TaxTMI Updates e-Newsletter
Feb 22,2025

Condonation of delay - Interference by the Supreme Court having regard to the quantum of tax involved - Non-establishment of precedent / impugned judgment does not lay down any principle of law

Condonation of delay - Delay in filing the special leave petition was condoned. - HELD THAT: - The Court, upon hearing counsels and considering the explanation for delay, exercised its discretion to condone the delay and permit the petition to be heard. No further discussion of law or facts was recorded in relation to the period of delay.

Delay condoned.

Interference by the Supreme Court having regard to the quantum of tax involved - The special leave petition seeking to interfere with the impugned judgment was dismissed on the ground that the Court was not inclined to interfere given the quantum of tax involved. - HELD THAT: - The Court expressly declined to intervene in the impugned judgment, taking into account the quantum of tax at stake. The dismissal is founded on the exercise of the Court's discretionary supervisory jurisdiction where the magnitude of the tax liability was treated as a determinative factor for non-interference. The order does not undertake any substantive review of the legal correctness of the impugned judgment.

Special leave petition dismissed; Court will not interfere in the impugned judgment in view of the quantum involved.

Non-establishment of precedent / impugned judgment does not lay down any principle of law - The Court clarified that the impugned judgment does not lay down any principle of law. - HELD THAT: - Alongside dismissal of the petition, the Court recorded a clarification that the impugned judgment does not establish or announce any general legal principle. This indicates that the impugned decision should not be treated as a precedent for wider legal propositions.

Clarification recorded that the impugned judgment does not lay down any principle of law.

Final Conclusion: Delay in filing was condoned; having regard to the quantum of tax, the Supreme Court declined to interfere and dismissed the special leave petition, while expressly clarifying that the impugned judgment does not lay down any principle of law; pending applications disposed of.

Cancellation of registration of the petitioner - appeal preferred by the petitioner has been dismissed by the respondent no.2 as barred by limitation as provided u/s 107(4) of the UPGST Act - applicability of doctrine of merger - HELD THAT:- Admittedly from the perusal of the order dated 06.04.2021 it transpires that no reason has been assigned for cancellation of the registration of the petitioner. The order of cancellation is in the teeth of various judgments of this Court as also referred to above. The reasons are heart and soul of any judicial and administrative order. In absence of the same the order cannot be justified in the eye of law. Further since the appeal of the petitioner was dismissed on the ground of delay, this Court finds that the doctrine of merger will have no application considering the facts and circumstances of the present case.

In M/s Chandra Sain[2022 (9) TMI 1047 - ALLAHABAD HIGH COURT] this Court has held that ' In the present case from the perusal of the order dated 13.02.2020, clearly there is no reason ascribed to take such a harsh action of cancellation of registration. In view of the order being without any application of mind, the same does not satisfy the test of Article 14 of the Constitution of India, as such, the impugned order dated 13.02.2020 (Annexure - 2) is set aside.'

The order dated 06.04.2021 passed by the Assistant Commissioner, respondent no.3 is hereby quashed - Petition allowed.

Non-service of order - impugned order is appealable or not - petitioner came to know about the impugned Order-in-Original only through bank and notices at no point of time were served on the petitioner - Section 37C of the Central Excise Act, 1944 - HELD THAT:- A conjoint reading of Sections 142(8)(a) and 169(1)(c) of the CGST Act shows that the argument of the learned Senior Standing Counsel for CBIC has substantial force. The provision relating to service of notice provided under the CGST Act can be applied in view of Section 142(8)(a) of the CGST Act in relation to any other existing law, which includes the 1944 Act. Thus, we are unable to persuade ourselves with the line of argument of the learned counsel for the petitioner that since Section 37C of the 1944 Act is silent about the electronic mode of service through e-mail etc., the said mode is impermissible or not acceptable.

So far the order of the CESTAT, Allahabad, in M/s. Samsung India Electronics Private Limited [2019 (11) TMI 1204 - CESTAT ALLAHABAD] is concerned, the said order only gives a reference to the order of the High Court of Madras in OSA Shipping Pvt. Ltd. [2015 (10) TMI 982 - MADRAS HIGH COURT]. But, the said paragraph does not deal with the aspect of the validity of service of notice through e-mail mode. Apart from that, in the said case, the notices etc., were issued before the CGST Act came into being. Thus, that order is, even otherwise, of no assistance.

The petitioner has a statutory remedy of preferring an appeal. The petitioner can avail the said remedy.

Conclusion - The petitioner is directed to file an appeal with an application for condonation of delay, with the appellate authority considering it in accordance with the law. The time spent before the Court would not count towards the limitation period for the appeal.

Petition disposed off.

Challenge to order u/s 73 of the G.S.T. Act - no opportunity of hearing was granted to the petitioner as is prescribed under Section 75(4) of the G.S.T. Act - violation of principles of natural justice - HELD THAT:- The copy of instructions has been produced by the learned Standing Counsel wherein notice was sent to the petitioner however in the column of date of personal hearing "N.A." was mentioned. The impugned order also does not record that any opportunity was afforded to the petitioner.

The issue with regard to non-grant of hearing was considered by the Division Bench of this Court in the case of M/S Atlas Cycles Haryana Limited Versus State of U.P. and another [2024 (2) TMI 942 - ALLAHABAD HIGH COURT] and held that the provisions of Section 75(4) of the GST Act are mandatory.

Considering the submission on the ground of non-grant of opportunity of hearing, the present petition is allowed. The impugned order is quashed and the matter is remanded to pass a fresh order in accordance with law after affording an opportunity of hearing to the petitioner.

Legality of arrest of the petitioner under the CGST Act, 2017 - arrest of the petitioner is in violation of section 36 of the BNSS as well as the instruction dated 17th August, 2022 as amended on 13th January, 2025 or not - HELD THAT:- In the present case, the opposite party has submitted a copy of the office order dated 1st February, 2025 authorizing arrest of the petitioner, the arrest memo, grounds of arrest, arrestee’s profile, thumb impression of the arrestee, information of arrest to the nearest relative, handing over of personal belongings, documents showing medical checkup of the petitioner and the inspection memo. It is crystal clear from the arrest memo that such memo is attested by a driver who is neither a member of the petitioner’s family, nor a person of the locality from where the arrest is made. Therefore the arrest is in violation of the instruction issued by the authority as well as the mandate laid down by the Hon’ble Supreme Court in the authority in D.K. Basu [1996 (12) TMI 350 - SUPREME COURT].

Conclusion - Since the arrest of the petitioner is in violation of the instruction issued by the authority as well as the mandate of the Hon’ble Supreme Court in D.K. Basu, such lapse on the part of the opposite party cannot be termed as a mere irregularity and in fact vitiates the arrest, moreso, since no explanation has been given by the arresting officer for not complying with the said direction.

This Court of the view that since the arrest itself is bad in law, the petitioner deserves an order in his favour - the prayer for bail is allowed.

Cancellation of GST registration - fraud/willful misstatement or suppression of material facts - proof of lawful occupancy/place of business - procedure of show cause and opportunity to rebut - appellate interference standard - perverse/no evidence

Cancellation of GST registration - fraud/willful misstatement or suppression of material facts - proof of lawful occupancy/place of business - Validity of the cancellation of the petitioner's GST registration under the grounds recorded in the show cause and order. - HELD THAT: - The Court upheld the Proper Officer's cancellation of registration after noting the Bureau of Investigation's field enquiry findings that the declared premises was primarily residential, the commercial room was locked, no nameplate or letterbox in the petitioner's name was found and the occupants identified a different person as the commercial occupant. The petitioner did not respond to the show cause notice, did not challenge the spot-visit observations and failed to demonstrate payment under the leave and licence or payment of electricity charges that would corroborate occupation. On these facts the inference that the registration was obtained on incorrect/false representation or suppression of material facts was held to be a plausible one and the cancellation order was not vitiated for want of evidence or perversity. [Paras 9, 10]

The cancellation of registration was sustained; the order of the Proper Officer was not shown to be based on no evidence or perverse.

Procedure of show cause and opportunity to rebut - appellate interference standard - perverse/no evidence - proof of lawful occupancy/place of business - Whether the appellate authority erred in refusing to interfere with the cancellation by not giving weight to documents (leave and licence agreement, electricity bills, municipal records) relied upon by the petitioner. - HELD THAT: - The Court found that the petitioner had not challenged the factual contents of the Bureau of Investigation's report, had not responded to the show cause notice and did not appear before the appellate authority. The leave and licence relied upon was short-term and the petitioner failed to establish payment of licence or utility charges to corroborate continuous occupation. Given the petitioner's non-appearance and failure to rebut the investigation report, the appellate authority's refusal to interfere was not perverse. The appellate authority's treatment of the documentary material was acceptable in the context of the unchallenged field findings and the petitioner's omission to dispute them. [Paras 6, 10]

The appellate authority did not commit error in refusing to interfere; its order is not perverse and requires no interference.

Final Conclusion: Writ petition dismissed; cancellation of the petitioner's GST registration upheld and the appellate authority's order refusing interference sustained, with no order as to costs.

Input tax credit - Opportunity of hearing - Remand for fresh decision - Section 16 of the CGST Act (as amended) - Setting aside of administrative order

Section 16 of the CGST Act (as amended) - Input tax credit - Opportunity of hearing - Remand for fresh decision - Validity challenge to the impugned order dated 27.12.2023 and the appropriate remedy in light of the amendment to Section 16. - HELD THAT: - The petitioner challenged the impugned order dated 27.12.2023 and sought quashing of the Notification dated 31.03.2023; however, counsel for the petitioner acknowledged that the insertion of sub-section (5) in Section 16 of the CGST Act by the Finance Act, 2024 largely addresses the grievance concerning availment of input tax credit. Respondents accepted instructions and agreed that the matter ought to be reconsidered. Given the parties' submissions and the change in law, the Court found it appropriate to set aside the impugned order and remit the matter to respondent No.7 for fresh decision. The remand requires the authority to decide the claim afresh in accordance with the provisions of Section 16 (as amended), and after affording the petitioner an opportunity of hearing.

Impugned order dated 27.12.2023 set aside; matter remitted to respondent No.7 to decide afresh in accordance with Section 16 of the CGST Act (as amended) after providing opportunity of hearing, within two months from production of a certified copy of this order.

Final Conclusion: The writ petition is disposed of by setting aside the impugned order dated 27.12.2023 and remitting the matter to the concerned authority for fresh adjudication in accordance with the amended Section 16, after giving the petitioner an opportunity of hearing, to be completed within two months from production of a certified copy of this order.

Condonation of delay - reasonable cause for delay - service on GST portal vis-a-vis physical service - discrepancy between GSTR-1 and GSTR-3B - appeal to appellate authority - remand for fresh adjudication on merits - opportunity of hearing

Condonation of delay - reasonable cause for delay - service on GST portal vis-a-vis physical service - Delay of 142 days in filing the statutory appeal was condoned. - HELD THAT: - The Court found that notices uploaded on the GST portal had been served to the petitioner belatedly and that the petitioner had also been impeded by acute lumbar disc prolapse, which affected his ability to appear. On these facts the petitioner demonstrated a sufficient and reasonable cause for the delay in filing the appeal. In exercise of its supervisory jurisdiction the Court therefore condoned the delay of 142 days and set aside the appellate authority's order which had rejected the appeal on the ground of delay. [Paras 6, 7]

Delay of 142 days is condoned and the appellate order rejecting the appeal for delay is set aside.

Appeal to appellate authority - discrepancy between GSTR-1 and GSTR-3B - remand for fresh adjudication on merits - opportunity of hearing - The appeal is remitted to the appellate authority for fresh adjudication on merits after affording opportunity of hearing. - HELD THAT: - Having condoned the delay, the Court directed that the appellate authority (first respondent) must take up the appeal and dispose of it on merits and in accordance with law. The appellate authority is required to afford the petitioner an opportunity of hearing before deciding the issues raised, which arise from the alleged discrepancy between GSTR-1 and GSTR-3B for the tax period 2019 - 2020. The remand is for adjudication on merits and not for mere quantification. [Paras 7]

The appeal is remitted to the first respondent to be decided on merits after affording the petitioner a hearing.

Final Conclusion: Writ petition allowed; delay in filing the appeal condoned, the appellate order rejecting the appeal for delay set aside, and the appeal directed to be decided on merits by the appellate authority after affording hearing.

Reversal of ITC claimed - timeliness of filing GSTR-3B returns for availing ITC due to various difficulties faced by the taxpayers - HELD THAT:- The issue involved in the present Writ Petition, has been squarely covered by the common order of this Court, SRI GANAPATHI PANDI INDUSTRIES [2024 (10) TMI 1631 - MADRAS HIGH COURT], batch, wherein, this Court has categorically held 'this Court considering the fact that the issue involved in all these Writ Petitions is only with regard to the availment of ITC, which is barred by limitation in terms of Section 16 (4) of the CGST Act, and in the light of the subsequent developments took place, whereby, Section 16 of the CGST Act was amended and sub-section (5) was inserted to Section 16, which came into force with retrospective effect from 01.07.2017, the petitioners are entitled to avail ITC in respect of GSTR-3B filed in respect of FYs 2017-18, 2018-19, 2019-20 and 2020-21 as the case may be, on or before 30.11.2021, is inclined to quash the impugned orders.'

Conclusion - The impugned order dated 26.02.2021 is quashed insofar as it relates to the claim made by the petitioner for ITC which is barred by limitation in terms of Section 16 (4) of the CGST Act, 2017 but, within the period prescribed in terms of Section 16 (5) of the said Act - the respondent-Department is restrained from initiating any proceedings against the petitioners by virtue of the impugned order based on the issue of limitation.

Petition allowed.

Seeking permission to withdraw this writ application with liberty to seek remedy before the Competent Authority - HELD THAT:- This writ application is permitted to be withdrawn with liberty as prayed for. All contentions are left open to the parties.

Cancellation of the registration of the petitioner on the premise that the statutory returns have not been filed for a continuous period of six months - HELD THAT:- This Court has been consistently following the directions issued in Tvl. Suguna Cutpiece Center's case [2022 (2) TMI 933 - MADRAS HIGH COURT] wherein, under identical circumstances, this Court has directed the revocation of registration subject to conditions.

The benefit extended by this Court vide its earlier order in Suguna Cut-piece Centre's case, may be extended to the petitioner.

Petition disposed off.

Rectification application u/s 254 - pendency of the application filed by the assessee before the Settlement Commission as per the provision of Section 245F(2) - assessee filed an appeal before the ITAT challenging the order passed by the CIT(Appeal) with an application to condone the delay in preferring the appeal - ITAT by order condoned the delay of 4379 days and remitted the matter back to the CIT(Appeal) for fresh consideration on merits.

As decided by HC [2024 (4) TMI 1230 - GUJARAT HIGH COURT] No infirmity in the impugned order passed by the Tribunal to come to the conclusion that there is no mistake apparent on record in the order of the Tribunal wherein after following the decision of the Coordinate Bench, the Tribunal condoned the delay and as the CIT(Appeal) did not adjudicate the issue on merits and dismissed the appeals of the respondent-assessee as not maintainable in view of the order passed by the Settlement Commission on the ground that the matters have abated, the Tribunal has rightly remanded the matter back to the CIT(Appeal)

HELD THAT:- As stated at the Bar that the application before the Settlement Commission has not been decided, and an order under Section 245D(4) on the application is to be passed.

It is only if the application for settlement is rejected without providing for terms of settlement that Section 245HA of the 1961 Act will be applicable and the appellate proceedings will stand revived.

The stand of the Revenue that the assessee must give up his right to contest the assessment order on merits, if the settlement application is rejected without providing for terms of settlement, is misconceived and must be rejected.

In the peculiar facts of the case the Income Tax Appellate Tribunal was justified in condoning the delay, as well as setting aside the order of the Commissioner of Income Tax (Appeals) and restoring the first appeal.

Recording the aforesaid, we dismiss the present special leave petition. Keep the appellate proceedings in abeyance till the disposal of the application by the Settlement Commission in terms of the 1961 Act

Maintainability of appeal on low tax effect - assessee submits that the tax effect in these appeals is less than Rs. 2 Crores; therefore, these appeals should be disposed of - HELD THAT:- As held in V.M. Salgaonkar and Brothers (P.) Ltd [2024 (12) TMI 717 - BOMBAY HIGH COURT] concerning M/s IPL Loan Trust and connected matters [2025 (2) TMI 453 - BOMBAY HIGH COURT] and Axis AD Print Media (India) Ltd.) [2025 (2) TMI 770 - BOMBAY HIGH COURT] and connected appeals hold that the monetary limits prescribed in CBDT circulars would apply to pending appeals. Still, the exceptions carved out by the CBDT circulars would apply only prospectively i.e. from the date of the introduction of such exception.

Admittedly, before 20 August 2018, these appeals were not covered by any exceptions. However, these appeals were filed because they were beyond the monetary limits prescribed then. The monetary limits have now been revised. These revised monetary limits would also apply to the pending appeals as held in the above precedents. By applying the revised monetary limits to the pending appeals and noting that the exception upon which the Revenue relies was unavailable before 20 August 2018, we uphold the objection on behalf of the assessee and dispose of these two appeals without any cost orders.

These appeals are disposed of because the tax effect is within the monetary limits set out by the CBDT.

Deduction under Section 80IC - Audit report requirement under Section 80IA(7) and Section 80IC(7) - Form No.10CCB - requirement to attach approval/agreement of local or State authorities (Clause 13) - Distinction between Section 80IA and Section 80IC - Application of Section 80IA(8) and Section 80IA(10) to assess abnormal profits/shifted expenses

Deduction under Section 80IC - Form No.10CCB - requirement to attach approval/agreement of local or State authorities (Clause 13) - Distinction between Section 80IA and Section 80IC - Whether an assessee claiming deduction under Section 80IC is mandatorily required to furnish an agreement/approval of Central/State/local authority with the audit report (Form 10CCB) as a precondition for grant of deduction. - HELD THAT: - The Court held that Rule 18BBB and Form No.10CCB prescribe documents for claims under a family of provisions (Sections 80I, 80IA, 80IB, 80IC) but that the statutory requirements of the particular enabling provision govern. Section 80IC does not require an agreement with the Central/State Government or a local authority as a precondition for claiming deduction under sub-clause (2)(b)(ii); by contrast Section 80IA(4)(i)(b) expressly conditions deduction on entering into such an agreement. Thus the Tribunal erred in importing from Form 10CCB/Rule 18BBB (which caters also to Section 80IA cases) a mandatory requirement of an approval/agreement for a claim under Section 80IC where Section 80IC itself contains no such mandate. In consequence, the Tribunal's direction to remit the issue to the Assessing Officer for verification on the ground that the agreement/approval was not on record was unsustainable. [Paras 13, 14, 15]

Tribunal's conclusion that an agreement/approval under Clause 13 of Form 10CCB is a mandatory precondition for claiming deduction under Section 80IC is set aside; Section 80IC does not mandate such an agreement.

Application of Section 80IA(8) and Section 80IA(10) to assess abnormal profits/shifted expenses - Limits of appellate fact-finding and raising new issues - Whether the Tribunal correctly adverted to and remitted for verification issues under Sections 80IA(8) and 80IA(10) (concerning abnormal profits and shifting of expenses/profits) when those matters were not canvassed before the AO or CIT(A) and were not grounds of appeal urged by the revenue. - HELD THAT: - The Court found that the Tribunal proceeded to examine applicability of Sections 80IA(8) and 80IA(10) and directed remand for their application despite those questions not having been raised before the AO or the CIT(A), nor being a ground of appeal. The observations in para 4.12 of the Tribunal's order were therefore unwarranted. The Tribunal exceeded its proper role by importing and directing inquiry on those provisions which were neither canvassed nor formed part of the appellate dispute, rendering the remand on that basis inappropriate. [Paras 16, 17]

Tribunal's observations and remand directed for application of Sections 80IA(8) and 80IA(10) are set aside as unwarranted.

Final Conclusion: The appeal is allowed; the Tribunal's order dated 28 February 2020 is set aside. The Tribunal erred in treating Clause 13 of Form 10CCB (approval/agreement of local/State authorities) as a mandatory precondition for deduction under Section 80IC, and its observations remitting issues under Sections 80IA(8) and 80IA(10) are unwarranted. Questions posed are answered in the affirmative and in favour of the appellant.

Computation of deduction u/s 80IA - quantum of deduction which the assessee would be entitled to claim u/s 80IA - HELD THAT:- The above appeal filed by the revenue being covered by the decision of this Hon’ble Court in [2025 (2) TMI 766 - CALCUTTA HIGH COURT] in the assessee’s case has to be dismissed.

Apart from the fact, there is inordinate unexplained delay in filing the appeal [supra]. We noted that the order impugned in this appeal was relied upon and followed in the assessee’s case for the assessment year 2018-19. When the Tribunal passed the said order, the revenue had not preferred any appeal for the assessment year 2016-17 and that has been recorded by the Tribunal in the order impugned in 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.

Therefore, this is also another ground to dismiss the revenue’s appeal.

Offence punishable u/s 276B - Liability of the Directors in-charge for offence is shown to have been committed by the Company -respondent was being treated as the Principal Officer of the Company - Whether there are sufficient materials to frame the charge against the accused No. 1 Company for the offence punishable under section 276B of the Act? - accused No. 2 to 6 shown that they are not in charge of day to day affairs of accused No. 1 Company

HELD THAT:- No such independent and separate notice is necessary when in the show cause notice, it was stated that Directors were to be considered. In the case on hand, there is no dispute with regard to the fact that before launching of the prosecution, a notice was issued on 30.07.2024 and counsel of the petitioner also brought to the notice of this Court the reply given by the Company wherein it also categorically acknowledged while giving reply that with reference to the above facts and subject with regard to the launching of prosecution when notice was issued under Section 276B r/w Section 278B of the Act that notice was given to the Company and Principal Officers of the Company and have received notices from the complainant and also categorically mentioned that notice was acknowledged with regard to the proposal to launching of prosecution against the Principal Officers of the Company for delaying remittance of TDS and in the reply also, they admitted reasons for delay in remittance of the amount.

When such material is available before this Court and when specific averment is made in the complaint itself that this respondent and others are in the helm of affairs of the Company and they are the Directors, they are the Principal Officers and notices were also given and marked documents - Exs.P5 to P9 and the very contention that no notice was served and they are not in charge of the affairs of the Company, the Trial Court committed an error in making such an observation that no notice was served as contemplated under Section 2 (35) of the Act and also that they have not been in charge of the Company is nothing but perversity and it requires interference by this Court.

The impugned order suffers from legal infirmity and also Court can exercise its revisional jurisdiction when the order suffers from illegality and incorrectness and the trial Court committed an error in coming to such a conclusion that this respondent and others were not in charge of the affairs of the Company when specific allegation is made in the complaint itself for making an averment and even the same has been extracted by the Trial Court in paragraph No. 11 of the impugned order in the beginning itself with regard to the specific averments made in the complaint and also marking of documents Exs.P5 to P9, the attested copies of the notices issued under Section 2 (35) of the Act and the defence cannot be raised at the time of considering the discharge application. Only the Court has to look into the material available on record and the same is a matter of trial.

The Court has to look into the principles laid down in the case of Madhumilan Syntex Ltd. [2007 (3) TMI 205 - SUPREME COURT] particularly referring the provisions of Sections 276B and 278B of the Act discussed in paragraph Nos.13, 14, 15, 26 and 28 and also comes to the conclusion that there is no need of issuance of independent and separate notice if in the show cause notice it was stated that Directors were to be considered as Principal Officers under the Act.

Order - The impugned order dated 01.10.2019 passed by the Special Court for Economic Offences, Bengaluru in so far as it relates to discharging accused No. 2 is set aside and Trial Court is directed to proceed in accordance with law.

Addition u/s.68 - funds received by assessee from SPPL have been added by doubting the genuineness of the transaction - HELD THAT:- Assessee has duly explained the nature of transaction and has also gone to the extent of explaining the source of source with corroborative documentary evidence including assessment order passed in the case of SPPL whereby Department accepted the share application money received by SPPL from its promoter, i.e., the Malaysian company.

In respect of part of funds as received in the subsequent year, assessee has explained it by way of bank reconciliation statement duly corroborated by entries in the bank statement, both of the assessee and that of SPPL. All the stated documentary evidences are placed on record in the paper book.

As SPPL itself assessed by the Department for the transaction having a direct bearing on the addition made in the hands of the assessee, we unhesitatingly, delete the addition in the hands of assessee u/s.68. Appeal of the assessee is allowed.

Penalty u/s 271(1)(c) - estimation of income on bogus purchases - AO added the entire bogus purchases whereas the Tribunal restricted the addition to 12.5% of the bogus purchases being the profit element imbibed in such bogus purchases

HELD THAT:- The undisputed fact is that the additions were made on account of bogus purchases and the quarrel travelled up to the Tribunal and the Tribunal restricted the quantum addition at 12.5% of the bogus purchases.

No merit in the contention of the ld. Counsel that the profit has been estimated and the penalty has been levied on estimated profit. Facts on record show that there were bogus purchases and only the profit element has been added which means that the assessee has concealed the income to this extent in the garb of purchases which turned out to be bogus.

No hesitation in confirming the penalty so levied u/s 271(1)(c) - Decided against assessee.

Reopening of assessment u/s 147 in the name of Partnership Firm as not in existence - penny stocks treated as undisclosed income u/s 68 - HELD THAT:-The law is well-settled in this regard. The re-assessment notice u/s 148 of the Act in the name of a non-existing entity despite unequivocal knowledge of its non-existence, is clearly vitiated and rendered nonest in law. The notice issued on a non-existent firm is not a mere technical glitch. The notice issued under s. 148 to the non-existent firm which was a distinct taxable entity is thus liable to be quashed at the threshold without anything more.

This view is supported by the judgement rendered in the case of Maruti Suzuki India Ltd [2019 (7) TMI 1449 - SUPREME COURT], Uber India Systems (P.) Ltd. [2024 (10) TMI 1001 - BOMBAY HIGH COURT] and Alok Knit Exports Ltd [2021 (8) TMI 777 - BOMBAY HIGH COURT].

Reasons for re-opening were not provided to the assessee - Noticeably, in the instant case, reasons are neither provided at the time of initiation of proceedings nor such reasons have been spelt out in the re-assessment order. Apparently, the vested right of the assessee to file objection to any unlawful assumption of jurisdiction has been completely done away causing serious prejudice to the assessee and embroiled him in protracted litigation.

For assumption of lawful jurisdiction under the Act, all jurisdictional conditions and procedural requirements need to be satisfied. In the absence of copy of reasons made available in spite of specific request, presumption would arise adverse to the Revenue on compliance of pre-requisites of s.147 & 151 of the Act. The re-assessment order framed under s. 147/143(3) is thus, liable to be quashed as rightly contended on behalf of the assessee.

Addition u/s 68 - The assessee has actually incurred business losses on the transactions in Banas Finance Ltd., a stock which is otherwise duly listed on the platform of the exchanges and transactions registered have been routed through SEBI registered stock brokers. The loss claimed has actually resulted in an outgo and depletion of funds. Hence the business loss by no stretch of imagination could fall within the expression ‘unexplained cash credits’. The outgo/loss has resulted in a debit transaction rather than credit transaction. Hence, the additions made under s. 68 is impermissible in law at the threshold. We find apparent rationally in the plea of the assessee for inapplicability of s. 68 of the Act to deny a business loss claimed to have occurred to the assessee. The assessee thus succeeds on this aspect as well.

Appeal of the assessee is allowed.

Denial of Foreign Tax Credit claimed under article 25(2)(a) of the India USA DTAA r.w.s. 90 of the I.T. Act - late filing of Form 67 - assessee filed revised return and claimed Foreign Tax Credit and also filed Form 67 - HELD THAT:- Identical issue came up in the case of Neha Kapoor [2023 (9) TMI 31 - ITAT DELHI] wherein the Tribunal directed the Assessing Officer to allow credit of Foreign Tax Credit as held Rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in filing Form No.67; (ii) filing of Form No.67 is not mandatory but a directory requirement and (iii) DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. Thus we hereby direct the AO to allow the impugned credit of FTC to the assessee. Decided in favour of assessee.

Revision order u/s 263 on a deceased person - HELD THAT:- Following the judgment in the case of Dharamraj [2022 (1) TMI 844 - DELHI HIGH COURT] notice issued u/s 148 of the Act on a dead person was held to be null and void and all consequent proceedings/orders, including the assessment order and the subsequent notices are equally tented and liable to be set aside.

Similar view has been taken in the case of Mrs. Sripathi Subbaraya Manohara L/H Late Sripathi Subbaraya Gupta [2021 (7) TMI 695 - DELHI HIGH COURT] wherein the High Court quashed the assessment and penalty orders passed on the deceased person.

Since in the case on hand an order u/s 263 was passed by the Pr. CIT on the assessee who deceased on 28.03.2020 such an order is null and void and the same is hereby quashed. Appeal of assessee allowed.

Addition u/s 68 - treating agricultural income as unexplained income of the assessee - During the course of assessment proceedings, details of agricultural income were not filed - HELD THAT:- CIT(A) while confirming the additions, has observed that the assessee has not been able to clarify as to how the agricultural operations were claimed to have been carried out on commercial land. Before us also, the assessee could not be able to justify whether the agricultural income earned, were from the agricultural land and no commercial land was used for the same.

Moreover, Form J submitted contained the name of the Director of the assessee company. All these facts need proper verification. Therefore, in the interest of justice, this issue is set aside to the file of the AO for making proper verification of the fact whether agricultural income is declared from the agricultural purposes carried out by the assessee on agricultural land or any commercial land is involved. The AO is further directed to verify whether Form J issued in the name of Director are related to the sale of agriculture produce by the assessee or not. The AO is also directed to allow proper opportunity and assessee is directed to make proper compliance of the notice issued by the AO.

Addition on account of gain from the compulsory acquisition of land by holding the same as unexplained income of the assessee - assessee is not entitled for exemption on the compensation received of the said land acquired by NHAI. He further observed that the assessee is not entitled for exemption u/s 10(37) of the Act as the same is not available to companies as well as in case of non-agricultural land - HELD THAT:- As per amended sub-section 3 of section 105, the provisions of the RFCTLARR Act, 2013 relating to the determination of compensation in accordance with First schedule shall apply to all cases of land acquisition under the enactments specified in Fourth schedule of the said Act. Since NHAI Act is already included in Fourth schedule of the RFCTLARR Act, 2013 thus exemption as provided in section 96 of the said act is available in cases where land is compulsory acquired by under NHAI Act for public purposes and the precondition of issue of notification to this effect has already been withdrawn through amendment in sub-section (3) of section 105 of the said Act.

CBDT vide circular No. 36 of 2016 dated 25.10.2016 after considering the exemption provided u/s 96 of the RFCTLARR Act, 2013 towards the compensation award under this Act as tax free under the Income Tax Act, 1961 clarified that award granted under the RFCTLARR Act, 2013 both for agricultural and non-agricultural land is tax free. Therefore, the compensation received by the assessee on compulsory acquisition of its land, both commercial and agricultural land, by NHAI is eligible for exemption from income tax as per the provisions of section 96 of the RFCTLARR Act, 2013 which is a special Act and prevail over the Income Tax Act, 1961. This view gets support from the judgement of V.S. Promotors Ltd.[2023 (2) TMI 1388 - ITAT LUCKNOW]

Since the land owned by the assessee were acquired by NHAI as compulsory acquisition u/s 3A of NHAI Act, 1956 and compensation was awarded by the competent authorities. The entire amount compensation so awarded was received by the assessee during the FY 2015-16 relevant to the assessment year under appeal, which is after the amendment made in section 105(3) w.e.f. 01.01.2015. Therefore, for claiming the exemption of the compensation under the RFCTLARR Act, 2013 awarded by NHAI, there is no requirement of issue of any notification. Moreover, we have already expressed the view that exemption from the income tax on the compensation received upon compulsory acquisition of land by NHAI is available as per section 96 of the RFCTLARR Act, 2013, therefore, addition made by disallowing the exemptions available to assessee is directed to be deleted. Decided in favour of assessee.

Revision u/s 263 - Short Term and Long Term Capital Gains earned during the year - HELD THAT:- Assessee produced the details of share trading statement of broker, Demat statement with re-conciliation, sale/purchase bills of share trading and financial ledger of the broker and after going through those documents the AO made no addition.

In the present case, the AO raised specific query on the issue of ‘Short Term and Long Term Capital Gains' earned during the year’ and the Assessee has produced the cogent documents and after verifying the documents, the A.O. came to a conclusion that no addition requires to be made and while doing so, AO has also called for books of accounts and examined on test check basis to examine the genuineness of the transaction.

PCIT committed error in invoking the provision of Section 263 accordingly, findings merits in the Grounds of appeal of the Assessee, we hereby quash the order impugned passed by the PCIT. Decided in favour of assessee.

Denial of deduction u/s. 80P - return of income was filed belatedly - HELD THAT:- CBDT vide instruction dated 27.02.2019 issued u/s. 119(2)(b) of the Act directed that all the return of income and reports of audit which are filed till 02.08.2019 are deemed to have been filed by 31.10.2018 in case of tax payers of Kerala following the devastating floods in the month of August, 2018.

Therefore return of income cannot be considered as belatedly filed. Therefore, the matter may be set aside to the AO to pass appropriate order rectifying the order passed u/s. 154 of the Act.

DR did not express any objection to the above submission.

We, remit the matter back to the file of the CPC to amend the rectification considering the instruction issued by the CBDT treating all the returns of income filed by 02.08.2014 were treated as filed by 31.10.2018. Appeal filed by the assessee stands partly allowed.

Disallowance u/s 40A(3) - amount paid in cash to the Kerala State Electricity Board (KSEB) towards electricity charges - HELD THAT:- The provisions of section 40A(3) is not absolute. Provisions of section 40 A(3) cannot be read in isolation but should be read with the provisions of rule 6DD of the I.T. Rules.

Provisions of rule 6DD enumerates certain exceptions for invoking provisions of section 40A(3). Clause (b) of rule 6DD provides that where the payment is made to the government no disallowance u/s. 40A(3) is to be made.

In the present case, the payment is made to state government undertaking, i.e. KSEB, which is considered to be a ‘state’ within the meaning of Article 12 of the Constitution of India and the cash payment made to the state government undertaking cannot be disallowed. See SRC Aviation P. Ltd. [2012 (9) TMI 296 - DELHI HIGH COURT] and Arvind Mills Ltd. [2014 (11) TMI 591 - GUJARAT HIGH COURT]

Since the payment in question falls under the exceptions enumerated under rule 6DD, we delete the addition. Assessee appeal allowed.

Reopening of assessment - non issuing and serving the notice u/s 143(2) - on the basis of AIR information, case of the assessee was reopened by AO u/s 147 -HELD THAT:- Keeping in view the legal position as emerging from the several judicial precedents which have taken the consistent stand that issue of notice u/s 143(2) is mandatory even in reassessment proceedings, hence the reassessment order framed by the AO u/s 147 of the Act is not sustainable in the eye of law and is liable to be quashed. Decided in favour of assessee.

Non-fulfilment of export obligation under the EPCG Scheme as per the EXIM policy 1992-97 - entitlement to concessional duty based on the export obligation achieved - HELD THAT:- When the DGFT had particularly sought for the details of export earnings upto the period 22.12.1999 along with the bank certificates and Appendix 10C attested by the Chartered Accountant and the same has also been furnished by the appellant with all particulars, there had been no further development and when these details were also filed before the Commission, the same had not been considered by the Commission only on the ground that the request for extension made by the appellant had been rejected. Before this Court, the appellant had filed a consolidated statement of exports and the receipts in foreign currency for the period from 01.04.1993 to 20.12.1999.

On perusal it could be seen that it is only a self serving document prepared by the appellant and we are not inclined to rely on this self serving document to appreciate the contentions made by the appellant. However, copies of 3 Bank certificates all dated 25.09.2000 issued by Federal Bank Limited, Indian Overseas Bank and State Bank of Travancore, pertaining to the remittances received for the period upto 22.12.1999 has been filed. The certificate issued by the State Bank of Travancore precisely states that the remittances had been received from various NRE accounts into the account of the appellant. But the certificate of Indian Overseas Bank states that they have collected and credited Rs. 1,63,84,165/- from various NRE customers for the period from 03.06.1999 to 20.12.1999 which is equivalent to US$ 3,56,170. The certificate issued by Federal Bank also certifies that for the period upto 20.12.1999 they have credited an amount of Rs. 4,21,550/- which is approximately equivalent to US$ 10,036.90.

When admittedly the EPCG licence has been extended for the period upto 20.12.1999 and also the appellant had received remittances from the NRE customers for cable subscriptions and when the export achieved upto 1998 had alone been taken into account, necessarily the remittances received by the appellant towards export obligation which according to the appellant has been achieved 30% has to be considered, as their obligation towards the payment of duty will proportionately reduce.

As both the Commission as well as the writ court had not considered this aspect and had simply concluded the issue holding that there has not been any extension after 1998 which is factually incorrect, the portion of the order insofar as fixing the export obligation to have been achieved at 14% alone is set aside and the matter is remanded back to the file of the first respondent Settlement Commission only for the limited purpose of ascertaining the actual export obligation achieved by the appellant by the remittances received by them from the NRE accounts towards cable subscription charges in the 3 banks.

Based on the ultimate decision to be arrived at by the Commission, fixing the export obligation achieved, the proportionate duty for the unfulfilled export obligation shall be paid by the appellant as directed by the Commission, failing which the DGFT will be entitled to realise the bank guarantee. The bank guarantee shall be kept alive till the proceedings are concluded before the first respondent Settlement Commission and ultimately acted upon. In view of the pendency of the issues for a considerable length of time, the entire exercise shall be completed within a period of 3 months from the date of receipt of copy of this order.

Conclusion - The court remanded the matter to the Settlement Commission to verify the actual export obligation achieved through NRE account remittances.

The Writ Appeal stands partly allowed.

Service of SCN - SCN not “given” within the stipulated time - Section 124(a) read with Section 110 (1) and (2) of the Customs Act, 1962 - interpretation of the word “given” in relation to the issuance and service of the show cause notice within the statutory timeframe - simple argument made by learned counsel for the respondent is that since show cause notice was not served on the respondent within six months, he was entitled to return of the goods - HELD THAT:- The respondent became entitled to return of the seized goods on 4th October, 2023. The appellant authorities did not release the goods. Now, if as a subsequent event a confiscation order was passed that order would operate on the goods wherever they were situated. This subsequent confiscation order has got nothing to do with the cause of action involved in the writ petition and appeal. It is an independent right acquired by the appellant authorities to be exercised independently.

The appellants are obliged to immediately return the goods to the respondent subject to the confiscation order. In other words, even if it is assumed that by virtue of confiscation, the ownership of the goods has been transferred to the appellants, still its possession status quo ante which was to be with the respondent has to be restored until the confiscation order is enforced.

Conclusion - The failure to serve a notice within the stipulated time requires the return of seized goods to the owner.

The appellants are directed to return the seized gold to the respondent within four weeks of communication of this order - appeal disposed off.

Order against a dead person - HELD THAT:- Since the impugned order in original dated 20.12.2023 and the consequential order dated 12.12.2024 have been passed against a dead person, the impugned orders have to be necessarily quashed by this Court and this writ petition will have to be allowed. Accordingly, the impugned order in original passed by the first respondent dated 20.12.2023 and the consequential order dated 12.12.2024 passed by the second respondent are hereby quashed and this writ petition is allowed. However, liberty is granted to the respondents to initiate legal action against the appropriate persons in accordance with law.

Penalty under Section 114 and 114AA of the Customs Act, 1962 - pre-deposit condition for preferring appeal - joint and several liability for penalty - mis-declaration and duty drawback evasion - retrospective application of amended tax law - pendency and inaction in prosecuting statutory appeals

Pre-deposit condition for preferring appeal - pendency and inaction in prosecuting statutory appeals - Validity and propriety of the appellate Tribunal's conditional direction requiring pre-deposit as a pre-condition for grant of leave to appeal and stay. - HELD THAT: - The Tribunal, having found gravity in the offence and mis-declaration leading to duty drawback evasion, directed substantial pre-deposits by the appellants as a condition for waiver and stay; those directions were recorded in the appellate order (paragraphs 7 and 8). The High Court held that the Tribunal acted within its power to require pre-deposit as condition for entertaining the appeal where the original authority had imposed penalty and drawback demand after investigation disclosed deliberate suppression and mis-declaration. The Court also took into account the appellants' prolonged inaction - pendency of the appeals for over eight years without complying with the pre-deposit - and treated that delay as a factor militating against the appellants. In consequence, the conditional pre-deposit directions were not found to be vitiated by excessive jurisdiction or infirmity, and the High Court dismissed the appeals as devoid of merits unless the specified pre-deposit is effected within the period directed by the Court. [Paras 7, 8]

Tribunal's conditional pre-deposit requirement upheld; appeals dismissed as devoid of merits unless appellants deposit the pre-deposit within the period directed.

Joint and several liability for penalty - mis-declaration and duty drawback evasion - Challenge to the Order-in-Original on the ground that penalty was fixed jointly and severally on multiple persons and whether such fixation was contrary to settled law. - HELD THAT: - The appellants contended that there is no principle for fixing joint and several liability in cases of customs duty evasion and that the Order-in-Original had improperly fastened joint and several liability on all persons. The High Court reviewed the Commissioner of Customs' finding that the exporters had deliberately mis-declared values and exported worn-out goods to fraudulently avail duty drawback, and noted the investigative findings (including statements under Section 108) implicating the appellants. On that factual and legal matrix the Court found no merit in the plea that the penalties were improperly imposed; the Court did not accept the contention that the penalty fixation was unlawful and treated the challenge as without substance in the circumstances of deliberate mis-declaration and involvement of the appellants.

Challenge to joint and several fixation of penalty rejected; the penalty findings were not disturbed.

Retrospective application of amended tax law - penalty under Section 114 and 114AA of the Customs Act, 1962 - Whether subsequent amendment to the law (reducing pre-condition for preferring appeal) could be applied retrospectively to relieve the appellants from the pre-deposit required by the Tribunal. - HELD THAT: - The appellants relied on change in law that, they submitted, reduced the pre-deposit requirement. The High Court observed that changes in taxation law would not be given retrospective effect so as to affect the fiscal liabilities arising under the regime applicable at the material time. Applying this principle, the Court held that the taxation regime in force when the liability arose (assessment year 2009-2010 and consequent orders) governs the present appeals and that the appellants could not claim retrospective benefit of subsequent amendments in the context of revenue demands and penalties. [Paras 6, 7]

Subsequent amendment to law not given retrospective application; appellants cannot rely on changed regime to avoid pre-deposit or liability.

Final Conclusion: The High Court upheld the Tribunal's conditional pre-deposit directions and rejected the appellants' challenges to the penalty findings (including joint and several fixation), refused retrospective application of subsequent amendments to relieve the appellants, and dismissed the appeals as devoid of merit unless the specified pre-deposits are made within the period directed, failing which the Department may proceed in accordance with law.

Sanction of the drawback claim of the petitioner set aside - rejection on the ground that the drawback claim was filed afer a delay of five and half years - no explanation for not submitting the original triplicate copy of the shipping bill available with the petitioner - Rule 13 of the Customs, Central Excise Duties, and Service Tax Drawback Rules, 1995 - HELD THAT:- On perusal of Rule 13 of the Rules, 1995, it appears that the same provides for the manner and time for claiming drawback on goods exported other than by post and that the triplicate copy of the shipping bill for export of goods is deemed to be a claim for the drawback filed on the date on which the proper Officer of the Customs makes an order permitting clearance and loading of goods for exportation under Section 51 of the Customs Act, 1962 and said claim of drawback is required to be retained by the proper Officer making such order - Sub-section (2) of Rule 13 of the Rules, 1995 provides that the claim for drawback should be accompanied by the copy of the export contract or letter of credit, copy of packing list, copy of ARE-I, wherever applicable, insurance certificate, wherever necessary and copy of communication regarding the rate of drawback where a drawback claim is for a rate determined under the Rule 6 or Rule 7 of the Rules, 1995 by the Commissioner of Central Excise as the case may be relating to the cases where either the amount of rate of drawback has not been determined or to be determined at a lower rate.

Therefore, essentially there has to be a claim to be made for claiming drawback for the goods exported other than by post on the basis of the triplicate copy of the shipping bill detained by the proper Officer to be accompanied by the relevant documents as specified in Sub-rule (2) of Rule 13 of the Rules, 1995.

On perusal of the facts considered by the Appellate and the Revisional Authority, it appears that at the relevant time in the year 2005-06, the goods were manually cleared for export by the appellant vide ten shipping bills and therefore the petitioner was required to be provided with the triplicate copy of the shipping bills for lodging the drawback claim. The petitioner was also provided with the triplicate copy at the relevant time which was reported to be lost in the year 2011. Therefore, there is no explanation for not submitting the original triplicate copy of the shipping bill available with the petitioner.

Both the Appellate Authority as well as the Revisional Authority have rightly come to the conclusion that when the documents were lost on or around 14.05.2011, the petitioner was having the same documents in its possession and in absence of any specific dates made available for loss of such original documents, for the specific cause that prevented the petitioner from filing the drawback claim immediately on receipt of the triplicate copy of the shipping bills from the Customs after export or some reasonable time thereafter, the only reason given by the petitioner is that the person handling the affairs of drawback claim had left the employment - such vague excuse on part of the petitioner cannot be accepted as there is clear delay and latches on the part of the petitioner to lodge the claim and the contention raised on behalf of the petitioner that the duty was cast upon the respondent-Authority to sanction the claim is also not acceptable in view of the fact that the original triplicate copy of the shipping bill was with the petitioner at the relevant time which was lost in the year 2011 and there is no plausible explanation coming forth from the petitioner to explain the delay and laches from the year 2006 to 2011.

Conclusion - The drawback claim could not be considered valid due to the significant delay and the absence of the required triplicate copy of the shipping bill.

It is not required to interfere in the concurrent findings of fact arrived at by the Commissioner of Customs (Appeals) as well as the Revisional Authority while exercising the extra-ordinary jurisdiction under Article 227 of the Constitution of India - petition dismissed.

Requirement of pre-deposit - appeal dismissed on the ground that pre-deposit condition was not fulfilled - importation of Peas, Yellow Peas - confiscation - redemption fine - penalty - HELD THAT:- Since the appellant has provided Security Deposit of Rs.91,30,121, this would meet the requirement of the pre-deposit when the penalty of Rs.60,00,000 crores is litigated. There are no provision to call for pre-deposit when the litigation is towards the Redemption Fine. Hence, being satisfied with the fact the pre-deposit condition has been met, we take up the case for disposal at Tribunal level itself, since on identical case the issue stands decided by this Bench.

It is found that against the DGFT Notifications, the appellants have contested the amendment of import policy by way of a Writ Petition vide WP No. 17962w/2018 before the Hon’ble High Court, Calcutta, wherein Commissioner of Customs, Kolkata was also respondent, on the ground that such an amendment in Foreign Trade policy is the sole prerogative of the Central Government as set out in section 3, 5 and 6 of the FTDR Act and the trade notice did not indicate that it was issued either with the concurrence or the approval of the Central Government.

As the goods were perishable in nature, the appellants moved a Misc. Application MAT No. 1405 of 2018 with CAN No. 8761 of 2018 before the Hon’ble Division Bench of the High Court, Calcutta. After considering the factual position of the case the Honourable High Court vide their Interim Order dated 26.11.2018 granted stay on the DGFT Notifications. Accordingly, goods were allowed clearance provisionally subject to the appellants keeping security deposit of 10% of the assessable value towards probable fine and 10% of duty towards penalty. For the Assessable Value component of Rs.6,08,67,460, they have given security deposit of Rs.60,86,747 and for the Duty component of Rs.3,04,33,731, they have given security of Rs.30,43,374.

In the present case, the appellant has challenged the Notifications before the Calcutta High Court. On going through that Final Order passed by the Kolkata Tribunal in the case of Rahul Agro Industries, it is found that the Assessable value there was to the tune of Rs.96.65 crores and Duty was to the tune of Rs.44.83 crores. For these imports the Adjudicating authority had imposed penalty of Rs.4 crores and redemption fine of 2.10 crores. On appeal by the Revenue, this Bench has considered the factual details and implication of the DGFT Notifications, the Supreme Court’s judgement and has taken a sympathetic view and reduced the same to Rs.25 lakhs of penalty and Rs.25 lakhs of redemption fine.

In the present case, the Assessable value is Rs.6.08 crores and Duty component is Rs.3.04 crores. The appellant is before the Tribunal, being aggrieved with the penalty of Rs.60,00,000 of penalty and Rs.60,00,000 of redemption fine. Since the facts are identical in the present case, following the same lines taken by the Tribunal in the case of Rahul Agro, the ends of justice would be met if the these amounts are modified to Rs.8 lakhs of penalty and Rs.8 lakhs of Redemption fine.

Conclusion - i) The pre-deposit condition was met by the appellant's security deposit, allowing the appeal to proceed. ii) The confiscation of goods under section 111(d) was justified as the imports were contrary to the DGFT notifications. iii) The penalty and redemption fine reduced to Rs. 8,00,000 each.

Appeal allowed in part.

Rejection of claim submitted by the Appellant before the Liquidator - waterfall mechanism - entitlement to payment of dues in accordance with Section 53(1)(a) of the IBC - acceptance of belated claim of the Appellant by including interest - interest amount was claimed by the Appellant or not - remedy embodied in Section 42 of the IBC - Tenability of the contention of the Appellant that it was being forced by the Liquidator to modify/withdraw their claim

Etitlement to payment of dues in accordance with Section 53(1)(a) of the IBC - HELD THAT:- The receipt of the supplies had been acknowledged by the RP along with an assurance that the dues would be paid once funds became available. The Liquidator cannot be allowed to go back from the mutually agreed terms and conditions for provision of services particularly when the services had been accepted without any demur or objections.

Acceptance of belated claim of the Appellant by including interest - HELD THAT:- The Appellant for the first time claimed interest component on 25.06.2019 much after the date of supply of goods. All the correspondences exchanged before this date between the Appellant and Respondent show that no demand was made with regard to interest component. The claim for interest is an afterthought. Submission was pressed that reliance on invoices for interest is nothing but a unilateral document that has no binding effect on the Respondent. Having not added interest at the time of filing belated claim which claim stood already crystallised and admitted, the Appellant cannot suddenly spring a surprise by adding an interest amount as part of claims after a lapse of more than two years from the date of supply - The Adjudicating Authority was not satisfied that the claim of interest had been adequately substantiated and validated by the Appellant before the Liquidator at the time of liquidation commencement.

Whether at the time of filing of their claims, any interest amount was claimed by the Appellant and how the Respondent had treated the claim filed by the Appellant? - HELD THAT:- In the present facts of the case, the Public Announcement seeking claims was issued by the Liquidator on 21.01.2019. The Appellant failed to file their claims on time. The Appellant then requested 14 days’ time on 22.01.2019 to file their claim. This request was not allowed by the Liquidator. Neither did the Appellant file their claims even during the extended period sought by them. Instead, the Appellant filed their belated claim on 23.03.2019 which claim was rejected by the Liquidator on 30.03.2019.

There are credence in the contention of the Respondent-Liquidator that failure to file claims during the liquidation process resulted in crystallization of the claims as per the invoice No. 11239/17, 11240/17 and 11241/17 of 07.08.2017 aggregating to USD 173,182.97. The impugned order agreed upon that the Appellant having once filed their claim amount without interest by their own volition, they cannot question the non-inclusion of interest after efflux of such a long period of time.

Whether the present application of the Appellant is an attempt to circumvent the specific remedy embodied in Section 42 of the IBC which provides that in case any claimant is aggrieved by the decision of the Liquidator in respect of admission of their claim the matter is to be brought to the notice of the Adjudicating Authority for seeking relief? - HELD THAT:- The law is well settled that when a statute provides a particular remedy or that if a thing is to be done in a particular manner, then it has to be done in that manner only. Having failed to challenge the rejection of their claims within the 14 days timeline prescribed under Section 42 of the IBC, the Appellant has indirectly sought to revive their claim by filing a petition under Section 60(5) of the IBC. There are no reasons to disagree with the Adjudicating Authority that this issue cannot be re-agitated at this stage now by invoking Section 60(5) of the IBC. The Adjudicating Authority has therefore correctly held that there is merit in the submission of the Respondent that the Appellant was trying to circumvent the specific remedy under Section 42 of the IBC having failed to avail of it at the appropriate point of time.

Tenability of the contention of the Appellant that it was being forced by the Liquidator to modify/withdraw their claim - HELD THAT:- The Liquidator has an important role to play in the timely conduct of the liquidation process and it is required of him to complete the process within one year from the date of commencement of liquidation proceedings. In the present case, we find that Liquidator has not committed any error in trying to complete the liquidation process on time which commenced way back in 2018. However, since the Appellant was unwilling to give their NOC, the progress of liquidation proceedings was facing a road-block on account of their non-responsive behaviour. Given the conspectus of facts, the Adjudicating Authority is agreed upon that seeking of NOC from the Appellant by the Liquidator in respect of the dues of suppliers of the sub-contractors was within the scope of his duties to protect the assets of the Corporate Debtor and do not find any cogent grounds which show that the Liquidator was found wanting in his conduct in expeditiously settling the ongoing liquidation of the Corporate Debtor.

Conclusion - i) The claims must be filed within the prescribed timeline, and failure to do so results in the finality of the Liquidator's decision. ii) The interest claims must be substantiated and included in the original claim filed with the Liquidator, and cannot be introduced later. iii) The Liquidator's request for an NOC to settle sub-contractors' claims was justified and within the scope of his duties.

No error has been committed by the Adjudicating Authority in rejecting the application. There are no cogent grounds to interfere with the impugned order. There is no merit in the appeal - appeal dismissed.

Extension of timeline for submission of Expressions of Interest (EoI) and Resolution Plans by the Committee of Creditors (CoC) - violation of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - approval of Resolution Plan - HELD THAT:- The present is a case where after issuance of Form-G on 23.10.2022, it was noticed by the CoC that after submission of EoI, some person who had not submitted EoI, whether fresh Form-G be issued or timeline be extended, which was deliberated in the 11th CoC Meeting held on 30.01.2023.

The discussion in the Meeting of the CoC clearly indicate that the proposal submitted by Appellant was discussed and considered on merits. It was noticed that a letter from Phoenix ARC is provided, which indicate that they are offering non-binding bid of Rs.23 crores for the acquisition of debt which has already expired on 15.03.2023. The CoC was also of the view that the action of Appellant was with the intention to distract the resolution in progress and raises enough doubt on his integrity and intentions of submitting a plan. Thus, the offer of the Appellant was not agreed to proceed with further. The Appellant’s submission that his Plan was not considered is not correct and against the records.

The present is a case where CIRP period came to an end and the RP has taken extension in the CIRP and the decision was already taken by the CoC to vote on the three Resolution Plans in its Meeting dated 11.07.2023. The request by the Appellant was made on 13.07.2023 and thereafter the Plan was submitted on 23.07.2023. The CoC had deliberated and discussed the Resolution Plan of the Appellant and did not accept the request to proceed any further with the Plan of the Appellant. The submission of the Appellant that Plan submitted by the Appellant was not considered by the CoC, cannot be accepted. The CoC had already decided to vote on the Plans, which Plans were voted from 19.07.2023 to 11.08.2023 and Plan of Pinax having been approved with the majority of 97% vote share, there are no good ground to interfere with the commercial wisdom of the CoC approving the Resolution Plan.

Conclusion - The Adjudicating Authority having noticed entire submissions and has found that there is no infirmity in the decision of the CoC in not accepting the Resolution Plan of the Appellant and deciding to vote on the Resolution Plans, there are no error in the order of the Adjudicating Authority rejecting IA No.1325/KB/2023. The Resolution Plan of Pinax, which was approved with 97% vote share of the CoC has been rightly approved by the Adjudicating Authority by order dated 20.12.2024, which order need no interference, since no ground has been made out within meaning of Section 61(3) of the IBC.

Appeal dismissed.

Rejection of application filed by the Appellant objecting to the Resolution Plan - objection against the extension of timeline or invitation to submit revised Resolution Plan - inclusion of Pinax Paper Mills Private Limited in the list of Prospective Resolution Applicants (PRAs) after the timeline extension - HELD THAT:- The voting period for the voting of the plan was allocated from 19.07.2023 to 11.08.2023 and as per e-voting result on 11.08.2023, the plan of Pinax Paper Mills Private Limited was approved with 96.05% voting share.

Present is a case where CoC in its meeting held on 09.02.2023 decided to extend the timeline for submission of EoI and Resolution Plan. It is noticed that Invitation for Expression of Interest itself contemplated extension of timeline by the CoC which is reflected in Clause 6 of the EoI. Thus, all Resolution Applicants were well aware that time for submission of the EoI and submission of the Resolution Plan can be extended by the Resolution Professional with approval of the CoC.

Whether extension of timeline which is contemplated in the EoI itself require a publication of fresh Form G? - HELD THAT:- Present is not a case that there was any modification in the Invitation for EoI rather only extension of timeline on same criteria and conditions as was initially provided have been made. Timeline as noticed above was already permitted to be extended by Clause 6 of the same Invitation for EoI dated 23.10.2022 by which process for receiving of EoI commenced. Clause 6 only provided for extension of last date for submission of EoI and when we read Clause 6, it does not indicate that for extension of last date of EoI revised fresh Form G was required to be issued. It is noticed that in Regulation 36 B of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 which is ‘request for resolution plans’ both expressions i.e. modification and extension of timeline have been used.

As per sub-regulation (5), any modification in the request for resolution plan has to be treated as fresh issue whereas extension of timeline with the approval of the committee has been separately dealt. Thus, modification of request for resolution plan and extension of timeline has been separately dealt in Regulation 36B. Applying the aforesaid analogy in Regulation 36A, it is clear that although any modification in the Invitation for Expression of Interest require publication of fresh Form G but Regulation 36A on its term does not contemplate publication of fresh Form G when timeline has been extended. In any view of the matter, the present is a case where Appellant who has aggrieved by the approval of the Resolution Plan and rejection of his IA was very much part of the CIRP process, he having expressed its interest in pursuance of the issuance of Form G and after extension of timeline, it was communicated by e-mail dated 13.02.2023 and after publication of list of Prospective Resolution Applicants on 23.02.2023, neither any objection was filed by Appellant rather it participated in the process by filing a resolution plan by deleting Nippon Ispat Pvt. Ltd. from its resolution plan with whom it has earlier submitted resolution plan which was non-compliant. Applicant, thus, participated in the process and took chance to succeed without raising any objection to the extension of timeline.

In the present case also, the ground taken by the Appellant is under Section 61(3)(ii) i.e. material irregularity in exercise of the powers by the Resolution Professional during the CIRP. Whether in the present case by non-publication of Form G after extension of timeline by the CoC in its 12th CoC meeting can be said to be material irregularity leading to scrapping of the entire CIRP process subsequent to the extension of timeline is the question to be considered.

Conclusion - i) The CoC's decision to extend the timeline for EoI and Resolution Plan submission upheld without issuing a fresh Form G, as it was in line with the original EoI and approved by the CoC. ii) The inclusion of Pinax Paper Mills in the final list of PRAs was proper, and no objections were raised by the Appellant, who participated in the process.

There is no merit in the Appeal. The Appeal is dismissed.

Invocation of extended period of limitation under proviso to section 73 (1) of the Finance Act - levy of mandatory penalty - suppression of facts or not - wrongful availment of Cenvat credit amount before discharging the service tax liability - eligible document to claim Cenvat credit under reverse charge mechanism as per rule 9(1) of CCR - HELD THAT:- The appellant having disclosed the availment of the Cenvat Credit for the month of October and November in the ST3 returns cannot be held liable for concealment of suppression of facts and therefore the extended period of limitation cannot be invoked. In view thereof it is wrong on the part of the revenue to say that the appellant had wilfully suppressed the material facts from the department with intent to wrongly avail Cenvat credit. As per the provisions of the Finance Act, the liability of the appellant was to file the STRs within the stipulated time disclosing the true facts and it is not the case of the revenue that they had not filed the STRs or had not disclosed the availment of Cenvat Credit. Hence, it is not a case of wilful suppression of material facts.

There is no averment in the show cause notice with reference to the factual matrix of the instant case, satisfying the presence of the ingredients of fraud, collusion, wilful misstatement, suppression of facts, or contravention of any of the provisions of this chapter or of the rules made thereunder with intent to evade payment of service tax. The burden is on the revenue which they have failed to discharge. The allegation of the revenue that the appellant had availed the Cenvat credit in contravention of the provisions of rule 4(7) is not sufficient to invoke the extended period as the violation has to be with reference to the intent to evade payment of duty.

Reliance is placed on the decision in Tamil Nadu Housing Board versus Collector of Central Excise [1994 (9) TMI 69 - SUPREME COURT], where the Apex Court held that extended period is invocable only if both the situations, suppression, fraud, collusion, etc. and intent to evade payment of duty is proved. Initial burden is on the department.

Even if it is held that there was an error on the part of the appellant in availing the credit, however the error was inadvertent as they were registered only in the month of September 2013 and therefore, the extended period invoked by the department is not justified. The principle enunciated in various decisions is that the proviso to section 73 (1) would be applicable on account of misstatement or suppression of facts only if the same was deliberate and for the purpose of evading payment of duty.

Levy of mandatory penalty - HELD THAT:- Revenue relied on the decision of the Tribunal in the case of Commissioner of C EX & ST–LTU, Delhi versus Gas Authority of India Ltd [2018 (12) TMI 91 - CESTAT NEW DELHI], to emphasise the plea that merely because the appellant is a public sector undertaking does not mean that mandatory penalty cannot be imposed once the invocation of the extended time limit has been upheld. Since it is already held that extended period of limitation cannot be invoked in the present case in the absence of the ingredients specified under section 73 of the Act, consequently, the penalty also cannot be imposed. Moreover, the facts in the said case are distinguishable from the present one, where the findings were to the effect that the appellant mis-classified the product as Naptha, on which much lesser excise duty was payable and therefore mis-declaration was held to be a strategy for tax evasion, and further the exemption claimed on the mis-declared product was held to be a positive act of misrepresentation of the facts. It was, therefore held that merely because the assessee is PSU is not sufficient to set aside the show cause notice as being barred by time.

Since the entire demand is beyond the normal period of limitation and it is held that the extended period is not invocable, the entire demand needs to be set aside on this ground alone. It is, therefore not necessary to further go into the merits of the matter. The question on merits is left open.

Conclusion - Due to the absence of deliberate intent to evade payment, the extended period and consequent penalties were deemed inapplicable.

Appeal allowed.

Rejection of declaration under Voluntary Compliance Encouragement Scheme (VCES), 2013 - alleged tax liability on remuneration paid to part-time directors of the company - rule 2(1)(d)(i)(EE) of Service Tax Rules, 1994 - HELD THAT:- It is evident that the adjudicating authority has neither perused the terms of employment of the said directors nor examined the scope for appointment of whole-time employees as directors in the statutory framework governing companies. It is also not the case of the adjudicating authority that the whole-time directors were being remunerated with sitting fees in addition to contractual compensation. The additional tax liability has been fastened after the ‘negative list regime’ was made operational and influenced, unduly so, by the definition of ‘person liable for paying the service tax’ in Service Tax Rules, 1994 which is nothing but a machinery provision stemming from statutory delegation under section 68 of Finance Act, 1994. Such machinery provision is of significance to the tax scheme only upon determination of tax liability. The tax liability in the present instance could not have been determined unless with, and except by, reference to the contract of employment.

In the absence of such enquiry, and further finding thereof in the impugned order, the determination that the claim under the Voluntary Compliance Encouragement Scheme (VCES), 2013 is false, and, thereby, warranting discard is not tenable. Such casual and peremptory discard of relevant aspects of compensation detracts from the validity of the findings. It falls to the adjudicating authority to consider this aspect and upon determination that the said amount should have been included in the taxable service with section 2(1)(d)(ii)(EE) of Service Tax Rules, 1994 to be invoked for fastening tax liability attendant upon discard of claim for privilege under the scheme to enable which the proceedings will have to be restored to the original authority.

Conclusion - There is a need for a thorough examination of the terms of employment and contractual arrangements to establish the tax liability accurately.

The impugned order is set aside and the matter remanded to back to the original authority.

CENVAT Credit - nexus of input services with the manufacture of final products/output services - Management Consultancy Service - Maintenance or Repair Service - Clearing & Forwarding Agent Services - Insurance Auxiliary Services - GTA-Outward Transportation Service - Courier services - Mandatory and Additional Inspection Service - business support services - Casting Error - recovery agent services - warranty handling service - Insurance Services for the plant, machinery and insurance for employees - subscription fees - Works Contract Service.

Management Consultancy Service - denial of credit on the ground that these services are related to gratuity valuation, superannuation valuation, leave encashment valuation, post-retirement valuation, etc., which are part of welfare measures for the employees - HELD THAT:- The services which are related to R & D facility, finance accounting and taxation etc., have been subsequently allowed in Order-in-Original No.10/2017-18 dated 29.01.2018. It is also stated that the services related to salary profile in terms of welfare measures was only denied for the later period. In view of the above, the matter is remanded for verification of the documents submitted by the appellant to examine whether the management consultant service is related to R & D, finance, trading, legal services, production management etc.

Management Consultancy Services - services on gratuity and superannuation funds - HELD THAT:- The Commissioner has allowed cenvat credit on most of the Management Consultancy Services except for service tax credit relating to services on gratuity and superannuation funds, which are basically related to the salary profile of the employees. The same is rightly denied since these services are not related to the manufacturing activities of the appellant; hence, it is disallowed.

Maintenance or Repair Service - HELD THAT:- This service is related to the services rendered by the dealers to the clients of the appellant and the dealers get reimbursement of the cost of these services. The services are of mandatory free services and maintenance services. Since, these services were actually provided by the dealers after the removal of final products at the customer’s premises, the service was an ‘input service’ for the customers of the appellant. Hence, the Commissioner held that it cannot be said to be a service which was used by the appellant and therefore, the service tax paid on such services cannot be availed as cenvat credit - credit allowed.

Clearing & Forwarding Agent Services - HELD THAT:- These services are related to packing of spare parts outside the factory premises used for repairs of excavators, which have been already cleared from the factory. Since the transaction value for the machine includes the cost of such repair and maintenance services on which excise duty has already been discharged and since it is within the warranty period, cenvat credit cannot be denied - credit allowed.

Insurance Auxiliary Services - HELD THAT:- These are the services which are related to medical insurance of employees, insurance of warehouse/branch office, transit insurance for space and car insurance used for sales promotion. Since, all these services are related to and add value to the manufacturing activities of the appellant and since the above services are also statutory requirement, they are eligible for the cenvat credit, hence allowed.

GTA-Outward Transportation Service - HELD THAT:- Transportation of goods from warehouse to customer’s site, the Commissioner has already allowed the credit for transportation of goods from factory to depot and denied only to the extent of transportation of goods from factory to the customers’ premises. The goods transported from warehouse to customer’s site from multiple centres at different places in India for maintenance or repair services have also been denied of cenvat credit since the services are rendered beyond the place of removal - It would be pertinent to place reliance on the decision rendered by the Larger Bench of the Tribunal in M/s. The Ramco Cements Ltd. vs. The Commissioner of Central Excise [2023 (12) TMI 1332 - CESTAT CHENNAI-LB], wherein the Tribunal had discussed in detail with regard to the issue on whether the cenvat credit on GTA services for outward transportation of goods from the factory to the buyer’s premises be denied in cases where the goods are sold on FOR (buyer’s premises or should such matters be remanded to the lower authorities for determining what is the place of removal - In view of the above Larger Bench decision, this issue is remanded to determine the admissibility of CENVAT credit on the GTA Service up to the place of removal.

Courier Services - HELD THAT:- The Commissioner has denied the cenvat credit on the ground that the courier service is used for transportation of materials from central warehouse to feeder warehouse and branches for replacement of materials under warranty or for providing maintenance or repair services. It is pertinent to refer to decision rendered in the case of CCE vs. CCL Products (India) Ltd [2009 (3) TMI 136 - CESTAT, BANGALORE], wherein it was held that various services including courtier services were rendered in respect to business activity. Hence, credit is allowed.

Mandatory and Additional Inspection Service - HELD THAT:- The appellant submitted that the cost of mandatory service inspection during the warranty period is part of their cost on which excise duty has already been paid. It is also stated that these mandatory services are provided to their customers to ensure that the consumable and critical items like filter and oil are replaced on the machine, the dealer raises a bill with service tax on which credit has been availed, hence submitted that for these mandatory services, cenvat credit cannot be denied. So also, the additional services are provided after the warranty period for which bills are raised along with service tax payment on which credit has been availed. Since, these services are rendered after clearance of the final products, on which Excise duty has been already paid and also, they are registered under “Maintenance and Repair Service”, hence, credit on this is allowed.

Business Support Service - HELD THAT:- These are services rendered by the dealers of the appellant after sale of goods and covered under the warranty service. Since the cost of warranty is included in the invoice value, on which tax has been discharged, the credit on this cannot be denied. Hence, it is allowed.

Casting Error - HELD THAT:- Since, no documents have been produced as to the services rendered under this category is either before the Commissioner nor heres, the same is denied for want of documents to prove the nature of service. On reimbursement of service tax, an amount of Rs.48705/- has been denied only on the ground that no documentary evidences have been provided having paid the tax. Since, nothing is also placed, the same is upheld.

Recovery Agent Service - HELD THAT:- These services have nothing to do with the manufacturing activities but relates to recovery of amounts unpaid by their customers, hence rightly denied.

Warranty Handling Service - HELD THAT:- These post-manufacturing services being part of the warrant period hence credit allowed. Club membership fees (Rs.3,240/-) is rightly denied in view of the fact that the membership fees and service tax paid on the club membership has nothing to do with the manufacturing activities of the appellant. The packing services (Rs.39,270/-) are meant for packing of parts locally procured which are used for maintenance and repair, which forms part of sale process and relates to packing of final products manufactured by them, which has nexus with the manufacturing activities, hence allowed.

Insurance Services for the plant, machinery and insurance for employees - HELD THAT:- Insurance Services for the plant, machinery and insurance for employees have all been allowed and what is disallowed is only those insurance policies that cover the family members of the employee that is to the extent of Rs.5,42,966/-. Since, the policies are related to the family members, this has been rightly denied.

Subscription Fees - HELD THAT:- This is the fees paid on taking membership of Indian Construction Equipment Manufacturer Association in order to participate in their exhibitions, in order to promote their products. The cost of which is included in the manufactured final product; hence, it is allowed.

Works Contract Service - HELD THAT:- The service tax credit has been denied only on the imported services related to civil works which are excluded from the definition of ‘input services’, the same is upheld.

Conclusion - Services directly or indirectly related to manufacturing activities and statutory requirements were generally eligible for credit.

Appeal allowed in aprt.

CENVAT Credit - denial on the ground that the invoices were issued from an unregistered premises - various input services such as Architect services, Event Management services, etc. - Demand of service tax on training kits sales and whether these constitute commercial training or coaching - Demand of service tax on the sale of software declared as exempt in their books of account - Demand of service tax on services supplied to SEZ units and the applicability of exemption under N/N. 4/2004-S.T. - Limitation period for invoking extended period for demand and imposition of penalties under Section 78 of the Finance Act, 1994.

Whether the appellant is eligible for cenvat credit on the invoices issued from a premises which is not registered under their Centralized Registration Certificate? - HELD THAT:- There is no dispute that these premises were not registered under the Centralized Registration Certificate. The appellant’s claim is that the invoices from Mumbai Unit were addressed to their registered premises at Bangalore, hence the same cannot be denied. The cenvat credit is related to the invoice where the rent was paid for the premises at Mumbai (Bandra) which was claimed to be used for marketing activities.

There is no dispute of the fact that the appellant was well aware that all the premises that are used for the manufacturing/marketing purposes are to be registered under centralized registration procedures. Hence, the rent paid on the premises which is not registered cannot be availed as cenvat credit for the simple reason that there is no evidence as such that the above premises was used for marketing or providing any output services, except for stating that the premises used to facilitate business meetings with existing and prospective customers. In view of the specified procedures laid down under Centralized Registration Procedures read with Rule 4 (5) of Service Tax Rules, 1994 and in accordance with the Cenvat Credit Rules, the cenvat credit cannot be extended on rent paid on unregistered premises in both the premises of Mumbai. Similarly, the premises at Bangalore were rented for training purpose, space for support team, space provided for telecommunication service and for support activity. From the description of the activities, it is clear that in these premises also no output service activities undertaken except for renting them for various other purposes as mentioned above. Since, these premises have nothing to do with manufacturing/output services of the appellant the question of extending cenvat credit for these premises does not arise, hence rightly denied.

Eligibility of cenvat credit on services - Architect service - Authorized Service Station Service - Event Management Service - denial of cenvat credit on the above services only on the ground that there is no nexus between the input service and the output service rendered by the appellant - HELD THAT:- The convention services are also used for day-to-day business operations/meetings. Similarly, design services, event management services, etc., are all services in relation to the activities undertaken by the appellant. Since, individual invoices have not been verified to examine whether these were in relation to the operations rendered by the appellant, the matter remanded to the Commissioner only to examine whether these services were rendered in connection with the operations of the appellant, without questioning the one-to-one corelation. However, all invoices issued from the 6 premises not registered under Centralized Registration are to be denied.

Demand of service tax on training kits sales - HELD THAT:- From the observations of the Commissioner in the impugned order, there are no evidence or discussion on payment of VAT on the above participation fees, hence the same is remanded for deciding the issue afresh after considering the fact that VAT is discharged on the value collected as participation fees, taking into consideration the decisions relied upon by the appellant.

Demand of service tax on sale of software where the turnover is declared as exempt in their books of account - HELD THAT:- The appellant claims that this software was subject to VAT/CST and the recipient issues Form-C and based on the agreements the appellant carries out the replication of the software in a CD/DVD the same needs to be considered as exempted service. Since the agreements were not placed before the Commissioner to prove that they are exempted services, and the Commissioner observes that ‘the assessee failed to produce the entire documents during the audit in spite of several opportunities provided to them and always argued that they have claimed exemption in the ST-3 returns filed by them as the same is liable for VAT and not taxable under the Finance Act, 1994’ - the matter is remanded to the Commissioner for further examination based on the documents placed on record by the appellant to prove that VAT has been discharged on the above software.

Demand of service tax on services supplied to SEZ units - HELD THAT:- The period of dispute is from October 2008 to March 2009 and as rightly stated by the appellant they are eligible for the benefit of the exemption for the services rendered to the SEZ unit as per the Notification No. 4/2004 dated 31.03.2004. Since no documents were placed before the authorities that these services were used within the SEZ premises for the authorised operations, the same is being remanded for this limited purpose of verification.

Time Limitation - HELD THAT:- Unless any positive allegation of misdeclaration or suppression with intention to evade is brought on record the question of suppression cannot be alleged. In the instant case audit visited the unit in December 2011 and January 2012, the show cause notice was issued in 2014. The show-cause notice clearly mentions that a letter dated 08.02.2013 was issued to the appellant followed by letter dated 25.02.2013. The appellant in his reply to show-cause notice submitted that vide letter dated 04.02.2013 a list of documents was submitted which was already placed before the audit team and again vide letter dated 22.02.2013 further documents such as Software Distribution Agreement, Rental Agreement and sample purchase orders were filed. In response to the audit enquiry note dated 06.03.2013 a detailed reconciliation of expenses was filed vide their letters dated 09.05.2013 and 16.05.2013. In view of the above, since there is no allegation that regular returns have not been filed alleging suppression of any of the specific documents, the question of mis-declaration or suppression cannot be sustained.

Conclusion - i) Cenvat credit is disallowed for invoices from unregistered premises. ii) Other issues were remanded for further examination. iii) Since there is no allegation that regular returns have not been filed alleging suppression of any of the specific documents, the question of mis-declaration or suppression cannot be sustained.

Appeal disposed off.

100% EOU / STPI - Classification of service - Manpower Recruitment and Supply Agency service or Consulting Engineer Service - time and material project - suppression of facts or not - invocation of extended period of limitation penalty.

Classification of service - HELD THAT:- The issue is no more res integra in as much as the agreements with M/s. Philips Electronics India Ltd. in the present case was similar to the agreement entered by M/s. Aztecsoft Ltd. with M/s. Philips Electronics India Ltd. in [2024 (7) TMI 312 - CESTAT BANGALORE] and this Tribunal on examination of these agreements had clearly held that the services rendered by the appellant is nothing but a ‘Manpower Recruitment and Supply Agency service’.

There are no reason to disagree with the decision and therefore, the demand of service tax as manpower supply service is upheld.

Extended period of limitation - suppression of facts or not - penalty - HELD THAT:- Since the ST-3 returns placed on record categorically show that they had declared the services rendered by them as exempted services under ‘Consulting Engineer Service’ and in view of the fact that the services were exempted till 16.05.2008 under consulting Engineer Service, the same cannot be considered as mis-declaration or suppression of facts. Hence, the impugned order is modified to the extent of confirming the demand for normal period and the penalties imposed under Section 76 and 77 are upheld and penalty imposed under Section 78 is set aside.

Conclusion - i) "Time and Material Projects" provided by the appellant constituted "Manpower Recruitment and Supply Agency Service", subject to service tax. ii) The appellant's classification of services as "Consulting Engineer Service" was based on a bona fide interpretation of the law, and there was no willful suppression or mis-declaration. The extended period of limitation was not applicable due to the absence of willful suppression. iii) The penalties under Sections 76 and 77 were upheld, but the penalty under Section 78 was set aside.

Appeal allowed in part.

Short payment of service tax - amount received for construction of roads - Manpower Supply Service (on reverse charge basis) - Extended period of limitation.

Whether the demand of service tax amounting to Rs.33,04,058/- on the amount received for construction of roads is valid under the applicable service tax exemption provisions? - HELD THAT:- There are several entries wherein amounts have been received towards construction of road. These funds have been received either from DRDA, Gorakhpur or Gorakhpur Development Authority, out of MP/MLA funds. It is found that entry 13(a) of Notification No.25/2012 dated 20.06.2012 grants exemption from payment of service tax on construction of road, bridge, tunnels or terminals for road transportation for use by general public. The said amount of Rs.2.20 crore having been received towards construction of road was exempted from payment of service tax. Therefore, the demand of Rs.33,04,058/- is liable to be set aside.

Demand of service tax on availing Legal and Manpower Supply service - Extended period of limitation - HELD THAT:- A similar matter of limitation had come up for consideration before the Division Bench of this Tribunal in the case of G. D. Goenka Pvt. Ltd. [2023 (8) TMI 995 - CESTAT NEW DELHI]. In the said case, the demand had been raised consequent to audit. The extended period of limitation was invoked on the ground that under self assessment, the Appellant assessee was required to assess its own tax due on the services provided by it and file returns under Section 70. By claiming the wrong Cenvat credit, the Appellant willfully and deliberately suppressed the facts from the Department.

The Division Bench referred to the decision of the Hon’ble Supreme Court in the case of Pushpam Pharmaceuticals Company Vs. CCE, Mumbai [1995 (3) TMI 100 - SUPREME COURT] and made detailed observation for holding that extended period of limitation could not have been invoked.

Thus, the Appellant’s case on limitation is squarely covered by aforesaid order of the Division Bench of the Tribunal. Respectfully following the aforesaid order, it is held that the demand of service tax (Rs.33,04,058/- as well as Rs.8,259/-) could not have been raised by invoking of extended period of limitation. As the demands itself are being set aside, penalties under Section 78(1) as well as Section 77(2) are also liable to be set aside.

Conclusion - i) Exemption under Notification No.25/2012 is applicable to road construction projects funded by government bodies, negating the service tax demand. ii) Regular filing of service tax returns precludes the invocation of the extended period of limitation absent evidence of willful suppression. iii) Penalties cannot be imposed when the underlying tax demand is invalidated.

Appeal allowed.

Refund claim of Excise Duty paid wrongly - alleged mistake in classification and payment - absence of a challenge to the assessment or self-assessment - maintainability of refund claims filed without challenging the initial assessment - HELD THAT:- The appellant has produced on record number of documents cited supra viz. copy of PLA for the months of July 1999 to December 1999 evidencing payment of Excise Duty for the clearance affected from 15.07.1999 to 31.12.1999, photocopies of TR-6 Challans No.71 dated 01.07.1999 to No.198 dated 13.12.1999 vide which the Excise Duty was originally deposited during July 1999 to December 1999, list of invoices issued during July 1999 to December 1999 showing clearance of above consignment of imported SKO - The appellant has also produced certificate of Chartered Accountant who certified on the basis of books of accounts of the appellants duly certifying total payment of duty on same SKO Customs Duty cargo.

In view of the plethora of judgments, the learned Commissioner (Appeals) has not considered the same and has come to the finding that the appellant has not been able to establish that double payment has been made. Once it has come on record that no Excise bonded SKO was pumped by any refinery during the year 1999 to 2000 in the pipeline which clearly shows that the Excise Duty paid by the appellant is by mistake which is liable to be refunded to the appellant. As regards the preliminary objections raised by the Revenue, it is to be noted that this Tribunal in the case of M/s Shree Balaji Warehouse etc. has held that refund of service tax is maintainable in the absence of any challenge to assessment or self-assessment.

As regards the preliminary objections raised by the Revenue, it is to be noted that this Tribunal in the case of M/s Shree Balaji Warehouse etc. [2023 (9) TMI 1478 - CESTAT CHANDIGARH (LB)] has held that refund of service tax is maintainable in the absence of any challenge to assessment or self-assessment. The said decision was followed by the Tribunal in the case of M/s Grand Prix Engineering Pvt. Ltd. [2023 (10) TMI 731 - CESTAT CHANDIGARH], which was a case of refund under the Excise Act and it was held that refund claim would be maintainable in the absence of any challenge to assessment or self-assessment in appeal.

Conclusion - i) Once it has come on record that no Excise bonded SKO was pumped by any refinery during the year 1999 to 2000, the excise duty paid was clearly a mistake. ii) Refund claims can be maintained without challenging the assessment if it is demonstrated that duties were paid erroneously. iii) Refund of the excise duty paid erroneously by the appellant is allowed.

The impugned order is not sustainable in law - Appeal allowed.

Doctrine of promissery estoppel - Rejection of the respective eligibility certificates applied under the relevant provisions of the Industrial Policy of 2008 - rejection of eligibility certificates without due and proper appreciation of the facts and materials available before the respondent-Department of Industries - industrial unit was “non-functioning” or not - validity of assessments made by the Department of Finance and Taxation, during the pendency of eligibility certificate applications.

Whether the rejection of eligibility certificates by the Department of Industries and Commerce under the Industrial Policy of Assam, 2008, on the grounds of being "non-functioning," was justified? - HELD THAT:- The period of validity of the Industrial Policy of 2008 was for a period of five years with effect from 01.10.2008 till 30.09.2013. The eligibility criteria as per the said Policy was all new units as well as existing units which go in for substantial expansion and which had commenced commercial production within the period of validity will be eligible for the incentives from the date of commencement of commercial production for the period applicable for each incentive. In the said Industrial Policy of 2008, various fiscal incentives such as interest subsidy on term loan, power subsidy, subsidy of quality certification/technical knowhow and subsidy on drawal of power line were given.

The respondents were permitted to place before the Court the materials on the basis of which the General Manager, DICC submitted its report of ‘non-functioning’ unit. The Court considered it apposite to permit the respondent authorities to place such materials to show the relevant date(s) when the physical inspection was made and the said unit was found to be non-functioning. On the other hand, the Sales Tax Department completed the assessments and raised the demand on the petitioner and other similarly situated petitioners. The assessment order clearly reveals that the assessment and the consequential demand was made after due examination of the books of accounts. The assessment of tax was made on the turnover of the unit/industry. Consequently, there appears to be a contrary stand reflected by the two departments of the Government namely, the Industries and the Finance Department. It is trite to mention here that in the State Level Committee constituted to examine and issue eligibility certificates, representatives of both the industries as well as the Finance and Taxation Department are members and which fact is not disputed by the respondents. Under such circumstances, it cannot be understood as to how a unit which was found to be non-functioning by the industries department could have reflected the turnover of goods manufacture and on the basis of which the assessments were carried out and demands were raised by the Finance and Taxation Department.

In Duroply Industries Limited Vs. The Union of India & 5 Ors [2023 (11) TMI 1353 - GAUHATI HIGH COURT], the Co-ordinate Bench of this Court held that the Petitioner’s unit was duly functioning at the time when the claims for Transport Subsidy were made, and the said unit has to be closed down subsequently due to the financial crisis and shortage of raw material and thereby the State Level Committee ought not to have rejected the claims of the Petitioner on the ground that with effect from January, 2018 the Petitioner unit was not functioning.

In Sukhamoy Paul Vs. State of Tripura & Ors. [2021 (5) TMI 1077 - TRIPURA HIGH COURT] while dealing with a similar situation with regard to the Transport Subsidy Scheme, the Tripura High Court held that the eligibility period for claiming subsidy may be 5 years, the scheme nowhere provides that only if a new industrial unit continues such manufacturing activity for a period of 5 years that it can claim the transport subsidy. Therefore, even if, as pointed out by the respondents, the petitioner at some later point of time after commencing its production got engaged into the same activity as a job worker, this would not amount to breach of any of the eligibility conditions of the scheme.

The aforesaid two judgments of this Hon’ble Court and that of Tripura High Court are squarely applicable in the present case.

Whether the doctrine of promissory estoppel applies to prevent the government from denying benefits promised under the Industrial Policy of Assam, 2008, after the petitioners had altered their position based on those promises? - HELD THAT:- Under the doctrine of promissory estoppels where the Government has made a promise and the prose relying on the promise has altered it’s position to its detriment the Government is not exempt from it’s liability to carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex-parte appraisement of the circumstances in which the obligation has arisen - The Apex Court in Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P.[1978 (12) TMI 45 - SUPREME COURT] observed that that the doctrine was not limited only to cases where there was some contractual relationship or other pre-existing legal relationship between the parties. The principle would be applied even when the promise is intended to create legal relations or affect a legal relationship which would arise in future. The Government was held to be equally susceptible to the operation of the doctrine in whatever area or field the promise is made — contractual, administrative or statutory.

The Doctrine of Promissory Estoppel has been repeatedly applied by the Apex Court in statutory notifications. In Pournami Oil Mills v. State of Kerala [2020 (12) TMI 1241 - SUPREME COURT] the Government of Kerala by an order dated 11-4-1979 invited small-scale units to set up their industries in the State of Kerala and with a view to boost industrialization, exemption from sales tax and purchase tax was extended as a concession for a period of five years, which was to run from the date of commencement of production. By a subsequent notification dated 29-9-1980, published in the gazette on 21-10-1980, the State of Kerala withdrew the exemption relating to the purchase tax and confined the exemption from sales tax to the limit specified in the proviso of the said notification.

After elaborate discussions of the law on Promissory Estoppel as laid down by the Apex Court, it is seen that the State authorities as well as its limbs covered under the sweep of Article 12 of the Constitution of India being treated as ‘State’ within the meaning of the said article, can be made subject to the equitable doctrine of promissory estoppel in cases where because of their representation the party claiming estoppel has changed its position and if such an estoppel does not fall under any statutory prohibition, absence of power and authority of the promisor and/or is otherwise not opposed to public interest, and also when equity in favour of the promisee does not outweigh equity in favour of the promisor entitling the latter to legally get out of the promise.

Whether the assessments made by the Department of Finance and Taxation, during the pendency of eligibility certificate applications, were valid? - HELD THAT?- The assessment orders itself reflects that the books of accounts etc were examined and pursuant to which the assessment orders and the consequential demands were raised. Therefore, in the facts of the present case, besides the other departments which had the occasion to examine the papers submitted for establishment of the industry as well as assessment order and the consequential demands raised by the Finance Department, the fact remains that there is no mala fide alleged against the industry or unit by the respondent authorities. There is also no allegation that undue advantage has been sought to be taken by the industries in respect of Industrial Policy concerned. Under such circumstances, the department of Finance as well as the Industries Department, being representatives of different department but a part of the same Government and a constituent members of the State Level Committee,- the State Level Committee being the mouth piece of the Government in so far as the Industrial Policy is concerned they must speak in one voice by taking into various views and evaluations undertaken by each of the constituent members.

The sole ground for assailing the assessment orders in these writ petitions is that the Finance Department ought not to have proceeded with the assessments in question as the relevant applications for grant of eligibility certificates in respect of the industries or units were pending before the appropriate authority under the relevant Industrial Policy. As a consequence thereof, the benefit of exemptions by the petitioners could not be availed off as the returns could not be filed on the online mode supported by the eligibility certificate as is required under the procedure. These returns were filed in the physical mode with due representations that the claims for eligibility are under consideration and the department is required to await the grant of eligibility certificate by the Industries Department.

Conclusion - i) The rejection of eligibility certificates on the grounds of being 'non-functioning' is contrary to the objectives of the Industrial Policy and the evidence of operational status as indicated by tax assessments. ii) The assessments conducted by the Finance Department without awaiting the outcome of eligibility applications are procedurally flawed and must be reconsidered. iii) The doctrine of promissory estoppel applies, binding the government to its promises under the Industrial Policy, as the petitioners relied on these promises to their detriment. iv) The Court directed the State Level Committee to reconsider the eligibility applications and issue certificates, ensuring that the petitioners receive the benefits they are entitled to under the Industrial Policy. v) The Court ordered that once eligibility certificates are granted, the petitioners should receive tax exemptions and any necessary refunds or adjustments.

Petition disposed off.

Validity of auction conducted by respondent No.1 (Bank) for the sale of the secured asset - right of redemption of the secured asset by respondent No.2 under Section 13(8) of the SARFAESI Act - HELD THAT:- Section 54 of the Transfer of Property Act, 1882, defines a “sale” as the transfer of ownership in exchange for a price that is either paid, promised, or part-paid and part-promised. This provision further describes the manner in which a sale is effected. It stipulates that, in the case of tangible immovable property valued at one hundred rupees or more, the transfer can be made only through a registered instrument. The use of the term “only” signifies that, for tangible immovable property valued at one hundred rupees or more, a sale becomes lawful only when it is executed through a registered instrument. Where the sale deed requires registration, ownership does not pass until the deed is registered, even if possession is transferred, and consideration is paid without such registration. The registration of the sale deed for an immovable property is essential to complete and validate the transfer. Until registration is effected, ownership is not transferred.

In the present case, the original owner/borrower, Champa Ben Kundia, ‘sold’ the secured asset to her son, Chandu Bhai by an unregistered sale deed dated 28.04.2000. Subsequently, the basement of the secured asset was “transferred” to Satnam Singh and Surinder Wadhwa through another unregistered sale deed dated 30.03.2001. Further, an unregistered agreement to sell, dated 23.04.2001, allegedly transferred the basement of the secured asset to respondent No.2. Therefore, all the documents relied upon by respondent No.2 to claim ownership of the basement of the secured asset are unregistered documents and fail to meet the requirements of a valid sale under Section 54 of the Transfer of Property Act.

This Court in Babasheb Dhondiba Kute vs. Radhu Vithoba Barde [2024 (2) TMI 1516 - SUPREME COURT] held that the conveyance by way of sale would take place only at the time of registration of a sale deed in accordance with Section 17 of the Registration Act, 2008. Till then, there is no conveyance in the eyes of law.

It is now a well-settled principle that a sale by way of public auction cannot be set aside until there is any material irregularity and/or illegality committed in holding the auction or if such auction was vitiated by any fraud or collusion. This Court in V.S. Palanivel vs. P. Sriram [2024 (9) TMI 625 - SUPREME COURT] held that unless there are some serious flaws in the conduct of the auction as for example perpetration of a fraud/collusion, grave irregularities that go to the root of such an auction, courts must ordinarily refrain from setting them aside keeping in mind the domino effect such an order would have.

Conclusion - i) The Ownership does not pass until the deed is registered, even if possession is transferred, and consideration is paid without such registration. ii) A public auction sale cannot be set aside without evidence of "material irregularity and/or illegality committed in holding the auction or if such auction was vitiated by any fraud or collusion.

The impugned order of the High Court is set aside - Appeal allowed.

Dishonour of Cheque - legally enforceable debt under Section 138 of the Negotiable Instruments Act, 1881 - discharge of rebuttal of presumption of consideration under Sections 118(a) and 139 of the NI Act - HELD THAT:- In the present case, learned Trial Court has categorically observed that the petitioner herein failed to prove its case beyond reasonable doubt and the respondent has created reasonable doubt over the veracity of the story of the petitioner.

It is pertinent here to discuss the law regarding the nature and extent of legal presumption in favour of complainant under NI Act and the possibility and manner of rebuttal of the same by the accused while balancing reverse onus of proof under the NI Act and presumption of innocence of accused under normal criminal jurisprudence.

The Hon’ble Supreme Court in Kumar Exports v. Sharma Carpets [2008 (12) TMI 682 - SUPREME COURT] has held that where the complainant (respondent therein) did not produce any books of account or stock register maintained in the course of regular business or any acknowledgement for delivery of goods to establish that as a matter of fact woolen carpets were sold to the appellant therein (accused), it was opined that the complainant has failed to establish its case under section 138 of NI Act as required under law.

This Hon’ble Court in Pine Product Industries & Another v. R.P. Gupta & Sons & Another [2006 (12) TMI 553 - DELHI HIGH COURT] has held that if the complaint itself is vague about the nature of liability in discharge of which the cheques were issued and no details as to how the amount in question was arrived at, mere liability of the respondent to pay her dues towards purchase of goods is not enough to proceed under section 138 of NI Act.

It is now well settled that the accused can always rely upon the material and circumstances brought on record by the complainant. It is also well settled law that the accused is not required to prove innocence by establishing the defence beyond all reasonable doubts as accused can always prove his innocence on basis of preponderance of probabilities - in the instant nature of the particular case in hand, the mandatory presumption under sections 118 (a) read with section 139 of NI Act does not relieve the petitioner from establishing the foundational facts.

From a perusal of the testimonies, it is clear that the petitioner did not lead any evidence regarding transaction, supply of materials against which the cheques in question were issued. Further, the bills have neither been placed on record nor proved by the complainant/petitioner - the witnesses of the petitioner cannot be treated as credible witnesses and neither the sale tax forms nor the statement of account can be relied upon safely, due to various inconsistencies and contradictions. Hence, the learned Trial Court has correctly acquitted the respondent.

Conclusion - The respondents have successfully rebutted the statutory presumption under section 118 (a) read with 139 of NI Act. Once the respondent has successfully rebutted the presumption, the petitioner is not able to prove its case beyond reasonable doubt. The impugned judgment passed by the learned Trial Court is well reasoned based upon the evidences and materials and documents placed on record.

The leave to appeals are dismissed.

Dishonour of Cheque - Challenge to order directing the payment of interim compensation under Section 143A of the Negotiable Instruments Act, 1881 - HELD THAT:- A perusal of the reasoning given by the learned Metropolitan Magistrate if tested on the touchstone of the law laid down in Rakesh Ranjan Srivastava [2024 (4) TMI 719 - SUPREME COURT] shows that the learned Metropolitan Magistrate has not prima facie evaluated the merits of the case of the complainant nor the defence of the petitioner/accused has been considered. Further, there is neither any application of mind to the quantum of interim compensation to be granted nor the factors like, nature of the transaction, the relationship, if any, between the accused and the complainant, financial distress etc. have been considered.

Somewhat similar is the position in case of the impugned order passed by the learned Principal District & Sessions Judge, South-East, District Court Saket, New Delhi. The revisional court has not even prima facie evaluated the merits of the case set up in the complaint as well as defence of the petitioner/accused. The factors to be borne in mind for deciding the quantum of interim compensation have also not been adverted to.

Conclusion - The matter is remanded back to the learned Metropolitan Magistrate for deciding the application of the complainant/respondent under Section 143A of the Act afresh, keeping in mind the law down in Rakesh Ranjan Srivastava.

Petition disposed off by way of remand.