showed investments in their audited balance sheets; bank statements corroborated transfers to the assessee through banking channels with no suspicious pre-investment cash deposits. In respect of the loan, confirmations and bank entries (including HDFC bank statements) established the source and genuineness of the advances. The High Court recognised these concurrent factual findings by the CIT(A) and the Tribunal and observed that counsel for Revenue failed to point out any material infirmity in fact or law warranting interference. Given the concurrent findings on identity, capacity and genuineness, the additions under section 68 were held to have been rightly deleted. [Paras 7, 8]

Additions under section 68 in respect of share capital/premium and the contested loan were rightly deleted; Revenue's challenge rejected.

Accrual of compensation under a collaboration agreement and force majeure - Whether accrued income/compensation was chargeable to the assessee under the collaboration agreement with M/s Satya Developers Ltd. - HELD THAT: - The collaboration agreement contained a clause (clause-14) providing that the construction period of 24 months would be subject to force majeure and delays caused by statutory authority/possession matters. The Tribunal and CIT(A) found on facts that possession was not handed over by PUDA in time and that delay fell within the exceptions; further, material placed by the assessee and not objected to by the AO supported the conclusion that no compensation had accrued. The High Court accepted these concurrent findings, noting absence of any infirmity in law or fact urged by the Revenue. [Paras 7, 8]

No accrued compensation was held to have accrued to the assessee under the agreement; the addition was rightly deleted.

Final Conclusion: The appeal is dismissed. The High Court declined to interfere with concurrent factual findings of the CIT(A) and Tribunal: (i) additional evidence was properly considered after the Assessing Officer's remand report raised no objection; (ii) additions under section 68 in respect of share capital/premium and the contested loan were correctly deleted on established identity, creditworthiness and genuineness; and (iii) no accrued compensation arose under the collaboration agreement due to excusable delay.

Treatment of bogus purchases - addition of profit element - estimation of profit percentage - acceptance of sales as evidence of corresponding purchases

Treatment of bogus purchases - addition of profit element - acceptance of sales as evidence of corresponding purchases - Whether, where sales declared by the assessee were accepted and purchases were recorded in books with payments by account payee cheques, the entire amount of alleged bogus purchases must be disallowed or only the profit element embedded in such purchases should be added to the taxable income - HELD THAT: - The court accepted the factual findings of the lower authorities that sales declared by the assessee were not disputed and that corresponding purchases were reflected in the sales tax records and in the assessee's books with payments made through account payee cheques. On these facts the court applied the established principle that where purchases correspond to accepted sales and the purchases themselves are held to be made (even if from grey/hawala sources), not the whole purchase value but the profit element embedded in those purchases is the proper taxable addition. The Tribunal and CIT(A) therefore estimated a reasonable profit percentage to be added; CIT(A) adopted 2% while the Tribunal, noting the higher profit element likely on grey market transactions and the assessee's historical gross profit range, directed a further addition of 3%. The High Court found no error in concluding that only the profit element should be added and that the estimation of an appropriate percentage by the authorities was a matter of fact and estimation within their discretion. The court also distinguished the decisions relied upon by Revenue on their facts and agreed with the view in Bholanath Polyfab that the question of whether purchases were actually made is one of fact and, if purchases are held to have been made, only the embedded profit is taxable. [Paras 17, 18, 19, 20, 21]

Only the profit element embedded in the accepted purchases was to be added to the assessee's income; the Tribunal's direction for an addition estimating profit at an additional 3% on the bogus purchases was sustained.

Final Conclusion: Appeal dismissed. No substantial question of law arises; the Tribunal's order directing an estimate of profit (additional 3%) on the accepted purchases is upheld and retained.

Release of seized property - search and seizure - application under Section 132B of the Income Tax Act - exercise of powers under section 132 - reasoned order

Application under Section 132B of the Income Tax Act - release of seized property - Respondents' omission to respond to an application for release of jewellery seized during search and seizure was unreasonable and cannot be justified on the ground that the application was not filed by the petitioners themselves. - HELD THAT: - The Court noted that jewellery was seized from the petitioners' residence and bank lockers during search and seizure. An application dated 26.04.2019 under Section 132B was filed by a family member in representative capacity on behalf of all family members, including the petitioners. The respondents chose not to respond to that application and later relied on the technical point that the application was not filed by the petitioners themselves. The Court held that such omission to even respond was not a reasonable justification; at minimum the respondents ought to have responded to the application rather than permitting time to elapse and thereafter asserting non-compliance with time limits. [Paras 7]

Respondents' failure to respond to the representative Section 132B application was unreasonable and not a valid basis to refuse consideration.

Release of seized property - reasoned order - search and seizure - Procedural directions for fresh application and action thereon: petitioners permitted to move application for release and respondents directed to act without delay and, if rejecting, to communicate a reasoned order within four weeks. - HELD THAT: - In view of the respondents' omission, the Court permitted the petitioners to move the application for release of the jewellery seized from their residence and bank lockers. The Court directed that any such application shall be actioned without delay and, in the event of rejection for any reason, the respondents must communicate a reasoned order within four weeks from the date the application is made. The Court thereby did not order immediate release on merits but mandated prompt consideration and reasoned decision-making by the respondents in accordance with law. [Paras 8, 9]

Petitioners may file the application for release; respondents must consider it promptly and, if rejecting it, issue a reasoned order within four weeks.

Final Conclusion: Writ disposed of with directions permitting petitioners to move the Section 132B application for release of jewellery; the respondents to consider the application without delay and, if rejecting it, to communicate a reasoned order within four weeks.

Assessment order set aside and remanded for fresh adjudication - consideration of subsequent documentary evidence in assessment proceedings - quashing of demand notices - order rejecting stay of demand interfered with - protection against harassment in prosecution of statutory appeals

Consideration of subsequent documentary evidence in assessment proceedings - assessment order set aside and remanded for fresh adjudication - Whether the assessment order should be set aside and the matter remitted for fresh assessment in light of postal department communication asserting internal transfers and not cash deposits. - HELD THAT: - The Court found that the Assessing Officer proceeded to make additions treating amounts as unexplained cash despite the petitioner having explained that sums arose on maturity of Post Office Monthly Income Scheme deposits and having procured a communication from the postal department dated 18.12.2019 stating the transfers were internal and not cash deposits. The assessment order, however, was passed on 07.12.2019 before receipt of that communication. In these circumstances the Court was unable to appreciate the AO's rejection of the stay application and concluded that the petitioner should not be subjected to harassment in prosecuting her appeal. The Court therefore set aside the assessment order and remanded the matter to the AO with a direction to pass a fresh assessment after considering the relevant documents, including the postal communication. [Paras 8, 9]

Assessment order set aside and remitted to the Assessing Officer for fresh assessment after considering the postal department communication and other relevant documents.

Quashing of demand notices - order rejecting stay of demand interfered with - protection against harassment in prosecution of statutory appeals - Whether the demand notices and the order refusing stay should be set aside in view of the order setting aside the assessment and remanding for fresh consideration. - HELD THAT: - Given that the assessment has been set aside and remitted for fresh adjudication, the Court held that the consequential demand notices could not subsist. The Court also observed that the AO's order rejecting the stay (and directing deposit of a portion of the demand) could not be sustained in the circumstances and would amount to harassment of the petitioner pursuing her statutory remedies. Accordingly, the impugned demand notices were set aside and the appeal before the CIT(A) rendered infructuous. [Paras 8, 10]

Impugned demand notices set aside; order rejecting stay quashed; appeal before the CIT(A) rendered infructuous.

Final Conclusion: The assessment order dated 07.12.2019 is set aside and the matter remitted to the Assessing Officer for fresh assessment after considering the postal department communication and other relevant documents; consequential demand notices are quashed and the appeal before the CIT(A) stands rendered infructuous.

Vires of administrative circular - interpretation and application of deductions under Section 10-A and Section 10-B of the Income Tax Act - stage of deduction - gross total income of eligible undertaking vs total income of assessee - binding effect of board circulars vis-a -vis judicial pronouncement

Vires of administrative circular - binding effect of board circulars vis-a -vis judicial pronouncement - interpretation and application of deductions under Section 10-A and Section 10-B of the Income Tax Act - Impugned Circular dated 16.07.2013 is ultra vires and is no longer binding insofar as it conflicts with the law declared by the Supreme Court in Commissioner of Income Tax Vs Yokogawa India Limited. - HELD THAT: - The Court held that circulars represent the executive's view and are not binding on the Court where judicial interpretation of statute is contrary; the principle in CCE v Ratan Melting & Wire Industries was applied to reject supremacy of an inconsistent circular. The impugned Circular construed aggregation and set-off rules under Chapters IV and VI as requiring application of sections 70, 71 and 72 prior to allowing Chapter VI-A/Sections 10A/10B deductions. The Court found that the law as declared by the Supreme Court in Commissioner of Income Tax Vs Yokogawa India Limited treats deductions under Section 10-A (and pari materia Section 10-B) as to be computed at the stage of determining the gross total income of the eligible undertaking itself - i.e., prior to the inter-head aggregation and set-off under Chapter VI. Given that the Yokogawa ratio requires deduction to be given at the undertaking level, the aspects of the impugned Circular that mandate contrary sequencing are inconsistent with that judicial pronouncement and therefore cannot stand as authoritative guidance for assessing officers.

Impugned Circular dated 16.07.2013 declared irrelevant/ultra vires to the extent it conflicts with the Supreme Court's decision in Commissioner of Income Tax Vs Yokogawa India Limited.

Interpretation and application of deductions under Section 10-A and Section 10-B of the Income Tax Act - direction to assessing officers - Assessing Officers are bound to complete pending assessments or reassessments in accordance with the Supreme Court's decision in Commissioner of Income Tax Vs Yokogawa India Limited, treating Section 10-A/10-B deductions at the eligible undertaking stage. - HELD THAT: - The Court observed that the Yokogawa decision clarified that deductions under Section 10-A are to be allowed while computing the gross total income of the eligible undertaking (i.e., before application of Chapter VI aggregation/set-off provisions), and that this reasoning applies equally to Section 10-B. Consequently, the impugned Circular cannot be followed by Assessing Officers where it prescribes a contrary sequence. The Court directed that pending assessments and reassessments must be completed consistent with the Supreme Court's ratio, thereby ensuring uniform application of the law as declared by the apex court.

Assessing Officers directed to proceed with pending assessments/re-assessments in terms of the Yokogawa decision; impugned Circular shall not be applied.

Final Conclusion: Writ petition allowed; impugned Circular dated 16.07.2013 declared ultra vires and irrelevant insofar as it conflicts with the Supreme Court's interpretation in Commissioner of Income Tax Vs Yokogawa India Limited; Assessing Officers to complete pending assessments/reassessments in accordance with that decision.

Interference by writ court in revenue recovery proceedings - service of notice of demand under Section 156 of the Income tax Act - remand under Section 264 and conduct of consequential proceedings - belated challenge and failure to avail statutory appellate remedy - right to file appeal with condonation of delay and independent adjudication by appellate authority

Remand under Section 264 and conduct of consequential proceedings - service of notice of demand under Section 156 of the Income tax Act - belated challenge and failure to avail statutory appellate remedy - interference by writ court in revenue recovery proceedings - Whether writ intervention was warranted to set aside the consequential assessment and restrain recovery proceedings - HELD THAT: - The Court found that the original assessment for AY 1999 - 2000 had been remanded under the revision order and consequential proceedings were conducted with opportunities afforded to the assessee. The assessee appeared once but did not produce fresh evidence or request cross examination of creditors, and repeatedly sought and then failed to attend further proceedings. The Assessing Officer finalised the assessment in the face of time bound directions. The Revenue produced documentary evidence showing service of the assessment order along with a demand notice in January 2007, and the assessee did not challenge the assessment or pursue the statutory appellate remedy until recovery steps in 2011-2013 prompted the writ. Given the long delay, the absence of cooperation in the remand proceedings, and the availability of statutory remedies which were not invoked, the Single Judge correctly refused to interfere with the assessment and recovery at that belated stage. [Paras 2, 3, 5, 6]

Writ interference was declined; the assessment and recovery proceedings were not set aside.

Right to file appeal with condonation of delay and independent adjudication by appellate authority - Whether the impugned order and observations foreclose the appellants from seeking statutory appellate remedy with condonation of delay - HELD THAT: - The Court held that dismissal of the writ petition should not operate to bar the appellants from pursuing the statutory remedy of appeal. If an appeal is filed with a request for condonation of delay, the appellate authority must consider and decide the appeal on its own merits to the extent it is admitted under law. [Paras 7, 8]

Observations in the impugned judgment shall not prevent the appellants from seeking and prosecuting an appeal with condonation of delay; the appellate authority to deal independently if the appeal is admitted.

Final Conclusion: Writ appeal dismissed for want of merit for belated challenge to assessment and failure to avail statutory remedies; appellants remain free to file an appeal and seek condonation of delay, which, if admitted, shall be considered independently by the appellate authority.

Reopening of assessment under Section 147 of the Income Tax Act, 1961 - Audit objection withdrawn and its effect on reassessment proceedings - Writ jurisdiction under Article 226 of the Constitution

Reopening of assessment under Section 147 of the Income Tax Act, 1961 - Audit objection withdrawn and its effect on reassessment proceedings - Writ jurisdiction under Article 226 of the Constitution - Effect of the audit dropping its objection on the reassessment proceedings initiated under Section 147 and consequent adjudication of the writ petition. - HELD THAT: - The Court recorded the Department's written communication that the reopening of assessment for A.Y.2013-14, initiated pursuant to a revenue audit objection, has been dropped because the audit itself has withdrawn the objection. In view of that factual position, the Court concluded that there is no longer any live controversy requiring adjudication on the merits of the petition challenging the reopening. The court therefore declined to decide the substantive issues raised against the notice of reopening, while noting the petitioner had not yet been formally intimated in writing. The Revenue was observed to be obliged to inform the petitioner in writing about its decision to withdraw the reopening so that the assessee's position is formalised. [Paras 6, 7]

Proceedings under Section 147 were dropped following withdrawal of the audit objection; the writ petition was disposed of without adjudication on merits, notice discharged, and the Revenue directed to inform the petitioner in writing of the withdrawal.

Final Conclusion: The reassessment proceedings for A.Y.2013-14 stood withdrawn because the audit objection was dropped; consequently the writ petition was disposed of as infructuous with a direction that the Revenue communicate the withdrawal to the petitioner in writing.

Condonation of delay - discretion to condone delay under Section 119(2)(b) of the Income Tax Act, 1961 - belated return under Section 139(4) of the Income Tax Act, 1961 - electronic filing acknowledgment (ITR-V) requirement and consequential technical default - reasonable cause for delay and genuine hardship - CBDT circular dated 09.06.2015 permitting administrative discretion for small claims - refund claim arising from tax deducted at source

Condonation of delay - discretion to condone delay under Section 119(2)(b) of the Income Tax Act, 1961 - electronic filing acknowledgment (ITR-V) requirement and consequential technical default - reasonable cause for delay and genuine hardship - CBDT circular dated 09.06.2015 permitting administrative discretion for small claims - refund claim arising from tax deducted at source - Application under Section 119(2)(b) to condone delay in forwarding ITR V after electronic filing and to allow processing of refund for AY 2015 - 16. - HELD THAT: - The petitioner filed an electronic return within the temporal limits of Section 139(4) but failed to forward the signed acknowledgment (ITR V) to CPC within 120 days due to the critical illness and hospitalization of his wife. The CBDT circular dated 09.06.2015 contemplates administrative discretion to condone such delays, particularly where the claim is not indicative of tax evasion and arises from TDS. The Principal Commissioner has power under Section 119(2)(b) to exercise this discretion, but in the present case the authority rejected the application on the ground that routine treatment after discharge meant the petitioner was not prevented from filing. The High Court found that the facts demonstrated genuine hardship and that the failure was a technical default rather than an attempt to evade tax. Given the nature of the claim (refund of TDS) and the conceded power to condone under the circular and Section 119(2)(b), the exercise of discretion in favor of the assessee was warranted. The impugned order declining condonation was therefore quashed and the respondent was directed to process the refund claim ignoring the delay, with a final decision to be rendered within three months from receipt of the certified copy of the order.

Order dated 15.03.2019 refusing condonation is quashed; petitioner's application dated 07.11.2017 under Section 119(2)(b) is allowed and respondent directed to process the refund claim for AY 2015 - 16 ignoring the delay.

Final Conclusion: Writ petition allowed; discretionary condonation under Section 119(2)(b) granted on grounds of genuine hardship caused by the petitioner's wife's critical illness; respondent directed to process and decide the refund claim for Assessment Year 2015 - 16 within three months.

Rectification of mistake apparent from the record under Section 245D(6B) - limitation period computed from the end of the month in which the order was passed - first proviso to Section 245D(6B) creating bar on rectification applications after six months - service of order not altering statutory limitation unless statute so provides - legislative power to prescribe and limit statutory remedies

Rectification of mistake apparent from the record under Section 245D(6B) - limitation period computed from the end of the month in which the order was passed - service of order not altering statutory limitation unless statute so provides - Whether the rectification application filed on 30.06.2017 under Section 245D(6B) was barred by limitation. - HELD THAT: - The Court examined sub-section (6B) of Section 245D and the first proviso thereto and held that the statutory scheme permits rectification only within six months from the end of the month in which the order under subsection (4) is passed, or within six months from the end of the month in which an application for rectification is made by the specified authorities. The first proviso expressly bars any application for rectification after the expiry of six months from the end of the month in which the order under subsection (4) is passed. Applying that provision to the facts, the Settlement Commission's order dated 28.11.2016 triggered the limitation period which expired on 31.05.2017, and the application filed on 30.06.2017 was therefore time barred. The Court further considered the petitioner's submission that limitation should run from the date of service of the order, but observed there is no statutory mandate in Section 245D(6B) making communication a condition for computing limitation; consequently precedents interpreting different statutes that required communication were distinguishable. Even on the petitioner's alternate contention, the petitioner failed to prove the exact date of service in December 2016 and so could not show that filing on 30.06.2017 fell within six months from the date of service. The Court found no error in the Settlement Commission's decision and noted that the Legislature is entitled to prescribe temporal conditions for exercise of statutory rights. [Paras 6, 7, 8, 10, 11]

The rectification application was barred by limitation and the writ petition challenging the dismissal of that application is dismissed.

Final Conclusion: The Settlement Commission correctly held the rectification application under Section 245D(6B) to be time barred (six months from the end of the month in which the order was passed); the petition is dismissed.

Deduction under section 35(2AB) - Procedural intimation in Form No.3CL and approval in Form No.3CM - Power of revision under section 263 - Verification of R&D expenditure for allowability - Allowability under general principle of section 37 as alternative

Deduction under section 35(2AB) - Procedural intimation in Form No.3CL and approval in Form No.3CM - Whether the claim of weighted deduction under section 35(2AB) can be denied solely for non-submission of Form No.3CL by the prescribed authority. - HELD THAT: - The Tribunal held that mere absence of Form No.3CL - an inter-departmental intimation between the prescribed authority and the Income-tax Department - is a procedural lapse and by itself does not justify denial of deduction under section 35(2AB) where approval in Form No.3CM has been granted. The Tribunal relied on the coordinate decisions and on the High Court of Gujarat's decision in CIT v. Sun Pharmaceutical Industries Ltd., which recognised that failure by the prescribed authority to send Form 3CL should not penalise the assessee if the in-house R&D facility has been approved in Form 3CM. However, the Tribunal emphasised that allowability is subject to scrutiny of the nature and genuineness of the expenditure; absence of Form 3CL does not absolve the assessing authority from verifying that the claimed expenditure meets the statutory conditions for deduction. The Tribunal therefore modified the Revisional Order to the extent of directing verification rather than outright denial. [Paras 9, 10]

Deduction under section 35(2AB) cannot be rejected solely for want of Form No.3CL where Form No.3CM exists; the claim remains admissible subject to verification of the expenditure.

Power of revision under section 263 - Verification of R&D expenditure for allowability - Allowability under general principle of section 37 as alternative - Whether the matter should be remitted for verification of the nature and allowability of the R&D expenditure and for consequential reconsideration under section 263. - HELD THAT: - The Tribunal found that neither the Assessing Officer nor the Pr. CIT had examined and recorded findings on the factual nature and admissibility (revenue or capital) of the expenditures claimed as R&D. Following the High Court's direction that the AO should verify the actual expenditure incurred, the Tribunal held that the appropriate course is to remit the matter to the Pr. CIT/AO for due verification and re-determination after affording the assessee opportunity to be heard and to produce supporting records. The Tribunal also observed that if conditions for section 35(2AB) are not established on verification, the claimed expenses may still be examinable under section 37, subject to meeting its tests. [Paras 8, 9, 10]

Matter remitted to Pr. CIT/AO for verification of R&D expenditure and consequent fresh adjudication after hearing the assessee; the revision order is modified to require verification rather than blanket disallowance.

Final Conclusion: Both appeals are partly allowed: the Revisional Orders under section 263 are modified to the extent that absence of Form No.3CL alone is not a ground for denying deduction under section 35(2AB); the Pr. CIT/AO is directed to verify the nature and admissibility of the claimed R&D expenditure and pass consequential orders after giving the assessee an opportunity to be heard.

Estimation of income on the basis of seized documents and turnover - set-off of previously disclosed amount against assessed estimated income - penalty under Section 271AAA - conditions for exemption from penalty under Section 271AAA(2) - undisclosed income as defined in Explanation (a) to Section 271AAA

Estimation of income on the basis of seized documents and turnover - set-off of previously disclosed amount against assessed estimated income - Whether the addition of Rs. 18,20,407/- (net commission) sustained by the CIT(A) on estimated commission income was justified when the assessee had already disclosed cash of Rs. 27.50 lakhs - HELD THAT: - The Tribunal held that the CIT(A) estimated commission income for the period the firm existed (207 days) by deriving average turnover from seized documents and applying an appropriate commission rate, arriving at an estimated commission of about Rs. 25 lakhs. However, the firm had already disclosed cash of Rs. 27.50 lakhs as income. Where an assessed estimated income is computed for the same period, the correct method is to determine total commission income for that period and set it off against the amount already disclosed by the assessee (after allowing expenditures). Because the disclosure of Rs. 27.50 lakhs exceeded the CIT(A)'s ultimately estimated commission for the period, no further addition was required. Applying this approach, the Tribunal deleted the addition of Rs. 18,20,407/-. [Paras 6]

Addition of Rs. 18,20,407/- deleted

Penalty under Section 271AAA - conditions for exemption from penalty under Section 271AAA(2) - undisclosed income as defined in Explanation (a) to Section 271AAA - Whether penalty under Section 271AAA was leviable and, if so, whether its computation required modification in view of the deletion of the addition - HELD THAT: - Section 271AAA imposes a penalty equal to 10% of the undisclosed income found on search, subject to exemption where the assessee admits, substantiates and pays tax with interest in respect of the undisclosed income during the course of search. The assessee did not fulfil the conditions in subsection (2) (it did not admit the recovered cash in the statement recorded during search nor substantiate the manner of derivation), hence penalty is prima facie leviable. However, the quantum of undisclosed income for computing penalty must reflect the Tribunal's determination. Since the Tribunal deleted the addition of Rs. 18,20,407/-, that amount cannot be included for penalty computation. Therefore the penalty is to be limited to 10% of the undisclosed income as confirmed by the Tribunal (i.e., excluding the deleted addition), resulting in reduction of the penalty to 10% of Rs. 27,50,000/-. [Paras 11]

Penalty under Section 271AAA sustained but reduced and restricted to 10% of the undisclosed income as confirmed by the Tribunal (penalty limited accordingly)

Final Conclusion: Both appeals are partly allowed: the addition of Rs. 18,20,407/- is deleted, and the penalty under Section 271AAA is confirmed but recalculated by excluding the deleted addition (penalty restricted to 10% of the undisclosed income as confirmed).

Exemption under section 54F - ownership of residential house for proviso to section 54F - search and assessment under section 153A where material is unearthed - interest under section 234B as consequential

Search and assessment under section 153A where material is unearthed - Validity of initiation and confirmation of assessment under section 153A in view of non-disclosure detected during search - HELD THAT: - The Tribunal found that the assessee, while claiming exemption under section 54F, had not disclosed certain properties in the computation of income filed with the return. The reply given to question No.9 during the course of search disclosed ownership of flats which were not reflected in the computation, rendering the claim prima facie doubtful. In that situation, the AO was justified in invoking section 153A to reopen scrutiny. The Tribunal dismissed the ground challenging the confirmation of action under section 153A. [Paras 7]

Ground challenging action under section 153A dismissed; AO's exercise of jurisdiction upheld.

Exemption under section 54F - ownership of residential house for proviso to section 54F - Entitlement to exemption under section 54F where question arose whether an identified property was a 'residential house' on the date of transfer - HELD THAT: - The Tribunal accepted the assessee's contention that the flat at Bafna Tower, though described as residential in the sale deed, had ceased to be a usable residential house because the building was occupied for commercial activities and flats were let out for commercial purposes. The Tribunal observed that the character of the property required examination by the AO before rejecting the claim; excluding the Bafna Tower property from residential house classification leaves the assessee with only the 90% share in the Kalpataru Heights flat as residential property at the relevant time. Emphasising that the object of section 54F is to encourage investment in residential housing and that this should not be defeated on flimsy reasons, the Tribunal held the assessee entitled to the claimed exemption and directed the AO to grant exemption of Rs. 50 lakhs by treating the investment in the new residential house as qualifying under section 54F. [Paras 10, 11, 12, 13, 14]

Assessee entitled to exemption under section 54F; direction to AO to allow exemption of Rs. 50 lakhs.

Interest under section 234B as consequential - Treatment of interest under section 234B in consequence of appellate adjudication - HELD THAT: - The Tribunal held that interest charged under section 234B is consequential in nature. If, upon giving effect to the Tribunal's order, the assessed income is reduced such that interest under section 234B is not chargeable on part of the assessment, the AO should re-compute interest after providing the assessee an opportunity of hearing. The Tribunal remitted the matter to the AO for read-judication of interest in accordance with the appellate outcome. [Paras 3]

Interest under section 234B remitted to the AO for recomputation and read-judication consequential to the Tribunal's decision, after affording hearing to the assessee.

Final Conclusion: The appeal is partly allowed: the Tribunal upholds initiation under section 153A, allows the claim of exemption under section 54F (directing grant of exemption of Rs. 50 lakhs), and remands computation of interest under section 234B to the AO for consequential read-judication after giving the assessee an opportunity of hearing.

Refund of IGST on zero-rated supplies - export shipping bill amendment - amendment under Sec. 149 of the Customs Act, 1962 - mandamus directing administrative decision

Refund of IGST on zero-rated supplies - export shipping bill amendment - Direction to the Customs authorities to consider and decide the petitioner's claim for refund of IGST paid in relation to exported goods after amendment of the shipping bills. - HELD THAT: - The writ applicant, a registered manufacturer and exporter, paid IGST in respect of exported goods but due to a clerical omission the IGST amount was not reflected in the shipping bills. The shipping bills were subsequently amended (letter dated 15.02.2018 records approval of amendment under Sec.149 of the Customs Act, 1962) to incorporate the IGST details. The petitioner made representations to the Deputy Commissioner and Principal Commissioner of Customs seeking sanction of the refund of IGST on zero rated supplies which, according to the petitioner, remained unresponded to. The High Court, noting the representations and the amendment communication, directed the concerned Customs authorities to look into the matter and take an appropriate decision in accordance with law and to communicate the decision to the petitioner in writing within four weeks from receipt of the writ of this order. [Paras 7, 8]

The Principal Commissioner of Customs, Mundra and the Deputy Commissioner of Customs, Mundra are directed to consider the petitioner's representations and decide the claim for IGST refund in accordance with law and communicate the decision in writing within four weeks.

Final Conclusion: Writ petition disposed with a direction to the Principal Commissioner and the Deputy Commissioner of Customs, Mundra to consider and decide the petitioner's representations for refund of IGST on zero rated exports (after amendment of the shipping bills) and to communicate the decision within four weeks.

Regular bail - interim bail made absolute - parity with co-accused and pre-arrest bail - detention during pendency of trial - conditions of bail and cancellation on breach - no expression of opinion on merits

Regular bail - interim bail made absolute - parity with co-accused and pre-arrest bail - Petition for grant of regular bail was allowed and the interim bail earlier granted was made absolute subject to conditions. - HELD THAT: - The Court exercised its discretionary power to enlarge the accused on bail pending trial after weighing relevant facts. The trial in the complaint under the Customs Act was likely to take considerable time and continued detention during that period would not serve any useful purpose. The Court noted that several co-accused had already been granted regular bail and that the petitioner had been granted pre-arrest bail in the connected FIR; there was nothing on record suggesting prior criminal antecedents or that the petitioner was a hardened criminal. Acting without touching the merits of the allegations, the Court concluded that continued detention was not warranted and that bail should be confirmed with appropriate safeguards. The order records that the trial Court may impose further conditions to ensure attendance and non-interference with the trial, and that the prosecution remains entitled to seek cancellation of bail on proof of any breach of conditions.

Interim bail is made absolute and continued release on bail is subject to conditions: (i) appearance on each date of hearing; (ii) no threat or intimidation to prosecution witnesses; (iii) not to leave the country without prior permission and surrender of passport or affidavit; further conditions may be imposed by the trial Court and prosecution may seek cancellation on breach.

No expression of opinion on merits - The Court explicitly declined to express any opinion on the merits of the complaint while deciding the bail application. - HELD THAT: - While granting bail, the Court limited its adjudication to the question of custodial release and made clear that its order does not amount to any determination on the substantive allegations in the complaint. The liberty granted is subject to procedural safeguards and the prospect of trial; merits will be decided in the regular course of trial.

Order granting bail does not prejudice the trial or determine the merits; merits to be adjudicated during trial.

Final Conclusion: Bail petition allowed; interim bail converted into regular bail subject to specified conditions and without any adjudication on merits; trial Court may impose further conditions and the prosecution may move for cancellation if conditions are violated.

Limitation under Regulation 20 of the Customs Brokers Licensing Regulations, 2013 for issuance of show-cause notice - mandatory nature of the ninety-day time-limit for show-cause proceedings - validity of revocation of customs broker licence consequent to time-barred show-cause notice

Limitation under Regulation 20 of the Customs Brokers Licensing Regulations, 2013 for issuance of show-cause notice - mandatory nature of the ninety-day time-limit for show-cause proceedings - validity of revocation of customs broker licence consequent to time-barred show-cause notice - Show-cause notice issued beyond the ninety-day period under Regulation 20 rendered the consequent revocation of the petitioner's customs broker licence invalid. - HELD THAT: - The Court examined the show-cause notice issued to the petitioner and found it was issued after the ninety-day period prescribed by Regulation 20 of the Customs Brokers Licensing Regulations, 2013. Relying upon earlier decisions of this Court, including Santon Shipping Services v. The Commissioner of Customs and Masterstroke Freight Forwarders Pvt. Ltd. v. Commissioner, the Court held that the ninety-day limitation is mandatory and that issuance of a show-cause notice beyond that period vitiates subsequent proceedings. Although a Division Bench of the Bombay High Court has taken a contrary view characterising the limitation as directory, the High Court declined to follow that decision and applied the binding precedents of this Court. As the impugned show-cause notice was time barred, the consequential order revoking the petitioner's licence could not stand and was quashed.

Impugned revocation order quashed as the show-cause notice was issued beyond the ninety-day period prescribed by Regulation 20.

Final Conclusion: Writ petition allowed; the revocation of the petitioner's customs broker licence is quashed on the ground that the show-cause notice was issued after the statutory ninety-day period under Regulation 20, and the Court followed its own precedents holding the time-limit to be mandatory.

Redetermination of transaction value - contemporaneous import prices as primary guide for valuation - inapplicability of LME-based valuation for scrap when contemporaneous data exists - sequential application of Customs Valuation Rules (Rule 5 and Rule 6) - inadmissibility of uncorroborated oral statements and retracted statements - requirement of opportunity to cross-examine witnesses relied upon - insurance policy values and foreign consulate reports not substitute for contemporaneous evidence - finality of earlier assessment bars reassessment of the same Bills of Entry - non-liability to additional customs duty (CVD) on non-manufactured scrap

Inapplicability of LME-based valuation for scrap when contemporaneous data exists - redetermination of transaction value - Redetermination of value by applying LME prices less discount band under DGOV circular is not sustainable where contemporaneous import prices of identical or comparable scrap are available. - HELD THAT: - The Tribunal held that the adjudicating authority erred in redetermining the value of imported aluminium scrap solely by applying the DGOV/LME-based discount bands while overlooking contemporaneous import data on record. When declared transaction value is sought to be rejected, the Customs Valuation Rules must be applied sequentially and contemporaneous imports provide the best guide to value. The Tribunal followed its earlier reasoning in Sunland Metal and Pushpak Metal, and CBEC acceptance of Pushpak Metal, to conclude that LME (which deals with prime metal) cannot be blindly applied to scrap valuation where contemporaneous transaction values at similar prices are available. Accordingly, the declared values comparable to contemporaneous data must be upheld. [Paras 11]

The redetermination of value on the basis of the DGOV/LME circular is set aside and the declared value, being comparable to contemporaneous imports, is upheld.

Sequential application of Customs Valuation Rules (Rule 5 and Rule 6) - contemporaneous import prices as primary guide for valuation - The proper procedure for rejecting declared transaction value requires sequential application of the Customs Valuation Rules (Rules 5 and 6) and adoption of contemporaneous import values where available. - HELD THAT: - The Tribunal emphasised that if the assessing authority intends to reject the transaction value, it must apply the Valuation Rules in sequence-considering transaction value of identical or similar goods and determination under Rule 6-before resorting to other indicia. Where contemporaneous imports at similar prices exist, those values must form the basis for redetermination; the LME-based approach cannot override the Valuation Rules. The impugned order failed to apply this sequence and therefore erred. [Paras 11]

Failure to apply Rules 5 and 6 sequentially renders the LME-based revaluation unsustainable; contemporaneous import values prevail.

Inadmissibility of uncorroborated oral statements and retracted statements - requirement of opportunity to cross-examine witnesses relied upon - Oral statements of partners, co-noticees or third parties-especially retracted statements or statements where cross-examination was not afforded or witnesses did not appear-cannot form the sole or decisive basis for confirming undervaluation. - HELD THAT: - The Tribunal found that the impugned order relied heavily on statements of partners and other witnesses which were either retracted, contradicted by documentary contemporaneous data, or where the witnesses were not made available for cross-examination. The Tribunal reiterated the principle that documentary evidence prevails over inconsistent oral statements and that natural justice requires the opportunity to cross-examine witnesses whose statements are used against the assessee. In the absence of proper cross-examination or corroboration, such statements cannot sustain a demand. [Paras 11]

The statements relied upon are insufficient and cannot sustain confirmation of undervaluation; reliance on them is rejected.

Insurance policy values and foreign consulate reports not substitute for contemporaneous evidence - Values shown in insurance policies and unauthenticated foreign consulate/third party reports cannot be treated as conclusive evidence to enhance valuation in the absence of corroborative contemporaneous import data. - HELD THAT: - The Tribunal held that insurance certificates may reflect supplier choices (higher cover or clerical errors) and do not reliably indicate the transaction value for the importer; consequently, insurance values cannot be the basis for enhancement without independent corroboration. Similarly, the Brussels report and its enclosures were found to relate to transactions between third parties, were unauthenticated and not directly attributable to the appellant's purchases; such material cannot be used to sustain the undervaluation charge. [Paras 11]

Insurance values and the Brussels report cannot be relied upon to confirm the demand; they do not support enhancement of declared value.

Finality of earlier assessment bars reassessment of the same Bills of Entry - Where value was already enhanced at assessment and the assessment order has attained finality (no appeal/review), a subsequent proposal to re-enhance or re-determine the value for the same Bills of Entry is not sustainable. - HELD THAT: - The Tribunal observed that many Bills of Entry had earlier been finally assessed after enhancement and those assessment orders had become final for want of appeal. Reopening or re-enhancing value in respect of such Bills is impermissible; prior final orders cannot be disturbed by the present show cause process. The Tribunal followed precedent to hold that reassessment of values which have attained finality is not permissible. [Paras 11]

Demands based on re-enhancement of values for Bills of Entry whose assessments have attained finality are unsustainable.

Non-liability to additional customs duty (CVD) on non-manufactured scrap - No additional customs duty (CVD) is payable on imported scrap that is not a manufactured product. - HELD THAT: - The Tribunal accepted that the nature of the imported materials (as per ISRI definitions and supporting photographs) indicated they were scrap not arising from manufacture, and therefore not liable to excise and consequently not subject to additional customs duty. The adjudicating authority's refusal to entertain this contention at the show-cause stage was rejected since a notice under Section 28 permits the assessee to contest the whole assessment and claim applicable reliefs or exemptions. [Paras 11]

The appellant is entitled to relief that additional customs duty is not payable on non-manufactured scrap.

Limitation and maintainability of demand - Limitation for the show cause notice was not decided on merits and has been kept open for consideration. - HELD THAT: - The Tribunal expressly stated that since the appeals were being decided on merits it did not address the contention on limitation, leaving that issue open for future adjudication if necessary. [Paras 11]

Limitation was left open and not adjudicated.

Final Conclusion: For the reasons stated, the Tribunal set aside the impugned order dated 26.03.2019: demands based on LME/DGOV revaluation, confiscation and penalties are unsustainable; declared values comparable with contemporaneous imports are upheld; reliance on uncorroborated statements, insurance values and the Brussels report is rejected; reassessment of values already finally assessed is impermissible; the appellant is entitled to relief that CVD is not payable on non-manufactured scrap; the issue of limitation is kept open. All appeals are allowed with consequential reliefs.

Condition of sale - inclusion of payments made on behalf of the seller in assessable value - Rule 10(1)(e) of the Customs (Determination of Value of Imported Goods) Rules, 2007 - transaction value - post importation promotional expenditure - interpretative note to Rule 3(b) - extended period of limitation by reason of suppression - penalty under Section 114A of the Customs Act, 1962 - confiscation and consequential relief including refund with interest

Condition of sale - Rule 10(1)(e) of the Customs (Determination of Value of Imported Goods) Rules, 2007 - post importation promotional expenditure - transaction value - inclusion of payments made on behalf of the seller in assessable value - Whether marketing, advertising, sponsorship and promotional expenses incurred by the appellant are includible in the assessable value of the imported goods under Rule 10(1)(e) as a condition of sale. - HELD THAT: - The Tribunal found no contractual obligation requiring the appellant to spend any fixed amount or fixed percentage of the invoice value as a pre condition of sale. Article 7 obliges the distributor to carry out marketing/promotional activities in consultation with the seller but does not impose a mandatory quantum or make expenditure a condition precedent to import. The activities in question are post import promotional efforts undertaken on the appellant's account and not payments made on behalf of the seller to discharge the seller's obligation. Reliance placed on decisions where a mandatory obligation or specific percentage was prescribed (e.g., Reebok) is inapplicable because the distribution agreement here lacks any provision obliging the buyer to incur a stipulated promotional outlay or to render accounts to the seller except where pre approved and reimbursed. The interpretative note to Rule 3(b) supports that buyer's activities undertaken on its own account, even if by agreement, are not to be treated as direct payments by the buyer on behalf of the seller. For these reasons, the precondition for addition under Rule 10(1)(e) is absent and no enhancement of transaction value was called for. [Paras 16]

Promotional and sponsorship expenses incurred by the appellant are not includible in the assessable value under Rule 10(1)(e); the requisite condition of sale is absent.

Extended period of limitation by reason of suppression - disclosure of distribution agreement - suppression and wilful misstatement - Whether the extended period of limitation could be invoked on the ground of suppression or non disclosure by the appellant. - HELD THAT: - The Tribunal recorded that the appellant had produced the distribution agreement when requisitioned during investigation and that there was no evidence of concealment or contumacious conduct warranting invocation of the extended period. The finding of the adjudicating authority that non disclosure amounted to suppression was held to be vitiated by mistake of fact. In the absence of deliberate suppression or misstatement, extended limitation could not be sustained. [Paras 16, 17]

Extended period of limitation not invokable; allegation of suppression/non disclosure not established.

Penalty under Section 114A of the Customs Act, 1962 - confiscation - refund with interest - Whether the confiscation and penalty imposed on the appellant can be sustained in view of the Tribunal's findings. - HELD THAT: - Since the foundational addition to assessable value was not sustainable, the consequential findings of confiscation and penalty under Section 114A were vitiated. The Tribunal allowed the appeal, set aside the impugned order including the differential duty, confiscation finding and penalty, and directed that amounts deposited during investigation be refunded with interest as per law, noting that such deposits have acquired the character of pre deposit under Section 129E. [Paras 17]

Confiscation and penalty set aside; appellant entitled to consequential benefits including refund with interest.

Final Conclusion: Appeal allowed. Impugned order is set aside: additions under Rule 10(1)(e) disallowed, extended period of limitation not sustained, and consequential confiscation and penalty reversed; appellant entitled to refund of deposits with interest and other consequential reliefs.

Disclosure of essential facts under Rule 16 of the Anti Dumping Rules - Article 6.9 of the Anti Dumping Agreement (WTO) - disclosure obligation - principles of natural justice in quasi judicial proceedings - methodology disclosure and change of methodology (PCN to PCN comparison) - causal link between dumped imports and material injury - termination of investigation under Rule 14/Rule 17 - status and locus of non cooperative exporters/participants

Disclosure of essential facts under Rule 16 of the Anti Dumping Rules - Article 6.9 of the Anti Dumping Agreement (WTO) - disclosure obligation - principles of natural justice in quasi judicial proceedings - Whether the Designated Authority could issue final findings that diverged from the disclosure statement without disclosing the additional facts/methodology relied upon and thereby deny the parties an opportunity to comment. - HELD THAT: - Rule 16 requires the Designated Authority to inform interested parties of the "essential facts under consideration" which form the basis of its decision so as to afford sufficient time and opportunity to defend their interests. The disclosure must set out the actual facts and analysis the Authority is using - not merely a replica of received information - because those are the intermediate findings on which the final determination will be based. Article 6.9 of the ADA has the same object. Where the final findings rest upon additional data, a changed methodology, or other material not disclosed earlier, the Authority must put that material before interested parties and permit comments. Reliance in the final order on facts or methodology not disclosed in the disclosure statement violates the principles of natural justice applicable to the quasi judicial proceedings of the Designated Authority. Post hoc explanations in court cannot substitute for the required disclosure in the final order. [Paras 35, 36, 37, 38, 39]

Final findings set aside and matter remanded to the Designated Authority to issue a fresh, complete disclosure of essential facts/methodology, afford parties an opportunity to comment, and thereafter give fresh final findings.

Methodology disclosure and change of methodology (PCN to PCN comparison) - non cooperative/residual category methodology - Whether the unexplained change in methodology (from the price comparison approach used in the disclosure to a PCN to PCN comparison in the final findings) without disclosure was permissible. - HELD THAT: - The Designated Authority acknowledged that certain inadvertent errors in the disclosure were corrected in the final findings; during hearing it was contended that this correction involved adopting a PCN to PCN comparison. The Tribunal held that a change of methodology which materially affects intermediate conclusions must be disclosed in the disclosure statement so that parties can respond. The Court also emphasised that post order explanations of reasons not appearing in the order cannot be relied upon. Further, PCN wise analysis is appropriate only where cooperative exporters have made claims requiring such matching, and the record must show which PCNs were compared. Absent such disclosure, the methodology change cannot stand. [Paras 30, 36]

Designated Authority directed to disclose the complete methodology (including any PCN to PCN comparisons used), allow comments and, after analysis, re frame final findings if warranted.

Causal link between dumped imports and material injury - termination of investigation under Rule 14/Rule 17 - Whether the Designated Authority lawfully concluded there was no causal link and terminated the investigation despite the disclosure statement showing positive dumping, injury and a causal link. - HELD THAT: - The disclosure statement contained intermediate findings indicating positive dumping margins, injury indicators (losses, negative returns, inventories, under pricing) and a causal link. The final findings recorded contrary conclusions, including that dumping margins became de minimis for most exporters and that observed losses could be attributable to start up/teething problems, leading to termination. Because the final conclusions diverged from the disclosed essential facts without adequate disclosure of the additional material or methodology relied upon, the Tribunal found the process defective. The question of whether, on full disclosure and fresh consideration, the causal link exists is left open for determination by the Designated Authority after affording parties opportunity to comment. [Paras 27, 28, 29, 35]

Final conclusion on causal link and any termination is set aside for fresh consideration after compliance with disclosure and hearing directions.

Status and locus of non cooperative exporters/participants - participation of exporters who submitted representations - Whether the Malaysian exporter (respondent no.3), whose representation was found unreliable by the Designated Authority, could continue to participate and be heard in the proceedings before the Tribunal and on remand. - HELD THAT: - The Tribunal noted that Rule 5(2)(c) of the CEGAT Procedure Rules permits joinder of any person who submitted representations during the investigation. Although the Designated Authority rejected the Malaysian exporter's submissions on reliability grounds and that rejection was not itself challenged, the Tribunal observed that the Authority has liberty on remand to reconsider the status of the Malaysian exporter and the genuineness of its representation. The issue of locus and participation therefore requires fresh consideration in light of full disclosure. [Paras 21, 24, 39]

Liberty granted to the Designated Authority to reconsider the status of the Malaysian exporter and the genuineness of its representation on remand; exporter's participation to be addressed accordingly.

Final Conclusion: The final findings dated 2 September 2017 and the consequential Government notification are set aside. The matter is remanded to the Designated Authority with directions to issue a complete disclosure of essential facts and methodology, afford interested parties an opportunity to comment, reconsider the status of the Malaysian exporter if necessary, and thereafter pronounce fresh final findings upon which the Central Government may issue a fresh notification.

Entertainment of appeals against interim orders - right to cross-examination as part of principles of natural justice - appellate jurisdiction under Section 129A of the Customs Act, 1962 - reconsideration by successor adjudicating authority

Entertainment of appeals against interim orders - appellate jurisdiction under Section 129A of the Customs Act, 1962 - Appeal against the communication rejecting request for cross-examination is not maintainable before the Appellate Tribunal at the interim stage. - HELD THAT: - The Tribunal held that an appeal against an interim communication declining permission for cross-examination amounts to seeking adjudication of interlocutory reliefs which the appellate authority should not normally entertain. Entertaining such appeals would require the appellate forum to pre-judge matters that are pending before the adjudicating authority and any observations thus made could bind the adjudicating authority. The proper course is to entertain challenges to orders of the adjudicating authority as prescribed by Section 129A(1), which contemplates appeals from decisions or orders passed by the Principal Commissioner or Commissioner acting as adjudicating authority or specified appellate orders; interim communications declining procedural requests do not fall within the scope of orders that should be independently adjudicated by the Appellate Tribunal at that stage. The appeal was therefore not entertained on merits and disposed on that basis. [Paras 4]

Appeal against the communication rejecting the request for cross-examination is not maintainable before the Appellate Tribunal and is not to be entertained at this interim stage.

Right to cross-examination as part of principles of natural justice - reconsideration by successor adjudicating authority - Request that the appellants may seek reconsideration of the denial of cross-examination from the (new) adjudicating authority and the new authority must consider the request afresh. - HELD THAT: - The Tribunal observed there is no legal bar on the appellants approaching the adjudicating authority for reconsideration of a procedural request such as permission to cross-examine witnesses. Significantly, the adjudicating authority has since changed; under settled principle a successor adjudicating authority must consider the matter afresh and cannot be bound by the prior incumbent's rejection. Given that the appellants had not approached the current adjudicating authority after receipt of the communication, the Tribunal directed that the appellants are at liberty to make the request and that the new adjudicating authority should consider it without bias, taking into account all relevant facts and law applicable to such requests. [Paras 4, 5]

Appellants are permitted to approach the adjudicating authority (now changed) for reconsideration of their request for cross-examination; the new adjudicating authority must consider the request afresh.

Final Conclusion: The appeal against the communication declining permission for cross-examination is disposed as premature and not maintainable before the Appellate Tribunal; the appellants may seek reconsideration of their request from the current adjudicating authority, who shall consider it afresh and in accordance with law.

Rejection of transaction value under Rule 12 - Redetermination of assessable value under Rule 8 - Reliance on raw material/LME prices for valuation - Contemporaneous imports as benchmark for transaction value - Confiscation under section 111(m) read with section 46(4) and section 14 - Penalty under section 114A and section 114AA - Demand, interest and extended period under proviso to Section 28(1) and section 28AB - Precedential effect of Tribunal decisions

Rejection of transaction value under Rule 12 - Contemporaneous imports as benchmark for transaction value - Validity of rejection of the declared transaction value and whether the adjudicating authority erred in not considering contemporaneous imports - HELD THAT: - The Tribunal held that the adjudicating authority rejected the appellant's transaction value without adequate reasoning or evidentiary foundation. The authority labelled the declared values "unrealistic and ridiculously low" but did not produce contemporaneous imports of higher value nor record any finding addressing the contemporaneous import details submitted by the appellant. Reliance on mere assertion of unrealistically low value, absent comparison with contemporaneous imports or other admissible evidence, is inadequate to reject transaction value. The Tribunal applied its prior decisions emphasising that contemporaneous imports accepted by the Department must be considered before discarding declared transaction value and that rejection requires evidentiary support rather than presumptions or surmises. [Paras 4]

Declared transaction value could not be validly rejected; the impugned rejection is unsustainable.

Redetermination of assessable value under Rule 8 - Reliance on raw material/LME prices for valuation - Lawfulness of re-determining assessable value on the basis of raw material/LME prices and an assumed value-addition without material evidence - HELD THAT: - The Tribunal found the methodology of redetermination flawed because it proceeded from unsupported assumptions about product composition and adopted raw material (LME) prices plus an assumed manufacturing margin without testing samples or producing evidence to establish constituent percentages. The adjudicating authority relied on third party statements and estimations of raw material content and applied Rule 8 thereafter, but the Tribunal held that such an approach, in the absence of objective evidence (e.g., laboratory testing, contemporaneous reliable data), amounts to presumption and cannot supplant the transaction value. Accordingly, re-determination based on LME prices and arbitrary percentage-based value addition was not legally sustainable. [Paras 4]

Redetermination of value based on raw material/LME prices and assumed composition was unlawful and cannot be sustained.

Confiscation under section 111(m) read with section 46(4) and section 14 - Demand, interest and extended period under proviso to Section 28(1) and section 28AB - Penalty under section 114A and section 114AA - Validity of consequential orders of confiscation, demand of differential duty with interest, and imposition of penalties premised on the redetermined value - HELD THAT: - Because the Tribunal set aside the rejection of transaction value and the subsequent redetermination, it necessarily found the consequential actions-confiscation under section 111(m), demand of differential duty (including invocation of extended period under the proviso to section 28(1)), interest under section 28AB, and penalties under sections 114A and 114AA-to be unsustainable. The impugned orders imposing these measures were founded on the defective redetermination and lack adequate evidential basis. The Tribunal therefore allowed the appeal and set aside the impugned orders, granting consequential relief as appropriate. [Paras 5]

Orders of confiscation, demand of differential duty with interest, and penalties set aside as they rest on an unsustainable valuation.

Precedential effect of Tribunal decisions - Applicability of earlier Tribunal decisions (S K Dhawan and Raghav Overseas) to the facts of the present appeal - HELD THAT: - The Tribunal held that the present case is squarely covered by its earlier decisions in S K Dhawan and Raghav Overseas where similar methods of valuation were rejected for lack of evidence and for failure to consider contemporaneous imports. The distinctions urged by the revenue did not address the core defect-absence of evidentiary foundation for discarding the transaction value. In view of those precedents, the Tribunal applied consistent reasoning and followed its earlier rulings to set aside the impugned orders. [Paras 4]

Earlier Tribunal decisions apply; those precedents support setting aside the impugned orders.

Final Conclusion: The Tribunal allowed the appeal, set aside the adjudicating authority's rejection of the transaction value and the resultant re determination, and consequently quashed the orders of confiscation, demand of differential duty with interest, and penalties, following the Tribunal's prior decisions and for lack of adequate evidentiary basis to discard the declared transaction value.

Bar on civil courts where matters fall within the jurisdiction of the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016 - Bar of jurisdiction over matters in which the Adjudicating Authority or the Board is empowered to pass orders under the Insolvency and Bankruptcy Code, 2016 - Insolvency resolution and liquidation of corporate persons under the Insolvency and Bankruptcy Code, 2016 - Orders passed by the National Company Law Tribunal bind parties and preclude collateral attack in civil courts

Bar on civil courts where matters fall within the jurisdiction of the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016 - Orders passed by the National Company Law Tribunal bind parties and preclude collateral attack in civil courts - Maintainability of a civil suit filed after commencement of insolvency proceedings and appointment of an insolvency professional, having regard to the jurisdictional bars in the Code of 2016. - HELD THAT: - The suit was instituted after initiation of insolvency proceedings under the Code of 2016 against the corporate defendant and after appointment of an insolvency professional and subsequent winding up order by the National Company Law Tribunal. Part II of the Code deals with insolvency resolution and liquidation of corporate persons and the adjudicatory jurisdiction in relation thereto lies with the National Company Law Tribunal. The court held that parties are bound by orders passed by the Tribunal in those proceedings and that collateral challenges by filing a separate civil suit are barred. Applying the statutory scheme and the jurisdictional bar, the court concluded that the civil court lacks jurisdiction to entertain matters falling within the Tribunal's domain and that the plaintiff's grievances related to the insolvency process could not be the subject of the separate suit.

The suit is barred by the jurisdictional provisions of the Insolvency and Bankruptcy Code, 2016 and is dismissed.

Bar of jurisdiction over matters in which the Adjudicating Authority or the Board is empowered to pass orders under the Insolvency and Bankruptcy Code, 2016 - Insolvency resolution and liquidation of corporate persons under the Insolvency and Bankruptcy Code, 2016 - Effect of Part V miscellaneous bar on courts granting injunctions in respect of actions taken pursuant to orders of the Adjudicating Authority under the Code of 2016. - HELD THAT: - Section 231 (miscellaneous provisions) was held to preclude civil courts from assuming jurisdiction in respect of any matter in which the Adjudicating Authority or the Board is empowered to pass orders under the Code, and to deny injunctions against actions taken or to be taken pursuant to such orders. The court observed that Section 231 contemplates proceedings both against corporate entities and individuals and reinforces the exclusive forum and remedial regime under the Code. Consequently, injunction and other reliefs sought in the civil suit challenging actions in the insolvency proceeding were not maintainable.

Reliefs seeking injunction or to challenge actions pursuant to orders under the Code are barred; the application by defendants 5 to 8 succeeds.

Final Conclusion: The civil suit filed after commencement of insolvency proceedings and after appointment of an insolvency professional was held to be barred by the insolvency regime; the suit is dismissed and ancillary applications disposed of accordingly.

Initiation of Corporate Insolvency Resolution Process - existence of financial debt - date of default - limitation under the Limitation Act, 1963 - admissibility of Banker's Book certificate - appointment of Interim Resolution Professional - declaration of moratorium - role of Committee of Creditors in fixing interest for a resolution plan

Initiation of Corporate Insolvency Resolution Process - admissibility of Banker's Book certificate - Whether the Section 7 petition filed by the Financial Creditor is complete and admissible to initiate CIRP. - HELD THAT: - The Adjudicating Authority examined the loan documents, sanction letters, hypothecation and mortgage instruments, revival letters, ROC search report and the statement of accounts accompanied by a certificate under the Banker's Book of Evidence Act, 1891. The Tribunal held that the petition was filed by an authorised officer in the prescribed format and that the documents annexed, including the Banker's Book certificate, sufficiently established the existence of debt and default for the purpose of admission under Section 7. On that basis the petition was found to be complete for initiation of the Corporate Insolvency Resolution Process. [Paras 23, 24]

The Section 7 petition is admitted as complete and the initiation of CIRP is justified.

Existence of financial debt - date of default - limitation under the Limitation Act, 1963 - Whether there was a financial debt due and whether the petition was filed within the period of limitation. - HELD THAT: - On consideration of the statement of accounts, CIBIL report and various documents showing revival letters, registration of charges with the ROC and filings of balance sheet, the Tribunal recorded that the Corporate Debtor had availed the sanctioned facilities and acknowledged indebtedness. The Tribunal found that default occurred on 31/03/2014. Taking into account revival letters, charges created and subsequent acknowledgements and filings, the Authority concluded that the petition was filed within the period of limitation and that the claim did not stand barred by Section 137 of the Limitation Act, 1963. [Paras 23, 24]

There exists a financial debt, default is dated 31/03/2014, and the petition was filed within the limitation period.

Appointment of Interim Resolution Professional - declaration of moratorium - Appointment of Interim Resolution Professional and imposition of moratorium upon admission of the petition. - HELD THAT: - Having admitted the petition, the Tribunal appointed the proposed Insolvency Professional as Interim Resolution Professional and directed him to make the public announcement and perform functions under the Code. Consequent to admission, the Authority declared moratorium with effect from the date of admission prohibiting institution or continuation of suits, transfer or disposal of assets by the corporate debtor, and actions to enforce security interests, and directed compliance with Sections 13 and 14 and other relevant provisions of the Code. [Paras 24, 25, 26, 27]

The proposed IRP is appointed and moratorium is declared from the date of admission.

Role of Committee of Creditors in fixing interest for a resolution plan - Whether the Committee of Creditors may consider restructuring interest parameters while finalising a viable resolution plan. - HELD THAT: - The Tribunal observed that to make a resolution plan viable and implementable, the Committee of Creditors may explore restructuring interest by loading maximum interest at the applicant bank's base rate plus prescribed margins from date of default to implementation, and thereafter by reference to MCLR parameters without penal or overdue interest. This observation was recorded as guidance to the CoC while framing or approving a resolution plan, keeping viability and market considerations in view. [Paras 28]

The CoC may consider interest restructuring (as indicated) while finalising a resolution plan.

Final Conclusion: The Tribunal admitted the Section 7 petition filed by the Financial Creditor, held that a financial debt existed and default occurred on 31/03/2014, found the petition to be within limitation, appointed the nominated Interim Resolution Professional and declared moratorium with directions to the IRP and stakeholders; the CoC was also invited to consider specified interest-structuring options while finalising a resolution plan.

Definition of financial debt having commercial effect of a borrowing - financial creditor as an allottee under the amended definition - Corporate Insolvency Resolution Process triggered under Section 7 - existence of default for admission under Section 7 - moratorium on initiation or continuation of certain proceedings - appointment of an Interim Resolution Professional and public announcement - concurrent remedies under RERA and the Code and principle of harmonious construction

Financial creditor as an allottee under the amended definition - definition of financial debt having commercial effect of a borrowing - The petitioner is a financial creditor as an allottee and the amounts paid under the builder-buyer agreement fall within the definition of financial debt. - HELD THAT: - The petitioner's status as a financial creditor is accepted on the basis of the agreement of allotment and the amendment to the Code clarifying that amounts raised from an allottee under a real estate project have the commercial effect of a borrowing. The petitioner's payments are evidenced by the registered agreement and bank statements and no payment of the contractual interest or possession has been provided. The Supreme Court's decision in Pioneer Urban Land & Infrastructure Ltd. vindicates the constitutional validity and clarificatory nature of the amendment, and the Court treats the allottee's payment as a financial debt for the purposes of admitting a Section 7 petition. [Paras 5, 6, 12, 15, 16]

Petitioner is a financial creditor and the amounts paid by him constitute financial debt having the commercial effect of a borrowing.

Existence of default for admission under Section 7 - Corporate Insolvency Resolution Process triggered under Section 7 - There was a default and the Section 7 petition is liable to be admitted to initiate the Corporate Insolvency Resolution Process. - HELD THAT: - The agreement fixed possession by December 2012 with a three month grace period and further envisaged interest and refund remedies on failure to deliver possession. Despite the lapse of long periods and absence of occupation certificate or delivery of possession, contractual interest was not paid. The Tribunal found an extraordinary delay (about six and a half years), reckoned a reasonable extension period at most, and concluded that default has occurred. Sections 7(2) and 7(5) requirements and the Rule 4(2) filing formalities were held satisfied, and the admission is consistent with the approach that an allottee who has lost faith in the developer may invoke the Code while recognizing concurrent remedies under RERA. [Paras 13, 14, 16, 20, 21]

Default is established and the Section 7 petition is admitted to trigger the Corporate Insolvency Resolution Process.

Appointment of an Interim Resolution Professional and public announcement - An Interim Resolution Professional is appointed and directed to make public announcement and take steps under the Code. - HELD THAT: - On admission of the petition the Tribunal appointed the proposed professional whose registration and communications complied with the relevant Rules. The Interim Resolution Professional is directed to make the statutory public announcement immediately and to perform the functions mandated by the Code and IBBI regulations. [Paras 4, 21, 22, 23]

Mr. Amit Agarwal is appointed as Interim Resolution Professional and shall make the public announcement forthwith.

Moratorium on initiation or continuation of certain proceedings - A moratorium under the Code is declared on the Corporate Debtor from the date of admission, subject to statutory exceptions. - HELD THAT: - Upon admission the Tribunal declared moratorium in terms of the Code, clarifying that transactions the Central Government may notify and essential supplies (e.g., water, electricity) as per regulations are not to be terminated during the moratorium period. The declaration follows the statutory scheme and Regulation 32 of the IBBI regulations as applicable. [Paras 24]

Moratorium in terms of the Code is declared, with specified exceptions for notified transactions and essential supplies.

Procedural directions regarding interim funding, documents and Registrar of Companies update - Procedural directions issued for deposit to meet IRP expenses, production of documents and updating statutory records are to be complied with. - HELD THAT: - The Tribunal directed the financial creditor to deposit a specified sum with the Interim Resolution Professional to meet initial expenses, subject to adjustment by the Committee of Creditors, and ordered ex management, auditors and others to furnish all documents and information under Section 19 within stipulated time, failing which coercive steps may follow. The Registrar of Companies and Ministry of Corporate Affairs are directed to be informed for updating the corporate status. [Paras 25, 26, 28, 29]

The specified deposit, document production and statutory notifications are directed to be complied with within the timelines ordered.

Limitation of summary proceedings to determine quantum and role of Information Utility - The Tribunal declined to finally determine the amount due in summary admission proceedings and left verification and correction to the Interim Resolution Professional and the Information Utility. - HELD THAT: - The Tribunal observed that discrepancies were alleged in the account statement but that admission proceedings are not the forum for a conclusive determination of the quantum due. The Information Utility is not yet fully functional and the IRP may seek corrections from ex promoters/directors and place the matter before financial creditors for appropriate adjudication in the insolvency process. [Paras 27]

Quantum is not finally determined in these summary proceedings; verification and correction are to be undertaken by the IRP/Information Utility and placed before the financial creditors.

Final Conclusion: The Section 7 petition is admitted: the petitioner is held to be a financial creditor whose payments constitute financial debt, default is established, Mr. Amit Agarwal is appointed as Interim Resolution Professional, moratorium is declared and procedural directions (public announcement, interim funding deposit, document production and statutory updates) are issued; the precise amount due is left for verification by the IRP/Information Utility and the Committee of Creditors.

Corporate Insolvency Resolution Process - Financial Service Provider - Appropriate Regulator - Notification under section 227 of the Insolvency and Bankruptcy Code - Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 - Financial Debt - Default - Administrator - Moratorium - Advisory Committee

Appropriate Regulator - Notification under section 227 of the Insolvency and Bankruptcy Code - Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 - Corporate Insolvency Resolution Process - Application by Reserve Bank of India as the Appropriate Regulator to initiate CIRP against DHFL is maintainable and is to be governed by the Rules and Notification under section 227. - HELD THAT: - The Bench examined the statutory scheme under Section 227 empowering the Central Government to notify categories of Financial Service Providers and the Rules framed thereunder. The Notification dated 18.11.2019 and the FSP Rules, 2019 designate NBFCs (including housing finance companies) of specified asset size as FSPs and specify that insolvency proceedings shall be undertaken under the Code read with those Rules through the Appropriate Regulator. On the materials and notifications placed, the Bench accepted that RBI, as the designated Appropriate Regulator, is competent to file the application and that the CIRP for DHFL falls to be conducted in terms of the Code read with the FSP Rules and the Notification. [Paras 2, 3, 7]

The RBI's application as Appropriate Regulator under Section 227 and the FSP Rules is maintainable and the CIRP provisions as modified by those Rules apply to DHFL.

Financial Debt - Default - The amounts claimed by the financial creditor qualify as financial debt and default in repayment has been established for purposes of admission. - HELD THAT: - On review of the facility agreements, bank communications, CRILC report, bankers' book entries and correspondence (including SBI's intimation and supporting documents), the Bench held that the debt in question falls within the definition of financial debt and that the correspondence and documentary record establish a default as defined under the Code. The Bench noted specific documentary evidence of loan facilities, demand notices and entries indicating non-payment, and accepted the contention that default had occurred. [Paras 4, 7]

The claimed obligations constitute financial debt and default has been established; therefore the condition for admission under the Code is satisfied.

Administrator - Appropriate Regulator - The proposed Administrator named by RBI is fit to be appointed as the Administrator (acting as Resolution Professional) for the CIRP. - HELD THAT: - The Bench recorded that the proposed Administrator was nominated by RBI following its supersession of the board, that the nominee furnished the written consent and declaration in the prescribed Form-2, and that requisite compliance for appointment under the FSP Rules was made. In view of these compliances and the statutory scheme which contemplates appointment of the Administrator proposed by the Appropriate Regulator, the Bench confirmed the proposed Administrator to perform the functions of Resolution Professional. [Paras 4, 7]

The proposed Administrator is appointed to perform the functions of Resolution Professional for DHFL's CIRP.

Moratorium - Corporate Insolvency Resolution Process - An interim moratorium under the Code (as adapted by the FSP Rules) commences from the date of filing of the application and operates upon admission. - HELD THAT: - Applying Rule 5(b)(i) of the FSP Rules read with Section 14, the Bench held that moratorium commences from the date of the application (29.11.2019) and that the consequences of moratorium prescribed under the Code follow: institution or continuation of suits, execution of decrees, transfer or disposal of assets and enforcement of security are prohibited, while supply of essential goods and services shall continue. The moratorium shall remain in effect till completion of the insolvency process as provided by the Code. [Paras 2, 7]

Moratorium is declared from the date of the application and the statutory consequences of moratorium apply.

Administrator - Corporate Insolvency Resolution Process - Directions regarding public announcement, claim submission and treatment of depositors are to be followed by the Administrator. - HELD THAT: - The Bench directed the Administrator to make the public announcement as required by Section 13 and to call for claims under Section 15 of the Code. It emphasized that the public announcement must include the Corporate Debtor's details, information about the Administrator and last date for claims. Given the existence of public deposits disclosed in the records, the Administrator was specifically directed to update and publish the list of depositors with outstanding amounts and contact details so their interests can be protected during the process. [Paras 7]

Administrator to publish public announcement, invite claims and update/publish the list of depositors as directed.

Final Conclusion: The petition filed by the Reserve Bank of India under the Code read with the Notification under Section 227 and the FSP Rules, 2019 against Dewan Housing Finance Corporation Ltd. is admitted; an Administrator is appointed to act as Resolution Professional, moratorium is declared from the date of the application, and the Administrator is directed to make the public announcement, invite claims and update the list of depositors.

Dismissal of Section 9 petition for pre-existing dispute - operational debt - initiation of Corporate Insolvency Resolution Process under section 9 of the Insolvency and Bankruptcy Code, 2016 - plausible contention requiring further investigation (Mobilox test) - resolution over recovery

Operational debt - pre-existing dispute - plausible contention requiring further investigation (Mobilox test) - initiation of Corporate Insolvency Resolution Process under section 9 of the Insolvency and Bankruptcy Code, 2016 - Maintainability of the Section 9 petition in presence of a pre-existing dispute between the operational creditor and the corporate debtor. - HELD THAT: - The Adjudicating Authority applied the test laid down in Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. and examined whether there existed an "operational debt" shown by documentary evidence and whether a pre-existing dispute or pending suit/arbitration existed. The record showed contested facts on quality of work and supply (including admitted non-use of the agreed Tata Steel), a newspaper report of the failed installation, a notice of dispute served within 10 days of the demand notice, and absence of any contractual interest clause in the invoices or ledger. These matters established a pre-existing, triable dispute that was not a patently feeble or spurious defence but required further investigation. Given that the Insolvency and Bankruptcy Code seeks resolution (and not a recovery mechanism) and that recovery through CIRP cannot be used to circumvent genuine disputes, the Section 9 petition could not be maintained and had to be dismissed. [Paras 25, 26, 27, 28, 29]

CP(IB) No. 16 of 2019 is dismissed on the ground of a pre-existing dispute; IA No. 605 of 2019 is disposed of accordingly.

Final Conclusion: The Section 9 petition filed by the operational creditor is dismissed for want of maintainability due to a pre-existing triable dispute; the related interim application is disposed of and no costs were awarded.

Liquidation under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - committee of creditors' resolution by not less than sixty-six per cent of voting share - inability to carry forward corporate insolvency resolution process due to non-availability of books of account and untraceable directors - commencement of fresh moratorium under Section 33(5) of the Insolvency and Bankruptcy Code, 2016 - appointment of liquidator and obligations under the Insolvency and Bankruptcy (Liquidation Process) Regulations

Liquidation under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - committee of creditors' resolution by not less than sixty-six per cent of voting share - inability to carry forward corporate insolvency resolution process due to non-availability of books of account and untraceable directors - Initiation of liquidation proceedings against the corporate debtor pursuant to the CoC's resolution under Section 33(2) of the IBC, 2016. - HELD THAT: - The Resolution Professional reported that essential records (books of account, financial documents) were unavailable-some allegedly destroyed by fire-and attempts to locate or obtain information from erstwhile directors and personnel failed. The Information Memorandum and Form G could not be prepared or published, and the CIRP was at a standstill. The CoC, at its fifth meeting, unanimously resolved to liquidate the corporate debtor. Having regard to the factual position and the statutory provision quoted in the order, the Tribunal found itself constrained to pass a liquidation order under Section 33(2), and to direct consequential steps required by the liquidation regime. [Paras 9, 11, 12]

Liquidation of the corporate debtor is ordered under Section 33(2) of the IBC, 2016, following the CoC's resolution and the inability to continue the CIRP.

Appointment of liquidator and obligations under the Insolvency and Bankruptcy (Liquidation Process) Regulations - commencement of fresh moratorium under Section 33(5) of the Insolvency and Bankruptcy Code, 2016 - statutory notifications and intimation to regulatory and fiscal authorities - Appointment of the liquidator and directions for carrying out the liquidation process, including notifications and commencement of fresh moratorium. - HELD THAT: - On liquidation being ordered, the Tribunal appointed a named insolvency professional as Liquidator with his consent and directed him to issue the public announcement, intimate relevant authorities (Registrar of Companies, IBBI, Income Tax Department and other fiscal/regulatory bodies), commence the fresh moratorium under Section 33(5), treat the order as discharge notice under Section 33(7), and proceed in accordance with Chapter III of Part II of the IBC and the Liquidation Process Regulations, including submission of a preliminary report within the regulatory timeline. [Paras 12]

Mr. Brij Kishore Sharma is appointed Liquidator and directed to undertake the liquidation process and statutory notifications, with the fresh moratorium and related consequences to follow from the date of the order.

Final Conclusion: The Tribunal allowed the application of the Resolution Professional and ordered liquidation of Guman Furniture and Services (P.) Ltd. under Section 33(2) of the IBC, 2016, appointed the Liquidator named in the order, and issued consequential directions necessary to commence and carry out the liquidation process.

Financial debt - consideration for the time value of money - commercial effect of borrowing - Section 5(8) of the Insolvency and Bankruptcy Code, 2016 - debt and default - admission of Section 7 application

Financial debt - consideration for the time value of money - commercial effect of borrowing - Section 5(8) of the Insolvency and Bankruptcy Code, 2016 - Amounts advanced by the Financial Creditor to the Corporate Debtor qualify as financial debt under Section 5(8) of the IBC. - HELD THAT: - The Appellate Tribunal examined the written agreements and promissory notes and held that the substance of the transactions was lending/borrowing rather than mere advance for future supplies. The Share Pledge/Finance Facility Agreement of 4th April, 2017 described the Corporate Debtor as 'Borrower' and the Financial Creditor as 'Lender', expressly contemplated a loan of INR 5,00,00,000 with interest, pledged security, promissory notes and undated cheques as repayment guarantees, and provided for an interest rate. The agreement also manifested a commercial arrangement whereby advances were made to tide over the Corporate Debtor's financial difficulty so that the Financial Creditor could secure future supply - a structure having the commercial effect of borrowing. In that factual and contractual matrix the Tribunal found that the transactions fall within the inclusive definition of 'financial debt' in Section 5(8), which covers amounts disbursed against consideration for the time value of money and transactions having the commercial effect of a borrowing. The Court declined to go behind the documentary characterisation offered by the parties and relied on the written instruments to determine the nature of the obligation. [Paras 8, 9, 10]

The advances constitute financial debt within the meaning of Section 5(8) IBC.

Debt and default - admission of Section 7 application - The Section 7 petition by the Financial Creditor was correctly admitted by the Adjudicating Authority on the ground of debt and default. - HELD THAT: - The Tribunal noted that the Corporate Debtor admitted receipt of substantial amounts between October 2016 and March 2017 and that the Corporate Debtor acknowledged liability in respect of the amount claimed as demurrage in its correspondence. Even without resolving the narrow question whether the demurrage component independently qualifies as financial debt, the admitted advances and the undisputed non-payment established the existence of a debt and a default. On that basis the Tribunal found no error in the Adjudicating Authority's conclusion to admit the Section 7 application. [Paras 11, 12]

The Adjudicating Authority's admission of the Section 7 petition is affirmed for want of any error in finding debt and default.

Final Conclusion: The appeal is dismissed; the adjudicating authority's order admitting the Section 7 petition is affirmed for the reasons given, and no costs are awarded.

Refund of tax paid under mistake of law - limitation under Section 11B not applicable where payment is not duty - composite contract - service tax on construction of a complex as a declared service under Section 66E(b) - service portion in execution of works contract under Section 66E(h) - Rule 2A applicable only to works contracts and not to composite sale including land - absence of machinery provision for ascertaining service element defeats levy - Article 265 - no tax except by authority of law

Refund of tax paid under mistake of law - limitation under Section 11B not applicable where payment is not duty - Whether the petitioners' claim for refund is barred by limitation under Section 11B where the amount paid was not a duty of excise/service tax. - HELD THAT: - The Court applied precedents holding that Section 11B(1) bars claims only in respect of a refund of a 'duty of excise' and interest thereon. Where the payment was made without authority of law and therefore could not be characterized as service tax, the bar of limitation under Section 11B(1) is not attracted. Reliance was placed on decisions which held that amounts collected without authority must be returned and that mere payment does not convert an unauthorized demand into a valid tax. On the facts, the petitioners paid the disputed amount under a mistaken belief; if no service tax was leviable on the transaction, the payment does not acquire the character of duty and cannot be time-barred under Section 11B(1). [Paras 16, 18]

The claim is not barred by limitation under Section 11B because the payment made was not a service tax payable by the petitioners.

Refund of tax paid under mistake of law - Whether rejection of refund claim on the ground that petitioners did not furnish proof that the vendor deposited the collected amount with the Central Government was valid. - HELD THAT: - The Court observed that the authority never sought such proof from the petitioners nor enquired of the vendor, despite the petitioners having provided the vendor's registration details. The respondents also did not dispute, in the writ proceedings, the proof subsequently filed by the petitioners showing that the vendor had indeed deposited the amount to the Central Government. In these circumstances the deficiency relied upon in the impugned order cannot sustain the rejection of the refund claim. [Paras 20, 21]

Rejection of the claim for want of proof of deposit was unjustified; the ground cannot be sustained.

Composite contract - service tax on construction of a complex as a declared service under Section 66E(b) - Rule 2A applicable only to works contracts and not to composite sale including land - absence of machinery provision for ascertaining service element defeats levy - Whether service tax could be validly levied on the composite contract for sale of developed property (including undivided share of land and goods) in the absence of a statutory mechanism to ascertain the value of the service component. - HELD THAT: - The Court examined the statutory scheme, noting that Section 66E(b) declares construction of a complex intended for sale as a declared service while Section 66E(h) refers to the service portion in execution of works contracts. Rule 2A of the Service Tax (Determination of Value) Rules, 2006, deals with valuation of the service portion only in execution of works contracts referred to in clause (h). No rule has been framed to determine the value of the service element in composite contracts that also involve sale of undivided land and incorporated goods as contemplated by clause (b). Following and adopting the reasoning of the Delhi High Court, the Court held that in the absence of machinery provisions to segregate and determine the service element, levy of service tax on the composite consideration including land and goods cannot be sustained; doing so would intrude upon State legislative field and lacks the necessary statutory mechanism to ascertain the taxable measure. [Paras 31, 32, 33]

Service tax cannot be validly levied on the composite sale of developed property including undivided share of land and goods in the absence of a statutory mechanism to determine the value of the service component; Rule 2A does not apply to such contracts.

GD Builders' decision overruled by later Supreme Court pronouncement - Article 265 - no tax except by authority of law - Whether reliance on GD Builders to sustain the levy was tenable and whether the writ petition seeking refund was maintainable. - HELD THAT: - The Court noted that the decision in GD Builders, relied upon by the respondents, was held to be incorrect by the Supreme Court in Commissioner, Central Excise and Customs, Kerala v. Larsen & Toubro Ltd., which rejected the view that the Act contained machinery to levy service tax on indivisible works contracts as held in GD Builders. Further, the petition seeks recovery of amounts collected without authority of law; invoking Article 265 and settled precedents, the Court found the writ to be maintainable where there are no disputed factual issues requiring elaborate adjudication and where the claim is founded on lack of legislative authority to retain the amount collected. [Paras 23, 35, 36]

Reliance on GD Builders was misplaced; the writ petition is maintainable to obtain refund of amounts collected without authority of law.

Final Conclusion: Writ petition allowed; respondents directed to refund the amount paid by the petitioners as service tax together with interest at the rate directed by the Court, from the date of payment until actual refund.

Supply of tangible goods service - Right of possession and effective control - Goods Transport Agency service - Taxability of transportation of goods by road - Extended period of limitation - Bonafide belief

Supply of tangible goods service - Right of possession and effective control - Goods Transport Agency service - Taxability of transportation of goods by road - Classification of the appellant's activity for service-tax purposes - HELD THAT: - The Tribunal, construing the definition in section 65(105)(zzzzj), held that where machinery, equipment or appliances are provided for use without transferring the right of possession and effective control, the activity falls within the category of Supply of tangible goods service. Applying that principle, the Tribunal found that the appellant retained right of possession of the vehicle and therefore the activity prima facie attracts tax as supply of tangible goods for use. The Tribunal nevertheless noted the appellant's agreements and conduct showing a bona fide belief that it was engaged in transportation of goods on behalf of the service recipient, and recorded the appellant's alternative contention that, if taxable, the activity ought to be treated under the Goods Transport Agency service category and that transportation receipts were not issued by the appellant. [Paras 8, 9]

Activity held to fall within "supply of tangible goods" as right of possession was with the appellant, though the appellant had a bona fide belief it was providing transportation services.

Extended period of limitation - Bonafide belief - Invokability of the extended period of limitation and consequence for demand and penalty - HELD THAT: - The Tribunal accepted that the appellant acted under a bona fide belief that it was providing transportation services (not liable as supplier of tangible goods) - a position evidenced by the agreements between the parties and the appellant's modus operandi. On that basis the Tribunal held that the extended period of limitation could not be invoked. Because the entire demand under the impugned order was confirmed by invoking the extended limitation, the Tribunal concluded that the whole demand was barred by limitation. Consequentially, penalty could not be imposed. [Paras 9, 10]

Extended period of limitation held not invokable; demand barred by limitation and penalty not imposable.

Final Conclusion: The appeal is allowed; the impugned order is set aside as the demand confirmed by invoking the extended period of limitation is barred by limitation and no penalty is imposable, with consequential relief, if any, to follow.

Determination of any question having a relation to the rate of duty of excise or to the value of goods for the purposes of assessment - determination of taxability or excisability of goods - jurisdiction under Section 35G of the Central Excise Act, 1944 - classification as Works Contract Service versus Erection, Commissioning and Installation Service

Determination of any question having a relation to the rate of duty of excise or to the value of goods for the purposes of assessment - determination of taxability or excisability of goods - jurisdiction under Section 35G of the Central Excise Act, 1944 - classification as Works Contract Service versus Erection, Commissioning and Installation Service - Whether this Court had jurisdiction to entertain the appeal where the question involved related to rate of duty or value of goods and determination of taxability/excisability, arising from classification as works contract service or erection, commissioning and installation service. - HELD THAT: - The Court examined whether the subject controversy - namely whether the assessee's services for the periods in question were to be treated as Works Contract Service (exempt) or as Erection, Commissioning and Installation Service (taxable), and whether valuation including materials had to be treated for service-tax purposes - directly related to the rate of duty or the value of goods. Section 35L(1)(b) and sub section (2) were noted to treat determination of such questions as including determination of taxability or excisability of goods, and thereby conferring jurisdiction on the Supreme Court where such questions arise. Because the appeal's core issue necessarily bore on the rate/value and taxability/excisability of goods, the High Court was precluded from entertaining the appeal under the statutory scheme: the matter was within the exclusive appellate jurisdiction prescribed for the Supreme Court. The Court therefore confined itself to the jurisdictional question and expressly did not decide the merits on classification or duty payable.

The appeal is dismissed for want of jurisdiction; the High Court has no jurisdiction under Section 35G to decide the matter and the appeal is not maintainable here.

Final Conclusion: The petition is dismissed on the ground of lack of jurisdiction because the questions raised relate to rate of duty/value of goods and determination of taxability/excisability; the Court did not decide the merits on classification or duty payable.

Rebate of excise duty under Rule 18 - Advance Authorisation Scheme and duty free inputs - use of CENVAT credit for payment of duty and prohibition on encashment - correlation of export documents with Form ARE 1 / variation in description - remand for fresh consideration by adjudicating authority

Rebate of excise duty under Rule 18 - Advance Authorisation Scheme and duty free inputs - use of CENVAT credit for payment of duty and prohibition on encashment - Whether the petitioner was entitled to rebate under Rule 18 where exported goods were manufactured using a mix of inputs imported duty free under Advance Authorisation and inputs on which CENVAT credit was availed, and whether the matter required fresh examination. - HELD THAT: - The Court observed that the petitioner had imported inputs under the Advance Authorisation Scheme and had also used inputs procured on payment of excise duty/additional duty of customs (on which CENVAT credit was availed) in the manufacture of exported goods. The Court noted the absence of discussion in the impugned orders as to the specific customs notification under which the imports were made and observed that the Foreign Trade Policy and Handbook of Procedures contemplate that inputs imported under Advance Authorisation are to be used subject to discharge of export obligation and, where transferred to other units, without claiming CENVAT on such transferred inputs. Allowing rebate without first examining whether export obligation under the relevant customs notification and Foreign Trade Policy was discharged, and whether use of CENVAT credited inputs together with duty free inputs produced an unintended export incentive, would be impermissible. For these reasons the Court held that the matter required fresh consideration by the adjudicating authority to determine entitlement to rebate and whether any unintended benefit was gained. [Paras 20, 21, 22, 23, 24]

Impugned order set aside and matter remitted to the 1st respondent for a speaking reconsideration on whether use of duty free inputs together with CENVAT credited inputs results in unintended export incentive; 1st respondent to pass order within three months after hearing the petitioner.

Correlation of export documents with Form ARE 1 / variation in description - rebate of excise duty under Rule 18 - Whether minor discrepancies in description between export documents (shipping bill, commercial invoice) and Form ARE 1 preclude grant of rebate where entitlement is otherwise established. - HELD THAT: - The Court noted that some export documents described the goods with minor variation (attributed by the petitioner to typographical error) and that the officers of Customs had verified the consignments. While the lower authorities had relied on such mismatches to deny the rebate to part extent, the Court directed that if, upon fresh consideration, the petitioner is held entitled to rebate on merits, the 1st respondent should not deny rebate solely on account of minor variations in description between export documents and Form ARE 1. [Paras 11, 15, 25]

If entitlement to rebate is found on fresh consideration, minor variations in descriptions between export documents and Form ARE 1 shall not be a ground to deny the rebate claim.

Final Conclusion: The revision order dismissing the rebate claim was set aside and the matters remitted to the adjudicating authority for a speaking reconsideration within three months to determine whether use of duty free inputs together with CENVAT credited inputs produced any unintended export incentive; if rebate entitlement is established on reconsideration, minor discrepancies in document descriptions shall not defeat the claim.

Refund of Cenvat credit - Rule 5 of Cenvat Credit Rules, 2004 - adjustment against payment of duty - procedural irregularity (failure to debit Cenvat account) - beneficial legislation - interest under Section 11BB

Refund of Cenvat credit - Rule 5 of Cenvat Credit Rules, 2004 - adjustment against payment of duty - Claim for refund under Rule 5 where accumulated input credit could not be fully adjusted against output duty - HELD THAT: - The Tribunal held that Rule 5 entitles an assessee to refund where adjustment is not possible. Although the adjudicating authority recorded that some exports were made on payment of duty and some under LUT, the factual position remained that inputs were procured at a higher duty rate than the duty borne on finished goods cleared to the domestic market, so full adjustment of accumulated credit against output duty was not feasible. Consequently the balance Cenvat credit which could not be adjusted was refundable. The Tribunal directed that the Commissioner (Appeals) ought to have allowed refund of the balance amount as further adjustment was not possible. [Paras 5]

Refund of the unadjustable balance of Cenvat credit granted under Rule 5.

Procedural irregularity (failure to debit Cenvat account) - beneficial legislation - Whether failure to debit the Cenvat account on the date of filing the refund claim is a fatal irregularity - HELD THAT: - The Tribunal accepted the appellant's explanation and relied on earlier decisions holding that Rule 5 is a beneficial provision and mere non-debiting of the Cenvat ledger on the date of claim is a removable procedural irregularity. The appellant had undertaken to debit the Cenvat account after sanction and before disbursal because of software limitations. The adjudicating authority and Commissioner (Appeals) had erred in treating non-debiting as fatal; the Tribunal set aside that finding in light of precedent and the remedial character of the refund provision. [Paras 6]

Failure to debit the Cenvat account at the time of claim is not a ground to deny refund; the refund claim is maintainable subject to compliance before disbursal.

Interest under Section 11BB - entitlement to interest on the refunded amount - HELD THAT: - Having allowed the refund, the Tribunal directed payment of applicable interest under Section 11BB of the Central Excise Act, 1944, computed from three months after the date of the final refund application until the date of payment, and ordered the department to disburse the sanctioned refund along with interest within three months of receipt of the Tribunal's order. [Paras 7]

Refund to be paid with interest under Section 11BB for the period specified, and payment to be made within three months of receipt of the order.

Final Conclusion: The appeal is allowed: the order of the Commissioner (Appeals) is set aside; the appellant is entitled to refund of Rs. 5,25,757/- for the period January, 2012 to March, 2012 under Rule 5 of the Cenvat Credit Rules, 2004, together with applicable interest under Section 11BB, payable within three months of receipt of this order.

Reasoned order - analysis of evidence - clandestine manufacture and clearance - remand for fresh adjudication - opportunity of hearing

Reasoned order - analysis of evidence - clandestine manufacture and clearance - remand for fresh adjudication - Whether the adjudicating authority's order could be sustained despite not recording detailed reasoning and analysis of the evidence on the allegation of clandestine manufacture and clearance. - HELD THAT: - The Tribunal examined the material on record, including statements recorded during investigation and records seized from the respondent's premises, and observed that the learned Commissioner did not record reasons showing evaluation of the evidence or its reliability in relation to the allegation of clandestine manufacture and clearance. The Tribunal held that an adjudicatory order must contain a reasoned analysis of the evidence relied upon; absent such reasoning the conclusion cannot stand. Reliance was placed on established authorities emphasising the requirement of reasoned orders. In view of the absence of detailed findings linking the evidence to the allegations, the Tribunal found it necessary to set aside the impugned order and remand the matter to the adjudicating authority for fresh consideration of the evidence, recording reasons for any conclusion reached and affording the respondent a reasonable opportunity of hearing. All issues were kept open for re-adjudication.

Impugned order set aside and matter remanded to the adjudicating authority for fresh consideration of the evidence with reasons and after giving a reasonable opportunity of hearing; appeal allowed by way of remand.

Final Conclusion: The Tribunal allowed the Revenue's appeal by setting aside the impugned order and remanding the matter to the adjudicating authority to consider the evidences afresh, record reasons for its conclusions on the allegation of clandestine removal, and grant a reasonable opportunity of hearing; all issues left open.

Cenvat Credit - refund of accumulated credit - refund in cash versus credit ledger - remand for verification of factual position - transitional credit under section 142(3) of the Central Goods and Services Tax Act, 2017

Cenvat Credit - refund in cash versus credit ledger - remand for verification of factual position - Whether the amount of Rs. 4,50,000 debited from the appellant's Cenvat Credit account should be refunded in cash or credited back to the Cenvat Credit account - HELD THAT: - The Tribunal noted that an amount of Rs. 4,50,000 was debited from the assessee's Cenvat Credit account during the pendency of the appeal. It observed that the correct form of refund depends on whether, as a consequence of that debit undertaken on the basis of Revenue's objection, the assessee was compelled to pay the duty from its profit and loss account during the relevant period. If the assessee had in fact paid duty from its own funds because of the debit from the credit account, refund of the debited credit would be payable in cash; however, if the credit remained available and was not so paid out, refund in cash would not be appropriate and the amount ought to be restored to the Cenvat credit account. As the factual record did not disclose whether the duty was paid from the assessee's own funds, the Tribunal concluded that the matter could not be finally adjudicated on the present record and required the Original Adjudicating Authority to verify this factual position. [Paras 4]

Impugned order set aside and the matter remanded to the Original Adjudicating Authority for verification of whether the debited Cenvat credit had resulted in payment from the assessee's profit and loss account and for consequential determination whether refund is to be made in cash or by crediting the Cenvat account.

Transitional credit under section 142(3) of the Central Goods and Services Tax Act, 2017 - refund of accumulated credit - remand for verification of factual position - Whether the appellant's plea for carry forward/transition of accumulated Cenvat credit into the GST regime under section 142(3) CGST Act, 2017 requires consideration - HELD THAT: - The Tribunal observed that with the commencement of the GST regime, accumulated credits, if available and not debited, could have been carried forward as transitional credit in terms of section 142(3) of the CGST Act, 2017. The lower authorities had not considered this aspect. Given the remand for verification of the factual position concerning the debit, the Tribunal directed that the Original Adjudicating Authority should also examine the appellant's plea for transitional carry forward of credit in the light of the Tribunal's decision in Toshiba Machine (Chennai) Pvt. Ltd. referred to by the appellant. [Paras 5, 6]

Directed the Original Adjudicating Authority to examine the appellant's claim for carry forward/transition of accumulated credit under section 142(3) CGST Act, 2017 while deciding the remanded factual issue.

Final Conclusion: The appeal is allowed in part by setting aside the impugned order and remanding the matter to the Original Adjudicating Authority to verify whether the debited Cenvat credit led to payment from the assessee's own funds (with consequential determination whether refund should be in cash or by credit) and to consider the appellant's claim for transitional carry forward of credit under section 142(3) CGST Act, 2017.

Rebuttal of presumption under Sections 118 and 139 of the Negotiable Instruments Act - Appreciation of evidence and effect of failure to cross examine a defence witness - Interference with an order of acquittal in a prosecution under Section 138 NI Act

Rebuttal of presumption under Sections 118 and 139 of the Negotiable Instruments Act - Preponderance of probability as standard for rebuttal - The presumption of liability under Sections 118 and 139 of the Negotiable Instruments Act was rebutted by the accused on the basis of the evidence on record. - HELD THAT: - The trial evidence, including the accused's unchallenged deposition and the xerox copy of her bank passbook (Exh.16), indicated repayment of the amount advanced under the earlier transaction. The complainant's own admissions in cross examination and inconsistencies about the timing and nature of the alleged subsequent loan undermined the prosecution's case. The accused gave evidence that the advanced amount had been repaid and explained the circumstances of signing documents; that evidence went uncontroverted because the complainant failed to cross examine her. On the totality of evidence and on preponderance of probabilities, the court found that the statutory presumption was successfully rebutted. [Paras 4, 5, 6]

Presumption under Sections 118 and 139 is rebutted and the defence evidence stands accepted.

Appreciation of evidence and effect of failure to cross examine a defence witness - Interference with an order of acquittal in a prosecution under Section 138 NI Act - Whether the High Court should interfere with the magistrate's order of acquittal under Section 138 of the NI Act. - HELD THAT: - The learned Magistrate recorded detailed reasons, relying on the accused's unchallenged testimony, documentary material indicating repayment, and the complainant's inconsistent statements in cross examination. The complainant's failure to cross examine the accused who entered the witness box meant that her version remained uncontroverted. The trial court concluded that the complainant's conduct and the evidence supported acquittal; on appellate scrutiny the High Court found no reason to disturb that evaluation of evidence. Given the sound reasoning of the trial court and absence of any demonstrable legal or factual error warranting interference, the High Court declined to admit the application for Special Leave to Appeal. [Paras 4, 5, 6]

No interference with the acquittal; Special Leave to Appeal refused and the order of acquittal is confirmed.

Final Conclusion: Special Leave to Appeal under Section 378(4) CrPC refused; the acquittal of the accused in Criminal Case No.13050 of 2017 (under Section 138 NI Act) is confirmed and trial records are directed to be returned to the trial Court.

Presumption under Section 139 of the Negotiable Instruments Act - rebuttable presumption of legally enforceable debt or liability - burden on the accused to rebut the presumption - reverse onus clause - conviction under Section 138 of the Negotiable Instruments Act

Presumption under Section 139 of the Negotiable Instruments Act - rebuttable presumption of legally enforceable debt or liability - Presumption under Section 139 arises on admission or proof of issuance and signature of cheque and shifts evidentiary burden to the accused to rebut existence of a legally enforceable debt or liability. - HELD THAT: - The Court held that once issuance of the cheque and the accused's signature are admitted or proved, Section 139 gives rise to a rebuttable presumption that the cheque was issued for discharge, in whole or in part, of a debt or liability. The presumption is of the nature of a reverse onus clause and is rebuttable; the accused must lead evidence to show that there was no legally enforceable debt or that the liability had been discharged. Mere denial without evidence is insufficient. The Court applied this principle on the facts where the accused admitted transactions and that some amount remained due, and no evidence was led to show full payment or other facts negating the presumption; the defence that the cheque was given as security was not substantiated by evidence, particularly as the cheque was issued again after earlier cheques were dishonoured. [Paras 5, 6, 7]

The presumption under Section 139 arose and the accused failed to rebut it by leading evidence; therefore the presumption in favour of the complainant stood unrebutted.

Burden on the accused to rebut the presumption - reverse onus clause - conviction under Section 138 of the Negotiable Instruments Act - Whether the acquittals by the trial Court and the High Court could be sustained in view of the unrebutted presumption and available evidence. - HELD THAT: - The Court found that both the trial Court and the High Court erred in shifting the burden to the complainant to prove the debt or liability despite the statutory presumption under Section 139. Having examined the record, the Court concluded that the accused had admitted issuance and signature of the cheques and that the cheque in question was issued after earlier cheques were dishonoured; yet the accused did not lead evidence to rebut the presumption. On that basis the Court set aside the acquittals, held the accused guilty of the offence under Section 138, and imposed conviction, sentence and compensation as recorded in the order. [Paras 7, 8]

Impugned acquittals quashed and set aside; accused convicted for the offence under Section 138 of the N.I. Act and sentenced; compensation directed to be paid to the complainant.

Final Conclusion: Both appeals are allowed. The trial Court's and High Court's orders of acquittal are quashed and set aside; the original accused are convicted under Section 138 of the Negotiable Instruments Act, sentenced to imprisonment and fine, and directed to pay compensation to the complainant.

Enforcement of foreign arbitral awards under Section 48 of the Arbitration and Conciliation Act, 1996 - Limited scope of judicial review of foreign awards-no merits review - Natural justice: "unable to present his case" as a facet of fair hearing - Public policy of India in enforcement of foreign awards-Renusagar principle (narrow test) - Discretion to refuse enforcement despite established grounds (permissive "may") - Remedial scope where award fails to decide material issues or shocks the conscience - Challenge based on violation of FEMA / Non Debt Instrument Rules and fundamental policy

Enforcement of foreign arbitral awards under Section 48 of the Arbitration and Conciliation Act, 1996 - Limited scope of judicial review of foreign awards-no merits review - Whether the four LCIA awards should be recognised and enforced in India under Section 48. - HELD THAT: - The Court held that recognition and enforcement of a foreign award is governed narrowly by Section 48 and the New York Convention and does not permit a re examination of the merits. The legislative policy forecloses a second bite at the merits in India where the award is foreign and the narrow exceptions in Section 48 alone are available to resist enforcement. The Court emphasised that interference under Article 136 should be rare and confined to cases raising novel points of law or blatant disregard of Section 48. Applying these principles to the awards, the Court found that the High Court correctly recognised and enforced the awards because the objections raised by the Appellants did not bring the awards within the limited statutory exceptions enabling refusal of enforcement. [Paras 22, 24, 33, 34]

The appeals against recognition and enforcement are dismissed; the foreign awards are enforceable in India.

Natural justice: "unable to present his case" as a facet of fair hearing - Right to be heard - scope limited to hearing stage and factors outside party's control - Whether the tribunal's conduct or the awards denied the Appellants a fair hearing so as to attract Section 48(1)(b). - HELD THAT: - The Court construed the phrase "or was otherwise unable to present his case" in Section 48(1)(b) narrowly as a facet of natural justice applicable primarily at the hearing stage. A working test is whether factors outside a party's control denied a fair hearing (for example, reliance on evidence taken behind the parties' back, or tribunal reliance on material not disclosed). The Court reviewed the arbitral record and awards and concluded that the Appellants were given full opportunity; instances relied upon by Appellants (late or unpleaded points, or failure to pursue foreign procedural remedies) did not amount to denial of a fair hearing under Section 48(1)(b). Accordingly the natural justice ground failed. [Paras 55, 56, 59, 76]

No breach of the fair hearing requirement under Section 48(1)(b) was made out; this ground for refusal of enforcement is rejected.

Public policy of India in enforcement of foreign awards-Renusagar principle (narrow test) - Challenge based on alleged contravention of FEMA is not necessarily a breach of fundamental policy - Whether enforcement would be contrary to the public policy of India, including because the awards direct transfer of shares at a discounted price that allegedly breaches FEMA/Non Debt Instrument Rules. - HELD THAT: - The Court reiterated that the public policy exception in Section 48(2)(b) is narrow (Renusagar and subsequent precedents) and does not permit review on merits; contravention of a statutory provision alone does not equate to violation of the fundamental policy of Indian law. The Court analysed the FEMA/Non Debt Instrument Rules contention and held that FEMA is a permissive regulatory regime (distinct from the prior FERA regime) where breaches can be condoned or remedied by regulatory action; a rectifiable regulatory breach does not amount to a violation of fundamental policy that would bar enforcement. Thus the contention that the awards offend FEMA did not establish the public policy exception. [Paras 34, 35, 79, 83]

Enforcement is not barred on public policy grounds; the FEMA-based objection fails.

Remedial scope where award fails to decide material issues or shocks the conscience - Failure to decide pleaded material issues - when it may amount to violation of basic notions of justice - Whether any specific complaints (failure to decide counter claims or material issues, selective consideration of evidence, perverse findings, conflicted valuer, valuation date, inconsistency of awards, or alleged bias) entitled the Appellants to resist enforcement. - HELD THAT: - The Court considered the catalogue of objections advanced by the Appellants (including non decision on Jaguar incorporation, alleged ouster claim, trademark registration, ACPL evidence/non production, selective use of contemporaneous documents, perverse interpretation of JVA clauses, direct sales/agency claims, conflict of Deloitte, exclusion of Power Plus in valuation, choice of valuation date, alleged inconsistencies between partial awards, and asserted bias arising from third party publicity). For each objection the Court examined the arbitral awards and record and found that (i) many complaints were unpleaded or raised late before the tribunal and thus not within the tribunal's remit; (ii) the tribunal addressed the core disputes (material breach, jurisdictional points, valuation process) and gave reasons; (iii) documentary non production by non parties (ACPL) fell within the tribunal's procedural directions and could have been pursued in the seat's courts - the Appellants did not do so; (iv) alleged conflicts or delay in valuation were either waived or attributable to the Appellants' conduct; and (v) none of the asserted defects amounted to a shocking disregard of justice or a structural denial of fair process that would attract Section 48 or the narrow public policy exception. The Court emphasised that allegations which amount merely to disagreement with the tribunal's evaluation or to asserted perversity concern merits and cannot be entertained under Section 48. [Paras 101, 102, 103, 104, 106]

All specific objections were considered and rejected; none met the narrow statutory grounds to refuse enforcement.

Final Conclusion: The Supreme Court held that the four LCIA awards are enforceable in India. The narrow statutory exceptions in Section 48 were not made out by the Appellants; natural justice and public policy arguments failed; FEMA based objections did not establish violation of fundamental policy. The appeals are dismissed with costs.

Proximate link between alleged events and detention - subjective satisfaction of the detaining authority - preventive detention under COFEPOSA - punitive character of detention order

Proximate link between alleged events and detention - preventive detention under COFEPOSA - Impugned detention order quashed on the ground that there was no proximate link between the alleged smuggling (January 2014 to July 2015) and the detention order dated 2 August 2019. - HELD THAT: - The Court examined the detaining authority's stated grounds, which rested on an alleged admission that the petitioner financed smuggling of 185 kgs of gold during January 2014 to July 2015. Relying on the principle applied by the Supreme Court in Pramodgiri Premgiri Goswami (reproduced in the judgment), the Court found that the detention order was issued nearly four years after the events relied upon and therefore lacked the necessary proximate or live link between the alleged activities and the preventive detention. Although the detaining authority's satisfaction is subjective, the Court may intervene where there is no material establishing a proximate nexus to justify continued preventive detention; applying that principle here, the Court concluded that the delay and absence of a contemporaneous link rendered the order liable to be quashed. Consequently the writ petition was allowed and the detenue ordered to be released if not wanted in any other case. [Paras 7]

Detention order dated 2 August 2019 quashed for want of proximate link; petitioner to be released forthwith if not wanted in any other case.

Final Conclusion: Writ petition allowed; detention order set aside as lacking proximate link to the events relied upon, and the petitioner directed to be released forthwith if not wanted in any other case.