TaxTMI Updates e-Newsletter
Feb 18,2023

Principles of natural justice - non-speaking order - personal hearing - Section 75(4) of the TNGST Act, 2017 - remand for fresh consideration

Non-speaking order - principles of natural justice - Impugned assessment orders are non-speaking for failing to record reasons for rejecting the petitioner's replies. - HELD THAT: - The Court found that the petitioner had submitted detailed replies dated 19.10.2022 to the show cause notices, enclosing supporting bills and return copies, and those replies were acknowledged by the respondent. Despite this, the assessment orders do not state reasons for rejecting those replies or explain why the documents were not accepted. The absence of such reasoning renders the orders non-speaking and constitutes a breach of the duty to apply mind and communicate the basis for an adverse conclusion under principles of natural justice. [Paras 4, 7]

Assessment orders quashed insofar as they fail to state reasons for rejecting the petitioner's replies; findings on the objections set aside for fresh consideration.

Personal hearing - Section 75(4) of the TNGST Act, 2017 - principles of natural justice - Personal hearing afforded before receipt of the petitioner's replies did not comply with the requirement of Section 75(4) and violated principles of natural justice. - HELD THAT: - The Court relied on the statutory tenor of Section 75(4) which contemplates granting an opportunity of hearing where a written request is received or where an adverse decision is contemplated. A prior decision of this Court was noted holding that a personal hearing issued before receipt of the assessee's explanation cannot satisfy Section 75(4). Here, the respondent afforded personal hearing prior to receiving the replies (which were later acknowledged), and thus did not afford hearing after application of mind to the replies where an adverse view was contemplated. That procedure offended the right to be heard. [Paras 5, 6, 7, 8]

Proceedings set aside to the extent that hearing was conducted before consideration of the petitioner's replies; fresh hearing to be afforded after receipt and consideration of replies in accordance with Section 75(4).

Remand for fresh consideration - principles of natural justice - Impugned orders quashed and matter remanded for fresh consideration after affording proper hearing and applying mind to the petitioner's replies. - HELD THAT: - Because the orders were non-speaking and hearing was not properly timed, the Court found it necessary to quash the assessment orders and remit the matter to the respondent for fresh adjudication on merits. The respondent is directed to adhere to principles of natural justice, consider the petitioner's replies and supporting documents, afford a personal hearing if an adverse decision is contemplated, and pass a reasoned final order. [Paras 7, 8, 9]

Impugned assessment orders quashed and remanded; respondent directed to pass fresh orders after complying with natural justice and affording personal hearing.

Final Conclusion: Impugned assessment orders dated 25.10.2022 are quashed for violation of principles of natural justice (non-speaking orders and hearing conducted before replies were considered); the matters are remitted to the respondent to decide afresh on merits after considering the petitioner's replies, affording a personal hearing where an adverse decision is contemplated, and passing reasoned orders within twelve weeks of receipt of this judgment.

Release of blocked bank funds pending adjudication - provisional attachment of bank accounts under the CGST regime - consideration of representation on merits - restraint on further attachments pending decision - judicial direction for fresh administrative decision

Consideration of representation on merits - release of blocked bank funds pending adjudication - judicial direction for fresh administrative decision - Petitioner to submit fresh representation and second respondent to decide on release of blocked funds on merits. - HELD THAT: - The Court directed that because the petitioner had not specifically sought the release of the blocked funds by a fresh representation, the petitioner must submit such a representation within one week. On receipt, the second respondent is required to consider the petitioner's grievances and pass final orders on merits and in accordance with law within four weeks. The Court framed this as an administrative remand to the revenue authority to examine the petitioner's submissions and documentary material narrated in the affidavit and to take a decision thereon rather than adjudicating the merits itself at the admission stage. [Paras 6, 7, 8]

Petitioner to file fresh representation within one week; on receipt the second respondent to decide on merits within four weeks.

Provisional attachment of bank accounts under the CGST regime - restraint on further attachments pending decision - Respondents restrained from attaching funds in any other bank account of the petitioner until final orders are passed on the fresh representation. - HELD THAT: - Recognising the petitioner's apprehension that further blocking of funds would impede its business, the Court directed interim protection by prohibiting respondents 1 to 3 from attaching funds in any other bank account of the petitioner pertaining to the subject demand until the second respondent passes final orders on the fresh representation. This interim restraint is limited in time and scope to preserve the status quo pending the administrative decision mandated by the Court. [Paras 8]

Respondents 1 to 3 are directed not to attach funds in any other bank account of the petitioner until final orders on the representation are passed.

Final Conclusion: Writ petition disposed with directions to the petitioner to submit a fresh representation within one week and to the second respondent to decide the same on merits within four weeks; interim restraint against attachment of other bank accounts until such decision; no orders as to costs.

Principles of natural justice - requirement to record reasons - speaking order doctrine - quashing of cancellation of GST registration for non-speaking show cause notice - right to personal hearing in quasi judicial proceedings - remand for fresh notice with particulars and opportunity to be heard

Principles of natural justice - requirement to record reasons - speaking order doctrine - quashing of cancellation of GST registration for non-speaking show cause notice - Validity of the show cause notice dated 09.05.2022 and the ex parte order dated 24.06.2022 cancelling GST registration in view of non speaking/cryptic notice and breach of principles of natural justice. - HELD THAT: - The Court examined the content of the show cause notice and found it cryptic and bereft of particulars such that it failed to disclose the jurisdictional facts or reasons on which cancellation was proposed. Relying on established authority that reasons are the "heart and soul" of an order and form part of the requirements of natural justice, the Court held that a quasi judicial authority must record cogent and specific reasons so as to enable effective response and judicial review. A bare or formulaic reproduction of statutory grounds in a notice, without particulars, reduces the show cause mechanism to a formality and deprives the person of meaningful opportunity to be heard. Applying these principles to the present case, the Court concluded that the impugned show cause notice and the resulting ex parte cancellation order were vitiated by the breach of natural justice and absence of speaking reasons. [Paras 4, 5, 6]

The show cause notice dated 09.05.2022 and the ex parte cancellation order dated 24.06.2022 are quashed and set aside for failure to comply with principles of natural justice and the requirement of recording reasons.

Remand for fresh notice with particulars and opportunity to be heard - right to personal hearing in quasi judicial proceedings - Remedial course to be followed after quashing: restoration of registration and procedure for fresh proceedings. - HELD THAT: - Having quashed the impugned orders, the Court directed restoration of the GST registration forthwith. The Court granted liberty to the authority to issue a fresh notice that must incorporate all particulars and reasons with sufficient detail, afford reasonable opportunity to the petitioner to respond and for personal hearing, and thereafter pass a speaking order on merits in accordance with law. The Court emphasised cooperation by the petitioner and caution to officers to avoid repetition of cryptic notices in future. Costs were not imposed in view of an apparent internal circulation of instructions among officers. [Paras 6, 8]

Registration restored; authority permitted to issue a fresh detailed notice, provide opportunity of hearing including personal hearing, and thereafter pass a speaking order in accordance with law.

Final Conclusion: The High Court quashed the cryptic show cause notice and the consequent ex parte cancellation of GST registration for violation of principles of natural justice and absence of reasons, restored the registration, and permitted the tax authority to issue a fresh detailed notice with particulars and to afford a reasonable opportunity of hearing before passing a speaking order.

Limitation for refund under Section 54(1) of the Central Goods and Services Tax Act, 2017 - exclusion of period for computation of limitation (01.03.2020 to 28.02.2022) - extension of limitation pursuant to Suo Motu Writ Petition (Civil) No. 3 of 2020 - processing of refund application in accordance with law

Limitation for refund under Section 54(1) of the Central Goods and Services Tax Act, 2017 - exclusion of period for computation of limitation (01.03.2020 to 28.02.2022) - Whether the refund application filed for February, 2018 could be rejected as time-barred despite the notification excluding the period 01.03.2020 to 28.02.2022 from computation of limitation. - HELD THAT: - The Court noted that the adjudicating authority rejected the refund application on the ground that it was filed beyond the two-year period prescribed under Section 54(1) of the Act. Attention was drawn to the notification dated 05.07.2022 which directs exclusion of the period 01.03.2020 to 28.02.2022 for computing limitation for filing refund applications under Sections 54 and 55, issued in view of the Supreme Court's order in Suo Motu Writ Petition (Civil) No. 3 of 2020. Applying that exclusion, the benefit of the relaxation in computation of limitation was to be accorded to the petitioner. Since the impugned orders did not apply that exclusion, they could not be sustained.

Impugned orders rejecting the refund as time-barred set aside; petitioner entitled to benefit of the exclusion and the refund application must be processed.

Processing of refund application in accordance with law - What relief should follow after finding that the refund was incorrectly held time-barred. - HELD THAT: - Having held that the benefit of the exclusion of the period 01.03.2020 to 28.02.2022 applies, the Court directed the respondents to forthwith process the petitioner's refund application in accordance with law. The appellate authority's confirmation of the adjudicating order was therefore displaced and the matter was returned to the respondents for statutory processing.

Respondents directed to process the refund application for February, 2018 forthwith in accordance with law.

Final Conclusion: The orders dated 24.07.2020 and 27.08.2020 rejecting the petitioner's refund on limitation grounds are set aside; the petitioner is entitled to the benefit of the notification excluding 01.03.2020 to 28.02.2022 for computation of limitation, and the respondents are directed to process the refund application for February, 2018 forthwith in accordance with law.

Detention, seizure and release of goods and conveyances in transit - Application of Section 129 of the CGST/SGST Act, 2017 - Non-requirement of intent to evade tax for levy of penalty under Section 129 - Compliance with E-Way bill requirements and Part B under rule 138 - Effect of payment under Section 129(5) concluding proceedings

Application of Section 129 of the CGST/SGST Act, 2017 - Non-requirement of intent to evade tax for levy of penalty under Section 129 - Whether intention to evade tax is a prerequisite for detention of goods and levy of penalty under Section 129 of the CGST/SGST Act, 2017. - HELD THAT: - The Court held that Section 129 is concerned with transit violations and does not require proof of intention to evade tax. The statutory scheme authorises detention or seizure of goods and imposition of prescribed penalties where goods are transported in contravention of the Act or rules, regardless of subjective intent. The judgment reproduces and applies the text of Section 129 to conclude that authorities are empowered to detain goods and demand payment of tax and penalty upon interception during transit when accompanying documents are non compliant.

Intention to evade tax is not a prerequisite for action under Section 129; detention and levy of penalty can be sustained on statutory non compliance alone.

Compliance with E-Way bill requirements and Part B under rule 138 - Detention, seizure and release of goods and conveyances in transit - Effect of payment under Section 129(5) concluding proceedings - Whether the authorities were justified in detaining the consignment, demanding tax and penalty, and whether payment made under Section 129(3) concluded proceedings. - HELD THAT: - The Court accepted the factual findings that Part B of the E Way bills had not been filled as required and discrepancies existed between vehicle details on invoices, consignment notes and the vehicle intercepted. Rule 138(3)'s limited exemption was held inapplicable on the facts (goods handed to transporter and interception beyond the stated exemption distance). Given statutory non compliance, detention under Section 129 and issuance of notices in prescribed formats were valid. The petitioner paid the amount under Section 129(3); under Section 129(5) such payment deems all proceedings in respect of the notice to be concluded. Consequently, there was no ground to interfere with the orders of detention and confirmation by the appellate authority.

Detention and penalty demand were justified on non compliance with E Way bill requirements; payment under Section 129(3) concluded proceedings under Section 129(5).

Final Conclusion: Writ petition dismissed; the High Court upheld the detention, demand of tax and penalty under Section 129 based on statutory non compliance with E Way bill requirements and found that payment made pursuant to Section 129 concluded the proceedings.

Anticipatory bail under Section 438 Cr.P.C. - custodial interrogation - application of Siddharam Satlingappa Mhetre principles - failure to cooperate with investigation / absconding - large-scale tax evasion and tracing the money trail - prima facie sufficiency of material for investigation

Anticipatory bail under Section 438 Cr.P.C. - application of Siddharam Satlingappa Mhetre principles - failure to cooperate with investigation / absconding - Grant of anticipatory bail to the petitioner - HELD THAT: - Applying the factors laid down by the Apex Court in Siddharam Satlingappa Mhetre, the High Court examined the nature and gravity of the accusation, the accused's conduct in relation to the investigation and the available material. The court noted that although the petitioner had submitted medical leave in response to an initial summons, subsequent attempts by the Investigating Agency to trace and procure the petitioner repeatedly resulted in Farari Panchanamas recording that he was not found at the given address. This conduct gave rise to a prima facie impression that the petitioner was avoiding cooperation with the investigation. The court further observed that the case diary did not disclose that the prosecution was frivolous or malicious and that the investigation had come to a standstill in relation to the petitioner. Weighing the prospect of prejudice to a full and fair investigation against the possibility of harassment by arrest, the court concluded that the Siddharam criteria favoured denial of anticipatory bail in the factual matrix presented. [Paras 6, 9, 10]

The prayer for anticipatory bail is refused.

Custodial interrogation - large-scale tax evasion and tracing the money trail - prima facie sufficiency of material for investigation - Whether custodial interrogation of the petitioner is warranted - HELD THAT: - The court assessed the prosecution's contention that custodial interrogation was necessary to trace the money trail in a matter involving allegedly large-scale tax evasion. The case diary and material placed before the court showed multiple bank debits and credits in the petitioner's account for the period 2017-2019 and involvement of several institutions and office-bearers, making the financial fact-finding complex. The prosecution also produced evidence that a purported letter defreezing the petitioner's bank account was forged and that co-accused had been arrested and custodially interrogated. Considering the complexity of the allegations, the scale of alleged evasion and the need to complete the investigation, the court found the prosecution's demand for custodial interrogation reasonable and necessary for a full investigation. [Paras 4, 6, 8]

Custodial interrogation is justified and refusal to grant anticipatory bail is warranted on that ground.

Final Conclusion: On the facts and material produced, and having regard to the applicable principles in Siddharam Satlingappa Mhetre, the High Court declined to grant anticipatory bail and dismissed the petition, holding that custodial interrogation of the petitioner is justified to enable completion of the investigation.

Seeking effective income tax regulation on sale of personal cars in order to prevent misuse of tax regulations - Allow only one personal car per person or allow second car after imposing some environment CESS - Considering air pollution a Pan India disease in an epidemic form - writ of mandamus under Article 226 of constitution of India to direct the respondents to initiate an effective National Program against air pollution in order to get special attention, priority and better co ordination amongst States and Centre with better utilization of budget, etc. Pass an order to health authorities to release some advisories for vulnerable class i.e. pregnant ladies regarding "what to do & what not to do" to safeguard themselves from air pollution - HELD THAT:- The issues which are raised in the petition under Article 32 of the Constitution of India in the present case pertain to the policy domain. Hence, we are not inclined to entertain the Petition. The petitioners are at at liberty to pursue their grievances before the authorities in accordance with law.

Subject to the aforesaid, the Petition is disposed of.

Waiver of interest under Section 220(2A) - interest under Section 220(2) compensatory nature - obligation to satisfy statutory conditions before rejecting waiver - non-speaking order - adjustment of refund under Section 244A against waiver

Waiver of interest under Section 220(2A) - obligation to satisfy statutory conditions before rejecting waiver - non-speaking order - Validity of the impugned orders granting only 20% waiver of interest under Section 220(2A) and whether full waiver should have been granted - HELD THAT: - The Court held that before rejecting or partially rejecting an application under Section 220(2A) the authority must positively satisfy itself whether the three statutory conditions are met. The impugned orders failed to advert to or consider the undisputed facts showing that (i) advance tax had been paid though in the minor's PAN and the consequent wrong demand and delayed rectification were beyond the assessee's control, (ii) there was no default or wilful lapse by the assessee, and (iii) the assessee had cooperated in proceedings. The orders granting only 20% waiver are non-speaking because they do not explain the basis for selecting that rate or record findings that the statutory conditions were not satisfied. In the circumstances, the Court concluded that full waiver under Section 220(2A) ought to have been granted. [Paras 10, 11, 13]

Impugned orders granting only 20% waiver are unsustainable; full waiver of interest under Section 220(2A) granted.

Interest under Section 220(2) compensatory nature - adjustment of refund under Section 244A against waiver - Whether amounts refunded under Section 244A should be adjusted against the waiver granted - HELD THAT: - The Court recognised that the assessee had already received refunds (including interest under Section 244A) resulting in sums having been paid to him which relate to the same tax periods. While granting full waiver of interest under Section 220(2A) on merits, the Court directed that the amounts already refunded to the assessee under Section 244A be adjusted against the waiver. This adjustment was treated as a limited quantification to avoid double benefit to the assessee and to protect revenue. [Paras 14]

Full waiver granted subject to adjustment of the refunds received under Section 244A; assessee directed to repay those refunded sums within four weeks.

Final Conclusion: Writ petitions partly allowed: impugned orders set aside to the extent they granted only 20% waiver; full waiver of interest under Section 220(2A) granted for AY 2009-10 and 2011-12, subject to adjustment of amounts refunded under Section 244A, to be paid back by the petitioner within four weeks.

Notice under Section 148 issued to an amalgamated (non existent) transferor company is void and without jurisdiction - amalgamating company ceases to exist upon sanction of scheme of amalgamation - sufficiency of intimation of amalgamation given in response to an assessment notice - participation in proceedings cannot operate as estoppel against law - quashing of reassessment notice where jurisdictional notice is issued to non existent entity

Notice under Section 148 issued to an amalgamated (non existent) transferor company is void and without jurisdiction - amalgamating company ceases to exist upon sanction of scheme of amalgamation - quashing of reassessment notice where jurisdictional notice is issued to non existent entity - Validity of the notice dated 30.03.2021 under Section 148 issued in the name of the transferor company which had been amalgamated into the petitioner - HELD THAT: - The Court held that where a transferor company has ceased to exist as a result of an approved scheme of amalgamation, a jurisdictional notice issued in its name for reopening assessment is fundamentally illegal and without jurisdiction. The sanctioning order of 05.08.2016 approving the scheme of amalgamation and the consequent extinction of the transferor companies were material and dispositive; the principle in Maruti Suzuki and the line of authority recognising corporate death upon amalgamation was applied. Participation in proceedings by the amalgamating company does not cure the jurisdictional defect and cannot operate as an estoppel against law. Applying these principles to the facts, the notice issued in the name of Kaizen Finstock Pvt. Ltd., which no longer existed on the date of the impugned notice, was held to be void and liable to be quashed. [Paras 10, 11, 12, 16]

The impugned notice dated 30.03.2021 issued in the name of the amalgamated transferor company is void for want of jurisdiction and is quashed.

Sufficiency of intimation of amalgamation given in response to an assessment notice - participation in proceedings cannot operate as estoppel against law - Whether the petitioner's intimation of amalgamation made in reply to the notice under Section 142(1) constituted adequate intimation to the Income tax Department - HELD THAT: - The Court observed there is no prescribed statutory format for intimating the sanction of amalgamation to the Income tax authority. In the present case the petitioner had specifically informed the assessing officer in reply to the Section 142(1) notice of the Court's order sanctioning amalgamation and of its acquisition of the two transferor companies. Given the absence of any mandated formality for such intimation and the fact that the very officer to whom intimation was sent later issued the impugned notice, the Court found the intimation to be sufficient. Consequently, the issuance of the notice to the extinct transferor company despite that intimation warranted interference. [Paras 6, 11, 16, 17]

The intimation given by the petitioner in response to the Section 142(1) notice was sufficient notice to the department of the amalgamation, and the subsequent notice issued to the non existent transferor company was liable to be quashed.

Final Conclusion: The writ petitions are allowed: the notice dated 30.03.2021 for A.Y.2016-17 issued in the name of the amalgamated transferor company is quashed, the intimation given in reply to the Section 142(1) notice was sufficient, and consequential reliefs follow; the Revenue remains free to proceed in accordance with law against the transferee company.

Estimation of income - best judgment assessment - discretionary factual finding - palpably arbitrary or perverse - maintenance and audit of books - reliance on earlier assessment years

Estimation of income - best judgment assessment - discretionary factual finding - palpably arbitrary or perverse - reliance on earlier assessment years - Validity of estimating the assessee's income at 4% of turnover on the basis of earlier years' assessments and best judgment assessment where books were not audited or maintained - HELD THAT: - The Tribunal upheld the CIT(A)'s reduction of the Assessing Officer's estimate (from 8% to 4%) after referring to earlier assessment years where net profit percentages of 3-4% had been adopted or determined. The High Court treated the matter as essentially one of fact and discretion, observing that estimation under best judgment assessment necessarily involves an element of guess work and that there is no rigid formula for such estimation. Interference by a higher forum is warranted only if the estimation is shown to be palpably arbitrary or perverse; no such arbitrariness or perversity was demonstrated in the present case. The fact that the assessee had not maintained audited books rendered estimation permissible, and the reliance on prior years' accepted figures provided an adequate basis for the Tribunal's and CIT(A)'s conclusion. Consequently, the Court found no infirmity in the Tribunal's order upholding the 4% estimation. [Paras 4, 5, 6]

The Tribunal's upholding of the estimate of income at 4% of turnover is sustained; no interference as the estimate is not shown to be palpably arbitrary or perverse.

Final Conclusion: The Tax Case Appeal is dismissed; the estimation of the assessee's income at 4% of turnover, affirmed by the Tribunal, is upheld as a permissible best judgment assessment in the absence of any showing of arbitrariness or perversity.

Disallowance of expenditure during temporary suspension of business - treatment of expenses to keep corporate entity intact as revenue deduction - application of section 50C and reference to valuation officer for determination of fair market value - interpretation of the word "may" in statutory provision as requiring reference in appropriate context - remand for fresh consideration with opportunity of hearing

Disallowance of expenditure during temporary suspension of business - treatment of expenses to keep corporate entity intact as revenue deduction - Disallowance of loss of Rs. 25,39,908/- on account of expenses incurred during a period when the assessee's business was temporarily suspended. - HELD THAT: - The Tribunal examined the assessee's claim that business activity was temporarily suspended and that wages, salaries and other financial costs were incurred to keep the corporate entity intact as a going concern and to facilitate revival. The Tribunal observed that whether the facts constitute a temporary lull requiring the claimed treatment is a matter needing verification and fresh consideration. In view of the absence of the assessee at the hearing and the material on record, the Tribunal concluded that the issue ought to be reconsidered by the Assessing Officer with opportunity to the assessee rather than being finally adjudicated on the present record. [Paras 7]

Set aside and restored to the file of the Assessing Officer for fresh adjudication in accordance with law after allowing the assessee adequate opportunity of hearing.

Application of section 50C and reference to valuation officer for determination of fair market value - interpretation of the word "may" in statutory provision as requiring reference in appropriate context - Addition of Rs. 51,44,000/- under section 50C on account of difference between sale consideration and stamp duty value, and the question of referring the property to the Valuation Officer. - HELD THAT: - The Tribunal noted that the Assessing Officer did not follow the prescribed procedure for valuation of fair market value and that considerable emphasis had been placed on construing the word "may" in section 50C(2). Observing that the word "may" can in context require action and that the procedural aspects and factual matrix concerning valuation had not been properly examined, the Tribunal held that the matter requires fresh consideration by the Assessing Officer. The Tribunal therefore directed that the Assessing Officer decide the issue afresh, in accordance with law, after giving the assessee an adequate opportunity of hearing. [Paras 7]

Set aside and restored to the file of the Assessing Officer for fresh adjudication in accordance with law after allowing the assessee adequate opportunity of hearing.

Final Conclusion: The orders of the Commissioner (Appeals) are set aside; both issues are remitted to the Assessing Officer for fresh consideration in accordance with law after affording the assessee adequate opportunity of hearing. The appeal is treated as allowed for statistical purposes.

Reopening of assessment under Section 147 - borrowed satisfaction - independent enquiry by Assessing Officer before reopening - identity, creditworthiness and genuineness test under Section 68 - onus of proof - use of third party statement recorded under Section 131 and requirement of providing statement to assessee for rebuttal/cross examination - principles of natural justice - opportunity to test evidence relied upon

Reopening of assessment under Section 147 - borrowed satisfaction - independent enquiry by Assessing Officer before reopening - Validity of reopening of assessment for A.Y. 2012-13 - HELD THAT: - The Tribunal found that the reasons recorded for reopening relied solely on information received from the DDIT (Inv), Kolkata about transactions involving entities allegedly controlled by an accommodation entry operator, without any independent inquiry by the Assessing Officer. The reasons did not demonstrate how the funds flowed into the lenders' accounts, whether the lender companies themselves were operated by the entry provider, or whether the alleged circularity rendered the lenders as mere pass through entities. The Tribunal held that mere mention of circular transactions and reliance on investigation material, without the Assessing Officer applying his independent mind by making enquiries to verify the material, amounts to reopening based on borrowed satisfaction. Applying the authorities cited before it, the Tribunal concluded that the statutory requirement of independent satisfaction prior to issuance of notice under Section 148/147 was not met and therefore the reopening was invalid. [Paras 13, 22]

Reopening quashed as based on borrowed satisfaction; notice under Section 148/147 held invalid.

Identity, creditworthiness and genuineness test under Section 68 - onus of proof - use of third party statement recorded under Section 131 and requirement of providing statement to assessee for rebuttal/cross examination - principles of natural justice - opportunity to test evidence relied upon - Sustainability of addition of Rs. 3 crores as unexplained loans under Section 68 - HELD THAT: - On the merits the Tribunal held that the assessee discharged the initial onus under Section 68 by producing loan confirmations, audited financial statements, income tax returns of the lenders, bank statements showing receipts and subsequent repayments, and replies to notices under Section 133(6). The Assessing Officer did not carry out independent enquiries to test the authenticity of the lenders' assets (such as verifying large inventory, bank balances or advances) and relied principally on a statement attributed to an accommodation entry provider recorded by the investigation wing. That statement was not placed before the assessee and no opportunity to cross examine was granted. The Tribunal emphasised that where the assessee furnishes prima facie evidence, the onus to rebut by independent enquiry lies on the Assessing Officer; absent such enquiry and absent disclosure of the impugned third party statement for rebuttal, reliance on that statement alone is impermissible. Consequently, the addition under Section 68 could not be sustained. [Paras 18, 19, 20, 21, 22]

Addition under Section 68 deleted; assessment on merits set aside for want of independent enquiry and denial of opportunity to test relied upon third party statement.

Final Conclusion: Appeal allowed: reopening under Section 147/148 set aside as based on borrowed satisfaction and, alternatively, the addition under Section 68 deleted because the assessee discharged initial onus and the Assessing Officer failed to conduct independent verification or provide the assessee opportunity to test the third party statement relied upon.

Computation of deduction under section 80HHC vis-a -vis deduction/exemption under section 80IB - Allowance versus computation of deductions under Chapter VI A - Effect of provisos to section 80HHC(3) and parity between exporters above and below Rs.10 crore

Computation of deduction under section 80HHC vis-a -vis deduction/exemption under section 80IB - Allowance versus computation of deductions under Chapter VI A - Whether deduction under section 80IB should be deducted from 'profits and gains of business' when computing deduction under section 80HHC, or whether section 80IB affects only the allowance (and not the computation) of other Chapter VI A deductions so that 80HHC is computed on full profits of business. - HELD THAT: - The Tribunal, following the decisions of the High Courts in SCM Creations and Associated Capsules, held that the wording of the relevant provisional restriction (as analysed in the cited authorities) affects the allowance of a deduction and not the computation basis for other deductions under heading 'C' of Chapter VI A. The reasoning adopted by the Bombay High Court - that the words used (for example in section 80 IA(9) as discussed in the authorities) restrict allowance and do not import a requirement to reduce the base profits for computing other deductions - was applied by the Tribunal. In the present facts the assessee's declared profits under the head 'profits and gains of business or profession' exceeded the aggregate of the claimed deductions; accordingly the Tribunal found the computation of deduction under section 80HHC must be carried out on the profits of the business and not after first reducing those profits by the amount of deduction/exemption claimed under section 80IB. The Tribunal directed recomputation of deduction in accordance with these principles. [Paras 8]

Assessee's appeal allowed on this point; AO directed to recompute section 80HHC deduction on the profits of business without reducing those profits by the amount of deduction/exemption claimed under section 80IB.

Effect of provisos to section 80HHC(3) and parity between exporters above and below Rs.10 crore - Recomputation of deduction in consequence of quashing of amendment - Whether the amendment to section 80HHC(3) introducing the 3rd and 4th provisos (which made a distinction between exporters with turnover below and above Rs.10 crore) must be given retrospective effect or be disregarded so as to treat exporters uniformly, and consequent direction for recomputation of deduction (including claim of DEPB) in light of the Supreme Court's decision. - HELD THAT: - Relying on the Supreme Court's decision in CIT v. Avani Exports (as placed before the Tribunal), which quashed the severable part of the 3rd and 4th provisos to section 80HHC(3) and directed that exporters with turnover below and above Rs.10 crore be treated similarly, the Tribunal directed that the AO recompute the deduction accordingly. The Tribunal accepted the submission that the quashing of the amendment removes the discriminatory distinction and requires recomputation of benefits (including the claim relating to DEPB) for the assessment year in question. The matter was remitted to the AO for recomputation in accordance with the Supreme Court's substituted direction. [Paras 11]

Assessee's claim allowed in part; amendment introducing the 3rd and 4th provisos to section 80HHC(3) is treated as quashed for the relevant assessments and the AO is directed to recompute the deduction treating exporters above and below Rs.10 crore alike.

Final Conclusion: Both appeals are allowed: (i) deduction under section 80HHC is to be computed on the profits of the business without first reducing those profits by the amount of deduction/exemption claimed under section 80IB; and (ii) in view of the Supreme Court's decision quashing the severable part of the provisos to section 80HHC(3), the AO is directed to recompute the deduction for the relevant assessment year(s) treating exporters with turnover above and below Rs.10 crore alike.

Applicability of amended section 115BBE as prospective law - taxation of surrendered excess stock and cash as business income versus deemed income under sections 69/69A/69B - effect of search and survey disclosures on subsequent assessment

Applicability of amended section 115BBE as prospective law - retrospective operation of tax amendments - Amendment to section 115BBE (w.e.f. 01.04.2017) could not be applied to search/survey disclosures made on 28.09.2016 and was not attracted to assessment completed at returned income for AY 2017-18. - HELD THAT: - The Tribunal accepted the CIT(A)'s finding that the search and survey occurred on 28.09.2016 and the amendment to section 115BBE was inserted later (15.12.2016) with operative effect from 01.04.2017. The authorities relied upon establish that a substantive taxing amendment is to be given prospective effect unless specifically made retrospective. As the assessing officer applied the amended provision to the facts of the case as of the date of search (28.09.2016), such application was erroneous. The amended scheme of section 115BBE, which imposes the higher rate and disallows set-offs where income under sections 68-69D is involved, therefore did not apply to the surrendered income in this case, where assessment was completed at the returned income without fresh additions. [Paras 4, 8]

Amended provisions of section 115BBE are not applicable to the surrendered income in this case and AO erred in invoking them.

Taxation of surrendered excess stock and cash as business income - scope of deeming provisions under sections 69/69A/69B - effect of acceptance of returned income by the assessing officer - The surrendered amounts constituted business income of the assessee and were not caught by the deeming provisions (sections 69/69A/69B) so as to attract section 115BBE, given the facts and acceptance by the AO. - HELD THAT: - The Tribunal endorsed the CIT(A)'s findings that (i) the assessee, a trader in jewellery and bullion, surrendered excess stock and cash during search and survey, (ii) the assessee explained the source as income from its declared business activities (forward commodity trading, mediation, sale of jewellery), and (iii) the assessee included the surrendered amount in the return filed under section 139(1), which the AO accepted and completed assessment at returned income without making additions under sections 69/69A/69B. The Tribunal relied on consistent judicial authority holding that where excess stock/cash is part of mixed business stock and its source is satisfactorily explained, it is assessable as business income rather than as a separately identifiable asset under deeming provisions. Because the AO did not make any addition under the deeming provisions and accepted the returned income, the higher penalised tax treatment under section 115BBE was not warranted. [Paras 5, 6, 7, 8]

Surrendered excess stock and cash are taxable as business income and do not fall within sections 69/69A/69B for invoking section 115BBE in the present facts; AO's contrary stance rejected.

Final Conclusion: Revenue's appeal dismissed: the Tribunal upheld the CIT(A)'s conclusion that (i) the amended section 115BBE could not be retrospectively applied to search/survey disclosures of 28.09.2016 and (ii) the surrendered excess stock and cash, having been explained as business receipts and accepted in the return without additions under deeming provisions, are taxable as business income and not liable to the penalised treatment under section 115BBE.

Principles of natural justice and right to opportunity of representation - validity of ex-parte assessment framed on reopening of assessment under reassessment and summary assessment provisions - verification of claimed gift as justification for cash bank deposits - remand for fresh adjudication and verification of factual claims

Principles of natural justice and right to opportunity of representation - validity of ex-parte assessment framed on reopening of assessment under reassessment and summary assessment provisions - verification of claimed gift as justification for cash bank deposits - remand for fresh adjudication and verification of factual claims - Whether the ex parte reassessment and additions in respect of cash deposits and interest could be sustained in view of absence of effective representation and the assessee's claim of gift. - HELD THAT: - The Tribunal found that there was no effective representation on behalf of the assessee before the Assessing Officer. In the circumstances and in the interest of natural justice the Tribunal set aside the orders of the authorities below and directed that the assessment be restored to the file of the Assessing Officer for fresh consideration. The Assessing Officer is to verify the correctness of the assessee's claim that the cash deposits were gifts from her father and thereafter frame the assessment afresh. The Tribunal did not decide the correctness of the addition on merits but remanded the matter for verification and fresh adjudication. [Paras 6]

Orders of the authorities below set aside; assessment restored to the Assessing Officer for verification of the gift claim and fresh framing of assessment.

Final Conclusion: Appeal allowed for statistical purposes; the assessment order is set aside and the matter remanded to the Assessing Officer for verification of the claimed gift and fresh adjudication consistent with principles of natural justice.

Condonation of delay - reopening of assessment under section 147 of the Income-tax Act - notice under section 148 requiring sanction under section 151 - presumptive taxation under section 44AD - addition on account of unexplained cash deposits - sufficiency of books of account to explain cash deposits

Condonation of delay - Application for condonation of 71 days' delay in filing the appeal was allowed. - HELD THAT: - The Bench considered the assessee's explanation that the national COVID-19 lockdown prevented timely filing and relied upon the Supreme Court's order extending limitation for matters where limitation expired between 15-03-2020 and 28-02-2022, providing a 90-day period from 01-03-2022 (or the longer actual balance thereafter). Applying the established principle that 'sufficient cause' under the Limitation Act must be construed liberally to advance substantial justice, the Tribunal found the pandemic constituted sufficient cause to excuse the delay and allowed the condonation application. [Paras 2]

Delay in filing the appeal is condoned and the appeal is admitted for adjudication.

Reopening of assessment under section 147 of the Income-tax Act - notice under section 148 requiring sanction under section 151 - Grounds challenging validity of reopening and issuance of notice under sections 147/148 (and sanction under section 151) were dismissed as not raised before the CIT(A). - HELD THAT: - The Tribunal observed that Grounds Nos. 1 and 2, which attacked the reopening and the issuance of notice, were not pressed before the first appellate authority. As those contentions were not adjudicated by the CIT(A), the Tribunal declined to consider them in the first instance and dismissed those grounds on that procedural basis. [Paras 3]

Grounds 1 and 2 dismissed for being not previously raised before the CIT(A).

Addition on account of unexplained cash deposits - presumptive taxation under section 44AD - sufficiency of books of account to explain cash deposits - Addition sustained by the AO and confirmed by the CIT(A) was deleted by the Tribunal (the CIT(A)'s restricted addition of Rs.13,83,300/- was set aside). - HELD THAT: - On merits the Tribunal reviewed the assessment facts: the assessee, a vegetable vendor, had declared income under the presumptive scheme of section 44AD and was not ordinarily required to maintain books, yet produced books of account, profit & loss and balance sheet during assessment and appellate proceedings. The AO treated certain cash deposits as unexplained and made an addition; the CIT(A) had restricted but upheld part of that addition. The Tribunal found that the assessee had supplied books, bank statements and financial details which were not shown to be defective by the lower authorities; the AO's computation (including an unexplained methodology for calculating an interest-related percentage) was not supported with cogent basis. Considering that cash sales and cash purchases had been explained from the produced records, and that no specific defects in the accounts were pointed out, the Tribunal concluded that the impugned addition was unjustified and deleted the addition sustained by the CIT(A). [Paras 4]

Addition confirmed by the CIT(A) is deleted and Ground No. 3 is allowed.

Final Conclusion: The Tribunal condoned the delay and admitted the appeal; Grounds attacking reopening and issuance of notice were dismissed for not having been raised before the CIT(A); on merits the Tribunal deleted the addition made on account of unexplained cash deposits and allowed the assessee's Ground No. 3, resulting in the appeal being partly allowed.

Limitation for completion of assessment - dispatch as constituting issuance of order (order going beyond control of authority) - assessment under section 153A r.w.s. 143(3) - validity dependent on timeliness of issuance

Limitation for completion of assessment - dispatch as constituting issuance of order (order going beyond control of authority) - assessment under section 153A r.w.s. 143(3) - validity dependent on timeliness of issuance - Whether the assessment order dated 27.03.2015 (completed under section 153A r.w.s. 143(3)) is time-barred because it left the control of the Assessing Officer only on 07.04.2015. - HELD THAT: - The Tribunal examined whether an order signed and dated within the statutory period is nevertheless barred if it did not leave the control of the Assessing Officer within that period. Applying authorities holding that an order is not complete unless it is issued so as to be beyond the authority's control, the Bench found the assessment order, though dated 27.03.2015, was dispatched from the AO's office only on 07.04.2015 (per India Post tracking produced by the assessee) and was therefore still within the control of the AO after the prescribed cut-off of 31.03.2015. The Tribunal followed the view of the jurisdictional High Court (M/s. Maharaja Shopping Complex v. DCIT) and related High Court decisions that the date of despatch determines whether an order has gone beyond the authority's control and must fall within the limitation period; contrary authority from other jurisdictions was held inapplicable. On the facts, the Tribunal concluded the assessment was completed (in legal effect) only when despatched and since despatch occurred after the statutory date, the assessment is barred by limitation. [Paras 9, 11, 12, 13, 14]

Assessment order under section 153A r.w.s. 143(3) is barred by limitation and is annulled.

Validity of search and consequential inquiries (section 132 / section 153C) - application of section 69 additions and penalties - interest under sections 234A & 234B - Whether the other grounds raised (validity of search, applicability of section 153C, additions under section 69, admission of additional grounds, and levy of interest) required adjudication after finding on limitation. - HELD THAT: - Having held the assessment barred by limitation, the Tribunal did not adjudicate the remaining substantive and procedural grounds raised by the assessee or the revenue. The Bench expressly left those issues open for consideration, noting that they do not require adjudication once the preliminary point of limitation was decided in favour of the assessee. [Paras 15]

Other issues not decided; left open for adjudication as they were not required to be considered after the limitation finding.

Final Conclusion: The Tribunal annulled the assessment passed under section 153A r.w.s. 143(3) as time barred because the order left the control of the Assessing Officer only after the statutory cutoff; other substantive and procedural grounds were not adjudicated and were left open.

Penalty under section 271B - tax audit requirement under section 44AB - due date for filing return under section 139(1) - prejudice to assessment as condition for penalty - technical breach - reasonable opportunity and bona fide cause

Penalty under section 271B - tax audit requirement under section 44AB - prejudice to assessment as condition for penalty - technical breach - reasonable opportunity and bona fide cause - Deletion of penalty levied under section 271B for delayed furnishing of tax audit report required by section 44AB - HELD THAT: - The Tribunal examined whether penalty under section 271B could be sustained for delay in furnishing the tax audit report mandated by section 44AB. The assessee filed the return and the tax audit report on 30.03.2018 though the Assessing Officer contended the audit report should have been filed earlier. The assessee's contention that the audit report was obtained before the specified date remained uncontroverted. The Tribunal emphasised that the object of section 44AB is to enable the Assessing Officer to determine correct taxable income. Since the returned income was accepted on assessment, no prejudice was caused to the Assessing Officer by the delayed submission. The Tribunal held that the delay constituted only a technical breach of the statutory requirement and, in the absence of prejudice, did not justify imposition of penalty under section 271B. The Tribunal therefore directed deletion of the penalty, noting also the assessee's plea regarding bona fide belief and absence of opportunity but resting the decision on lack of prejudice and the technical nature of the breach. [Paras 8]

Penalty under section 271B deleted and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal for Assessment Year 2016-17 and set aside the penalty under section 271B, holding the delay in furnishing the tax audit report to be a technical breach causing no prejudice to assessment.

Allowability of commission to sole selling agent - precedent effect of earlier assessment year's final adjudication - finality of High Court judgment - application of prior adjudication to subsequent assessment years

Allowability of commission to sole selling agent - finality of High Court judgment - Deletion of addition of commission paid to M/s L G Doctors & Associates for A.Y. 1993-94 upheld - HELD THAT: - The Assessing Officer disallowed commission paid to the sole selling agent by relying on findings in A.Y. 1992-93. The issue in A.Y. 1992-93 was finally adjudicated in favour of the assessee up to the Gujarat High Court, and no Special Leave Petition to the Supreme Court was filed. The Tribunal and the High Court had accepted on facts and law that the sole selling agent rendered services and that earlier limited adverse findings (relating to a handful of customers) did not justify disallowance of the entire commission. Given the finality of the High Court judgment in the assessee's favour, the same conclusion applies to the connected assessment for A.Y. 1993-94. Following that final adjudication, the Commissioner (Appeals) correctly deleted the addition and the Tribunal rightly refused to interfere.

Appeal dismissed; deletion of the addition of commission for A.Y. 1993-94 affirmed.

Application of prior adjudication to subsequent assessment years - precedent effect of earlier assessment year's final adjudication - Identical deletions for A.Ys. 1994-95 to 1996-97 upheld by application of the same reasoning - HELD THAT: - The appeals for A.Ys. 1994-95 to 1996-97 involved the same core controversy concerning allowability of commission to the sole selling agent and were dealt with by the Tribunal on the same legal and factual basis as A.Y. 1993-94. In the absence of any changed circumstances, the Tribunal applied the reasoning adopted for A.Y. 1993-94 mutatis mutandis and dismissed the Revenue's appeals.

Appeals for A.Y. 1994-95 to 1996-97 dismissed; deletions of the commission disallowances affirmed.

Final Conclusion: All appeals filed by the Revenue against deletion of the addition on account of commission paid to the sole selling agent for A.Ys. 1993-94 to 1996-97 are dismissed, the Tribunal following the final judgment in the assessee's favour in A.Y. 1992-93.

Genuineness of share capital under section 68 - accommodation entries - lifting the corporate veil - onus of proof and burden of evidence - addition as unexplained investment / income - addition for commission as unexplained expenditure under section 69C

Genuineness of share capital under section 68 - accommodation entries - lifting the corporate veil - onus of proof and burden of evidence - addition as unexplained investment / income - Addition of Rs.30,00,000 as income under section 68 held to be justified as the share capital was not genuine. - HELD THAT: - Assessment was reopened on information from the Investigation Wing linking the credited sum to entities controlled by the S.K. Jain group. The Assessing Officer, after examining seized material and the modus operandi, concluded that the credited amount represented accommodation entries rather than genuine investment. The Commissioner (Appeals) applied established legal principles that documentary evidence alone may not suffice, that creditworthiness must be affirmatively proved where surrounding circumstances indicate pre-arranged transactions, and that the party asserting genuineness bears the burden of proof. On the facts, the appellate authority found the documents to serve as a smoke-screen and that the transactions failed the test of human probability and preponderance of evidence. The Tribunal, after hearing the Revenue and noting absence of the assessee, found no infirmity in the concurrent findings of the AO and the CIT(A) and upheld the addition. [Paras 6, 7]

Addition of Rs.30,00,000 as income under section 68 upheld and sustained.

Addition for commission as unexplained expenditure under section 69C - accommodation entries - addition as unexplained investment / income - Addition of Rs.54,000 on account of commission for procuring accommodation entries held to be justified and added under section 69C. - HELD THAT: - The Assessing Officer quantified commission payable to entry providers at the prevailing rate and added the amount as unexplained expenditure linked to the accommodation entries. The Commissioner (Appeals) agreed that arranging such accommodation entries ordinarily entails payment of commission and sustained the quantification and addition. The Tribunal, having found no challenge or cogent material from the assessee to dislodge the concurrent findings, upheld the addition of commission as rightly attributable to the procurement of the accommodation entries. [Paras 6, 7]

Addition of Rs.54,000 by way of commission under section 69C upheld and sustained.

Final Conclusion: The Tribunal dismissed the appeal; the concurrent additions of Rs.30,00,000 under section 68 and Rs.54,000 under section 69C were upheld for assessment year 2010-11.

Assessment under Section 153A in relation to incriminating material - Requirement of nexus between additions and material seized in search - Deletion of additions made without any incriminating material - Reiteration of completed assessment where no incriminating material exists

Assessment under Section 153A in relation to incriminating material - Requirement of nexus between additions and material seized in search - Deletion of additions made without any incriminating material - Validity of addition of cash deposit of Rs. 1,50,000/- made under Section 153A in absence of any incriminating material found during search - HELD THAT: - The Assessing Officer made an addition of Rs. 1,50,000/- as unexplained income after a search, relying only on bank account details furnished by the assessee. The Tribunal found no reference to any incriminating material relating to the assessment year which could justify invoking Section 153A for making additions. Applying the legal principle laid down by the Hon'ble Delhi High Court in Kabul Chawla and followed in subsequent decisions, an assessment under Section 153A must have a nexus with incriminating material unearthed in the search or other post-search material relatable to the seized material; absent such material the earlier completed assessment must be reiterated. The Tribunal held that, on the facts, the addition was arbitrary and unsupported by any seized or incriminating material and thus could not be sustained under Section 153A. [Paras 13, 15, 16]

Addition of Rs. 1,50,000/- deleted; appeal allowed.

Final Conclusion: Following the requirement that additions under Section 153A must be supported by incriminating material discovered in the search, the Tribunal deleted the unexplained cash deposit addition and allowed the assessee's appeal for AY 2013-14.

Classification of imported goods - evidentiary weight of expert laboratory reports - commingling doctrine in maritime shipments - release of seized goods subject to undertaking and bond - continuation of investigation despite judicial release

Classification of imported goods - evidentiary weight of expert laboratory reports - Whether the samples of the imported cargo are GTL Light Paraffin and not Light Diesel Oil and the probative effect of the laboratory reports - HELD THAT: - The Court evaluated competing laboratory reports. While CRCL, Kandla's first-check report had identified the sample as other than certain light oils but had acknowledged limitation in available parameters, CECL, Vadodara reported that the samples met requirements for Light Diesel Oil. In deference to the appellate government laboratory, the Central Revenue Control Laboratory (CRCL), Pusa, New Delhi was directed to retest remnant samples on comprehensive parameters. The CRCL, New Delhi retest (CLR series) uniformly described the samples as liquid paraffin, found them to meet Paraffinic Diesel Fuel criteria under DIN EN 15940:2019 and expressly concluded they are other than Automotive Diesel Fuel, Diesel Fuel and Light Diesel Oil (IS-15770:2008). The Court accepted the CRCL, New Delhi findings as decisive on the classification issue, and also accepted prima facie that the petitioner's goods formed part of the commingled original lot discharged from the vessel. [Paras 8, 9, 11, 12]

The CRCL, New Delhi retest establishes that the samples are GTL Light Paraffin (liquid paraffin) and not Light Diesel Oil; the petitioner's commingling contention is accepted prima facie.

Release of seized goods subject to undertaking and bond - continuation of investigation despite judicial release - Whether the seized balance quantity should be released pending continuation of the inquiry and on what conditions - HELD THAT: - Balancing the accepted laboratory classification and the state interest in ongoing DRI inquiry, the Court directed release of the remaining seized quantities stored in specified tanks. Release was made conditional on the petitioner furnishing an undertaking to cooperate with the inquiry and executing a bond with the Commissioner of Customs; the petitioner was also directed to furnish an End Use Certificate within two weeks. The order preserves the respondent's rights to continue investigation and does not preclude further action; the Court declined the respondent's request for an additional bank guarantee in view of parity with treatment of a similarly placed party and the undertakings/bond to be furnished. [Paras 12, 13, 14, 15]

Balance quantities of the imported GTL Light Paraffin are released on the petitioner executing an undertaking to cooperate and furnishing the requisite bond; the investigation shall continue unimpaired.

Final Conclusion: The Court accepted the Central Revenue Control Laboratory, New Delhi retest that the samples are GTL Light Paraffin (liquid paraffin) and not Light Diesel Oil; accordingly the Court ordered release of the remaining seized consignments subject to the petitioner's undertaking to cooperate, furnishing of bond and submission of an End Use Certificate, while preserving the respondents' right to continue the investigation.

Unjust enrichment - deposit during investigation and pendency of appeal - refund of pre-deposit - burden of proof for passing on duty - interest on refund

Unjust enrichment - deposit during investigation and pendency of appeal - refund of pre-deposit - burden of proof for passing on duty - Whether the amounts deposited by the appellant should have been credited to the Consumer Welfare Fund on the ground of unjust enrichment, or whether they were refundable because they were deposits made during investigation and pendency of appeal (pre-deposit) and therefore not subject to the bar of unjust enrichment. - HELD THAT: - The Tribunal found that the deposits forming the subject-matter of the refund claim were made partly during the investigation and partly during the pendency of the first appeal, and that the appellant had contested the show cause notice and adjudication order. Applying the legal principle that amounts deposited during investigation or as pre-deposit in appeal are made under protest and are not amenable to the doctrine of unjust enrichment, the Tribunal held that the revenue had not established that the duty burden was passed on by the appellant. The Tribunal expressly relied upon the Supreme Court's ruling in Union of India vs. Suvidhe Ltd as authority for the proposition that deposits during investigation/appeal are not caught by unjust enrichment. Having concluded that the payments were in the nature of pre-deposit/under protest, the Tribunal held that the bar of unjust enrichment did not apply and directed refund of the amounts with interest, following the Division Bench precedent relied upon for the rate of interest in Parle Agro Ltd . [Paras 10, 11, 12]

The Tribunal held that unjust enrichment is not attracted to amounts deposited during investigation and pendency of appeal; the amounts credited to the Consumer Welfare Fund were refundable and the adjudicating authority was directed to grant refund with interest.

Final Conclusion: The appeal is allowed: the Tribunal set aside the credit to the Consumer Welfare Fund, held that unjust enrichment does not apply to the deposits made during investigation and pendency of appeal (pre-deposits), and directed refund of the deposited amounts with interest at the rate indicated, to be disbursed within 45 days.

Exclusion clause (vii) of the Anti Dumping Notification - interpretation of exemption / exclusion from anti dumping duty - effect of Directorate General (DG) clarification on scope of exclusion - binding effect of High Court ruling on interpretation of notification - application of exclusion to non clad / unclad aluminium alloy foils

Exclusion clause (vii) of the Anti Dumping Notification - application of DG clarification - precedential effect of High Court decision - scope of 'alloy' composition for exclusion - Whether the imported non clad aluminium alloy foils imported by the appellant fall within the exclusion in clause (vii) of Notification No.23/2017 Cus.(ADD) and are therefore not liable to anti dumping duty; and whether the DG clarification and the Bombay High Court ruling affect others beyond the petitioner. - HELD THAT: - The Tribunal found that the disputed goods were non clad aluminium alloy foils and that the Directorate General's clarification records that the exclusion was granted because the domestic industry admitted inability to produce both clad aluminium and compatible unclad aluminium, and the Final Findings repeatedly identify clad and unclad aluminium manganese silicon based alloys as excluded. The Tribunal rejected the Revenue's submission that the exclusion was limited to alloys of a particular specified composition, noting that clause (vii) does not confine the exclusion to alloys of any narrowly defined composition and that nothing in the DG letter limits the exclusion to a sub category of alloys. The Tribunal also held that the Bombay High Court's issuance of a writ of mandamus in Mahle Anand, which declared levy and collection of ADD on unclad/non clad aluminium foils to be incorrect and directed refunds, is a ruling on interpretation of the notification and not a personal relief confined to the petitioner; accordingly its interpretation applies equally to others in like position. In view of these conclusions, the Tribunal held the impugned assessment and appellate order levying anti dumping duty unsustainable and allowed the appeal with consequential relief. [Paras 7, 9, 11, 12]

Appeal allowed; impugned order set aside and anti dumping duty held not leviable on the imported non clad aluminium alloy foils, with consequential relief to the appellant.

Final Conclusion: The Tribunal allowed the appeal, holding that the imported non clad aluminium alloy foils fall within the exclusion in clause (vii) of Notification No.23/2017 Cus.(ADD) (as clarified by the DG) and that the Bombay High Court's interpretative ruling applies to others similarly situated; the assessment and appellate orders imposing anti dumping duty were set aside with consequential relief.

Interest under Section 27(A) of the Customs Act, 1962 - date from which interest accrues on delayed refund - application of the decision in M/s Ranbaxy Laboratories Ltd

Interest under Section 27(A) of the Customs Act, 1962 - date from which interest accrues on delayed refund - application of the decision in M/s Ranbaxy Laboratories Ltd - Whether the respondents are entitled to interest on delayed refunds and the date from which such interest is payable under Section 27(A) of the Customs Act, 1962. - HELD THAT: - The Tribunal considered the submissions that the Department processed and sanctioned the refund within three months of the refund application and therefore interest was not payable from the date of application but only from the date of the Tribunal's decision. Relying on the law laid down by the Hon'ble Apex Court in M/s Ranbaxy Laboratories Ltd, the Tribunal held that interest under the relevant statutory provision accrues from the expiry of three months from the date of receipt of the refund application and not from the date on which the refund order is made. The ld. Commissioner (Appeals) had applied this principle, examined relevant authorities and concluded that respondents were entitled to interest at the applicable rate from the date three months after receipt of the refund application until actual payment. The Tribunal found no infirmity in that conclusion and accepted the reasoning and authorities relied upon by the Commissioner (Appeals). [Paras 7, 8, 9]

All five appeals are dismissed and the impugned order granting interest is upheld; respondents are entitled to interest under Section 27(A) from the expiry of three months from receipt of the refund application until payment.

Final Conclusion: The Tribunal dismissed the Revenue's appeals and upheld the Commissioner (Appeals) order holding that interest on the refund is payable under Section 27(A) of the Customs Act, 1962 from the expiry of three months from the date of receipt of the refund application until actual payment, following the principle in M/s Ranbaxy Laboratories Ltd.

Voluntariness of confessional statements - admissibility and weight of retracted confessions as corroborative evidence - burden on the prosecution to prove voluntariness of statements - right to cross-examination of panch witnesses - natural justice in adjudication of seizure and penalty proceedings - protection of government officers - notice and limitation under Section 155(2) of the Customs Act, 1962 - use of co-accused confession against a co-accused and need for independent corroboration - separate operation of clauses (a) and (b) of Section 112 of the Customs Act, 1962

Voluntariness of confessional statements - burden on the prosecution to prove voluntariness of statements - admissibility and weight of retracted confessions as corroborative evidence - Initial statements dated 07.03.2017 recorded from the first three appellants are not voluntary and cannot be the basis for imposing penalties. - HELD THAT: - The Tribunal found that the first three appellants were detained in the custody of DRI from their apprehension until production before the Magistrate, that the statements relied upon were recorded after prolonged detention in DRI premises, and that the appellants retracted those statements before the Magistrate alleging extraction by physical and mental coercion. Applying the principle that the burden is on the Revenue to prove that confessional statements are voluntary, and having regard to the absence of evidence by investigating officers to establish voluntariness as well as the failure to record any subsequent statements despite opportunities, the Tribunal held that the Revenue did not discharge its burden. Consequently, the retracted statements cannot furnish a basis for penal consequences; at best such statements may be corroborative but here no independent corroboration exists to sustain penalties. [Paras 7]

The statements dated 07.03.2017 are held to be non-voluntary and cannot form the basis of the penalties imposed.

Right to cross-examination of panch witnesses - natural justice in adjudication of seizure and penalty proceedings - Denial of opportunity to cross-examine the panch witnesses rendered the finding of recovery from the two appellants unsustainable. - HELD THAT: - The appellants consistently denied recovery of gold from their possession and sought cross-examination of the panch witnesses to test the veracity of the Panchanama. The Tribunal recalled authority that cross-examination of seizing officers and panch witnesses is an effective tool to test evidence and that denial of such an opportunity can amount to violation of natural justice. Given the disputed facts as to place and manner of interception and the Revenue's failure to produce and subject the panch witnesses to cross-examination, the Tribunal concluded that the alleged recovery was not established on cogent evidence and adverse conclusions could not be drawn against the appellants on that basis. [Paras 7]

The refusal to allow cross-examination of the panch witnesses undermines the finding of recovery and renders the recovery allegation unsubstantiated.

Protection of government officers - notice and limitation under Section 155(2) of the Customs Act, 1962 - Proceedings under Section 124 were vitiated in respect of the first three appellants for non compliance with Section 155(2) - no month's previous notice and issuance beyond three months from accrual. - HELD THAT: - The Tribunal examined Section 155(2) and concluded that its mandates apply to proceedings contemplated against officers of the Central Government. The cause of action arose on 06.03.2017 but the Show Cause Notice was issued on 05.09.2017, well beyond the three month period, and the Revenue admitted that no one month's prior written notice to the officers was given. On those undisputed facts and consistent with earlier Tribunal precedent, the Tribunal held that the statutory safeguards of Section 155(2) were not complied with and that non compliance rendered the proceedings bad in law as against the first three appellants. [Paras 7]

Proceedings against the first three appellants are invalid for failure to comply with the notice and limitation requirements of Section 155(2).

Use of co-accused confession against a co-accused and need for independent corroboration - separate operation of clauses (a) and (b) of Section 112 of the Customs Act, 1962 - Penalty imposed on the fourth appellant was unsustainable as it rested on retracted statements of co-accused without independent corroboration, and imposition of a single penalty under both clauses (a) and (b) of Section 112 was erroneous. - HELD THAT: - The Tribunal observed that the case against the fourth appellant depended solely on the retracted confessions of the other appellants. Applying the settled principle that a confession of a co accused cannot by itself be substantive evidence against another and must be supported by independent material, the Tribunal found no corroborative evidence implicating the fourth appellant. Further, clauses (a) and (b) of Section 112 operate in different domains (commission/abetment versus dealing with illegally imported goods), and imposing one mechanical penalty under both clauses where the adjudicating authority had not made specific findings as to the fourth appellant's distinct culpability was legally erroneous. Accordingly the penalty could not be sustained. [Paras 7]

Penalty on the fourth appellant is quashed for lack of independent corroboration and for erroneous imposition of a single penalty under separate clauses.

Final Conclusion: The Tribunal set aside the penalties imposed on all four appellants: the initial confessional statements were held non voluntary and insufficient to support penal consequences; denial of cross examination of panch witnesses rendered recovery unproved; proceedings against the three officer appellants failed statutory notice and limitation requirements under Section 155(2); and the penalty on the fourth appellant lacked independent corroboration and was improperly imposed under both clauses of Section 112. The appeals are allowed and appellants are entitled to consequential reliefs as per law.

Classification of composite machines by principal function - classification as electric accumulators where accumulator is essential character - solar power based device entitlement to IGST Schedule I benefit despite alternative charging sources - recovery of differential IGST - penalty under Section 112 and Section 117

Classification of composite machines by principal function - classification as electric accumulators where accumulator is essential character - Imported goods (HANS power pack 300 / 150) are classifiable as electric accumulators under CTH 8507 rather than as torches under CTH 85131010 or as DC generators under CTH 85013120. - HELD THAT: - The goods are composite devices performing multiple complementary functions: generation of electricity (solar and other inputs), storage of electricity in a lithium ion battery, and supply of power for lighting and other uses. Section Notes (Note 3 and Note 4) require composite machinery to be classified according to the component which performs the principal or essential function. The Tribunal found that storage (the accumulator) is indispensable to the operation of the device regardless of input source or output use; the device cannot function without the accumulator. Consequently, the essential character is that of an accumulator and the correct classification within the Customs Tariff is under Chapter 85 as accumulators (CTH 8507). [Paras 18]

Classified as accumulators under CTH 8507.

Solar power based device entitlement to IGST Schedule I benefit despite alternative charging sources - recovery of differential IGST - The imported goods qualify as 'solar power based devices' for the purposes of S. No. 234 of Schedule I of Notification No. 1/2017 IGST even though they have alternative charging methods; therefore the higher IGST demand cannot be sustained. - HELD THAT: - The IGST Notification's S. No. 234 grants benefit to 'solar power based devices' and does not restrict that expression to devices charged solely by solar energy. The presence of alternative charging methods does not exclude a device from being 'solar power based' where it incorporates a solar panel and functions as a solar based device. As the goods indisputably incorporate solar generation capability and fall within Chapter 84/85 (in this case Chapter 85 as accumulators), they are entitled to classification under S. No. 234 of Schedule I. Accordingly, the demand for differential IGST arising from reclassification was held unsustainable. [Paras 19]

Goods entitled to classification under S. No. 234 of Schedule I; differential IGST demand set aside.

Classification as electric accumulators where accumulator is essential character - Claim for classification as DC generators (CTH 85013120) and resulting refund of customs duty was rejected. - HELD THAT: - Having held that the essential character of the imported goods is that of an accumulator, the alternative contention that the goods should be treated as DC generators was inconsistent with the principal function classification adopted. Storage (accumulator) being the core function, classification as DC generators could not be accepted and no refund of customs duty on that basis was admissible. [Paras 20]

Claim for classification under CTH 85013120 and refund on that basis refused.

Recovery of differential IGST - penalty under Section 112 and Section 117 - Interest and penalties (under Section 112 and Section 117) predicated on the differential IGST demand were not sustainable and therefore do not survive. - HELD THAT: - Because the Tribunal set aside the differential IGST demand by holding the goods eligible for S. No. 234 of Schedule I, there is no subsisting liability on which interest or penalties under the cited provisions can be imposed. The consequence is that the demand for interest and the imposition of penalties fall away. [Paras 21]

Interest and penalties under Section 112 and Section 117 do not survive and are set aside.

Final Conclusion: The appeal is allowed to the extent that the imported HANS power packs are held classifiable as accumulators (CTH 8507), entitled to the benefit of S. No. 234 of Schedule I (solar power based devices), the differential IGST demand (and consequential interest) is set aside, the claim to be reclassified as DC generators (and any refund on that basis) is rejected, and the penalties under Sections 112 and 117 do not survive.

Admissibility under proviso (a) to Section 28 I(2) of the Customs Act, 1962 - interpretation of exemption notification - parts for use in manufacture - value added sub category included within scope of notification - IGCR Rules - verification of end use and conditional concessionality - strict interpretation of exemption notifications

Admissibility under proviso (a) to Section 28 I(2) of the Customs Act, 1962 - Application for advance ruling was admissible despite an ongoing enquiry by the Principal Commissioner of Customs (Preventive), New Delhi. - HELD THAT: - The Authority examined the scope of the expression "already pending in the applicant's case before any officer of customs" in proviso (a) to Section 28 I(2). It held that an application is 'pending' before an officer of customs only where the matter is before an officer competent in a formal manner to answer the question (illustratively: issuance of a show cause notice, provisional assessment under Section 18, matter pending before Special Valuation Branch, or a pre notice consultation by the proper officer). An investigation by officers which has not culminated in any of these formal steps does not render the question 'already pending' for the purpose of the proviso. The Authority therefore rejected the Preventive Commissioner's contention that initiation of enquiry and document calls alone made the advance ruling inadmissible, noting that no show cause notice or provisional assessment had been issued at the relevant time. [Paras 13]

Application admitted under proviso (a) to Section 28 I(2); the enquiry by the Preventive wing did not render the matter 'already pending' so as to bar the advance ruling application.

Parts for use in manufacture - interpretation of exemption notification - value added sub category included within scope of notification - IGCR Rules - verification of end use and conditional concessionality - strict interpretation of exemption notifications - Li ion cells imported for use in manufacture of LED emergency lights qualify for benefit under S. No. 471 of Notification No. 50/2017 Cus., subject to compliance with IGCR Rules, 2017. - HELD THAT: - Applying the settled principle that exemption notifications are to be construed strictly, the Authority nevertheless proceeded to test the applicant's claim by three sequential questions. First, whether LED emergency lights fall within the category of 'LED lights' - the Authority held they do, as value added sub categories are included in the absence of an explicit exclusion. Second, whether the Li ion cell is essential to the functioning of an LED emergency light - on the facts and submissions (including inspection of a sample) the Authority found the Li ion cell to be a sine qua non of the emergency function and therefore an integral and essential part. Third, whether the imported Li ion cells were specifically designed for the applicant's LED emergency bulbs - prima facie evidence (sample fitment) supported that contention and, importantly, the IGCR Rules provide a mechanism to verify end use and prevent misuse. Balancing the Revenue's concern about strict interpretation against the physical and functional connection demonstrated, the Authority concluded that Li ion cells designed for and integral to LED emergency bulbs constitute 'parts for use in the manufacture of LED lights or fixtures including LED lamps' and are eligible for the concessional entry, subject to fulfilment of the procedural and verification safeguards under the IGCR Rules. [Paras 14, 15]

Li ion cells for use in LED emergency lights are eligible for S. No. 471 of Notification No. 50/2017 Cus., as amended, subject to compliance with IGCR Rules, 2017.

Final Conclusion: The advance ruling application was admitted because the Preventive wing's inquiry had not reached a formal stage rendering the question 'already pending'; on the merits, Li ion cells specifically designed and integral to LED emergency bulbs qualify as parts for use in manufacture of LED lights and are eligible for the concessional entry at S. No. 471 of Notification No. 50/2017 Cus., subject to fulfillment of IGCR Rules, 2017.

Restoration of company struck off - Strike off from register of companies - Compliance for restoration - Costs for restoration - Power of Registrar of Companies to initiate action for non filing - Article 19(1)(g) - right to carry on trade, business or profession

Restoration of company struck off - Strike off from register of companies - Article 19(1)(g) - right to carry on trade, business or profession - Validity of the Registrar's action in striking off the Appellant company's name and entitlement to restoration - HELD THAT: - The Tribunal found that the Appellant company had filed statutory records only up to the financial year ended 31.03.2008 and thereafter defaulted in filings due to internal disputes and adverse action by the Income Tax Department. The Registrar issued statutory notices (STK-1 and public STK-5) and struck off the name under the prescribed provisions. Having considered the pleadings, the Appellate Tribunal concluded that, on the material that the company possessed an immovable property and that the defaults arose from internal disputes and external action, the Registrar's and the NCLT's orders for removal were not sustainable. The Court accepted that restoration was appropriate but tempered the relief by imposing conditions to protect regulatory and public interest, recognising the Registrar's continuing statutory powers; the Court therefore ordered restoration subject to payment of costs, filing of all outstanding statutory returns and fees, and permitted the Registrar to proceed with any other action permissible under the Act for non filing or late filing. [Paras 8, 9]

Impugned NCLT order set aside; the name of the Appellant company restored to the Register of Companies subject to specified compliances, payment of costs and without prejudice to Registrar's power to take further action under the Act.

Compliance for restoration - Costs for restoration - Power of Registrar of Companies to initiate action for non filing - Terms and consequences of restoration - conditions to be fulfilled upon restoration and reservation of Registrar's powers - HELD THAT: - The Appellate Tribunal directed that restoration be conditional: the company must pay the prescribed costs to the Registrar within the time specified; thereafter the company must file all outstanding annual returns and audited financial statements and pay all requisite fees and late charges. The order expressly preserves the Registrar's statutory authority to initiate or continue any penal or other proceedings under the Companies Act in respect of earlier non filing or late filing. These conditions implement a balance between reinstating corporate legal status and ensuring compliance with statutory filing obligations and accountability for defaults. [Paras 9]

Restoration ordered on payment of costs and compliance with filing and fee obligations; Registrar free to undertake further action under the Act despite restoration.

Final Conclusion: The appeal is allowed to the extent that the Appellant company's name is restored to the Register of Companies; restoration is subject to payment of costs, filing of all outstanding returns and payment of applicable fees and late charges, and is without prejudice to any further corrective or punitive action the Registrar may lawfully take for prior non filing.

Restoration of company's name to the Register of Companies - striking off for non-filing of statutory returns - assessment of carrying on business based on audited financial statements and assets - conditional restoration subject to compliance and payment of costs - Registrar's power to initiate proceedings for non-filing or late filing

Striking off for non-filing of statutory returns - assessment of carrying on business based on audited financial statements and assets - Validity of striking off the company's name from the Register of Companies in light of the company's audited financial statements and asset position. - HELD THAT: - The Tribunal examined the appellant's audited financial statements for multiple financial years which demonstrated continued turnover and substantial movable and immovable assets. On that material, the Appellate Tribunal concluded that it could not be said that the company was not carrying on business or operations. Consequently, the earlier action of striking off the company's name from the register was held not to be sustainable. The court relied on the existence of filed audited financials and the company's demonstrated financial position as determinative of the company carrying on business, thereby justifying restoration of the name. [Paras 8]

The order striking off the company's name was set aside and the company's name was ordered to be restored to the Register of Companies.

Restoration of company's name to the Register of Companies - conditional restoration subject to compliance and payment of costs - Registrar's power to initiate proceedings for non-filing or late filing - Terms on which the company's name is to be restored and the liabilities or actions that may follow restoration. - HELD THAT: - While allowing restoration, the Tribunal attached conditions: payment of costs to the Registrar within a specified period and filing of all pending annual returns and balance sheets with payment of requisite fees and late charges. The court also made clear that restoration does not oust the Registrar's statutory authority to take any other punitive or remedial steps under the Companies Act for prior non-filing or late filing; such proceedings remain open to the Registrar. These conditions balance the ordered relief with compliance and preserve the Registrar's power to proceed where warranted. [Paras 9]

Restoration granted subject to payment of costs and compliance with filing and fee requirements; Registrar remains free to take further action for non-filing/late filing.

Final Conclusion: The appeal is allowed to set aside the NCLT order and the company's name is restored to the Register, subject to payment of costs and filing of all pending statutory returns and balance sheets with applicable fees and late charges; the Registrar remains entitled to initiate or continue punitive or other proceedings for prior non-compliance.

Provisional attachment order - res judicata - appellate remedy before Appellate Tribunal under PMLA - interim stay - multiplicity of proceedings - effect of superior court judgment on pending proceedings

Appellate remedy before Appellate Tribunal under PMLA - multiplicity of proceedings - Whether the writ petition should be entertained by this Court or the matters should be adjudicated by the Appellate Tribunal constituted under the PMLA Act. - HELD THAT: - The Court observed that there are two appeals pending before the Appellate Tribunal - one filed by the Enforcement Directorate against the Adjudicating Authority's order dated 20th June, 2018, and another filed by the petitioner challenging the show cause notice issued pursuant to the PAO dated 7th June, 2021. Given that the Appellate Tribunal under the PMLA has now been constituted, the Court concluded that the issues ought to be comprehensively considered by the Tribunal to avoid multiplicity of proceedings and the possibility of conflicting rulings. The Court therefore directed that the appeals before the Appellate Tribunal be considered together and that the petitioner be permitted to pursue its challenge before that forum. [Paras 11, 13, 14]

The petition is relegated to the Appellate Tribunal under the PMLA; the Tribunal is directed to consider together the appeals pending before it.

Interim stay - provisional attachment order - Whether the interim stay previously granted by this Court on the operation of the PAO dated 07.06.2021 should continue. - HELD THAT: - The Court recalled its interim order dated 13th August, 2021 which had stayed the operation of the impugned PAO dated 07.06.2021 and all consequential proceedings, noting that the PAO related to the same FIR and facts which were earlier the subject matter of proceedings where the Adjudicating Authority had declined confirmation. In view of the matters now being before the Appellate Tribunal and the pendency of interim applications there, the Court ordered that the interim stay granted by it shall continue until the interim applications, if any, filed before the Appellate Tribunal are disposed of by that Tribunal, subject to further orders that the Tribunal may pass. [Paras 3, 6, 16, 17]

The interim stay of the PAO and consequential proceedings, granted on 13.08.2021, shall continue until the Appellate Tribunal disposes of interim applications filed before it.

Effect of superior court judgment on pending proceedings - provisional attachment order - Whether the petitioner can place the Supreme Court judgment in B.L.A. Industries before the Appellate Tribunal and have the Tribunal consider the grounds raised against the PAO dated 07.06.2021. - HELD THAT: - Having noted the Supreme Court judgment in B.L.A. Industries (17th August, 2022) favourable to the petitioner on the legality of the coal block allotment, the Court directed that the petitioner be permitted to place that judgment on record before the Appellate Tribunal. The Court further directed that the Tribunal consider the challenges and grounds raised against the impugned PAO as part of the appeals pending before it and adjudicate the matters in accordance with law. [Paras 8, 12, 14]

The petitioner may place the Supreme Court judgment on record and the Appellate Tribunal shall consider that judgment and the challenges to the PAO while adjudicating the appeals.

Final Conclusion: The writ petition is disposed of by relegating the disputes to the Appellate Tribunal constituted under the PMLA, which is directed to consider together the pending appeals and to adjudicate them in accordance with law; the interim stay granted by this Court shall continue until interim applications before the Tribunal are disposed of, and the petitioner is permitted to place the Supreme Court judgment in B.L.A. Industries before the Tribunal for its consideration.

Provisional Attachment Order under the Prevention of Money Laundering Act - Jurisdictional competence of the Appellate Tribunal under the PMLA - Conversion of writ petition into appeal before specialized tribunal - Consolidation of pending appeals to avoid multiplicity and conflicting rulings - Interim orders to continue pending adjudication by the Appellate Tribunal

Conversion of writ petition into appeal before specialized tribunal - Jurisdictional competence of the Appellate Tribunal under the PMLA - Consolidation of pending appeals to avoid multiplicity and conflicting rulings - The writ petition challenging the PAO dated 27th November, 2020 shall be treated as an appeal to the Appellate Tribunal under the PMLA and considered along with the two pending appeals filed by the Directorate of Enforcement. - HELD THAT: - The High Court observed that the Appellate Tribunal under the PMLA has been constituted and that parallel proceedings (the ED's earlier appeals and the present challenge to the PAO) could give rise to multiplicity and possibly conflicting rulings. In order to avoid such outcomes and in recognition of the Tribunal's competence to adjudicate appeals under the PMLA, the Court directed that the present writ petition be treated as an appeal against the PAO dated 27th November, 2020 and that it be considered by the Appellate Tribunal in accordance with law together with the two pending appeals filed by the ED. The Court therefore refrained from adjudicating the merits and entrusted comprehensive consideration to the Tribunal. [Paras 12, 14]

The petition is to be treated as an appeal and placed before the Appellate Tribunal to be heard together with the pending ED appeals.

Interim orders to continue pending adjudication by the Appellate Tribunal - Conversion of stay application to tribunal proceeding - Existing interim orders passed by this Court shall continue until the Appellate Tribunal decides the stay application; the stay application before this Court is to be treated as a stay application before the Tribunal. - HELD THAT: - The Court recognised two interim orders previously granted by it and directed that those interim orders shall continue subject to further orders of the Appellate Tribunal. The stay application filed before this Court was to be treated as a stay application before the Appellate Tribunal, which would decide whether the interim protection should continue or be modified. The Court emphasised that its interim directions and observations would not affect the ultimate merits to be decided by the Tribunal. [Paras 14, 15, 16, 17, 18]

Until the Appellate Tribunal decides the stay application, the interim orders recorded by this Court shall continue.

Final Conclusion: The High Court declined to adjudicate the merits of the challenge to the PAO and directed that the writ be treated as an appeal to the Appellate Tribunal under the PMLA, to be heard along with existing ED appeals; interim orders previously granted by this Court shall remain in force until the Tribunal decides the stay application.

Claim of Cenvat Credit where output service is not taxable - proviso to Section 73(1) of the Act - suppression of facts - wilful mis-statement - extended period of limitation - obligation to deposit amounts collected as tax under Section 73A(2) of the Act - self-assessment under Section 70 of the Act

Proviso to Section 73(1) of the Act - suppression of facts - wilful mis-statement - extended period of limitation - Applicability of the extended period of limitation under the proviso to Section 73(1) of the Act - HELD THAT: - The Court held that the proviso to Section 73(1) operates only where non-levy, short-levy, short-payment or erroneous refund occurs by reason of fraud, collusion, wilful mis-statement, suppression of facts or contravention with intent to evade tax. Reliance on Supreme Court precedents established that 'suppression' and 'wilful mis-statement' require deliberate non-disclosure with intent to evade duty and cannot be invoked for mere differences in interpretation. The respondent had disclosed the nature of its activities and filed returns treating the services as Works Contract service - a contention the Court found to be a plausible interpretation. In such circumstances, mere classification contrary to the Revenue's view did not amount to suppression or wilful mis-statement to attract the extended five-year period. Consequently the Tribunal correctly held that the extended period under the proviso to Section 73(1) was not invokable. [Paras 21, 22, 24, 28, 29]

The proviso to Section 73(1) is not attracted; the extended period of limitation is unavailable.

Obligation to deposit amounts collected as tax under Section 73A(2) of the Act - proceedings dropped under Section 73A - Whether a demand could be sustained under Section 73A where the Commissioner had dropped proceedings under that provision and the Department did not appeal - HELD THAT: - The Court observed that Section 73A(2) requires deposit of amounts collected as service tax which were not actually tax, but in this case the Commissioner had dropped the demand under Section 73A in the order-in-original and the Revenue did not file a cross-appeal against that aspect. Having accepted the order-in-original, the Department cannot now sustain a demand under Section 73A. The Tribunal therefore correctly refused to confirm any demand under Section 73A in the absence of a departmental appeal against the order dropping those proceedings. [Paras 12, 13, 14]

Demand under Section 73A cannot be sustained as the proceedings under Section 73A were dropped by the Commissioner and not appealed by the Department.

Claim of Cenvat Credit where output service is not taxable - self-assessment under Section 70 of the Act - Entitlement to Cenvat Credit on input services where output service may not be taxable - final adjudication - HELD THAT: - The Court noted the legal principle that Cenvat Credit can be utilized only to discharge a liability in respect of taxable output services; if the output service is not taxable, the question of claiming Cenvat Credit does not arise. However, the Court did not decide the correctness of the Commissioner's substantive finding that the respondent had wrongly availed Cenvat Credit. The Tribunal confined its examination to limitation and did not adjudicate the merits of the Cenvat credit demand; accordingly, the substantive question of wrongful availment was not decided on merits in this appeal. [Paras 9, 11, 16]

The question whether the Cenvat Credit was wrongly availed was not adjudicated on merits in this appeal and remains unadjudicated.

Final Conclusion: The Tribunal's conclusion that the extended five-year limitation under the proviso to Section 73(1) is not attracted was upheld; demands under Section 73A could not be confirmed because those proceedings were dropped by the Commissioner and not appealed by the Department; the substantive correctness of the claimed Cenvat Credit was not finally adjudicated. The appeal is dismissed.

Timely payment under a statutory settlement scheme - Burden of proof for payment timing - Acceptance of bank transaction evidence as proof of payment - Sabka Vishwas (Legacy Dispute Resolution) Scheme - processing of applications and issuance of Form SVLDRS-4 - Judicial restraint in interfering with assessment orders pending scheme processing

Timely payment under a statutory settlement scheme - Burden of proof for payment timing - Acceptance of bank transaction evidence as proof of payment - Petitioner's payment dated 30.06.2020 is to be accepted as having been made on the scheme deadline in the absence of contrary evidence. - HELD THAT: - The petitioner produced bank payment details showing an NEFT remittance timed at 18:33:54 on 30.06.2020. The respondents produced no contra evidence to disprove that the remittance was initiated on the deadline date. In these circumstances the Court accepted the petitioner's evidentiary claim that payment was made on 30.06.2020 and held that the petitioner's statement must be believed where not rebutted by the respondents. The Court nevertheless confined its finding to the acceptance of the payment evidence and did not treat that acceptance as automatically deciding all scheme-related consequences.

Petitioner's proof of payment on 30.06.2020 is accepted in the absence of contrary proof.

Sabka Vishwas (Legacy Dispute Resolution) Scheme - processing of applications and issuance of Form SVLDRS-4 - Judicial restraint in interfering with assessment orders pending scheme processing - The Court will not interfere with the impugned original order dated 13.01.2020 at this stage and has directed the authority to process the petitioner's SVLDRS application on merits. - HELD THAT: - The impugned assessment order contains other terms and conditions relevant to acceptance under the Sabka Vishwas Scheme which the Court declined to adjudicate in the writ petition. Instead, the Court directed the second respondent to process the petitioner's application under the Scheme and to consider issuance of Form SVLDRS-4 on merits and in accordance with law within four weeks from receipt of the order. The direction confines the Court's intervention to securing fresh administrative consideration rather than deciding the substantive validity of the impugned order itself.

Writ petition disposed by directing respondents to process the SVLDRS application and consider issuance of Form SVLDRS-4 within four weeks; the original assessment order is not interfered with at this stage.

Final Conclusion: The Court accepted the petitioner's bank evidence of payment dated 30.06.2020 in the absence of rebuttal and, without adjudicating the impugned assessment order, directed the authorities to process the petitioner's Sabka Vishwas (Legacy Dispute Resolution) Scheme application and consider issuance of Form SVLDRS-4 on merits within four weeks.

Vivad se Vishwas Scheme relief and refund bar - Article 14 - hostile discrimination - classification in taxation - legislative latitude in fiscal statutes

Vivad se Vishwas Scheme relief and refund bar - Article 14 - hostile discrimination - classification in taxation - legislative latitude in fiscal statutes - Challenge to Sections 124(2) and 130(2) of the Finance Act, 2019 under Article 14 on the ground that the provisions deny refund of amounts paid (other than pre-deposit) and discriminate against declarants who paid in protest. - HELD THAT: - The Court held that the scheme is a legislative device aimed at settling legacy indirect-tax disputes by conditioning relief on specified terms, including a bar on refunds where pre-deposit or other deposits exceed the amount payable under the scheme. The provisions operate in furtherance of the objective to liquidate disputes and encourage voluntary resolution; they do not create or exempt levy of tax but provide an optional mechanism for compromise. Taxing statutes permit broad classification based on pragmatic fiscal considerations and are subject to a less onerous test for discrimination. Applying settled principles, including that the legislature enjoys wide latitude in framing fiscal measures and that differential treatment is permissible if it bears a rational nexus to the object of the statute, the Court found no hostile or arbitrary discrimination in denying refunds under the scheme. The optional nature of the scheme, the scheme's aim to end disputes, and the rational connection between the no-refund condition and the legislative objective were held sufficient to withstand Article 14 challenge. Reliance on N.S. Rathnam and sons was distinguished on facts and context.

Sections 124(2) and 130(2) of the Finance Act, 2019 do not violate Article 14; the petition challenging those provisions is dismissed.

Final Conclusion: Writ petition dismissed; the High Court upheld the no-refund bar in Sections 124(2) and 130(2) of the Finance Act, 2019 as constitutionally valid and not arbitrarily discriminatory in the context of the Vivad se Vishwas Scheme.

Eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - voluntary disclosure category - cut off date 30 June 2019 for pending enquiry, investigation or audit - conclusive nature of the discharge certificate under section 129 - presumption of falsity under section 129(2)(c)

Eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - voluntary disclosure category - cut off date 30 June 2019 for pending enquiry, investigation or audit - conclusive nature of the discharge certificate under section 129 - Declarant's eligibility under the voluntary disclosure category and validity of the show cause notice challenging the discharge certificate on the ground that the matter was 'under investigation'. - HELD THAT: - The Court applied the interpretation adopted by earlier Division Bench decisions of this Court to hold that disqualification under the voluntary disclosure category arises only if an enquiry, investigation or audit was pending as of 30 June 2019. The petitioner's declaration related to the period from 1 October 2014 to 30 June 2017 and the record did not establish any pending investigation against the petitioner as on 30 June 2019; the process relied upon by the respondents commenced after that date. While noting the statutory scheme which renders the discharge certificate conclusive and contemplates a presumption of falsity in limited circumstances, the Court found no material to treat the petitioner's declaration as false or to warrant action against the petitioner. The Court therefore concluded that the petitioner was eligible to apply under the voluntary disclosure category and that the impugned show cause notice was not sustainable on the ground invoked by the respondents. [Paras 8, 11, 12, 13, 14]

Writ petition allowed; show cause notice set aside and petitioner held entitled to the benefit of the Scheme as the investigation was not pending on 30 June 2019.

Final Conclusion: The petition is allowed: the petitioner was eligible to apply under the Sabka Vishwas Scheme in the voluntary disclosure category because no investigation was pending against it on 30 June 2019, and the show cause notice impugning the discharge certificate on that ground is unsustainable.

Service Tax on fixed component (telecast fee) - Revenue neutrality - CENVAT credit and payment by third party - Extended period of limitation under Section 73(1) of the Finance Act, 1994 - Show Cause Notice

Service Tax on fixed component (telecast fee) - CENVAT credit and payment by third party - Whether Service Tax could be demanded from the appellant on the fixed cost (telecast fee) collected as part of receipt from advertising agencies. - HELD THAT: - The Tribunal found that the advertising agency had remitted the applicable Service Tax to the Government and that the appellant was entitled to avail CENVAT credit, a fact acknowledged by the Adjudicating Authority. When the tax payable on the service has in fact been paid to the exchequer by the advertising agency, the identity of the remitter does not render the tax unpaid. The factual position that tax was paid and that the appellant could claim CENVAT establishes a revenue neutral situation. Consequently, there was no sustained basis for treating the fixed component as attracting additional Service Tax liability against the appellant where the tax for the service stood remitted by the advertising agency. [Paras 6, 7, 8]

Demand of Service Tax from the appellant on the fixed cost (telecast fee) was unsustainable and the appellant succeeds on this ground.

Extended period of limitation under Section 73(1) of the Finance Act, 1994 - Show Cause Notice - Revenue neutrality - Whether invocation of the extended period of limitation under Section 73(1) was justified by the Revenue. - HELD THAT: - The Tribunal observed that neither the Show Cause Notice nor the Order-in-Original alleged or proved that Service Tax was not levied, not paid, short-levied, short-paid or erroneously refunded; nor was there proof of fraud, collusion or suppression. Invocation of the extended limitation under Section 73(1) requires justification beyond mere allegations of suppression. As the tax for the relevant service had been paid by the advertising agency and the Revenue was not shown to be deprived of its dues, the prerequisites for invoking the extended period were not satisfied. Allegations alone could not substitute for proof to justify the extended limitation. [Paras 6, 7, 8]

Extended period under Section 73(1) was not justified and could not sustain the demand.

Final Conclusion: The appeal is allowed: the demand of Service Tax on the fixed cost component and the invocation of the extended period were unsustainable in view of payment of tax by the advertising agency and the revenue neutral position; the impugned Order-in-Original is set aside with consequential benefits as per law.

Classification of service as Works Contract Service - construction of a new residential complex - effect of registration and filing of returns on service classification - composition scheme for works contract service - irregular availment of CENVAT credit - Rule 9 of the CENVAT Credit Rules, 2004 - proviso to section 73(1) and Rule 14 of the CENVAT Credit Rules, 2004 - remand for fresh adjudication with opportunity to produce invoices

Classification of service as Works Contract Service - construction of a new residential complex - effect of registration and filing of returns on service classification - composition scheme for works contract service - Whether the demand of service tax could be sustained on the basis that the appellant's activity was 'construction of a new residential complex' rather than works contract service - HELD THAT: - The Tribunal accepted the appellant's contention that the services actually fell within works contract service (leviable w.e.f. 01.06.2007) and held that mere registration under a different category and payment/filing under that category does not, by itself, determine the true character of the service. The Commissioner's reasoning that registration and returns under 'construction of complex' precluded classification as works contract was held unsustainable; the correct approach is to ascertain the actual nature of the service when a dispute is raised. On this basis the confirmation of demand under 'construction of a new residential complex' could not be sustained and the impugned demand was set aside. [Paras 14, 24]

Confirmation of service tax demand under 'construction of a new residential complex' set aside and appeal allowed on this issue.

Irregular availment of CENVAT credit - Rule 9 of the CENVAT Credit Rules, 2004 - proviso to section 73(1) and Rule 14 of the CENVAT Credit Rules, 2004 - remand for fresh adjudication with opportunity to produce invoices - Whether the CENVAT credit of Rs. 1.73 crores was irregularly availed and whether the utilized credit of Rs. 1.22 crores required recovery - HELD THAT: - The adjudicating authority had disallowed and sought recovery of the CENVAT credit primarily on the ground that invoices were not produced. The record, however, contains competing material: the appellant's reply asserted that details and invoices (Annexure-5) were furnished and a Chartered Accountant's certificate and invoice-wise statements were placed on record before the Tribunal. The department's affidavit only states that Annexure-5 was not available in the adjudication file and that the copy before the department was a summary without enclosed invoices. Given these factual discrepancies and the appellant's offer to produce bulky invoices, the Tribunal concluded that the claim of availment requires fresh examination. Consequently the matter is remitted to the adjudicating authority to decide the availment/utilization of CENVAT credit afresh after giving the appellant an opportunity to furnish documents and be heard. [Paras 17, 18, 21, 23, 24]

Issue not decided on merits; remitted to the adjudicating authority for fresh adjudication after affording opportunity to the appellant to produce invoices and other documents (documents to be furnished within six weeks).

Final Conclusion: The Tribunal set aside the Commissioner's confirmation of service tax under 'construction of a new residential complex' and allowed the appeal on that point; the question of irregular availment and utilization of CENVAT credit is remitted to the adjudicating authority for fresh decision after giving the appellant an opportunity to produce invoices and be heard (documents to be furnished within six weeks).

Cenvat credit - input service - consulting engineering service - exempted output service - non-application of Rule 6(1)-(3) where specified input services are used for both taxable and tax-free outputs (Rule 6(5) of CCR) - definition of input service permitting indirect use (Rule 2(l) of CCR) - centralised registration and invoices addressed to other offices - service of notice and limitation - penalty under Section 78 read with Rule 15 of CCR

Cenvat credit - consulting engineering service - definition of input service permitting indirect use (Rule 2(l) of CCR) - non-application of Rule 6(1)-(3) where specified input services are used for both taxable and tax-free outputs (Rule 6(5) of CCR) - Admissibility of Cenvat credit on consulting engineering services acquired during construction of Delhi Metro when such services were also used to render taxable consultancy services to other metro projects. - HELD THAT: - The Tribunal accepted that the appellant provided taxable output consultancy services to other metro projects and had set up offices for that purpose. Rule 2(l) of the Cenvat Credit Rules defines input service to include services used either directly or indirectly for providing an output service, so a one-to-one correlation is not required. Rule 6(5) excludes the operation of Rules 6(1)-(3) in respect of specified input services (including engineering consultancy) where such services are used both for taxable and tax-free outputs. On the admitted facts that the input consultancy services were utilised in providing both the tax-free passenger transport service and taxable engineering consultancy to other projects, the Tribunal held that the provisos to Rules 6(1)-(3) do not apply and the Cenvat credit claimed is allowable. The demand for disallowance of the claimed credit was therefore set aside on merits. [Paras 17]

Allowed the claim for Cenvat credit on consulting engineering services and set aside the demand in respect thereof.

Cenvat credit - centralised registration and invoices addressed to other offices - documents required for availing Cenvat credit - Validity of taking Cenvat credit on the strength of invoices issued to the appellant's offices located outside the registered office (unregistered premises). - HELD THAT: - It was admitted that the appellant opened offices in other cities to provide taxable consultancy services and that receipts from those services were accounted for at the Delhi office and subjected to service tax. The Tribunal noted that registration of a particular premises is not a condition precedent for taking Cenvat credit and relied on precedent to that effect. Given the accounting and utilisation of the receipts and the nexus with taxable outputs, the Tribunal held that credit availed on invoices addressed to other offices was admissible and set aside the disallowance. [Paras 18]

Allowed the Cenvat credit claimed on invoices issued to the appellant's other offices and set aside the disallowance.

Penalty under Section 78 read with Rule 15 of CCR - Cenvat credit - Validity of penalty imposed under Section 78 read with Rule 15 of the CCR consequent to the demand for wrongly availed Cenvat credit. - HELD THAT: - As the Tribunal allowed the appeal on merits by setting aside the demand for alleged inadmissible Cenvat credit, the foundational basis for the penalty under Section 78 read with Rule 15 no longer subsisted. In view of the successful challenge to the demand on merits, the Tribunal set aside the penalty imposed under Section 78 r.w. Rule 15 of the CCR. [Paras 19]

Penalty under Section 78 r.w. Rule 15 of CCR set aside.

Service of notice and limitation - extended period of limitation under proviso to Section 73 - Whether the Show Cause Notice was time barred and whether extended period of limitation was correctly invoked. - HELD THAT: - Although limitation and service of the SCN were contested by the appellant and dealt with in the adjudication, the Tribunal, having allowed the appeal on merits, expressly left the ground of limitation open. The Tribunal did not decide the disputed factual/legal questions around service by dispatch/speed post or applicability of the extended period; those contentions were not adjudicated finally. [Paras 20]

Limitation and service issues left open; not finally decided by the Tribunal.

Final Conclusion: The Tribunal allowed the appeal on merits: it held that Cenvat credit on consulting engineering services was admissible under Rule 6(5) read with Rule 2(l) of the Cenvat Credit Rules where such services were used both for taxable consultancy services and tax-free passenger transport, and it allowed credit taken on invoices addressed to other offices; the consequential penalty under Section 78 r.w. Rule 15 was set aside. The question of limitation/service of the Show Cause Notice was left open.

Pure agent doctrine - Taxability of amounts collected for payment to vendors - application of section 67 of the Finance Act, 1994 to reimbursements - rule 5(1) of the Valuation Rules struck down as ultra vires section 67 - liquidated damages not consideration for a service - CBIC clarification on taxability of liquidated damages

Pure agent doctrine - Taxability of amounts collected for payment to vendors - application of section 67 of the Finance Act, 1994 to reimbursements - rule 5(1) of the Valuation Rules struck down as ultra vires section 67 - Service tax cannot be levied on amounts collected by the appellant from State Government Departments for payment to vendors which are reimbursements; only the appellant's service charges are taxable. - HELD THAT: - The Tribunal applied the principle that the appellant, acting as a nodal agency, appointed vendors on behalf of the State Government and merely supervised and monitored project execution while the vendors performed the contractual obligations and received the project cost. The sums paid to vendors were reimbursements borne by the State Government with corresponding utilization certificates and vendor invoices; therefore those sums were not received by the appellant 'for such service' within the meaning of section 67. The decision relied on the consequence of the Supreme Court having struck down rule 5(1) of the Valuation Rules as ultra vires section 67, and on the satisfaction of conditions of rule 5(2) such that the appellant acted as a pure agent. As a result, the amounts collected for payment to vendors do not form part of the taxable value, and only the separate service charges retained by the appellant were properly subject to service tax. [Paras 9, 13]

Demand of service tax on amounts collected for payment to vendors (reimbursements) is set aside; only the service charge retained by the appellant is taxable.

Liquidated damages not consideration for a service - CBIC clarification on taxability of liquidated damages - interpretation of scope of section 66E(e) in relation to penalties - Service tax is not leviable on amounts recovered as liquidated damages from vendors for breach of contract. - HELD THAT: - The Tribunal accepted the reasoning that liquidated damages are penal in nature and are not paid as consideration for any activity carried out by the appellant for the vendor; there is no intention of the parties to obtain or provide a service by way of the penal payment. The agreements did not contemplate an obligation by the appellant to refrain from an act or to tolerate an act such that liquidated damages could be treated as consideration under section 66E(e). The CBIC Circular No. 178/10/2022-GST confirming that liquidated damages are payments for not tolerating breach and not consideration for tolerating breach was noted and followed. Consequently, the demand of service tax on amounts collected as liquidated damages was held unsustainable. [Paras 11, 12, 13]

Demand of service tax on liquidated damages recovered from vendors is set aside.

Final Conclusion: The appeal is allowed: the Tribunal set aside the adjudicating authority's demand of service tax (and associated penalty) both on amounts collected for payment to vendors (treated as reimbursements/amounts collected as a pure agent) and on amounts recovered as liquidated damages; only the appellant's service charge remains taxable.

Extended period of limitation - Rule 14 of CENVAT Credit Rules, 2004 - Section 11A(4) of the Central Excise Act, 1944 - Fraud or suppression of fact - De novo adjudication and scope of remand - Penalty under Rule 15 of CENVAT Credit Rules, 2004

Extended period of limitation - Rule 14 of CENVAT Credit Rules, 2004 - Section 11A(4) of the Central Excise Act, 1944 - Fraud or suppression of fact - De novo adjudication and scope of remand - Penalty under Rule 15 of CENVAT Credit Rules, 2004 - Invocation of the extended period of limitation to disallow and recover CENVAT credit for the periods under challenge - HELD THAT: - The Tribunal examined whether the extended period of limitation under Rule 14 read with Section 11A(4) could be invoked when there was no allegation of fraud, collusion, wilful mis-statement or suppression of fact in the show cause notice or the adjudication. The Adjudicating Authority in its de novo order allowed part of the credit and dropped proposals for interest and penalty, and the Commissioner (Appeals) had earlier remanded the matter "keeping all options open." The Tribunal noted that the de novo proceedings did not record any finding of suppression or fraud; the Original Authority's dropping of penalty reinforced absence of mala fides. Relying on the principles in the authorities considered by the parties and on analogous decisions where invoking extended limitation required specific averment of misrepresentation or fraud, the Tribunal concluded that, in absence of any averment or finding of fraud or suppression, invoking the extended period of limitation was not proper. The Tribunal therefore allowed the appeal on the ground of limitation and declined to go into the merits of the disputed credit. [Paras 6, 8]

The appeal is allowed on the ground of limitation; invocation of the extended period of limitation to disallow and recover the credited amounts is not sustainable in absence of any allegation or finding of fraud or suppression, and the matter is decided without going into merits.

Final Conclusion: Appeal allowed on limitation grounds: extended period under Rule 14 read with Section 11A(4) cannot be invoked where there is no allegation or finding of fraud or suppression of facts; therefore the demand based on extended limitation is set aside and the Tribunal did not decide the merits of the credit dispute.

Remission of duty - clandestine removal - theft/burglary - proportionate duty liability - cooperation with investigation - penalty under Rule 25 read with Section 11AC - penalty under Rule 26 of Central Excise Rules

Remission of duty - clandestine removal - theft/burglary - proportionate duty liability - cooperation with investigation - penalty under Rule 25 read with Section 11AC - penalty under Rule 26 of Central Excise Rules - Whether the claim for remission was rightly denied and whether duty and penalties were rightly imposed in respect of goods alleged to be stolen or clandestinely removed. - HELD THAT: - The Tribunal found that the allegation of clandestine removal was not established on the record. The appellants had taken all steps of ordinary prudence to cooperate with the authorities and to get the theft investigated: they lodged complaints, pursued registration of FIR, kept the Department informed, assisted market-watch efforts that led to recovery of 25 cartons, and appeared before the Magistrate. The Tribunal noted that portions of the stolen goods were recovered by the Police and that the Department had not produced corroborative evidence to show clandestine removal. In consequence, the claim of burglary/theft could not be rejected as a mere afterthought and the appellants were entitled to relief limited to the proportion of goods actually lost after excluding the cartons recovered by Police. On this factual and evidentiary basis, the Tribunal held that duty could be demanded only on the balance quantity (138 CFC) and not on the 25 CFC cartons recovered. Having found absence of clandestine removal, the imposition of equal penalty on the appellant under Rule 25 read with Section 11AC and the personal penalty on the Director under Rule 26 of the Central Excise Rules could not be sustained and were set aside. [Paras 23, 24]

Remission claim accepted to the extent that clandestine removal was not established; duty limited to the balance quantity after excluding cartons recovered by Police; penalties imposed on the company and Director set aside; appeals allowed.

Final Conclusion: The Tribunal allowed the appeals, holding that clandestine removal was not proved, directing duty only on the unrecovered portion of the stock and setting aside the penalties levied on the company and its Director.

Pre-deposit requirement in appeals under the VAT regime - effect of ex-parte assessment on appellate pre-deposit direction - protection of revenue by creation of charge on attached property - right to adjudication on merits after adequate opportunity of hearing - adjustment of pre-deposit against final tax liability - stay of coercive recovery pending appellate adjudication

Pre-deposit requirement in appeals under the VAT regime - effect of ex-parte assessment on appellate pre-deposit direction - Validity of the VAT Tribunal's order directing pre-deposit of Rs.7.12 Crore as condition for entertaining the Second Appeal. - HELD THAT: - The Tribunal directed a substantially higher pre-deposit than that quantified by the First Appellate Authority. The court noted that the base assessment was ex parte and that the First Appellate Authority had already fixed and the petitioner deposited a much smaller pre-deposit. In view of the ex parte nature of the base order, the pendency of the Second Appeal and the fact that assets of high value were under attachment protecting the revenue interest, insistence on the larger pre deposit was unjustified. The Tribunal's order imposing the larger pre deposit was therefore quashed and set aside. [Paras 10, 11, 13, 15]

Order dated 17.01.2022 directing pre-deposit of Rs.7.12 Crore quashed; no further pre-deposit beyond the sum quantified by the First Appellate Authority to be insisted upon.

Adjustment of pre-deposit against final tax liability - right to adjudication on merits after adequate opportunity of hearing - Whether the amount already deposited pursuant to the First Appellate Authority's direction should be retained and adjusted, and the Second Appeal adjudicated on merits. - HELD THAT: - The court directed that the pre-deposit already made in compliance with the First Appellate Authority's order shall continue to be retained by the State and shall be adjusted against any tax liability finally determined. The Second Appeal (No.579 of 2021) must be decided on merits after affording opportunity to the parties; the court directed expeditious disposal within a fixed timeframe to secure timely adjudication. [Paras 8, 11, 16]

The deposited amount of Rs.30,75,000/- shall be retained and adjusted against final liability; the Second Appeal to be decided on merits within three months.

Protection of revenue by creation of charge on attached property - stay of coercive recovery pending appellate adjudication - Directions regarding protection of revenue and interim measures in respect of attached property and recovery proceedings. - HELD THAT: - Noting that the petitioner's property (commercial complex) stood attached and is of substantial value and that the bank holds a prior lien, the court directed the State to create a charge (second charge) over the property by making requisite entries with the sub registrar within two weeks to protect the revenue. The court recorded interim protection against coercive recovery and required the petitioner to file an undertaking not to create further charges on the property. Service by e mode on registered email was permitted to facilitate process. [Paras 6, 7, 12, 17]

State to create charge on the attached property within two weeks; petitioner to file undertaking not to create further liability; coercive recovery stayed pending disposal of the appeal; e service permitted.

Final Conclusion: The VAT Tribunal's order dated 17.01.2022 directing pre-deposit of Rs.7.12 Crore is quashed; the pre-deposit already made under the First Appellate Authority's direction shall stand retained and be adjusted against any final tax liability; the Second Appeal shall be decided on merits within three months; the State is directed to create a charge on the attached property within two weeks and the petitioner shall furnish an undertaking, with coercive recovery stayed and e service permitted.

Pre-deposit condition for entertaining appeals - entitlement to appellate adjudication on merits despite attachment - adjustment of deposited pre-deposit against tax liability - protection of revenue interest by attachment and creation of charge on property - requirement of reasonable quantification of pre-deposit

Pre-deposit condition for entertaining appeals - requirement of reasonable quantification of pre-deposit - adjustment of deposited pre-deposit against tax liability - Validity of the VAT Tribunal's direction to require an enhanced pre-deposit of Rs.3 Crore for entertaining Second Appeal No. 593 of 2021 and whether further pre-deposit beyond the amount quantified by the First Appellate Authority is necessary. - HELD THAT: - The Tribunal's direction for an additional pre-deposit of a substantially higher sum was examined in the context of the First Appellate Authority having already quantified and directed payment of a smaller pre-deposit which had been deposited. The Court found that the base assessment was contested as being founded on presumption and that the matter requires adjudication on merits by the appellate forum. Given that the amount earlier quantified by the First Appellate Authority has been deposited and the State's revenue interest is protected by attachment and the high valuation of the property, insisting on the larger pre-deposit would be unnecessary and disproportionate. The deposited amount shall therefore be retained and may be adjusted against any tax liability finally determined after affording the parties an opportunity to be heard. [Paras 10, 12, 14, 15]

The Tribunal's order directing pre-deposit of Rs.3 Crore is quashed; no further pre-deposit beyond the amount already deposited as directed by the First Appellate Authority shall be imposed, and the deposited sum shall be retained and adjusted against any final tax liability.

Entitlement to appellate adjudication on merits despite attachment - protection of revenue interest by attachment and creation of charge on property - Procedural directions for disposal of the pending Second Appeal and protection of revenue interest through creation of a charge on the attached property. - HELD THAT: - The Court directed that the Second Appeal be decided on merits within a fixed time frame to secure early adjudication. Noting that the attached property has a significant valuation and that the bank's lien and reduced outstanding dues leave scope for protecting revenue, the State was directed to create a charge (second charge) by submitting requisite details to the appropriate registrar within the stipulated time. The petitioner was required to furnish an undertaking not to create further encumbrances. These measures were ordered while ensuring the appeal proceeds to final disposal without demanding the additional pre-deposit. [Paras 11, 15, 16]

Second Appeal No. 593 of 2021 to be decided on merits within three months; State to create the prescribed charge on the attached property within two weeks and the petitioner to file an undertaking not to create further charges.

Final Conclusion: Writ petition allowed; VAT Tribunal's order of 17.01.2022 directing a pre-deposit of Rs.3 Crore quashed; no further pre-deposit required beyond the amount already deposited per the First Appellate Authority, which shall be retained and adjusted against any final liability; Second Appeal to be decided on merits within three months and State to create charge on the attached property within two weeks.

Res ipsa loquitur - strict liability (Rylands v. Fletcher principle) - act of God / vis major - duty of care of owner/occupier towards passers-by - foreseeability of natural events - advertisement / permission under Section 143 of the Delhi Municipal Corporation Act - standard of proof in civil and criminal proceedings

Res ipsa loquitur - duty of care of owner/occupier towards passers-by - Liability of the Bank in negligence for the signboard falling on the deceased writ petitioner's head. - HELD THAT: - The Court found the primary facts undisputed: the Bank's signboard came off the fac ade and caused severe head injuries to the deceased writ petitioner. Given the Bank's control over the signboard, its size and location and the fact that the victim was a passer-by using a public pathway abutting the building, the presumption of negligence under the doctrine of res ipsa loquitur/strict liability applied. The Bank did not aver or demonstrate periodic inspection or a maintenance protocol for the signboard, nor did it produce material showing that a maintenance contract had been entrusted to a third party in a manner that would absolve the Bank. On these findings the Bank was held guilty of the tort of negligence. [Paras 23, 28, 29, 31, 37]

The Bank was held liable in negligence for the injuries caused by its signboard.

Act of God / vis major - foreseeability of natural events - strict liability (Rylands v. Fletcher principle) - Availability of the defence of act of God/vis major to excuse the Bank's liability. - HELD THAT: - The Bank relied on a newspaper report of high-velocity winds on the date of the incident and contended the fall was an act of God. The Court applied the established test that the defence is available only where the natural event is extraordinary and could not reasonably have been anticipated. Noting that high-velocity winds in Delhi in May are a foreseeable seasonal occurrence, the Court concluded the defence was not available to the Bank and therefore could not defeat the strict/res ipsa liability arising from the signboard's escape. [Paras 24, 28, 37]

The defence of act of God/vis major was rejected and could not absolve the Bank of liability.

Advertisement / permission under Section 143 of the Delhi Municipal Corporation Act - Whether the signboard was necessarily excluded from the definition of 'advertisement' and therefore exempt from the permission requirement under Section 143 of the DMC Act. - HELD THAT: - The Court rejected the Bank's broad contention that any signboard is excluded from the concept of 'advertisement' under Section 143. It held that whether a signboard amounts to an advertisement depends on facts such as size, content, purpose and placement; some signboards (including where the name itself conveys business or where visibility/recall is intended) may fall within the provision. The Learned Single Judge had relied on the size and nature of the board to treat it as an advertisement, but the Court observed that even if permission under Section 143 were not required, that would not absolve the Bank from negligence. [Paras 25, 26]

The Bank's categorical exclusion of signboards from Section 143 is rejected; in any event lack of municipal permission would not absolve the Bank of negligence in the facts of this case.

Admission of additional documents - relevance of criminal acquittal to civil liability - standard of proof in civil and criminal proceedings - Whether the learned Single Judge erred in refusing to admit late documents and whether the criminal acquittal of the Bank manager undermines the civil finding of negligence. - HELD THAT: - The Court upheld the Learned Single Judge's refusal to admit documents filed at the last hour when the matter had been reserved, noting the Bank had not shown the documents were not in its possession earlier. The Court further held that the trial court's acquittal of the Bank manager in criminal proceedings does not preclude civil liability: criminal acquittal (proof beyond reasonable doubt) does not negate civil liability assessed on the preponderance of probabilities. [Paras 31]

Refusal to admit the late documents was justified; the criminal acquittal does not invalidate the civil finding of negligence.

Pendente lite and future interest - Grant of interest (pendency and future) in favour of the deceased writ petitioner in the cross-appeal. - HELD THAT: - The Court noted that the deceased writ petitioner had not sought interest before the Learned Single Judge nor had such relief been argued there. Given that the writ petition remains pending, the Court directed that the legal representatives may approach the Learned Single Judge with an appropriate application for interest, which will be decided in accordance with law after giving the Bank an opportunity to resist. [Paras 39]

Cross-appeal seeking interest is closed with liberty to approach the Learned Single Judge; no error is found in the impugned judgment on this ground.

Final Conclusion: LPA No. 382/2019 preferred by the Bank is dismissed; the Bank is held liable in negligence for the signboard falling on the deceased writ petitioner. LPA No. 569/2019 (cross-appeal) is closed with liberty to the legal representatives to seek interest before the learned Single Judge. The amount deposited in Court shall be released to the legal representatives of the deceased writ petitioner along with accrued interest; costs follow the result.

Condonation of delay - dismissal as time barred / limitation - wastage of judicial time - imposition and recovery of costs for inordinate delay - certificate proceedings filed to circumvent delay

Condonation of delay - dismissal as time barred / limitation - Application for condonation of delay of 737 days in filing civil appeals - HELD THAT: - The explanation for delay consisted of a sequence of inter departmental communications, consultations and alleged institutional inaction spanning several months to years. The Court found this pattern insufficient to constitute a reasonable cause for such a prolonged delay, observing that reliance on remote or dated precedents and filing merely to seek a certificate remedy does not justify condonation. Applying the settled standard for explaining delay, the Court concluded that the cause shown does not meet the parameters for condonation and that the matter represents misuse of judicial time rather than excusable institutional delay. [Paras 2, 3, 4, 5, 6]

Application for condonation of delay is refused and the civil appeals are dismissed as time barred.

Imposition and recovery of costs for inordinate delay - wastage of judicial time - Whether costs should be imposed for the delay and the manner of recovery - HELD THAT: - The Court considered that the filing was an attempt to shield departmental officers responsible for delay and constituted avoidable consumption of judicial resources. In line with earlier similar orders, the Court directed an award of costs as a punitive and corrective measure, to be recovered from the officers responsible for the delay and payable to the Supreme Court Group 'C' (Non Clerical) Employees Welfare Association. A certificate of recovery was ordered to be filed within a stipulated period and a copy of the order directed to be placed before the concerned Secretary to the Government of India. [Paras 5, 6, 7, 8]

Costs of Rs. 25,000/- imposed to be recovered from the officers responsible and paid to the Supreme Court Group 'C' (Non Clerical) Employees Welfare Association; certificate of recovery to be filed within two months and copy of order to be placed before the concerned Secretary.

Certificate proceedings filed to circumvent delay - merits not examined when appeal dismissed on limitation - Effect of dismissal on examination of the merits - HELD THAT: - The Court clarified that because the appeals were dismissed on the ground of limitation, it has not and need not examine the substantive merits of the underlying dispute. The dismissal is therefore confined to procedural non compliance on time and does not constitute an adjudication on the merits of the claims. [Paras 6, 9]

Dismissal on limitation without consideration of merits; substantive issues remain unexamined.

Final Conclusion: The applications for condonation of delay (737 days) are refused and the civil appeals are dismissed as time barred; costs of Rs. 25,000/ are imposed to be recovered from the officers responsible and paid to the Supreme Court Group 'C' (Non Clerical) Employees Welfare Association, recovery to be certified within two months and the order placed before the concerned Secretary; merits were not examined.

Quashing of charge-sheet - vagueness of charge - entries in loose papers inadmissible as sole evidence - requirement of corroborative evidence for diary/loose-sheet entries - assessment under Section 153A/153C not referring to alleged entries - judicial interference under Article 226 in disciplinary proceedings in exceptional cases - prejudice from pending disciplinary proceeding affecting promotion

Entries in loose papers inadmissible as sole evidence - requirement of corroborative evidence for diary/loose-sheet entries - vagueness of charge - Validity of the charge-sheet dated 24.02.2021 issued to the petitioner which is founded on loosely-scribbled entries recovered from a third person and which alleges that the petitioner paid Rs.7.5 Crore to a searched individual. - HELD THAT: - The Court found that the charge-sheet was founded on casual entries in loose papers whose contents do not, by themselves, establish a nexus between the petitioner and the alleged transaction. The Income Tax assessment consequent to the search against the third party (Prateek Joshi) for AY 2018-19, AY 2019-20 and AY 2020-21 did not treat or record the said entry as income of the searched person nor was any notice issued to the petitioner under the relevant provisions, indicating that the loose entry was not acted upon by the assessing authority. The impugned charge is vague and speculative (for example, the numeric entry '750' and an encircled '3' were assumed to denote Rs.7.5 Crore and three bags respectively) and lacks independent corroborative material. Reliance placed on authoritative precedents (including V.C. Shukla and Common Cause (A Registered Society) v. Union of India ) supports the proposition that diary or loose-sheet entries, without corroboration, are insufficient to found disciplinary charges. While judicial interference in departmental proceedings is ordinarily limited, the Court held that in exceptional cases a writ court may quash a charge-sheet if it is wholly without foundation or illegal; on the facts here the charge-sheet amounted to an unjustified exercise causing real prejudice to the petitioner (notably potential deferment of promotion). Applying these principles, the Court concluded that the charge-sheet was wholly unsustainable and liable to be quashed. [Paras 13, 14, 15]

The charge-sheet dated 24.02.2021 is quashed as being vague, founded on loose-paper entries without corroboration, and wholly unsustainable.

Final Conclusion: Writ petition allowed; the impugned charge-sheet dated 24.02.2021 is quashed on the ground that it is vague, based on uncorroborated loose-paper entries which the assessing authority did not act upon, and its continuation would cause undue prejudice to the petitioner.