TaxTMI Updates e-Newsletter
Feb 21,2025

Cancellation of GST registration without issue of show cause notice and hearing - Opportunity of hearing - Form GST REG-19 - Show cause notice and service - Exemption from filing official translation

Exemption from filing official translation - Application for exemption from filing official translation of the Annexures was allowed. - HELD THAT: - The Court considered the petitioner's application seeking exemption from filing official translation of the annexures and, upon hearing counsel, allowed the application. The allowance was recorded as an interlocutory order permitting the petitioner to proceed without submitting official translations of the annexures filed in support of the petition.

Application for exemption from filing official translation of the Annexures allowed.

Cancellation of GST registration without issue of show cause notice and hearing - Form GST REG-19 - Show cause notice and service - Opportunity of hearing - Notice was issued to respondents regarding the petitioner's grievance that GST registration was cancelled without service of a show cause notice or opportunity of hearing, and dasti service was permitted. - HELD THAT: - The petitioner's grievance, as recorded, was that the Department cancelled his GST registration without issuing a show cause notice or affording an opportunity of hearing. The cancellation order in Form GST REG-19 (Annexure P3) contained an apparent contradiction: it records a purported reply dated 14-4-2022 while also stating that no reply to the show cause notice dated 4-4-2022 was submitted, and shows the effective date of cancellation as 31-3-2022. The petitioner contends no show cause notice was served and no reply was ever given. The High Court had declined to interfere earlier, suggesting the petitioner could apply afresh for registration. In light of these contentions and the inconsistency in the cancellation order, the Court issued notice to the respondents returnable in four weeks to explain the circumstances of cancellation and the alleged reply, and expressly permitted dasti service of the notice.

Notice issued to respondents returnable in four weeks; dasti service permitted.

Final Conclusion: The Court allowed the petitioner's application for exemption from filing official translations of the annexures; it also issued notice to the respondents on the petitioner's challenge to the cancellation of his GST registration (recording apparent inconsistencies in the cancellation order) and permitted dasti service, with the matter listed on return in four weeks.

Rejection of appeal of the petitioner without entering into the merits for non-compliance of section 107(6)(b) of the GST Act, which provides for a pre-deposit of 10% of the amount of tax in dispute in order to maintain the appeal - petitioner submits that once the mandatory condition of pre-deposit is made good, the impugned order cannot be sustained in the eyes of law and therefore, a direction may be issued to decide the petitioner's Defective Appeal No. GST-0010/2023/D expeditiously.

HELD THAT:- The impugned order dated 10.04.2023 passed by the respondent no. 2 in Defective Appeal No. GST-0010/2023/D cannot be sustained in the eyes of law. The same is quashed.

Levy of tax and penalty - technical error in the e-way bill regarding the shipping address - auto-populated e-way bill - HELD THAT:- The Court is of the opinion that e-way bill is the document which is generated and accompanying the goods in transit, so that department may come to know about the movement of goods from one place to another place. So that at the time of passing final assessment, the particular transaction may not escape from levy of tax as per the prevalent provisions, under the GST Act - Further, the e-way bill can be cancelled within its validity as provided under the Act.

The case in hand, the e-way bill was automatically generated on 14.12.2022, which was valid up to 16.12.2022. In the present case, the e-way bill has not been cancelled within its validity, therefore, no adverse view can be taken against the petitioner that if the goods were not intercepted, transaction in question could have escape to assessment.

This Court in the case of M/s Sun Flag Iron and Steel Company Limited Vs. State of UP and others [2023 (11) TMI 456 - ALLAHABAD HIGH COURT] has held that the purpose of e-way bill is that the department should know the actual movement of the goods and once the e-way bill is not cancelled within the prescribed period, the genuineness of the transaction cannot be questioned.

Conclusion - Merely on technical ground that in the e-way bill accompanying with the goods in question, the place of shipment has wrongly been mentioned, the seizure or levy of penalty cannot be made. The proceedings initiated against the petitioner is not justified in the eyes of law.

Petition allowed.

Power of Appellate Authority to condone the delay in filing an appeal beyond one month of the prescribed period under Section 107 of the West Bengal Goods and Service Tax Act, 2017 - HELD THAT:- Admittedly in this case, it would appear that the appeal had been dismissed solely on the ground that the same had been filed beyond one month of the time prescribed for filing the appeal. The appeal therefore, was obviously barred by limitation. However, at the same time, the aforesaid could not prevent the petitioner from maintaining an application for condonation of delay by invoking the provisions of Section 5 of the Limitation Act, 1963. The issue whether the Appellate Authority is competent to condone the delay beyond one month from the prescribed period for filing of an appeal has already been conclusively decided by the Hon’ble Division Bench of this Court in the case of S. K. Chakraborty & Sons Vs. Union of India [2023 (12) TMI 290 - CALCUTTA HIGH COURT].

The Appellate Authority ought to have taken note of the explanation given in the application for condonation of delay under Section 5 of the Limitation Act, 1963.

Taking note of the fact that no fruitful purpose will be served by remanding the aforesaid matter on the issue of condonation of delay to the Appellate Authority and also considering the explanation given by the petitioner, the petitioner has been able to sufficiently explain the delay in filing the appeal belatedly.

The writ petition is disposed of.

Challenge to order passed u/s 73 of the GST Act - appeal has been dismissed as being beyond limitation - passed without giving a mandatory hearing - principles of natural justice - HELD THAT:- Considering the fact that the mandatory provisions of Section 75(4) are essentially to be followed and the same has not been followed as is clear from the perusal of the orders impugned. On the said limited ground, the impugned orders 13.12.2023 and the order dated 30.01.2025, are quashed. The writ petition is allowed.

The matter is remanded to pass orders afresh after giving opportunity of hearing to the petitioner.

Condonation of delay of 94 days in filing the appeal - penalty for wrong utilization of input tax credit - HELD THAT:- The issue decided in M/S. GREENSTAR FERTILIZERS LIMITED, REP. BY ITS CHIEF OPERATING OFFICER, E. BALU VERSUS THE JOINT COMMISSIONER (APPEALS), THE ASSISTANT COMMISSIONER OF GST AND CENTRAL EXCISE, TUTICORIN [2024 (6) TMI 667 - MADRAS HIGH COURT] where it was held that 'considering the fact that the petitioner has availed input tax credit, which was not eligible to be availed, but could have resulted in wrong utilization of input tax credit, a token penalty of Rs.10,000/- is imposed on the petitioner. The observation of the first respondent by placing reliance on the decisions of the Hon'ble Supreme Court, referred to supra, is also not relevant as Section 74 of the CGST Act deals with a situation where the credit is availed or utilized by reason of fraud or any wilful misstatement or suppression of facts.'

The impugned order dated is set aside and the matter is remitted back to the second respondent to consider the matter afresh, and pass appropriate orders on merits and in accordance with law - Petition disposed off by way of remand.

Security wages - Administration expenses - Principles of natural justice - Opportunity of personal hearing - Remand for fresh consideration - Non-application of mind - Condonation of delay in filing appeal

Security wages - Administration expenses - Principles of natural justice - Non-application of mind - Impugned assessment order set aside and remitted insofar as the addition/demand relating to security wages - HELD THAT: - The Court found that the respondents first identified and disputed the item described as "Security Wages" only after the petitioner produced documents, whereas the show cause notice referred only to "Administration Expenses". Because the specific issue of "Security Wages" was not raised in the show cause notice or otherwise put to the petitioner for explanation, the impugned order on that aspect was rendered without affording the petitioner an opportunity to be heard and thus suffered from non-application of mind and a breach of the principles of natural justice. For these reasons the Court concluded that interference was warranted limited to the security wages item and ordered remand for fresh consideration of that aspect. [Paras 10, 11, 12]

Impugned order dated 30.08.2024 set aside and matter remanded to the 1st respondent for fresh consideration only on the aspect of security wages.

Opportunity of personal hearing - Remand for fresh consideration - Procedure to be followed on remand - filing of reply and grant of personal hearing before passing fresh orders - HELD THAT: - The Court directed that the petitioner shall file its reply/objection with necessary documents within two weeks of receipt of the order. On receipt of such reply/objection, the 1st respondent is to consider it and issue a clear 14 days' notice fixing the date of personal hearing, and thereafter pass appropriate orders on merits and in accordance with law within two weeks from the date of personal hearing. These directions are intended to cure the procedural defect identified by the Court and ensure that the issue is decided after affording the petitioner a proper opportunity to be heard. [Paras 12]

Petitioner to file reply within two weeks; 1st respondent to give 14 days' clear notice for personal hearing and decide the matter on merits within two weeks of the hearing.

Remand for fresh consideration - Condonation of delay in filing appeal - Liberty to appeal and direction to appellate authority to admit appeal without insisting on limitation - HELD THAT: - The Court granted the petitioner liberty to file an appeal against the impugned order, including the aspect of security wages, and directed that upon filing such appeal the concerned Appellate Authority shall take the appeal on record without insisting on limitation and decide it on merits and in accordance with law. The Court observed that it would be improper for the petitioner to file piecemeal appeals but nonetheless allowed the petitioner to pursue appellate remedies and ensured that procedural limitation would not bar the hearing of the appeal arising from the remand. [Paras 12]

Petitioner granted liberty to file appeal; Appellate Authority directed to admit the appeal without insisting on limitation and decide on merits.

Final Conclusion: Writ petition disposed by setting aside the impugned order only in respect of security wages and remanding that limited issue for fresh consideration after affording the petitioner an opportunity of personal hearing; procedural timetable for filing reply, hearing and decision prescribed, and liberty to appeal granted with direction that the appellate authority admit the appeal without insisting on limitation.

Challenge to assessment order in Form GST DRC-07 - said proceedings did not contain a DIN number - HELD THAT:- The question of the effect of non-inclusion of DIN number on proceedings, under the G.S.T. Act, came to be considered by the Hon’ble Supreme Court in the case of Pradeep Goyal Vs. Union of India & Ors [2022 (8) TMI 216 - SUPREME COURT]. The Hon’ble Supreme Court, after noticing the provisions of the Act and the circular issued by the Central Board of Indirect Taxes and Customs, had held that an order, which does not contain a DIN number would be non-est and invalid.

A Division Bench of this Court in the case of M/s. Cluster Enterprises Vs. The Deputy Assistant Commissioner (ST)-2, Kadapa [2024 (7) TMI 1512 - ANDHRA PRADESH HIGH COURT], on the basis of the circular, dated 23.12.2019, bearing No.128/47/2019-GST, issued by the C.B.I.C., had held that non-mention of a DIN number would mitigate against the validity of such proceedings. Another Division Bench of this Court in the case of Sai Manikanta Electrical Contractors Vs. The Deputy Commissioner, Special Circle, Visakhapatnam [2024 (6) TMI 1158 - ANDHRA PRADESH HIGH COURT], had also held that non-mention of a DIN number would require the order to be set aside.

Conclusion - The Writ Petition challenging the assessment order was disposed of, allowing the respondent to conduct a fresh assessment with the requirement of assigning a DIN number and excluding the period from the original assessment order to the current decision for limitation purposes.

Petition disposed off.

Service of notice - opportunity of hearing / principles of natural justice - remand for fresh adjudication - pre-deposit condition for interim relief - adjustment of amounts already paid towards pre-deposit - lifting of attachments on compliance

Service of notice - opportunity of hearing / principles of natural justice - Impugned assessment order set aside on ground of non-service on the petitioner and consequent denial of opportunity to participate in adjudication. - HELD THAT: - The Court found that notices, the assessment order and subsequent communications were uploaded on the GST Portal and were not served on the petitioner by tender or RPAD, resulting in the petitioner being unaware of the proceedings and unable to participate. In these circumstances the impugned order dated 16.03.2024 was set aside and the assessment proceedings were remanded so that the petitioner may be afforded an opportunity to file objections and be heard afresh. [Paras 3, 6]

Impugned order dated 16.03.2024 is set aside and the matter remanded for fresh adjudication after affording the petitioner an opportunity of hearing.

Pre-deposit condition for interim relief - adjustment of amounts already paid towards pre-deposit - remand for fresh adjudication - lifting of attachments on compliance - Terms on which the matter is remitted: deposit of 25% of disputed tax (with adjustment of any amounts already paid), timelines for payment and filing objections, and administrative directions including lifting of attachments on compliance. - HELD THAT: - By consent the Court directed conditional relief: the petitioner shall deposit 25% of the disputed taxes within four weeks (subject to adjustment of amounts already recovered or pre-deposited), with the assessing authority to verify payments and intimate any balance. The verification and any further compliance steps are to be completed within specified short timelines. On payment of the directed sum the impugned order shall be treated as a show cause notice and the petitioner given four weeks to file objections, which the authority must consider after affording a reasonable opportunity of hearing. Failure to comply with the payment or filing conditions will result in restoration of the impugned order. If bank attachments or garnishee recoveries exist, they shall be lifted on compliance with the payment condition. [Paras 6]

Remand is subject to the petitioner depositing 25% of the disputed tax (with adjustment for amounts already paid), after which the assessment order will be treated as a show cause notice, objections may be filed and reconsidered; non-compliance will restore the impugned order and compliance will lead to lifting of attachments.

Final Conclusion: Writ petition disposed by setting aside the assessment order for AY 2018-19 and remitting the matter for fresh adjudication on the terms that the petitioner deposit 25% of the disputed tax (adjusted for amounts already paid), file objections on receipt of the treated show cause notice, and that the assessing authority shall reconsider after affording a hearing; non-compliance will result in restoration of the order.

Challenge to assessment order - the proceeding does not contain the signature of the assessing officer - HELD THAT:- The effect of the absence of the signature, on an assessment order was earlier considered by this Court, in the case of A.V. Bhanoji Row Vs. The Assistant Commissioner (ST), in W.P.No.2830 of 2023, decided on 14.02.2023 [2023 (2) TMI 1224 - ANDHRA PRADESH HIGH COURT]. A Division Bench of this Court, had held that the signature, on the assessment order, cannot be dispensed with and that the provisions of Sections 160 & 169 of the Central Goods and Service Tax Act, 2017, would not rectify such a defect - Following this Judgment, another Division Bench of this Court, in the case of M/s. SRK Enterprises Vs. Assistant Commissioner [2023 (12) TMI 156 - ANDHRA PRADESH HIGH COURT], had set aside the impugned assessment order.

Another Division Bench of this Court by its Judgment in the case of M/s. SRS Traders Vs The. Assistant Commissioner ST & ors [2024 (4) TMI 894 - ANDHRA PRADESH HIGH COURT], following the aforesaid two Judgments, had held that the absence of the signature of the assessing officer, on the assessment order, would render the assessment order invalid and set aside the said order.

Conclusion - The impugned assessment order would have to be set aside on account of the absence of the signature of the assessing officer, on the impugned assessment order.

Petition disposed off.

Seeking release of admitted liability towards the difference of GST - HELD THAT:- Reliance placed on an order Division Bench of this Court in M/S APEX STRUCTURE PVT. LTD. [2024 (12) TMI 928 - MADHYA PRADESH HIGH COURT] wherein it is observed that 'Respondent No.4 which is a State GST Department, according to which also the rate of GST has been enhanced from 12% to 18% and same is liable to be paid by respondent No.2 which is a Government Entity.'

Petition disposed off.

Suspension of GST registration - show cause notice - expeditious disposal of proceedings - rights and contentions on merits kept open

Suspension of GST registration - show cause notice - expeditious disposal of proceedings - presentation of certified copy - Direction to the competent authority to decide the pending show cause proceedings relating to suspension of the petitioner's GST registration with due expedition. - HELD THAT: - The petitioner challenged the continued suspension of its GST registration following issuance of a Show Cause Notice dated 04 October 2024. Although the petitioner filed a detailed reply on 08 October 2024, the SCN proceedings remained undecided. The High Court, exercising supervisory jurisdiction, directed the competent authority to dispose of the pending SCN proceedings in accordance with law and with due expedition, preferably within two weeks from the date of presentation of a certified copy of the Court's order. The Court expressly left all rights and contentions of the parties on merits open for determination by the authority or in any further proceedings. [Paras 1, 2, 3, 4]

SCN proceedings to be finally disposed of in accordance with law with due expedition, preferably within two weeks from presentation of a certified copy of this order; parties' substantive rights left open.

Final Conclusion: Writ petition disposed by directing the competent authority to decide the pending SCN relating to suspension of GST registration expeditiously (preferably within two weeks of presentation of a certified copy); merits reserved.

Voluntary cancellation of GST registration - Disposal of pending application in accordance with law - Notice to applicant - Preservation of rights and contentions

Voluntary cancellation of GST registration - Disposal of pending application in accordance with law - Notice to applicant - Application for voluntary cancellation of GST registration pending before Central GST authorities to be examined and disposed of in accordance with law with due notice to the writ petitioner; writ petition disposed. - HELD THAT: - The Court recorded that the writ petition, filed to seek voluntary cancellation of GST registration, had earlier been disposed of by directions addressed to State GST authorities while the corresponding application remained pending before Central GST authorities; that fact had not been disclosed earlier. In these circumstances the Court directed the first respondent to duly examine and dispose of the pending application in accordance with law and after giving due notice to the writ petitioner. The Court disposed of the writ petition while leaving all substantive rights and contentions of the parties on merits open for adjudication before the authority called upon to act. [Paras 2, 3]

The pending application for voluntary cancellation shall be examined and disposed of by the Central GST authority in accordance with law after giving due notice to the petitioner; the writ petition is disposed and parties' rights on merits are kept open.

Final Conclusion: Writ petition disposed; Central GST authority directed to consider and decide the pending application for voluntary cancellation of GST registration in accordance with law after giving due notice to the petitioner; parties' substantive rights retained.

Challenge to impugned order on the premise that there is violation of principles of natural justice - petitioner is ready and willing to pay 25% of the disputed tax and seeks grant of one final opportunity before the adjudicating authority - HELD THAT:- The impugned order dated 18.07.2024 is set aside.

The petitioner shall deposit 25% of the disputed taxes as admitted by the learned counsel for the petitioner and the respondent, within a period of four weeks from the date of receipt of a copy of this order.

Withdrawal of Advance Ruling application - GST Search can be conducted other than the place specified in the Search warrant or not - cash or valuables can be seized by the department from the place other than specified and authenticated in the search warrant or not - cash and goods pertaining to the person other than the assessee can be seized by the Department or not - confiscation of cash seized - HELD THAT:- The applicant has not raised any questions which are found to be covered under any of the clauses of sub-section (2) of section 97 of the GST Act. It is satisfied that the applicant has been provided reasonable opportunity to counter the observations. Therefore, there are no reason to accept the instant application made by the applicant for pronouncement of ruling. The application is, therefore, rejected on this ground alone.

In terms of first proviso of sub section (2) of section 98 of the GST Act “the authority shall not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act”. Here, found that as the matter has already been decided by Assistant Commissioner, CGST division-J, Ajmer vide Order in Original No. 14/GCM/GST/DIV-I/2024-25/AC dated 11.06.2024. Therefore, the application filled by the applicant is not fit to accept for pronouncement of ruling. The application is liable to be rejected, hence, rejected.

Since the ruling authority has not found any reason to accept the application for pronouncement of ruling as above and the applicant has also requested for withdrawal of the application, therefore, their request to withdraw the application is considered.

Offence punishable u/s 276B - TDS (Tax Deducted at Source) was collected by the company but not deposited into the Central Government account in time - delay of payment on 39 occasions as per the online data available - as decided by HC [2024 (1) TMI 1440 - TELANGANA HIGH COURT] when the entire amount of TDS along with interest was paid even prior to the first communication from the Department and the balance interest amount was paid after the notice, this Court deems it appropriate to quash the proceedings against the petitioners - HELD THAT:- There is a gross delay of 239 days in filing the special leave petition. The reasons assigned for seeking condonation of delay are neither sufficient in law so as to condone the same nor satisfactory. Hence, the application seeking condonation of delay is dismissed.

Consequently, the special leave petition also stands dismissed.

Reopening of assessmnet u/s 147 - “reason to believe” OR “reason to suspect” - delay filling SLP

As decided by HC [2023 (2) TMI 426 - BOMBAY HIGH COURT] Reasons recorded do not suggest at all whether pursuant to receipt of information, the assessing Officer had independently applied its mind to the information received or conducted its own inquiry into the matter for the purpose of coming to a conclusion that indeed income assessable to tax had escaped assessment or that the transaction in question with the alleged shell entity was only a paper transaction

HELD THAT:- There is a delay of 354 days in filing the present special leave petition, which has not been adequately and satisfactorily explained. Even on merits, we do not see any good ground and reason to interfere with the impugned judgment.

Recording the aforesaid, the application for condonation of delay and, consequently, the special leave petition are dismissed.

Denial of exemption u/s 11 - delay in electronically uploading Form 10B but filed it manually within the prescribed period - HELD THAT:- We are satisfied that the Petitioner filed Form 10B manually or physically within the prescribed period. True, Form 10B was not uploaded electronically. Petitioner was not intimated for a long time that this was the requirement for which the exemption was being denied. Belatedly, the Petitioner was informed that this was one of the reasons. Therefore, the Petitioner took expedient steps.

Petitioner also explained that she had nothing to gain from non-compliance. The non-compliance, if any, was due to the advice of a professional Chartered Accountant. Even the Chartered Accountant filed an affidavit explaining her bona fides and the factum of the advice. After the Petitioner became aware of the reasons, she took several steps and ultimately uploaded Form 10B electronically. Still, the application for condonation of delay has been rejected without adequate compliance with the principles of natural justice and fair play.

The delay should be condoned as long as such lapse is not mala fide and the assessee has not derived any undue advantage out of his own lapse.

Besides, in this case, though the delay appears considerable, there is some merit contentions that the delay should be construed from the day Petitioner was informed of the real reason for the denial of exemption. After it was informed of the real reason, the Petitioner's conduct cannot be said to be either informed with lethargy or indolence. The Petitioner took several steps and time and again pointed out that Form 10B was already filed manually within the prescribed time.

That even before the CIT (Exemption), the Petitioner categorically pleaded and made good their submissions about Form 10B being filed manually within the prescribed time limit. This was a crucial circumstance when considering the Petitioner’s conduct and its application for condonation of delay. The possession of the certification is a mandatory requirement. The mode of proof may not always be. In any event, no dispute is raised about the Petitioner submitting the prescribed form within the prescribed period manually or physically. The impugned order, however, takes no cognisance of this crucial circumstances.

We are satisfied that discretion should have been exercised, and the delay should be condoned.

We condone the delay in electronically uploading Form 10B after noting that his form was already filed in the physical form within the prescribed period, i.e. on 30 September 2014, about which there is no dispute whatsoever.

Validity of reassessment proceedings - notice as issued u/s 148A(b) to the petitioner on the basis of High Risk CRIU/VRU information available on ‘Insight Portal’ - allegation of entity being a non-existent bogus entity - denial of principle of natural justice -receipt of accommodation entries in the form of bogus capital expenses from fictitious entity - HELD THAT:- Revenue appears to have conducted a physical verification which was confirmed vide the Clarificatory Letter dated 22.08.2024. However, without issuing a further notice in respect of the alleged non-existence of the said entity at the Jasola address and calling for an explanation in that regard, the respondent/Revenue passed the impugned order u/s 148A (d) of the Act dated 31.08.2024. This procedure, to our mind, is abject violation and infraction of the principles of natural justice, inasmuch as, the conclusion regarding the said entity being a non-existent bogus entity was never put to the petitioner in the show cause notice dated 09.08.2024 issued u/s 148A (b) of the Act. In other words, the petitioner was never afforded an opportunity to respond to the said allegation.

The aforesaid infraction gathers great significance having regard to the fact that the original assessment proceedings for the AY 2018-19 stood closed. It was only by the impugned notice u/s 148A (b) of the Act dated 09.08.2024, the initiation of re-assessment proceedings were to commence. Ordinarily, after the closure of the assessment proceedings, AO would be functus officio and to re-confer jurisdiction upon the AO to initiate re-assessment proceedings, relevant incriminating material ought to be put to the assessee before any such re-commencement can be sought.

Reassessment proceedings set aside - Decided in favour of assessee.

Condonation of delay in filing form 10 CCB u/s 119 - Petitioner prayed for condonation of delay for revised Income Tax Return to be accepted, as a return filed u/s 139 (5) - HELD THAT:- The management of the company did not know about his personal problems until socially unacceptable conduct came to light when his wife barged into the Registered Office of the company along with her children.

Petitioner further stated that, it was only after the receipt of notice u/s 142 (1) calling for information and details pursuant to notice issued u/s 143 (2) the company realised that the original tax filings on 7th November 2017, were based on incorrect figures.

Petitioner has also submitted that, in the midst of all this, the director of the company, was also irregular in attending the office due to his mother’s deteriorating ill health during the period from June 2017 to March 2018. The Petitioner has submitted that, during this period, his mother was operated for 3 major spine problems at Hinduja Hospital. His mother was completely bedridden after the surgeries and, hence, the director could not attend the office on a regular basis. Petitioner also submitted that since the business of the company had expanded, and there was need for an ERP system for the company to manage its operations, the company, during F.Y. 2016-17, implemented a new ERP accounting programme system in its office. During this phase, the company experienced a high attrition rate impacting accounting work on day to day basis, leading to delayed preparation of financial information. In these circumstances, the Petitioner has sought for condonation of delay.

Such factors which are purely fortuitous and purely human attributes necessarily required due consideration, when it comes to compliances of time limits prescribed under the IT Act.

As observed by this Court in Jyotsna M. Mehta [2024 (9) TMI 585 - BOMBAY HIGH COURT] the situation in hand would be akin to how a Court would consider in the legal proceedings before it, in condoning delay in filing of proceedings.

Resultantly, the impugned Order dated 21st September 2023 is quashed and set aside. The Respondents are directed to permit the Petitioner to file returns with penalty, fees and interest, if any, within a period of two weeks from the date a copy of this Order is available.

Validity of Order passed u/s 92CD(3) - Whether an Appeal under Section 246A(bb) is the appropriate remedy for the Petitioner? - HELD THAT:- What the Petitioner refers to as a letter dated 31st March, 2024 (Exh. ‘Q’ to the Petition) is not a letter but an Order passed under Section 92CD(3). Against the said Order, an Appeal is provided under Section 246A(bb) of the Act. Section 246A(bb) of the Act clearly provides for an Appeal to the Commissioner (Appeals) against the Order made under sub-section (3) of Section 92CD of the Act.

21. In these circumstances, since the efficacious alternate remedy of an Appeal is available to the Petitioner under Section 246A (bb) of the Act, we are not inclined to entertain this Petition and we are inclined to relegate the Petition to the alternate remedy of an Appeal.

It has been pointed out to us that, subsequent to the filing of this Petition, an Order has been passed under Section 154 r/w Section 92CD of the Act. The said Order shows that, even as per the Revenue, a sum of Rs. 23,77,74,400/- is refundable to the Petitioner. Even though we are dismissing this Petition on the ground of an alternate remedy available to the Petitioner, we are of the view that this admitted amount of Rs. 23,77,74,400/- should be paid to the Petitioner along with interest.

The Petitioner is at liberty to file an Appeal under Section 246A (bb).) Respondents are directed to refund to the Petitioner an amount as per the Order passed under Section 154 r/w Section 92CD of the Act along with applicable interest until the date of payment.

Denying credit for Tax Deduction at Source (TDS) - Whether ITAT erred in confirming the action of the Respondent in denying the credit for the TDS amount although TDS Certificates stood in the name of the Appellant and credit could be given only to the Appellant as the deductee and not to any one else? - HELD THAT:- It is not in dispute that the income corresponding to the TDS was not offered to tax by the appellant. It is stated to have been offered to tax by ISPL alongwith the TDS. The Appellant has not placed on record as to what was the exact position in respect of the returns of the ISPL qua the said amount and whether the ISPL, in offering the relevant income, has claimed TDS or otherwise.

Admittedly, in the present case, the assessee has filed a NIL return. It would not require any elaboration that the TDS is on the income/receipt of the assessee and forms part of the income of the assessee. Thus, when there is no income being offered qua the corresponding TDS and as TDS is part of the assessee’s income, the position being taken by the appellant is a position contrary to its returns. There cannot be a situation that the principal income corresponding to the TDS as claimed, is not offered for assessment as a NIL return is filed, however, merely the benefit of TDS income is claimed.

This would be contrary to the provisions of Section 198 which provides that the tax deducted at source would be the income received. Admittedly in the present case, for the Assessment Year in question, independent tax returns have been filed by the assessee as also by the ISPL. Thus, such incongruence and a position contrary to the return of the appellant goes contrary to the provisions of Section 198 read with Section 199 of the Income Tax Act. Decided in favour of the Revenue.

TCS u/s 206C - As per the Revenue verification of the declaration to be furnished by the purchaser is to be done by the seller (i.e. the assessee in the instant matter) - Whether it is duty and the responsibility of the assessee company to collect TCS @ 1% u/s 206C (1A) of the Act from all buyers on the sale of coal if it is not used for self-consumption or for the purpose for which it was intended to be used ? - whether assessee company is not responsible for verification of Form 27C if it is duly filed in and signed by the declarant?

HELD THAT:- The ‘declarant’ in Form-27C is the ‘purchaser’ and not the ‘seller’

Quite clearly, the phrase ‘verified in the prescribed manner’ in the scheme of the Act and the Rules, mean that the verification/ declaration is to be made by the purchaser who is providing the signed/ verified form to the seller, and neither the Act, nor the Rules, in any manner lay down that any verification whatsoever is to be done by the seller, as is being sought to be contended by the Revenue.

There is no question of law, much less any substantial question of law involved in the instant appeal, as, what is being contended by the Revenue is clearly de hors what is laid down in section 206C (1A) of the Act read with Rule 37C of the Rules and Form 27C.

Hon’ble Supreme Court in the case of CIT v. A.A. Estate (P) Ltd. [2019 (4) TMI 957 - SUPREME COURT] has held that if the High Court is of the view that if an appeal does not involve any substantial question of law so as to attract the rigor of section 260-A of the Act for its admission, the appeal ought to be dismissed in limine.

Maintainability of appeal on low tax effect - assessees submit that the tax effect in these appeals is less than Rs. 50,00,000/- - HELD THAT:- The letter dated 20 August 2018 categorically states that the modification introduced thereby to the CBDT circular dated 11 July 2018 shall come into effect on the date of issue of this letter. Thus, no retrospective effect is given to the two added exceptions by letter dated 20 August 2018. Paragraph 13 of the CBDT circular dated 11 July 2018 remains unamended. This means that, insofar as the increased monetary limits are concerned, they would apply even to the pending appeals. However, when it comes to applying the exceptions, the same would apply from 20 August 2018 and not earlier.

A similar issue arose before the co-ordinate bench in the case of V. M. Salgaonkar and Brothers (P.) Ltd. [2024 (12) TMI 717 - BOMBAY HIGH COURT]On analysing circulars 5 of 2024 and 9 of 2024, the coordinate bench held that the monetary limits would apply to the pending appeals, but when it comes to the exceptions subsequently introduced, such exceptions could not be construed retrospectively.

The above decision was followed by us in M/s IPL Loan Trust) [2025 (2) TMI 453 - BOMBAY HIGH COURT] Applying the same principles to the circulars and amending letters involved in the present appeals, we are satisfied that these four appeals which were instituted before 20 August 2018 would have to be disposed of as the tax effect involved in these appeals is below the monetary limits of Rs.50,00,000/-.

MAT applicability to a company engaged in the business of providing electricity and governed by the Electricity Supply Act - HELD THAT:- The issue raised in various appeals insofar as applicability of Section 115JB is covered by the decision of Ajmer Vidyut Vitran Nigam Ltd. [2021 (11) TMI 1103 - RAJASTHAN HIGH COURT] and Tata Power Delhi Distribution Ltd. [2025 (1) TMI 879 - DELHI HIGH COURT] We may further observe that both the parties have agreed that the ratio laid down in the case of Union Bank of India [2019 (5) TMI 355 - BOMBAY HIGH COURT], M/s. Dresdner Bank AG [2025 (2) TMI 707 - BOMBAY HIGH COURT] and Dena Bank [2019 (8) TMI 1924 - BOMBAY HIGH COURT] squarely applies to the facts of the present case since even the banking companies are not required to make their financials according to the Companies Act, but since they are required to make their financials as per the Banking Regulation Act, the provision of Section 115JB would not be applicable. Decided in favour of the Assessee.

Addition of interest charged u/s. 234D - The issue is covered against the Assessee and in favour of the Revenue by the decision of this Court in the case of Indian Oil Corporation Ltd. [2012 (9) TMI 517 - BOMBAY HIGH COURT]. Therefore, following the decision of the Coordinate Bench Question (ii) is answered in favour of the Revenue against the Assessee.

Power of CIT(A) to dismiss the appeal for non-prosecution - delay in filing the appeal to be condoned due to sufficient cause, including the impact of the COVID-19 pandemic - HELD THAT:- Sub-section 2 of Section 251 states that the Joint Commissioner (Appeals) or the Commissioner (Appeals), as the case may be, shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction.

Explanation contained in Section 251 states that in disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant.

Thus, on a plain reading of the above provision indicates that the Commissioner (Appeals) should decide the appeal petition on merits.

The Hon’ble Supreme Court in Aditya Khaitan & Ors. [2023 (10) TMI 155 - SUPREME COURT] had taken note of the impact of the covid pandemic and observed that when the whole world is in grip of devastating pandemic, it could never have been said that the parties were slipping over their rights. In the instant case it is no doubt that the entire period was not covered during the pandemic but the part of the period was undoubtedly covered during the pandemic.

Even thereafter there has been some delay in the matter. However, what is to be borne in mind is the settled legal principle that the facts of each case have to be considered before applying the legal principle as to how an application under Section 5 of the Limitation Act has to be decided.

Ordinarily, a litigant does not stand to gain by either preferring an appeal belatedly or not appearing before the appellate forum. There may be cases where for certain mala fide reasons the appellant will avoid proceedings. However, in the instant case there is no such record to show that the appellant had deliberately lodged appeal belatedly before the Tribunal or that deliberately they did not appear before the CIT(A) for certain other collateral purposes.

Therefore, apart from that, since the matter involves the tax liability, and the appellant’s remedy before the CIT(A) is a very valuable remedy since the Commissioner’s powers are coterminus with that powers of the assessing officer, we deem it appropriate to restore the appeal to the CIT(A) for being decided on merits subject to the condition that the appellant should not seek for any adjournment and should cooperate in the disposal of the appeal by the Commissioner.

Appeal is allowed and the order passed by Tribunal is set aside as well as the order passed by the CIT dated 16.10.2019 and the appeal stands restored to the file to be decided on merits in accordance with law.

TDS u/s 195 - liability to deduct TDS on payments made to non-residents - ITAT come to conclusion that the payments made to three non-resident Companies do not fall within the meaning of ‘royalty’ as defined in DTAA - HELD THAT:- We agree with the aforesaid conclusion drawn by the ITAT.

The conclusion drawn by the CIT(A) in favour of the Revenue was primarily by relying upon the judgment in the case of Samsung Electronics Co. Ltd. [2011 (10) TMI 195 - KARNATAKA HIGH COURT] and also by holding that the payments received by assessee from two affiliates by granting user right to software is royalty and has been brought to tax in India. The said judgment has been over-ruled. In this regard, we may also refer to the judgment of the Supreme Court in the case of Engineering Analysis [2021 (3) TMI 138 - SUPREME COURT]

Similarly, a reference is also made to the judgments of Infrasoft Ltd. [2013 (11) TMI 1382 - DELHI HIGH COURT] and ZTE Corporation [2017 (1) TMI 1338 - DELHI HIGH COURT] to hold High Court is not correct in referring to Section 9 (1) (vi) of the Income Tax Act after considering it in the manner that it has and then applying it to interpret the provisions under the Convention between the Government of the Republic of India and the Government of Ireland for the Avoidance of Double Taxation and for the Prevention of Fiscal Evasion with respect to Taxes on Income And Capital Gains - when a copyrighted article is sold, the end-user gets the right to use the intellectual property rights embodied in the copyright which would therefore amount to transfer of an exclusive right of the copyright owner in the work, is also wholly incorrect. Decided against revenue.

Computation of deduction u/s 80-IA - quantum of deduction which the assessee would be entitled to claim u/s 80IA - AO did not accept the case of the assessee that the market value of the electricity should be computed based on the rates fixed by the State Electricity Board for the electricity which is purchased by the assessee and held that there was excessive claim of deduction on captive consumption and restricted the deduction claimed by the appellant u/s 80IA of the Act.

HELD THAT:- For the purpose of taking a decision on merits, we need not labour much as we are guided by the decision of the Hon’ble Supreme Court in Jindal Steel and Power Limited. [2023 (12) TMI 417 - SUPREME COURT] as held that market value of the power supplied by the State Electricity Board to the industrial consumers should be construed to be the market value of electricity. It should not be compared with the rate of power sold to or supplied to the State Electricity Board since the rate of power to a supplier cannot be the market rate of power sold to a consumer in the open market. The State Electricity Board’s rate when it supplies power to the consumers have to be taken as the market value for computing the deduction u/s 80-IA of the Act.

We hold that the Tribunal had rightly computed the market value of electricity supplied by the captive power plants of the assessee to its industrial units after comparing it with the rate of power available in the open market, i.e., the price charged by the State Electricity Board while supplying electricity to the industrial consumers. Decided against revenue.

Reopening of assessment u/s 147 - as argued procedure contemplated by Section 148A as not been followed before issuing the impugned notices - case of the appellant was not such as permitted the department to avoid following the procedure contemplated u/s 148A more so because it could not be said that proceedings u/s 132A had been initiated against the appellant in the instant case.- HELD THAT:- Appellant's submission appears to confuse between the existence of a power u/s 132A of the I.T. Act and the manner of exercise of that power.

Merely because the Department had resorted to a different procedure under the Cr.P.C. for the purposes of effectuating the action initiated under Section 132A it could not be said that the power under Section 132A had not been invoked, and the proceedings thereunder initiated, for the purposes of the I.T. Act. Inasmuch as the provisions of Section 132A have been invoked, we are in agreement with the finding of Single Judge that there was no requirement for compliance with the procedure contemplated u/s 148A of the I.T. Act prior to issuing the impugned notices under Section 148.

Thus, Writ Appeal fails, and is accordingly dismissed.

Revision u/s 263 - Whether the assessment order under section 143(3) was erroneous and prejudicial to the interests of the revenue? - HELD THAT:- What is relevant for clause (a) of Explanation 2 to section 263 of the Act is whether the AO has passed the order after carrying our enquiries or verification, which a reasonable and prudent officer would have carried out or not. It does not authorize or give unfettered powers to the Ld Pr. CIT to revise each and every order, if in his opinion, the same has been passed without making enquiries or verification which should have been made.

This would inevitably mean that every order of the lower authority would thus become susceptible to section 263 of the Act and, in turn, will cause serious unintended hardship to the tax payer concerned for no fault on his part.

Apparently, this is not intended by the Explanation. Howsoever wide the scope of Explanation 2(a) may be, its limits are implicit in it. It is only in a very gross case of inadequacy in inquiry or where inquiry required on the basis of record available before the AO was not conducted, the revisionary power so conferred can be exercised to invalidate the action of AO.

AO in the present case has not accepted the submissions of the assessee on various issues summarily but has duly scrutinize the whole issue of excess stock as apparent from various queries made during the assessment proceedings. He passed after making due enquiries after due application of mind.

Twin conditions are not satisfied for invoking the jurisdiction under section 263. Here, in our view, it cannot be held that the assessing officer did not carry out enquiry or verification which should have been done.

Thus, CIT was not justified and not correct in law in holding that the impugned assessment order was erroneous. Accordingly, we find merit in the contentions of the assessee that the revision order passed by ld. PCIT for the year under consideration is beyond the scope of section 263 of the Act and hence not valid. Accordingly, we set aside the revision order passed by him. Assessee appeal allowed.

Classification of goods - reliance on authoritative classification by Directorate General of Foreign Trade - judicial interference with administrative classification - Merchandise Exports from India (MEIS) scrips as indicia of administrative classification - power and jurisdiction of Customs authorities

Classification of goods - reliance on authoritative classification by Directorate General of Foreign Trade - Merchandise Exports from India (MEIS) scrips as indicia of administrative classification - judicial interference with administrative classification - Validity of interfering with the impugned judgment in light of prior DGFT classification and issuance of MEIS scrips - HELD THAT: - The Court noted that the Directorate General of Foreign Trade had earlier examined and determined the classification of the goods Lamda Cyhalothrin Technical under the tariff heading described as CTH 38089199 and, on that basis, had issued Merchandise Exports from India (MEIS) scrips. Having regard to those administrative determinations and the factual matrix of the case, the Court found no sufficient ground to interfere with the impugned judgment. The reasoning reflects deference to the prior authoritative classification by the DGFT and treats the prior administrative action (including issuance of MEIS scrips) as a material factor against upsetting the impugned order.

Appeal dismissed; no interference with the impugned judgment in view of prior DGFT classification and issuance of MEIS scrips.

Power and jurisdiction of Customs authorities - Question regarding the power and jurisdiction of the Customs authorities - HELD THAT: - The Court expressly left open the question concerning the power and jurisdiction of the Customs authorities. No adjudication on that point was made; the matter was not decided and remains to be considered or determined in appropriate proceedings.

Issue of the power and jurisdiction of the Customs authorities left open for future consideration.

Final Conclusion: The appeal is dismissed on the ground that prior DGFT classification of the goods (with issuance of MEIS scrips) warranted no interference with the impugned judgment; the separate question of the Customs authorities' power and jurisdiction remains undecided and is left open.

Classification of imported goods - parts of the shock absorbers to be classified under Customs Tariff Item [CTI] 8714 91 00 or under 8714 10 90? - it was held by CESTAT that 'Classification of the goods in the order impugned in this appeal under 8714 10 90 needs to be sustained.'

HELD THAT:- There are no good ground and reason to interfere with the findings recorded by the Customs, Excise & Service Tax Appellate Tribunal. Hence, the present appeal is dismissed.

Entitlement to exemption under N/N. 50/2017 dated 30th June, 2017 - Challenge to provisional attachment order of the bank account of the Petitioner - certain parts of CNG kits in 2017 - subsequant withdrawal of the exemption - HELD THAT:- This Court holds the view that the Customs Department ought to take a decision as to whether there is adequate material before it or not and if they wish to issue a show cause notice the same sought to be done at the earliest. Therefore, the Department is directed to complete the investigation and issue a show cause notice within a period of three months from now.

In the meantime, since the demand, which is yet to be computed, seems to be only in the range of Rs. 30 crores and considering the amount of business that the Petitioner is doing, it is directed that the Petitioner shall deposit a sum of Rs. 3 crores as an ad hoc deposit with the Department within a week. The HSBC bank accounts shall be defrozen immediately to enable the Petitioner to deposit within a week, a sum of Rs. 3 crores with the Department.

Petition disposed off.

Implementation of the order dated 29th January, 2024 - release of certain goods belonging to the Petitioner, who had arrived from Paris and had goods detained by the Customs Department - liberty sought by the Petitioner to file an appeal - HELD THAT:- On both counts, the Court has perused the copy of the incomplete appeal which has been served by the Department upon the Petitioner. Clearly, there has been an appeal which has been filed by the Department of which formal notice may yet even be not issued to the Petitioner. Moreover, as per the Petitioner, the appeal has also not been listed till date.

Considering these circumstances and the fact that the matter would have to be adjudicated comprehensively by the Commissioner (Appeals), the Petitioner is also permitted to file his appeal within a period of thirty days from now before the Commissioner (Appeals) - If the Petitioner intends to seek implementation of the order dated 29th January 2024, to the extent that permits the deposit of redemption fine and partial release of goods for export under specified conditions, he may seek the same from the Commissioner (Appeals).

Let both the Appeals be listed before the Commissioner (Appeals) on 15th April, 2025 for hearing and adjudication in accordance with law.

The petition is disposed of.

Challenge to preventive detention order under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA Act) - Smuggling of foreign gold from Yangoon (Myanmar) to Gaya through Gaya International Airport with the active involvement of Marshal deputed in the flight - petition was in custody in connection with the criminal complaint for the same incident - HELD THAT:- The object of detention under the detention law is not to punish, but to prevent the commission of certain offences. Further, in the recent decision rendered by the Hon’ble Supreme Court in the case of Ameena Begum [2024 (1) TMI 4 - SUPREME COURT], it has been specifically held by the Hon’ble Supreme Court that a constitutional court, when called upon to test the legality of orders of preventive detention, would be entitled to examine certain aspects referred in paragraph 28.1. to 28.10 of the said decision.

In the case of Saraswathi Seshagiri [1982 (3) TMI 252 - SUPREME COURT], the Hon’ble Supreme Court has observed that the concerned detenue tried to export Indian Currency to the tune of Rupees 2,88,900.00 to a foreign country in a planned and pre-meditated manner by clever concealment of it in several parts of his baggage and, therefore, the Hon’ble Supreme Court observed that the detaining authority was justified in coming to the conclusion that he might repeat his illegal act in future also. His past act in the circumstances might be an index of his future conduct. Thereafter, the Hon’ble Supreme Court observed that the authority may prosecute the offender for an isolated act or acts of an offence for violation of any criminal law, but if it is satisfied that the offender has a tendency to go on violating such laws, then there will be no bar for the State to detain him under a Preventive Detention Act.

In the case of Rekha [2011 (4) TMI 1217 - SUPREME COURT], the Hon’ble Supreme Court has observed that if the ordinary law of the land (the Penal Code and other penal statutes) can deal with a situation, recourse to a preventive detention law will be illegal.

The main contention of the petitioner is that criminal complaint has been lodged against him and in connection with the same he was already in custody when the impugned order of detention has been passed. Thus, there was no apprehension on the part of the detaining authority that petitioner will indulge into similar type of activity if he is released on bail. Thus, the subjective satisfaction of the detaining authority is vitiated. The aforesaid contention is misconceived in view of the decision rendered by the Hon’ble Supreme Court in the case of Haradhan Saha [1974 (8) TMI 104 - SUPREME COURT] and observations made in paragraph 26 in the case of Ameena Begum.

Delay in service of the order of detention by contending that the detention order has been passed on 06.03.2024, which was communicated to him on 29.05.2024 - HELD THAT:- From the records, it transpires that the order of detention was passed on 06.03.2024, which was duly executed on the petitioner on 11.03.2024. Thereafter, the petitioner made representation on 04.04.2024 to the detaining authority and the Central Government, which was received on 12.04.2024 and 15.04.2024 respectively, which were duly considered by the concerned authorities and, in the meantime, the case of the petitioner was referred to the Advisory Board on 10.04.2024 and after conducting the proceedings on 29.04.2024 and 13.05.2024, the Advisory Board gave the opinion and opined that the detention of the petitioner is justified. The said opinion has been duly considered by the Central Government and thereafter the Central Government also confirmed the impugned detention order, which was communicated by the Deputy Secretary of the Government of India vide order dated 29.05.2024. Therefore, it cannot be said that the order of detention dated 06.03.2024 was communicated to the petitioner on 29.05.2024. Hence, the said contention is misconceived.

Conclusion - The respondent detaining authority has followed all the constitutional, statutory and procedural requirements as well as safeguards. The subjective satisfaction of the detaining authority does not vitiate, as has been contended by the petitioner. Therefore, when the detaining authority after satisfying itself subjectively after considering all the relevant material, passed the impugned order of detention, the same cannot be interfered with while exercising power under Article 226 of the Constitution of India.

Petition dismissed.

Classification of Natural Beta Carotene Powder - classifiable under Tariff item 3203 00 20 of the Customs Tariff Act, 1975 or under Customs Tariff Heading 2106 90 60? - HELD THAT:- Chapter 3203 is meant for ‘Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and other colouring matter; paints and varnishes; putty and other mastics; inks’ which clearly establish the fact that these colouring products are industrial products and not edible products as the case of the impugned product. Hence, the question of classifying the product under Chapter Heading 3203 is ruled out.

The supplier’s brochure clearly mentions that ‘Beta Carotene’ is used as colouring matter in a variety of food and beverages applications as it gives bright yellow-orange colour to the food products when it is added. Chapter 2106 9060 which is meant for Food flavouring material is nothing but a product which provides colouring for the food items which are edible, the impugned product being a colouring food agent is specifically covered under this category, hence rightly classifiable under Customs Tariff Heading 2106. The products are rightly classifiable under Chapter Heading 2106 9060, consequently, impugned order is upheld.

Conclusion - The product fell under Tariff Heading 2106 as a food flavoring material, specifically for providing color to edible items.

Appeal dismissed.

Classification of imported Power Weeders - to be classified under Chapter Heading 8433 or under Chapter Heading 8432 of the Customs Tariff Act, 1985? - concessional rate of duty - benefit of N/N.12/2012-Cus. dated 17.03.2012 - HELD THAT:- The appellant had filed Bill of Entry No.3675794 dated 29.10.2013 for clearance of 150 sets of Rotary Power Weeder and on investigation, it was found to be ‘Brush Cutters’ and hence, the benefit of Notification was denied demanding a duty of Rs.3,91,930/- which was paid under protest by the appellant. On further investigation for the period 06.12.2010 to 23.07.2013, similar goods were found to be ‘Brush Cutters’ which were imported under concessional rate of duty, hence, the differential duty of Rs.26,43,951/- on the past clearances was also confirmed.

With regard to past clearances, it is found that Bills of Entry No. 4656425 dated 16.09.2011, 6559041 dated 17.04.2012, 6935540 dated 26.05.2012, 7280139 dated 03.07.2012, the appellant has declared the items as ‘Brush Cutters’ as also the description was correctly mentioned, therefore, the question of suppression does not arise. In view of the above, there are no reason to sustain the demand beyond the normal period of limitation. Accordingly, the demand is confirmed for the normal period.

Regarding confiscation of goods valued at Rs.18,65,268/- is sustained, however redemption fine reduced to Rs.2,00,000/- under Section 125 of the Customs Act, 1962. Since, demand is confirmed for normal period, penalties imposed under Section 114A and Section 114AA is set aside. Penalties imposed under Section 112 and 114AA on Director S.V. Aravind is also set aside.

Conclusion - i) Classification of 'Brush Cutters' under Chapter Heading 8467 8990 is upheld. ii) Penalties not imposed due to suppression of facts. iii) Confiscation of goods sustained, redemption fine reduced.

Appeal allowed.

Applicability of Anti-Dumping Duty (ADD) - Origin of imported consignments of PVC Flex Banner - Malaysian origin or Chinese origin - admissibility and reliability of statements and documents provided by witnesses - cross-examination of only one witness allowed, while that of otheres were denied - applicability of section 138B of the Customs Act - HELD THAT:- The entire case has been built up by the investigation on the basis of the statements recorded and documents submitted by these persons. The appellants have questioned the veracity of these documents as the originals of these documents were never given to them. The appellants also submitted that the persons who handed over the documents never disclosed the origin of the documents and from where they got them. Thus, if the Department wanted to rely upon the statements recorded from them and the documents submitted by them, then the Department should have allowed cross examination of all those persons. In stead, cross examination only one person by name Shri Arup Bandhu Guha was conducted. Thus, the statements recorded and documents submitted by all persons, other than Shri Arup Bandhu Guha, are not admissible as evidence in the adjudication proceedings as they have not fulfilled the tests prescribed in Section 138B of the Customs Act, 1962.

By relying on the decision of the Hon'ble Calcutta High Court in Ajay Saraogi Vs. Union of India [2023 (9) TMI 733 - CALCUTTA HIGH COURT] it is held that the statements given and documents recovered from those persons who have not been cross examined, cannot be relied upon in the adjudication proceedings in this case.

Regarding the statements recorded and the documents submitted by Shri Arup Bandhu Guha, whose cross examination was conducted, it is observed that during the cross examination Shri Guha has given vague and unclear answers to the questions put by the appellants.

Regarding the origin of the goods, we observe that the appellants have produced AIFTA Certificate of Origin, which was issued by the Ministry of International Trade & Industry, Malaysia. It is observed that the investigation has not established that the said Certificates are not genuine. The investigation only alleges that the said certificates have been obtained by influence, but it is observed that the said claims were not supported by any evidence.

In all the swift transfer messages, name of the overseas supplier of Malaysia was given. We find that there is no allegation that the money was transferred to supplier appearing in the alleged master bill of lading. The entire payments were remitted to said overseas supplier and there is no evidence that said supplier had not received the payments remitted by the appellants. Thus, the evidences available on record indicate that the Malaysian exporter was the actual beneficiary of the money transfer.

The demands of Anti-Dumping Duty, Customs Duty and interest confirmed in respect of all the ten consignments imported by the appellants is legally not sustainable and accordingly, the same are set aside. Since, the demands of duty are not sustainable, the question of imposition of penalties does not arise.

Conclusion - The evidences available on record indicate that the goods are of Malaysian origin and thus no Anti-Dumping Duty is payable on the 10 consignments imported by the appellant. The appellant is eligible for the benefit of concessional rate of duty provided under Customs N/Ns.46/2011-Cus. dated 01.06.2011 and 053/2011-Cus. dated 01.07.2011.

Appeal allowed.

Misuse of clients' funds - Exposure beyond T+2+5 days - Nonissuance of contract notes - Doctrine of proportionality in imposition of penalty - SEBI adjudication and penalty mitigation - Repeat offender status

Misuse of clients' funds - Findings of misutilisation of clients' funds were upheld. - HELD THAT: - The Tribunal noted that during SEBI's inspection funds of creditbalance clients were used to meet settlement obligations of debitbalance clients. Out of 41 instances examined, misutilisation was observed in 31 instances, with particulars tabulated in the impugned order. The appellants did not deny the negative G value reflected for March 2021 nor the infusion of Rs. 1 crore in October 2020 which nevertheless left G negative for the later period. On these undisputed factual findings the Tribunal sustained the Adjudicating Officer's conclusion of misutilisation. [Paras 12, 15]

Misuse of clients' funds confirmed and the finding upheld.

Exposure beyond T+2+5 days - Finding of provision of exposure to clients beyond T+2+5 days was upheld. - HELD THAT: - The appellants did not dispute that overexposure occurred and explained it was due to a software bug; however the Tribunal recorded that overexposure of approximately Rs. 39.13 lakhs was established as per the inspection table reproduced in the impugned order. Given these undisputed facts, the Tribunal sustained the Adjudicating Officer's finding on excess exposure. [Paras 13, 16]

Exposure beyond T+2+5 days established and finding upheld.

Nonissuance of contract notes - The charge of nonissuance of contract notes was not sustained. - HELD THAT: - The appellant produced an excel sheet indicating status of delivery of contract notes and it was pointed out that there is no provision requiring a stock broker to furnish proof of delivery of contract notes on a regular basis. The Tribunal accepted the absence of any such statutory provision and accordingly held that the charge relating to nonissuance (or proof of delivery) was untenable. [Paras 14]

Charge of nonissuance of contract notes rejected as untenable.

Doctrine of proportionality in imposition of penalty - SEBI adjudication and penalty mitigation - Repeat offender status - Penalty imposed was modified on the ground of proportionality; findings sustained but quantum reduced. - HELD THAT: - While affirming the factual findings on misutilisation and overexposure, the Tribunal examined proportionality of the penalty. It observed comparative orders (noting Angel Broking's lesser penalty for much larger misutilisation) and also the respondent's contention that the appellant was a repeat offender. Balancing these considerations, the Tribunal concluded that reduction of the monetary penalty would meet the ends of justice. Accordingly, the aggregate penalty originally imposed was modified to Rs. 15 lakh payable by the first noticee, noting that the second noticee had merged with the first. [Paras 15, 16]

Penalties modified for proportionality; penalty reduced to Rs. 15 lakh payable by the first noticee.

Final Conclusion: Findings of misutilisation of clients' funds and provision of exposure beyond T+2+5 days are upheld; charge of nonissuance of contract notes is not sustained. On application of the doctrine of proportionality and noting repeatoffender status, the Tribunal reduced the monetary penalty to Rs. 15 lakh payable by the first noticee (second noticee having merged), and allowed the appeal in part.

Approval of the Resolution Plan - Section 30(2) of the IBC - HELD THAT:- The financial creditors having been given the right to proceed against the personal guarantor for the balance liability, it is always open for the financial creditor to proceed against the personal guarantor/ corporate guarantor that being the approved clause of Resolution Plan, Appellant cannot be heard to say anything against that. One more ground which has been taken in the appeal is that after the commencement of the insolvency proceeding against the Appellant against the personal guarantor w.e.f. 01.03.2024, Appellant has not been invited to participate in the meeting of the CoC.

In the present case, Appellant has not pleaded that in the CoC meeting which was held subsequent to 01.03.2024 there was no representation of the suspended director of the corporate debtor. The personal insolvency having been commenced on 01.03.2024 not allowing participation of the Appellant cannot be said in any manner affect the meeting of the CoC where it is not even pleaded that suspended management was not invited to participate. It is not the case of the Appellant that the Resolution Plan submitted by the SRA is not compliant of Section 30(2) of the IBC. The jurisdiction of the Adjudicating Authority and this Tribunal to interfere with the commercial wisdom of the CoC is too limited and the Adjudicating Authority and this Tribunal can interfere with approval of the Resolution Plan only when plan is not in compliance of Section 30(2).

Conclusion - There are no grounds to interfere with the Adjudicating Authority's approval of the Resolution Plan. Approval of a Resolution Plan does not discharge a personal guarantor's liabilities.

There are no ground to interfere with the impugned order. There is no merit in the appeal. The Appeal is dismissed.

Seeking grant of discharge/bail - Money Laundering - proceeds of crime - Resolution Professional is a public servant under Prevention of Corruption Act, 1988 or not - demand of bribe - all the conditions as stipulated under Section 3 of the PML Act, 2002 read with Section 2 (1) (u) of the PML Act, 2002 are satisfied or not - HELD THAT:- The “proceeds of crime” means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad - In the explanation it has been referred that for removal of doubts, it is hereby clarified that "proceeds of crime" include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence. The explanation has been inserted in the statute book by way of Act 23 of 2019.

The reason for giving explanation under Section 2 (1) (u) is by way of clarification to the effect that whether as per the substantive provision of Section 2 (1) (u), the property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country but by way of explanation the proceeds of crime has been given broader implication by including property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence.

It is settled connotation of law that at the stage of framing of charge, the probable defence of the accused is not to be considered and the materials, which are relevant for consideration, are the allegations made in the First Information Report/complaint, the statement of the witnesses recorded in course of investigation, the documents on which the prosecution relies and the report of investigation submitted by the prosecuting agency. The probative value of the defence is to be tested at the stage of trial and not at the stage of framing of charge and at the stage of framing of charge minute scrutiny of the evidence is not to be made and even on a very strong suspicion charges can be framed.

The Hon'ble Apex Court in the case of Palwinder Singh Vs. Balvinder Singh & others [2008 (10) TMI 742 - SUPREME COURT] has been pleased to hold that charges can also be framed on the basis of strong suspicion. Marshaling and appreciation of the evidence is not in the domain of the court at that point of time.

Further it is pertinent to mention here that power to discharge an accused was designed to prevent harassment to an innocent person by the arduous trial or the ordeal of prosecution. How that intention is to be achieved is reasonably clear in the section itself. The power has been entrusted to the Sessions Judge who brings to bear his knowledge and experience in criminal trials. Besides, he has the assistance of counsel for the accused and Public Prosecutor. He is required to hear both sides before framing any charge against the accused or for discharging him.

Whether the evidence which has been collected in course of investigation and has been brought on record, as would be available in the impugned order prima facie case against the petitioner is made out or not? - HELD THAT:- Sub-section (v) of Section 2(c) of the Prevention of Corruption Act defines public servant. Further it is the nature of a duty, not an individual’s position, that discloses whether or not the person carrying it out is a public servant. Under the Prevention of Corruption Act the concept was to replace the notion of conventionally recognized public officials with those who carry out public duties - Further it is evident from the record that earlier the petitioner had preferred the Criminal Miscellaneous Petition being Cr.M.P. No. 1048 of 2021 for quashing of entire criminal proceeding arising out of the instant case, instituted against the petitioner including the F.I.R. being R.C.1(A)/2020-D, CBI, ACB, Dhanbad for the offence under Section 7 of Prevention of Corruption Act, 1988 by raising the similar ground which has been raised herein that petitioner is not a public servant within the meaning of Section 2(c) of the Prevention of Corruption Act, 1988 or under Section 21 of the IPC therefore charges under Prevention of Corruption Act cannot be alleged against him.

The learned Single Judge of this Court has categorically held that Resolution Professional is made during the resolution process before the Company Law Tribunal with its approval, he will be a public servant under Section 2(c)(v) of the P.C. Act - This Court is of the view that since the duties performed by RP are public in nature, they are public servants and Sec 2(c) of Prevention of Corruption Act is pretty clear that an individual who performs public duties are public servants for the purpose of the Act and hence, the legislature would have felt that there are no explicit provisions are required.

The ‘Resolution Professional’ will not come within the meaning of ‘Public Servant’ under Section 2 (c) of the PC Act is not tenable in the eyes of law.

Discharge application - HELD THAT:- The expression “money-laundering”, ordinarily, means the process or activity of placement, layering and finally integrating the tainted property in the formal economy of the country. However, Section 3 has a wider reach. The offence, as defined, captures every process and activity in dealing with the proceeds of crime, directly or indirectly, and not limited to the happening of the final act of integration of tainted property in the formal economy to constitute an act of money-laundering. This is amply clear from the original provision, which has been further clarified by insertion of Explanation vide Finance (No. 2) Act, 2019, Section 3, as amended.

The law regarding the approach to be adopted by the court while considering an application for discharge of the accused persons under Section 227 and approach while framing charges under Section 228 of the Code, is that while considering an application for discharge of the accused under Section 227 of the Code, the Court has to form a definite opinion, upon consideration of the record of the case and the documents submitted therewith, that there is not sufficient ground for proceeding against the accused. However, while framing charges, the Court is not required to form a definite opinion that the accused is guilty of committing an offence. The truth of the matter will come out when evidence is led during the trial. Once the facts and ingredients of the Section exist, the court would presume that there is ground to proceed against the accused and frame the charge accordingly and the Court would not doubt the case of the prosecution.

It appears that the complaint contains material evidences for prosecution, thus, the petitioner has to prove her innocence by undergoing the trial therefore, the aforesaid contention of the learned counsel for the petitioner that the alleged money which has been allegedly trapped from this petitioner was under deemed custody of CBI (ACB), and the petitioner was never put in possession of the alleged cash, which is said to have been recovered from the possession of the petitioner, therefore alleged offence is not made out, cannot be adjudicated herein in the light of aforesaid discussion and settled position of law - there is no reason to believe by this Court that the petitioner is not involved in the alleged offence.

This Court is of the view, that in such a grave nature of offence, which is available on the face of the material, applying the principle of discharge wherein the principle of having prima facie case is to be followed, the nature of allegation since is grave and as such, it is not a fit case to allow the application for discharge.

Conclusion - i) A Resolution Professional, due to the nature of their duties, qualifies as a "public servant" under the Prevention of Corruption Act, 1988. ii) The petitioner's actions, as alleged, constituted money laundering under Section 3 of the PMLA, given the acquisition and possession of proceeds of crime. iii) At the discharge stage, the court must assume the prosecution's evidence to be true and determine if a prima facie case exists, without delving into the probative value of the evidence.

The petitioner's application for discharge dismissed.

Money Laundering - proceeds of crime - alleged transfer of public funds, by way of fraudulent transactions - Appellant Bank, as a victim of fraud, has a legitimate claim over the attached properties that were mortgaged to it by Vijay Kumar Kushwaha and others or not - HELD THAT:- The properties which have been attached by the Respondent Directorate in exercise of powers under section 5 of the PMLA, 2002 were, admittedly, already under mortgage with the appellant bank. The Appellant Bank has argued that it is the victim of a fraud and has the first charge over the property. As such, it is entitled to appropriate the properties in view of the charge created on the properties in its favour. The Appellant has inter alia placed reliance on the judgement titled Deputy Director, Directorate of Enforcement. Delhi v. Axis Bank [2019 (4) TMI 250 - DELHI HIGH COURT].

The underlying issue is squarely covered by the judgement of this Appellate Tribunal in the case of JM Financial Asset Reconstruction Company Ltd. [2024 (4) TMI 1228 - APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI] where it was held that 'the interference in the order of the attachment order, on a challenge by the financial institution, should not be persuaded by the sentiments and only on the ground that once there is a mortgage of the property, it should go to the financial institution.'

Conclusion - The attachment under PMLA is lawful and does not transfer title unless the property is confiscated. The rights of financial institutions are protected under Section 8(8), and they may pursue their claims in accordance with the provisions of PMLA.

Appeal dismissed.

Money Laundering - proceeds of crime - challenge to Provisional Attachment Order - mala fide intention to misappropriate the fund - withdrawing and utilizing funds without knowing the actual source and without receiving confirmation from the Council - non-recording of satisfaction by the respective authorities - Properties purchased much before the alleged predicate offence - Amount in question had been utilized fully by the appellant in the month of April 2008 itself for the purposes of their business, more particularly, for payment of vehicle loan, overdraft facility, payment to labourers etc.

Non-recording of satisfaction by the respective authorities - violation of sections 5 and 8 of PMLA - HELD THAT:- The authority has merely repeated the language of the statute and has not arrived at any independent satisfaction to the fact that the offence of money laundering has been committed under section 3 and if the property was not attached immediately, the proceedings under the Act will be frustrated. The decisions of the Hon'ble Punjab and Haryana High Court in Seema Garg v. Deputy Director, Directorate of Enforcement [2020 (3) TMI 460 - PUNJAB & HARYANA HIGH COURT], and the judgment of the Hon'ble Delhi High Court in J. Sekar v. Union of India & Ors. [2018 (1) TMI 535 - DELHI HIGH COURT] are relied upon. It is also contended that though the judgment in the latter case has been stayed by the Hon‟ble Supreme Court, as per the settled legal position, its ratio would continue to apply.

There are no substance in the contention of the appellants that the condition u/s 5(1) of recording the reasons was not met. It is found that detailed reasons for the action initiated under the provision have been recorded by the respondents before initiating the action. As regards, the reasons under section 8, it is seen that the language of the said provision is different insofar as section 8 does not specifically lay down that the reasons to believe are to be recorded or that there should be any material in possession, other than the original complaint filed by the Directorate under section 5(5). Nor does the provision specifically necessitate recording of the reasons in writing.

There are no sufficient grounds to hold that the actions taken under sections 5 and 8 were not valid for want of recording of reasons (which were duly recorded) or on account of non-communication of the reasons by the relevant authorities.

Properties purchased much before the alleged predicate offence - HELD THAT:- The Canara Bank was impleaded as respondent in the present case vide an order dated 04.12.2018 based on the finding that the Canara Bank was Defendant No. 7 in the complaint and the subject properties had been mortgaged with the Bank. With its reply on 31.01.2019 the Bank had submitted copies of the title deeds of the properties standing in the name of the appellants herein which had been offered as securities to the Bank. The same were taken on record. In subsequent proceedings, it was submitted on behalf of the Bank that the loan account has since been closed and the Bank has no further interest in the case. Accordingly, there are no issues pending for decision before this Appellate Tribunal in the present case in so for as Respondent No. 2 (Canara Bank) is concerned - thus, the subject properties have been attached by the respondents in the present case as value of proceeds of crime.

Amount in question had been utilized fully by the appellant in the month of April 2008 itself for the purposes of their business, more particularly, for payment of vehicle loan, overdraft facility, payment to labourers etc. - HELD THAT:- The present position is that a charge sheet dated 21.01.2011 stands filed against the two appellants herein along with Shri Depolal Hojai and Shri Dabiruz Jaman, in the Court of Special Judge, CBI, Assam, Guwahati. Though the appellants have moved the Hon‟ble Gauhati High Court for quashing of the Special Case filed against them under Sections 3 and 4 of PMLA, 2002, the said petition of the appellants is still pending before the Hon‟ble High Court. Further, as clarified by both parties in the hearing held on 08.01.2025, prosecution complaint under the PMLA, 2002, also stands filed against the accused persons in this case. Proceedings in the prosecution case under the PMLA, 2002, have been stayed by the Ld. Special Judge following the stay granted by the Hon‟ble Guwahati High Court - at this stage, when the criminal trial of the appellants herein is still pending before a court of competent jurisdiction, even the balance of interests lies in favour of continued attachment of the subject properties. The same by itself does not disturb the ownership title of the appellants and does not deprive them of possession and enjoyment of the same.

Thus, so long as the source of the money is alleged to be „proceeds of crime‟ within the meaning of the Act, it can be attached by the respondents regardless of whether the appellants herein themselves stood charged of any scheduled offences or the prosecution complaint filed under the PMLA, 1999 or not. In the present case, as already noted, the appellants have been named in the prosecution case filed under the PMLA, 2002. However, even if they were not accused in the PMLA case, the properties could have been attached so long as there was evidence to indicate that alleged proceeds of crime traveled from one or more persons who are so accused.

Conclusion - i) The procedural requirements under sections 5 and 8 of the PMLA, 2002, were met, and the attachment of properties was valid. ii) The properties acquired before the alleged crime can be attached if they represent the value of the proceeds of crime, following the three-limb definition of "proceeds of crime." iii) The retrospective application of the PMLA, 2002, is constitutionally valid, as the attachment is a civil action.

Appeal dismissed.

Exemption from service tax - services rendered to a Governmental authority - providing services of work contract services - providing services of laying of cable under or along side the road under the National Optical Fibre Undertaking (NOFN) Project - HELD THAT:- The Customs, Excise & Service Tax Appellate Tribunal, New Delhi took the view that the appellant is not entitled to seek exemption under the Notification which it sought to rely upon.

This is a fit case to remand the matter to the original authority only for the purpose of recalculation of the demand extending the benefit of cum-tax on the gross amount charged by the appellant.

Issue notice returnable after four weeks.

Invocation of Extended period of limitation - no intent to evade payment of service tax - whether there is any error apparent on the face of the record to review the judgment? - it was held by High Court that 'there is no error apparent on the face of the record, and also there are no grounds to review the judgment, therefore the review petition stands disposed of.'

HELD THAT:- The penalties imposed by the Department in the peculiar facts and circumstances of these cases deserve to be waived and are waived, accordingly.

Appeal allowed.

Rejection of refund claim of accumulated Cenvat Credit - rejection on the ground that since opening balance in ST-3 return for the period April’2015 to September’2015 was ‘Nil’, hence credit was never availed in returns and consequently there is no question of refund - HELD THAT:- Apparently, the refund claim was filed by the Appellant in terms of Rule 5 of the CENVAT Credit Rules, 2004 and sub-rule (1) of Rule 5 provides that refund of CENVAT credit shall be allowed subject to procedure, safeguards, conditions and limitations as may be specified by the Board by notification in the Official Gazette. A perusal of Rule 5 nowhere indicates that the same provides disclosure of balances of CENVAT credit in ST-3 return as the condition precedent for claiming refund of credit. There is nothing in Rule 5 to assume that if credit was validly availed but not disclosed in ST-3 return, the same would prohibit the refund of credit.

In exercise of powers conferred under Rule 5(1), Notification No.27/2012-CE(N.T.) dated 18.06.2012 has been issued specifying the safeguards, conditions and limitations and also the procedure for filing the refund claim - clause 2(g) has to be read as it is without any addition or subtraction of words and clause 2(g) cannot be interpreted on any presumption or assumption that balance has to be considered as the amount shown as closing balance in ST-3 return. The interpretation to the contrary placed in the impugned order is therefore clearly erroneous and is not flowing from a plain reading of clause 2(g) of the notification - clearly clause 2(g) of the notification has been incorrectly interpreted in the impugned order and rejection of refund claim on this ground is not sustainable.

Both the parties are ad-idem to the fact that no objection has been raised by the Revenue to the revised return for the subsequent period Oct’2015 to March’2106 showing the same opening balance as disclosed by the Appellant in corrigendum for the period April’2015 to Sep’2015 - It is not disputed before me that by the time the Appellant realised the mistake, the time period for revising the return got expired and therefore the Appellant cannot be expected to perform an impossible task. Thus, there are no reasonable reason for not extending the benefit of the corrigendum to the Appellant.

As regards finding in the adjudication order regarding taking credit within a period of one year, it is found that the said finding has been recorded only on the ground that the amount of credit was not disclosed by the Appellant in ST-3 return for the period April’2015 to Sep’2015. The adjudicating authority appears to have misguided himself by taking a view that credit is taken by declaring the amount of credit in ST-3 return. On the contrary, credit is always taken in account books and/or other statutory records. The disclosure of opening/closing balance of credit and utilised amount of credit in ST-3 may be a condition required to be complied by a taxpayer, but the same by itself is not a condition to claim credit.

There is absolutely no finding in the adjudication or appeal order that the invoices in question were issued prior to period of one year. no adverse finding has been recorded by the two authorities and therefore the submission to the contrary made by the Ld. A.R. deserves to be rejected.

Conclusion - i) Substantive benefits cannot be denied on technical grounds, such as non-disclosure in ST-3 returns. ii) Clause 2(g) of Notification No. 27/2012-C.E should be interpreted based on the actual balance, not the disclosed balance in ST-3 returns. iii) The Adjudicating Authority is directed to sanction the refund claim in accordance with the law.

Appeal allowed.

Valuation of service tax - inclusion of charges collected by the appellant, apart from service charges, in the gross taxable value for the purpose of service tax under Section 67 of the Finance Act, 1994 - Pure Agent under Rule 5(2) of the Service Tax (Determination of Value) Rules, 2006 - invocation of extended period of limitation - HELD THAT:- The issue is no more res-integra in view of the decision of the Honourable Supreme Court in the case of UOI v Intercontinental Consultants and Technocrats Pvt Ltd, [2018 (3) TMI 357 - SUPREME COURT] which has considered the issue of liability to pay service tax on reimbursable expenses received by the service provider in the course of rendering services for the client, apart from the consideration received for rendering the services on which the client has discharged the liability to pay service tax. The Honourable Supreme Court affirmed the decision of the Delhi High Court in Intercontinental Consultants & Technocrats Pvt Ltd v UOI, [2012 (12) TMI 150 - DELHI HIGH COURT], wherein Rule 5(1) of the Service Tax Valuation Rules, 2006 which provided for inclusion of expenditures or costs incurred by the service provider in the course of providing taxable services, in the value of such taxable services, was stuck down as ultra vires Section 66 and Section 67 of the Act and as travelling beyond the scope of the said sections.

Conclusion - The service tax should be levied only on the actual consideration for the service provided, excluding reimbursable expenses unless legislatively amended.

The impugned order is set aside - appeal allowed.

Area Based Exemption - Denial of benefit of central excise duty exemption under N/N. 01/2011-CE dated 01.03.2011, as amended by Notification dated 17.03.2012 - Invocation of extended period of limitation - suppression of facts or not - whether the provisions of section 11A(4) of the Central Excise Act dealing with the invocation of the extended period of limitation could have been invoked? - HELD THAT:- In the present case, all that has been stated in the show cause notice regarding invocation of the extended period of limitation is that the appellant wrongly availed the benefit of the Exemption Notification deliberately with the sole intent to evade payment of central excise duty. The Commissioner also held that there was an intent to evade payment of central excise duty merely because the benefit of the Exemption Notification was wrongly availed - Mere wrong availment of an Exemption Notification would not lead to a conclusion that it was with an intent to evade payment of central excise duty unless the department is able to not only allege but substantiate that the said suppression was deliberate with an intent to evade payment of central excise duty.

The provisions of section 11A of the Central Excise Act, as it then stood, came up for interpretation before the Supreme Court in Pushpam Pharmaceuticals Company vs. Collector of Central Excise, Bombay [1995 (3) TMI 100 - SUPREME COURT]. The Supreme Court observed that the proviso to section 11A empowers the Department to reopen the proceedings if levy has been short levied or not levied within six months from the relevant date but the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of which is suppression of facts. It is in this context that the Supreme Court observed that the act must be deliberate to escape payment of duty.

In Easland Combines, Coimbatore vs. Collector of Central Excise, Coimbatore [2003 (1) TMI 107 - SUPREME COURT]the Supreme Court observed that for invoking the extended period of limitation, duty should not have been paid because of fraud, collusion, wilful statement, suppression of fact or contravention of any provision. These ingredients postulate a positive act and, therefore, mere failure to pay duty which is not due to fraud, collusion or wilful misstatement or suppression of facts is not sufficient to attract the extended period of limitation.

It is, therefore, clear that the suppression of facts should be deliberate and in taxation laws it can have only one meaning, namely that the correct information was not disclosed deliberately to escape payment of duty. The show cause notice issued to the appellant, however, merely mentions that the appellant wrongly availed the benefit of the Exemption Notification with intent to evade payment of central excise duty. It does not elaborate why the appellant intended to evade payment of duty - in the absence of any intent by the appellant to evade payment of service, the extended period of limitation under section 11A(4) of the Central Excise Act could not have been invoked.

The contention of the appellant is also that it bona fide believed that it was entitled to avail the benefit of the Exemption Notification and it cannot be said that the belief of the appellant is mala fide merely because it may ultimately be held that the appellant is not entitled to the benefit of the Exemption Notification. This contention deserves to be accepted.

It also needs to be noticed that in the present case three Audits had been conducted. The first Audit was conducted in March 2016 for the period from April 2011 to March 2015. All the relevant facts were disclosed by the appellant and even otherwise the Audit Team could have required the appellant to provide all the information. No infirmity was found by the Audit Team and the Audit Team gave a Fair Audit Report to the appellant - The Department, therefore, cannot allege that the appellant had suppressed any facts. The show cause notice could have been issued within the normal period contemplated under section 11A(1) of the Central Excise Act but it was issued only on 26.06.2020.

The appellant had also been regularly filing the excise returns. The Commissioner observed that mere filing of the returns does not mean any kind of approval or validation by the department since in an era of self-assessment, the party has to correctly disclose the facts.

Conclusion - The extended period of the limitation could not have been invoked in the facts and circumstances of the case. The entire period covered under the show cause notice is for the extended period of limitation. The impugned order would, therefore, have to be set aside for the sole reason that the extended period of limitation contemplated under section 11A(4) of the Central Excise Act could not have been invoked.

The impugned order dated 30.09.2021 passed by the Commissioner is, accordingly, set aside and the appeal is allowed.

CENVAT Credit - input service or not - service tax paid on payment of penalty on pre- payment of loan - Rules 2(l), 3 of the CENVAT Credit Rules, 2004 - HELD THAT:- On perusal of the impugned order, it transpires that the disputed service of foreclosure charges or pre-payment premium had been considered as not part of ‘banking and other financial service’ and thus the service tax paid thereon has been considered as not eligible for availing as CENVAT Credit. However, at one another place, the order states that the disputed service could be considered as ‘declared service’. Therefore, to the extent of such inconsistency with the other findings of the impugned order and inasmuch as this disputed issue had already been decided by the Larger Bench of the Tribunal, it is not found the impugned order as correct. Therefore, such findings, which do not find a bearing on the final decision ordered by the learned Commissioner (Appeals) in the impugned order are not taken up for examination.

On initial reading, it may appear that the pre-payment premium or foreclosure charges forms part of the financial arrangements of availing loan by the appellants from the banks. However, since there is no separate or distinct service being offered by such banks for taking the pre-payment premium, it would be correct to state that these are not related to the service of financing the loans, which the appellants have taken from these consortiums of banks. Rather, it is clear that those banks are compensating themselves for the loss of interest, which otherwise would have been paid by the appellants in the normal course of financing arrangement as per agreed contract, if the prepayment was not effected by the appellants. Hence, the factual matrix of the case clearly reflects that the prepayment premium paid by the appellants do not have any relation to the financing services availed from the banks.

This aspect of the financial arrangements have been discussed at length by Larger Bench of the Tribunal in the case of Commissioner of Service Tax, Chennai Vs. Repco Home Finance Ltd. [2020 (7) TMI 472 - CESTAT CHENNAI], wherein it has been held that service tax cannot be levied on the foreclosure charges levied by the banks and non-banking financial companies on premature termination of loans under the taxable category of “banking and other financial services” as defined under Section 65(12) of the Finance Act, 1994.

Conclusion - The disputed CENVAT credit taken on input services of ‘foreclosure charges’ or ‘pre- payment premium’ and availed by the appellants, is not admissible as CENVAT benefit to the appellants, inasmuch as there is no service tax payable on such services which could be considered as permissible credit in terms of Rule 3 of the CENVAT Credit Rules, 2004.

The appeal filed by the appellants is dismissed.

Refund of excess amount realized by Respondents in terms of Settlement Scheme of 2022 - Dismissal of Jharkhand Karadhan Adhiniyamon Ki Bakaya Rashi Ka Samadhan Act, 2022 - rejection of exemption from payment of additional tax and surcharge - HELD THAT:- A perusal of Settlement Scheme would reveal that under Settlement Scheme, term ‘admitted tax’ is defined to mean an amount of tax admitted as being payable as per the return filed by an assessee, and, the term ‘disputed amount’ means the amount of tax, interest or penalty which determined as payable by an assessee pursuant to an order of assessment/re-assessment/scrutiny or any other order and which is not admitted, and, for such demand, a litigation has been filed by an assessee - under the Scheme, amount of ‘admitted tax’ clearly represents an amount which is admitted by assessee, whereas ‘disputed amount’ means amount of tax, interest or penalty which is in dispute pursuant to a litigation filed by an assessee.

The Scheme clearly provides that assessee is liable to pay 40% of the amount of tax in dispute provided the same has not been declared/considered in any order/assessment/re-assessment. In the present case, it is not in dispute that the petitioner admitted an amount of Rs. 33,79,374/- being the admitted amount of tax payable by it as per its return. However, pursuant to an adjudication order, an amount of Rs. 6,27,82,418/- was determined against the petitioner - balance between disputed tax and admitted tax was the amount in dispute i.e. in the present case Rs. 5,94,03,043/-. Under the Scheme, Petitioner was only liable to deposit 40% of the disputed amount and there was 60% waiver, but while computing the tax liability, Settlement Officer first deducted the amount of pre-deposit from the amount in dispute and, thereafter, extended the benefit of waiver under the scheme which is clearly travelling beyond the contours of the scheme itself.

Admittedly, Settlement Scheme is a beneficial scheme and Hon’ble Supreme Court in its judgment rendered in the case of Government of Kerala and Another v. Mother Superior Adoration Convent [2021 (3) TMI 93 - SUPREME COURT], has held that even in tax statutes, exemption provisions should be liberally considered in accordance with the object sought to be achieved. In a beneficial legislation, literal formalistic interpretation should be eschewed to give full effect to the provisions of the beneficial legislation.

The impugned order passed by the appellate authority is set aside and, further, order of settlement to the extent, amount of pre-deposit of 49,00,000/- has been directed to be adjusted from the amount in dispute before extending the benefit of settlement is set aside.

Conclusion - i) The calculation of tax liability under the Settlement Scheme must not deduct pre-deposits from the disputed amount before applying the waiver. ii) The petitioner is entitled to a refund of the excess amount paid due to the misapplication of the Scheme. iii) The petitioner is entitled to interest on the refunded amount at 6% per annum from the date of deposit until the refund is made.

Petition disposed off.

Jharkhand Karadhan Adhiniyamon Ki Bakaya Rashi Ka Samadhan Act, 2022 (Amnesty Scheme) - Computation method of settlement amount - amount of pre-deposit was first adjusted against the disputed amount and upon remaining balance, waiver of 60% and 50% of tax respectively was extended to petitioner - HELD THAT:- A perusal of Settlement Scheme would reveal that under Settlement Scheme, term ‘admitted tax’ is defined to mean an amount of tax admitted as being payable as per return filed by an assessee, and, the term ‘disputed amount’ means the amount of tax, interest or penalty which is determined as payable by an assessee pursuant to an order of assessment/re-assessment/scrutiny or any other order and which is not admitted, and, for such demand, a litigation has been filed by an assessee - Thus, under the Scheme, amount of ‘admitted tax’ clearly represents an amount which is admitted by assessee, whereas ‘disputed amount’ means amount of tax, interest or penalty which is in dispute pursuant to a litigation filed by an assessee.

The difference between disputed tax and admitted tax was the amount in dispute and under the scheme, petitioner was entitled for waiver of 60% and 50% respectively, but while computing the tax liability, Settlement Officer first deducted the amount of pre- deposit from the amount in dispute and, thereafter, extended the benefit of waiver under the scheme which is clearly travelling beyond the contours of the scheme itself.

The petitioner is right in contending that due to incorrect application of Settlement Scheme, petitioner is denied its actual benefit which resulted into a loss of Rs. 1,32,03,446/- (Rs. 1,33,42,802-1,39,356). However, before the appellate authority, petitioner filed its revised computation taking into consideration the component of declaration form and claimed as per revised computation an amount of Rs. 1,18,02,056/- as refund. Hence, we are of the opinion that petitioner cannot take a different stand than what it has taken in the appellate proceedings and it can only be entitled for refund as per the revised computation submitted before the appellate authority of an amount.

Settlement Scheme is a beneficial scheme and Hon’ble Supreme Court in its judgment rendered in the case of Government of Kerala and Another v. Mother Superior Adoration Convent [2021 (3) TMI 93 - SUPREME COURT], has held that even in tax statutes, exemption provisions should be liberally considered in accordance with the object sought to be achieved. In a beneficial legislation, literal formalistic interpretation should be eschewed to give full effect to the provisions of the beneficial legislation.

Conclusion - Under the Amnesty Scheme, the waiver should be applied to the full disputed amount before deducting any pre-deposit. This ensures that taxpayers who have made partial payments are not disadvantaged compared to those who have not paid. The petitioner is entitled to a refund of Rs. 1,18,02,056/- with interest at 6% per annum from the date of deposit until the refund is made.

Petition allowed.

Recovery of deficit stamp duty and penalty - whether the appellant is liable to pay stamp duty and penalty on the agreement to sell dated 03.09.2003 allegedly executed between the appellant and the mother of Respondent No.1 in respect of the suit property? - HELD THAT:- In the instant case, the agreement to sell executed between the appellant and mother of the Respondent No.1, specifically states that “this property is in your occupation on rental basis and it will not be part of the sale transaction. After completion of sale transaction, the possession of the said property will be given to you on the ownership basis. This makes it very clear that the suit property was occupied by the appellant on a rental basis and it would not be a part of the sale transaction. Further, there was a clause, by which, timeline was given for execution of sale deed. Since the possession was admittedly given to the appellant even before the date of agreement, implying acquisition of possessory rights protected under Section 53A of the Transfer of Property Act, the same requires payment of proper stamp duty.

The agreement to sell includes a clause stating that physical possession had already been handed over to the appellant, regardless of the basis of such possession. This satisfies the requirement to treat the instrument as a ‘conveyance’ within the meaning of Explanation I to Article 25 of Schedule I of Bombay Stamp Act, with only the formality of executing the sale deed remaining. Pertinently, it is to be pointed out that the appellant filed a suit for specific performance of the agreement to sell against the respondents; Respondent No.1 filed a suit seeking eviction of the appellant from the subject property; and both the suits are pending, which clearly establish the possession of the property by the appellant. Therefore, the said document is liable for payment of stamp duty at the hands of the appellant.

The Courts below impounded the document and directed the same to be sent to the Registrar of Stamps for recovery of deficit stamp duty and penalty as per law, by the orders impugned herein, which is perfectly correct. However, it is made clear that as per the second proviso to Article 25, if the stamp duty is already paid or recovered on the agreement to sell, then, the same shall be deducted while computing the stamp duty payable, when the sale deed is executed; and the recovery shall be restricted only to the extent of difference in stamp duty and the entire penalty from the date of execution of the agreement to sell till the date of payment of stamp duty.

Conclusion - The agreement to sell, which involved possession, is a conveyance for stamp duty purposes under Explanation I to Article 25 of Schedule I of the Bombay Stamp Act. The duty is on the instrument, and possession, whether current or agreed, triggers the duty.

There are no reason to interfere with the orders passed by the Courts below - appeal dismissed.

Exemption from Property Tax to educational institutions operated by registered charitable trusts and registered u/s 12A - Investigation of objections by Commissioner u/s 148 ofMunicipal Corporation Act, 1956- as submitted clear statutory provision u/s 136 (c) of Municipal Corporation Act, 1956 has exempted all the educational institutions run and operated by charitable trusts, educational institutions, which are registered u/s 12A of the Income Tax Act, 1961 and the said institution is wholly exempted for the payment of property tax and other educational institutions may be given a rebate of up to fifty per cent of the property tax - as submitted there is a efficacious alternative remedy available to the petitioner in terms of Section 184 of Municipal Corporation Act, 1956 which provides appeal against any notice of demand issued under subsection (1) of section 174, without availing such efficacious alternative remedy, there is no reasonable justification to the petitioner to directly approach the High Court.

HELD THAT:- Petitioner No. 3/educational institution continuously raised the objection, the said institution is under the exempted category under Section under Section 136 (c) of Municipal Corporation Act, 1956 and there is a specific procedure if any such objection has been raised about the valuation of the property tax that the Commissioner shall give a notice in writing to the objector of the time and place at which his objection will be investigated and after giving the opportunity of personal hearing to the objector, any such objection has been determined, when a query has been put to the learned Senior Counsel, from the record, it is explicit that no such procedure has been followed, though the legislature in clear terms mandated to fix the time and place to hear the objection.

This Court finds appropriate to direct the competent authority/Respondent No. 1/ Commissioner, Municipal Corporation, Bhilai to decide the objection raised by the petitioner No. 3/educational institution in terms of procedure stipulated under Section 148 of Municipal Corporation Act, 1956 (hereinafter referred to as ‘1956 Act’) and it is further expected from the said authority that if any document is required from the authority of the income tax, reasonable time of at least eight weeks must be given to the petitioner No. 3/educational institution to obtain any such certificate from the competent authority.

This Court makes a serious note that though the objection has been raised for more than a decade, but no proper speaking order has been passed and the matter has not been finally determined. So, it is expected from the authority to decide the issue in an expeditious manner and pass a fresh speaking order preferably within an outer limit of 06 months. Till such adjudication, no coercive steps shall be taken for the earlier notices and the same shall be kept in abeyance.