TaxTMI Updates e-Newsletter
Feb 23,2024

Penalty under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 - Requirement of intention to evade tax (mens rea) for imposition of penalty - Burden of proof on tax authority to establish evasion where only clerical/typographical errors exist - Clerical/typographical error versus substantive irregularity in e-way bill - Transport of goods from SEZ to DTA with payment of customs duty and IGST

Penalty under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 - Requirement of intention to evade tax (mens rea) for imposition of penalty - Burden of proof on tax authority to establish evasion where only clerical/typographical errors exist - Clerical/typographical error versus substantive irregularity in e-way bill - Validity of imposition of penalty under Section 129(3) where goods were accompanied by invoices, bill of entry and e-way bill but the vehicle number on the e-way bill was incorrect - HELD THAT: - The Court examined the documents produced at the time of interception and found that the goods were being transported from an SEZ unit to the Domestic Tariff Area after payment of customs duty and IGST, and were intercepted shortly after departure. The error in the e-way bill was limited to an incorrect vehicle number due to a change of truck by the transporter. Applying the principle that penalties require a demonstrated intention to evade tax, the Court held that where the discrepancy is a mere clerical or typographical error, the initial burden lies on the department to show intention to evade tax. The department failed to displace the documentary evidence produced by the petitioner or to demonstrate any mens rea. The Appellate Authority also did not adequately consider the transporter's explanation or other documents tendered to rebut the allegation of evasion. On these findings the imposition of penalty under Section 129(3) could not be sustained and the impugned orders were quashed. The Court further directed refund of any deposited amount. [Paras 6, 7, 8, 9, 10]

Imposition of penalty under Section 129(3) set aside as department failed to prove intention to evade tax; impugned orders quashed and deposited amount ordered refunded.

Final Conclusion: The writ petition is allowed; the orders dated 22.06.2018 and 22.06.2019 imposing penalty under Section 129(3) are quashed for want of any established intention to evade tax, and any amount deposited is directed to be refunded within four weeks.

Remand for fresh consideration - nature of services - documentary evidence - service agreements - setting aside appellate order - opportunity of personal hearing

Nature of services - service agreements - documentary evidence - Whether the Appellate Authority could decide the nature of services in the absence of the relevant service agreements and documentary evidence. - HELD THAT: - The Appellate Authority had noted that the determinative question concerned the nature of services provided by the petitioner and that that nature could be ascertained from the service agreements with foreign clients, which were not on the appellate record. The High Court accepted the respondents' concession that sample agreements had been filed in these proceedings and that, because the core controversy turns on documentary proof of the contractual terms, the Appellate Authority was constrained from correctly determining the issue without those agreements. For that reason the appellate decision was set aside and the matter remitted so that the petitioner may place on record the agreements it intends to rely upon and the Appellate Authority may reconsider the matter in light of that documentary evidence. [Paras 1, 2, 3]

Appellate decision set aside and matter remitted for fresh consideration after the petitioner places the relevant service agreements on record.

Remand for fresh consideration - opportunity of personal hearing - setting aside appellate order - The procedural direction to the Appellate Authority on reconsideration. - HELD THAT: - The Court directed that upon placement of the agreements on record by the petitioner, the Appellate Authority shall reconsider the appeal and pass a fresh order. The Appellate Authority must give the petitioner an opportunity of personal hearing before passing the fresh order. This remedial course was adopted because the absence of the contractual documents prevented an adjudication on the core issue on the existing record. [Paras 3]

Matter remitted to the Appellate Authority with liberty to the petitioner to place agreements on record and with a requirement that the Appellate Authority afford a personal hearing and pass a fresh order.

Final Conclusion: Order in Appeal dated 16.02.2022 set aside; appeal remitted to the Appellate Authority for fresh consideration after the petitioner files the relevant service agreements and is given a personal hearing; petition disposed accordingly.

Prevention of grant of bail in economic offences involving fake Input Tax Credit - cognizability and non-bailability of offences under CGST for fraudulently availing Input Tax Credit - economic offences constitute a class apart for bail consideration - distinction between cases of fake ITC and cases of supply without payment of tax (Ratnambar Kaushik) - precedential reliance on Lalit Goyal and Basudev Mittal in denial of bail for fake ITC schemes

Prevention of grant of bail in economic offences involving fake Input Tax Credit - economic offences constitute a class apart for bail consideration - cognizability and non-bailability of offences under CGST for fraudulently availing Input Tax Credit - precedential reliance on Lalit Goyal and Basudev Mittal in denial of bail for fake ITC schemes - distinction between cases of fake ITC and cases of supply without payment of tax (Ratnambar Kaushik) - Bail application under Section 439 Cr.P.C. by accused charged with generating fake Input Tax Credit was refused. - HELD THAT: - The court noted that the charge-sheet alleges that the accused generated fake Input Tax Credit amounting to Rs. 20,28,40,841 by issuing/using invoices from multiple firms without supply of goods/services. The court applied the principle that economic offences are a class apart and warrant a different approach when considering bail. The facts of Ratnambar Kaushik were held to be distinguishable because that case involved supply of goods without payment of tax rather than generation of fake ITC. The court also placed reliance on the Apex Court's dismissal in Lalit Goyal (and related authority Basudev Mittal) where bail was denied in a comparable fake-ITC scheme. In view of the gravity of the allegations, the magnitude of the alleged loss to the revenue, and the settled approach in the cited precedents, the court declined to enlarge the accused on bail. The court further observed that a charge-sheet has been submitted and the offences alleged are cognizable and non-bailable under the CGST scheme, reinforcing the decision to refuse bail.

Bail under Section 439 Cr.P.C. is dismissed.

Final Conclusion: The bail petition of the accused, charged with generating fake Input Tax Credit and implicated in an alleged loss to the revenue of Rs. 20,28,40,841, is refused; the court distinguished Ratnambar Kaushik and followed precedents denying bail in comparable fake-ITC schemes.

Service by electronic upload on GST portal - Validity of notice hosted under "Additional Notices and Orders" - Compliance with intimation requirements under Section 169 of the Central Goods and Services Tax Act, 2017 - Opportunity to file response and personal hearing before adjudication - Setting aside order and remand for fresh adjudication

Service by electronic upload on GST portal - Validity of notice hosted under "Additional Notices and Orders" - Compliance with intimation requirements under Section 169 of the Central Goods and Services Tax Act, 2017 - Whether uploading the Show Cause Notice in the GST portal under the category 'Additional Notices and Orders' constituted effective notice to the petitioner - HELD THAT: - The Court found that the petitioner did not receive or notice the Show Cause Notice because it was hosted under the portal category 'Additional Notices and Orders' rather than the ordinarily accessed 'View Notices and Orders' area. The Court relied on the observations in the Madras High Court judgments which identified the portal architecture and separate menu locations as causing genuine non-receipt. The respondent's submission that mere uploading on the portal satisfies intimation requirements under Section 169 was not accepted in the circumstances where the notice was placed in a less accessible category and thereby escaped the petitioner's attention. Having regard to these facts, the Court concluded that service in the manner adopted did not result in effective notice to the petitioner and that the petitioner had been deprived of the opportunity to respond prior to adjudication. [Paras 5, 6, 8]

Uploading the Show Cause Notice under 'Additional Notices and Orders' did not constitute effective notice to the petitioner and the contention that portal uploading alone sufficed was rejected on these facts.

Opportunity to file response and personal hearing before adjudication - Setting aside order and remand for fresh adjudication - Remedial steps to be taken in consequence of the defective service - HELD THAT: - The Court set aside the impugned order which recorded non-reply/non-appearance and directed that the portal be opened to enable the petitioner to file a response to the Show Cause Notice within 30 days. The Proper Officer was directed to re-adjudicate the Show Cause Notice within four weeks of filing and to afford the petitioner a personal hearing. The Court's order does not decide the merits of the Show Cause Notice; it mandates fresh consideration after providing the petitioner the opportunity to participate in the proceedings. [Paras 9, 10]

Impugned order set aside; Show Cause Notice to be re-adjudicated after the petitioner files a response and is given a personal hearing.

Final Conclusion: Impugned order dated 29.11.2023 is set aside. The respondent shall enable the petitioner to file a response to the Show Cause Notice dated 24.09.2023 within 30 days, after which the Proper Officer shall adjudicate the matter within four weeks and afford a personal hearing; the merits of the Show Cause Notice are left open for fresh adjudication.

Section 107 of the GST Act as a self-contained code excluding general limitation provisions - Exclusion of Section 5 of the Limitation Act by a special statute - Limitation and condonation mechanism under Section 107(4) of the GST Act

Section 107 of the GST Act as a self-contained code excluding general limitation provisions - Exclusion of Section 5 of the Limitation Act by a special statute - Section 5 of the Limitation Act is not attracted to appeals under Section 107 of the Uttar Pradesh GST Act. - HELD THAT: - The Court held that the GST enactment is a special statute with an inbuilt appellate limitation framework and therefore operates as a complete code, implicitly excluding the application of the Limitation Act. The judgment relied on earlier authoritative pronouncements of the Supreme Court as applied in this Court's prior decisions, which establish that Section 5 of the Limitation Act applies only where it is extended to a special statute. The Calcutta High Court decision invoking Section 5 was disapproved for failing to give due weight to the cited Supreme Court precedents and this Court's consistent view that Section 107 contains its own limitation and condonation scheme. [Paras 4, 11, 12]

Section 5 of the Limitation Act does not apply to appeals under Section 107 of the GST Act; the Calcutta High Court view is not accepted.

Limitation and condonation mechanism under Section 107(4) of the GST Act - Strictness of limitation in fiscal statutes - Appeal filed beyond the period permitted by Section 107(4) (three months plus the one-month condonable period) could not be condoned and dismissal on limitation was justified. - HELD THAT: - The Court examined Section 107 and noted that the appellate authority's power to extend time is limited to one month under sub section (4). Since the present appeal was filed approximately 66 days beyond the permissible condonable extension (i.e., beyond the total four months), the appellate authority had no jurisdiction to condone the delay even if sufficient cause were shown. The Court emphasised the importance of strict limitation in taxing statutes to ensure expeditious resolution and revenue certainty, thereby upholding the order dismissing the appeal on grounds of limitation. [Paras 7, 8, 9, 12]

The appeal being filed beyond the period condonable under Section 107(4) could not be condoned and its dismissal on limitation was appropriate.

Final Conclusion: Writ petition dismissed; the court affirmed that Section 107 of the GST Act constitutes a complete code excluding Section 5 of the Limitation Act, and held that the appeal, having been filed beyond the period condonable under Section 107(4), was rightly dismissed on the ground of limitation.

Cancellation of GST registration - retrospective cancellation of registration - non-speaking order / lack of reasons - objective satisfaction for cancellation - opportunity to be heard - cancellation of registration under Section 29(2) of the CGST Act, 2017 - consequences for input tax credit

Non-speaking order / lack of reasons - opportunity to be heard - Validity of the show cause notice and the order of cancellation insofar as they fail to give reasons, are internally contradictory and did not put the petitioner on notice of retrospective cancellation; and whether the appeal could be dismissed on limitation without examining these foundational defects. - HELD THAT: - The show cause notice dated 09.01.2021 and the order dated 27.01.2021 do not state reasons for cancellation and are contradictory: the order records a reply dated 19.01.2021 yet states "Response not received" and shows nil dues. Such absence of reasoned findings renders the order vitiated. The notice likewise failed to indicate that cancellation would be with retrospective effect, depriving the petitioner of an opportunity to object to retrospective cancellation. Given these foundational defects, relegation of the petitioner to an appeal (which was dismissed solely on limitation) would serve no purpose. The Court therefore found the impugned show cause notice, cancellation order and the order in appeal unsustainable and set them aside, restoring registration subject to filing returns up to date. [Paras 4, 5, 7, 8, 11]

Show cause notice dated 09.01.2021, order dated 27.01.2021 and the order in appeal dated 28.04.2023 are set aside; GST registration restored subject to filing requisite returns.

Cancellation of registration under Section 29(2) of the CGST Act, 2017 - retrospective cancellation of registration - objective satisfaction for cancellation - consequences for input tax credit - Whether cancellation of GST registration can be ordered with retrospective effect as a mechanical consequence of non-filing of returns, and what standard the proper officer must apply under Section 29(2). - HELD THAT: - Section 29(2) permits cancellation from such date, including retrospective dates, where the proper officer is satisfied of the circumstances set out in the sub-section. That satisfaction cannot be purely subjective or mechanical; it must be based on objective criteria. Mere non-filing of returns for a period does not automatically justify retrospective cancellation covering periods when returns were filed and the taxpayer was compliant. The proper officer is required to consider the consequences of retrospective cancellation, including the effect on the taxpayers' customers being denied input tax credit, and may cancel retrospectively only where such consequences are intended and warranted by objective satisfaction. [Paras 9, 10]

Retrospective cancellation cannot be mechanically applied; it requires objective satisfaction by the proper officer and consideration of consequences such as impact on input tax credit.

Final Conclusion: The petition is allowed. The show cause notice dated 09.01.2021, the order of cancellation dated 27.01.2021 and the appellate order dated 28.04.2023 are set aside; the petitioner's GST registration is restored subject to filing requisite returns up to date, while respondents remain free to pursue recovery of any tax, penalty or interest in accordance with law.

Cancellation of GST registration with retrospective effect - requirement of objective satisfaction for retrospective cancellation - notice of retrospective cancellation in show cause notice - consequences of retrospective cancellation on Input Tax Credit

Cancellation of GST registration with retrospective effect - requirement of objective satisfaction for retrospective cancellation - Validity of retrospectively cancelling the petitioner's GST registration from 01.07.2017 - HELD THAT: - The Court held that Section 29(2) permits cancellation of registration from a retrospective date only where the proper officer 'deems fit' to do so based on objective criteria; retrospective cancellation cannot be imposed mechanically. Mere non-filing of returns for a period does not justify cancelling registration with retrospective effect for periods when returns were filed and compliance existed. The correctness of retrospectivity must be founded on objective satisfaction recorded by the officer rather than subjective conclusion. [Paras 7]

The retrospective cancellation from 01.07.2017 was not sustained as validly imposed without objective satisfaction.

Notice of retrospective cancellation in show cause notice - consequences of retrospective cancellation on Input Tax Credit - Appropriate effective date of cancellation and ancillary rights of the department to recover dues - HELD THAT: - The Court observed that the Show Cause Notice did not put the noticee on notice of prospective retrospective cancellation and recognised that retrospective cancellation has consequences for third parties, including denial of Input Tax Credit to recipients. Considering that the petitioner does not intend to continue business and in the circumstances of the case, the Court modified the impugned order to treat the registration as cancelled with effect from 14.08.2019 (date of the Show Cause Notice). The Court expressly left open the respondents' right to initiate recovery of any tax, penalty or interest in accordance with law. [Paras 8, 9, 11, 12]

Registration is treated as cancelled with effect from 14.08.2019; respondents remain entitled to recover any tax, penalty or interest as per law.

Final Conclusion: The order cancelling GST registration retrospectively from 01.07.2017 was modified: registration is deemed cancelled from 14.08.2019 (date of the Show Cause Notice). The requirement of objective satisfaction for retrospective cancellation and the absence of notice of retrospectivity were pivotal; respondents retain statutory remedies to recover any dues.

Composite supply - reverse charge mechanism and specification of recipient by notification - levy of IGST on import value including freight and impermissible vivisection of service component - entitlement to refund of erroneously paid IGST - quashing of adverse advance ruling inconsistent with settled law

Composite supply - levy of IGST on import value including freight and impermissible vivisection of service component - reverse charge mechanism and specification of recipient by notification - Validity of Entry 10 of the impugned notification insofar as it notifies the importer as the recipient for levy of IGST on reverse charge and authorises levy on the importer in CIF imports - HELD THAT: - The writ petition was disposed of in light of the Supreme Court decision in Union of India v. Mohit Minerals (supra). The Supreme Court held that where IGST has been levied on the value of imported goods which includes ocean freight under the IGST/Customs scheme, a separate levy characterising the freight as a distinct taxable supply of service and taxing it again would violate the principle of composite supply under Section 2(30) read with Section 8 of the CGST Act. The Court further observed that the specification of the recipient (the importer) by notification was clarificatory of the recipient prescribed by Section 5(3) of the IGST Act and did not fetter the statutory definitions, but that any separate levy on the service component contrary to the composite supply principle was impermissible. Applying that ratio, the challenge to Entry 10 insofar as it results in double taxation by levying tax again on the service component was upheld. [Paras 5]

Entry 10 to the extent it results in a separate levy on the service component of CIF imports, thereby effecting double taxation inconsistent with the composite supply principle, cannot be sustained and the petition is disposed of accordingly.

Entitlement to refund of IGST - levy of IGST on import value including freight and impermissible vivisection of service component - Claim for refund of IGST paid by the petitioner on the ground that such tax was levied again on the service component - HELD THAT: - Relying on the Supreme Court's conclusion that the notifications imposing a separate levy on the freight/service component are illegal, the petitioner is held entitled to refund of the IGST paid which is rendered payable consequent to that illegality. The High Court directed respondents to process and grant the refund in accordance with law within a specified period. [Paras 6]

The petitioner is entitled to refund of the IGST paid; respondents to effect refund in accordance with law within six weeks from the date of this order.

Quashing of adverse advance ruling inconsistent with settled law - composite supply - Challenge to the Advance Ruling (AAR) impugned in the petition - HELD THAT: - In view of the Supreme Court's findings that a separate taxation of the service component where IGST has been charged on the composite import value is impermissible, the order of the Authority for Advance Ruling that is inconsistent with that principle cannot stand. The writ petition was disposed of in light of Mohit Minerals and the relief seeking quashment or modification of the impugned AAR was allowed to the extent it is contrary to the legal position laid down by the Supreme Court. [Paras 5]

Impugned Advance Ruling set aside/modifed insofar as it is inconsistent with the legal position in Mohit Minerals.

Final Conclusion: Writ petition disposed of in view of Union of India v. Mohit Minerals (supra); Entry 10 insofar as it effects double taxation on the service component of CIF imports is unsustainable, the impugned advance ruling is set aside to the extent inconsistent with that principle, and the petitioner is entitled to refund of IGST paid, to be processed by the respondents within six weeks.

Jurisdiction to issue show-cause notice - issuance of multiple show-cause notices based on one audit report - interpretation of Section 65(7) of the Central Goods and Services Tax Act, 2017 - definition of proper officer under Section 2(91) of the Act - interim stay of proceedings pursuant to a show-cause notice

Jurisdiction to issue show-cause notice - definition of proper officer under Section 2(91) of the Act - Order dated 13.12.2023 of the Additional Commissioner, CGST, Jaipur concluding that he has jurisdiction to issue the show-cause notice was taken on record. - HELD THAT: - The High Court permitted the respondents' miscellaneous application to place on record the authority's order dated 13.12.2023 in which the Additional Commissioner recorded a conclusion on jurisdiction. The court recorded that the order of the authority on jurisdiction has been produced and accordingly allowed the application to take that order on record. The writ petition challenging jurisdiction was not decided on merits; the recorded order merely forms part of the material before the court for adjudication.

Application allowed; order dated 13.12.2023 taken on record.

Interpretation of Section 65(7) of the Central Goods and Services Tax Act, 2017 - issuance of multiple show-cause notices based on one audit report - Interim relief in respect of proceedings under the show-cause notice dated 25.09.2023 was granted pending adjudication of the petition raising the question whether multiple notices may be issued on the basis of a single audit report. - HELD THAT: - The petitioner challenged the validity of the second notice on the ground that Section 65(7) and the statutory definition of proper officer permit only one notice in respect of an audit report or that issuance must be governed by the monetary limits notified. Respondents sought time to file their reply and contended that Section 65(7) does not restrict issuance to a single notice and that separate notices could follow different paragraphs of the audit report. The court found that the matter requires consideration and, as an interim protective measure, stayed proceedings pursuant to the show-cause notice dated 25.09.2023 until further orders to preserve the parties' positions pending final adjudication.

Proceedings pursuant to the show-cause notice dated 25.09.2023 stayed until further order.

Jurisdiction to issue show-cause notice - interpretation of Section 65(7) of the Central Goods and Services Tax Act, 2017 - Petition raising the substantive question of whether multiple show-cause notices can be issued on the basis of a single audit report was admitted for consideration and notice issued to respondents; the question was not finally adjudicated and requires fresh consideration on the pleadings and replies. - HELD THAT: - The court recorded competing contentions: petitioner urged that the statutory scheme and the notified role of the proper officer restrict issuance of notice to a single notice commensurate with the monetary limits, whereas respondents contended that Section 65(7) permits separate notices based on different parts of the audit report. Rather than deciding the substantive issue on the papers, the court issued notice, listed the matter for further hearing, and permitted the respondents to seek vacation of the interim order after filing their reply. Thus the jurisdictional question remains for final adjudication following filing of pleadings and hearing.

Notice issued and matter listed for further hearing; substantive question remanded for fresh consideration on the pleadings.

Final Conclusion: The court recorded and took on file the authority's order dated 13.12.2023, issued notice on the writ petition challenging jurisdiction under Section 65(7) of the CGST Act, 2017, and granted an interim stay of proceedings under the show-cause notice dated 25.09.2023 pending further orders; the substantive question on the permissibility of multiple notices arising from a single audit report is left for final adjudication after respondents' reply.

Entertainment of writ petition where second appellate tribunal is not constituted - interim stay of tax demand subject to deposit - deposit condition for maintaining stay of tax demand - appellate limitation and admissibility under Section 107 of the Odisha Goods and Services Tax Act, 2017

Entertainment of writ petition where second appellate tribunal is not constituted - appellate limitation and admissibility under Section 107 of the Odisha Goods and Services Tax Act, 2017 - Whether the High Court may entertain the writ petition in view of non-constitution of the Second Appellate Tribunal and the challenge to the first appellate order rejecting admission under Section 107. - HELD THAT: - The Court entertained the writ petition only because the Second Appellate Tribunal has not yet been constituted, making the statutory appellate remedy effectively unavailable. The petitioner challenged the first appellate authority's order rejecting admission of the appeal under the cited provisions; the Court proceeded to hear the petition as an alternative remedy in the absence of a functioning second appellate forum. Although objections were raised regarding delay in preferring the appeal and limitations under the statutory scheme, the Court's decision to admit the writ petition was founded on the absence of the second appellate forum rather than on an adjudication of the merits of limitation or the correctness of the impugned order. [Paras 2, 3]

Writ petition entertained on the ground that the Second Appellate Tribunal has not been constituted, rendering the statutory second appeal unavailable.

Interim stay of tax demand subject to deposit - deposit condition for maintaining stay of tax demand - Whether interim relief in the form of stay of the balance tax demand should be granted pending adjudication of the writ petition and on what conditions. - HELD THAT: - As an interim measure while the writ petition is pending, and because the petitioner wishes to pursue remedy before the yet-to-be-constituted Second Appellate Tribunal, the Court directed that the petitioner deposit the entire tax demand within fifteen days. Upon such deposit, the remaining part of the demand was stayed during the pendency of the writ petition. This direction imposes a condition precedent (deposit within the specified time) for continuance of the stay; the Court thus balanced the department's interest in recovery with the petitioner's pursuit of alternative remedies in the absence of the appellate forum. [Paras 8]

Interim stay granted on condition that the petitioner deposits the entire tax demand within fifteen days; the rest of the demand shall remain stayed during pendency of the writ petition.

Final Conclusion: The High Court entertained the petition because the Second Appellate Tribunal has not been constituted and granted an interim stay of the balance tax demand on condition that the petitioner deposits the entire tax demand within fifteen days; the matter is listed for further hearing.

Condonation of delay - Delay in Aadhaar verification - Filing of revocation application - Filing of 'NIL' returns - Obligation to deposit duty liability before filing revocation

Condonation of delay - Delay in Aadhaar verification - Filing of revocation application - Filing of 'NIL' returns - Obligation to deposit duty liability before filing revocation - Whether the delay of eight days in filing the application for revocation is liable to be condoned and the impugned order rejecting condonation to be set aside. - HELD THAT: - The Court considered the petitioner's explanation that Aadhaar verification delay caused the eight-day delay in filing the revocation application and noted the petitioner's assertion that 'NIL' returns had been filed, negating any duty liability that would have prevented uploading the revocation application. The respondent contended that non-uploading was also due to unpaid duty liability and recorded a summed demand in the impugned order; the petitioner denied that position and placed on record that an amount was deposited for the purpose of filing the revocation application. Having heard the parties and perused the affidavits and material on record, the Court found the explanation satisfactory and held that the short delay was condonable. On this basis the Court set aside the impugned order rejecting the condonation application and allowed the writ petition. [Paras 10, 11]

Delay of eight days condoned; impugned order dated 07.09.2023 set aside and writ petition allowed.

Final Conclusion: The Court condoned the eight-day delay in filing the revocation application, set aside the respondent's order rejecting condonation dated 07.09.2023, and allowed the writ petition.

Stay of recovery proceedings - Deposit as condition for stay under Section 112(8) of the Central Goods and Services Tax Act, 2017

Stay of recovery proceedings - Deposit as condition for stay under Section 112(8) of the Central Goods and Services Tax Act, 2017 - Interim stay of recovery proceedings subject to deposit under Section 112(8) of the Central Goods and Services Tax Act, 2017. - HELD THAT: - The petitioner submitted that it could not avail the remedy before the Appellate Tribunal due to its non-constitution and undertook to make the deposit required by sub section (8) of Section 112 of the Central Goods and Services Tax Act, 2017. On that basis the Court directed that, until the next date of hearing, recovery proceedings in respect of the balance of the disputed amount shall be deemed stayed, provided the petitioner deposits the amount specified in Section 112(8). The order is an interim direction conditioned upon compliance with the statutory deposit requirement and does not decide the merits of the underlying dispute. [Paras 3, 4]

Until the next date of hearing, recovery proceedings are stayed for the balance amount of the disputed demand, subject to deposit by the petitioner in terms of Section 112(8) of the Central Goods and Services Tax Act, 2017.

Final Conclusion: Notice issued; interim stay of recovery granted until the next date of hearing on the petitioner making the deposit mandated by Section 112(8) CGST Act, 2017; matter listed on 08.09.2023.

Classification as Sugar Boiled Confectionery - preference of specific tariff entry over general or residual entry - application of the General Rules of Interpretation (Rule 3) of the Customs Tariff - relevance of FSSAI Regulations and Indian Standard IS 1008:2004 for product characterisation - rejection of 'immediate consumption' as a determinative criterion for classification under Chapter 1704

Classification as Sugar Boiled Confectionery - relevance of FSSAI Regulations and Indian Standard IS 1008:2004 for product characterisation - Whether the product 'Crackle' manufactured and supplied by the appellant is classifiable as 'Sugar Boiled Confectionery' under the tariff heading 1704 and hence covered by Sl. No. 32AA of Schedule II of Notification No. 01/2017-CT(Rate). - HELD THAT: - The Authority examined the composition and manufacturing process as described by the appellant and the definitions and technical specifications contained in the Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011 and Indian Standard IS 1008:2004. The product contains 68-72% sugar and is produced by boiling sugar (caramelisation) with doctoring agents (butter, liquid glucose), followed by coating with nuts to form a solid product. Those features correspond to the definition and technical parameters of 'Sugar Boiled Confectionery' (including hard boiled confectionery, pan goods and toffees) set out in the FSSAI Regulations and IS 1008:2004. The Authority accepted the appellant's process and test report evidence and relied on those standards to characterise the product as sugar boiled confectionery. Applying the Interpretative framework made applicable by Notification No. 01/2017 (Rule 3 of the General Rules of Interpretation), the specific entry 'Sugar Boiled Confectionery' under Sl. No. 32AA of Schedule II is the appropriate tariff provision for the product described by the appellant. [Paras 5]

The product 'Crackle' is a 'Sugar Boiled Confectionery' and is classifiable under Sl. No. 32AA of Schedule II of Notification No. 01/2017-CT(Rate).

Preference of specific tariff entry over general or residual entry - application of the General Rules of Interpretation (Rule 3) of the Customs Tariff - rejection of 'immediate consumption' as a determinative criterion for classification under Chapter 1704 - Whether the AAR was correct in denying classification under Sl. No. 32AA on the basis that the product was not marketed for immediate consumption and was an industrial input used by ice cream manufacturers. - HELD THAT: - The Authority reviewed the AAR's reliance on HS Explanatory Notes and CBEC FAQs invoking 'immediate consumption' and found that the AAR's reasoning was flawed insofar as it treated 'immediate consumption' as a criterion applicable selectively to certain entries under Chapter 1704. Since Schedule I, II and III entries all fall under CH 1704, the immediate consumption notion cannot be applied to deny the benefit of a specific entry while leaving others intact. Moreover, having accepted on the facts that the product meets the definitional and technical characteristics of sugar boiled confectionery, the product falls squarely within the specific Schedule II entry. The Authority also noted that its finding is based on the appellant's submissions and literature; suppression or misrepresentation could be addressed under statutory provisions. [Paras 5]

The AAR's negative ruling was set aside; the AAR's 'industrial input / not for immediate consumption' rationale cannot defeat the specific Schedule II entry and is therefore rejected.

Final Conclusion: The Appellate Authority sets aside Advance Ruling No. 10/AP/GST/2023 dated 26.05.2023 and holds that the product 'Crackle' manufactured and supplied by the appellant is a 'Sugar Boiled Confectionery' classifiable under Tariff Heading 1704 and Sl. No. 32AA of Schedule II of Notification No. 01/2017-CT(Rate), attracting the 12% GST rate (6% CGST and 6% SGST).

Institutional consumer - pre-packaged and labelled - Legal Metrology (Packaged Commodities) Rules - exclusion for supplies meant for industrial or institutional consumers - GST levy on pre-packaged and labelled goods - agent acting on behalf of principal (nodal agency)

Institutional consumer - pre-packaged and labelled - Legal Metrology (Packaged Commodities) Rules - exclusion for supplies meant for industrial or institutional consumers - Department for Women, Children, Disabled & Senior Citizens qualifies as an institutional consumer for the purposes of the GST levy on pre-packaged and labelled goods, subject to specified conditions - HELD THAT: - The Authority examined the amended entry in the exempt/non-taxable schedule and Notification No. 06/2022 which makes certain commodities taxable if they are "pre-packaged and labelled", adopting the definition of "pre-packaged commodity" from the Legal Metrology Act. Rule 3 of the Legal Metrology (Packaged Commodities) Rules, 2011 expressly excludes from Chapter II packaged commodities meant for industrial or institutional consumers. The definition of "institutional consumer" in rule 2(bc) is for institutions that buy packaged commodities bearing the declaration "not for retail sale" directly from the manufacturer, importer or wholesale dealer for use by the institution and not for commercial or trade purposes. Applying these provisions to the facts, the Authority held that the Department for Women, Children, Disabled & Senior Citizens will qualify as an "institutional consumer" provided the three cumulative conditions are satisfied: (i) the packaged commodities bear the declaration "not for retail sale", (ii) the purchase is made directly from the manufacturer, importer or wholesale dealer, and (iii) the purchase is for use by the institution and not for commercial or trade purposes. The Authority relied on the Ministry of Finance FAQ clarifying that supplies attracting the exclusion under rule 3(c) will not be treated as "pre-packaged and labelled" for GST levy. [Paras 7, 8]

YES, provided the packaged commodities bear the declaration "not for retail sale", are purchased directly from the manufacturer/importer/wholesale dealer and are for institutional use and not for commercial or trade purposes.

GST levy on pre-packaged and labelled goods - pre-packaged and labelled - agent acting on behalf of principal (nodal agency) - Supplies of the goods by the applicant through the Nodal Agency (HACA) do not attract CGST & SGST, subject to specified conditions - HELD THAT: - The Authority analysed Notification No. 06/2022 which subjects certain commodities to GST when they are "pre-packaged and labelled" as per the Legal Metrology Act. However, Chapter II of the Legal Metrology (Packaged Commodities) Rules excludes packaged commodities meant for institutional consumers from the definition of "pre-packaged and labelled" for the purpose of GST levy. The factual finding is that HACA has been nominated as a nodal agency to procure and ensure supply on behalf of the Department for Women, Children, Disabled & Senior Citizens; HACA functions as an agent for the Department (the principal). Where the Department (the institutional consumer) satisfies the conditions in rule 2(bc) - the packaged goods bear the declaration "not for retail sale", procurement is direct from manufacturer/importer/wholesale dealer, and the goods are for institutional use and not for commercial or trade purposes - such supplies fall within the exclusion and thus do not attract GST despite being routed through the nominated nodal agency. [Paras 7, 8]

NO, provided the packaged commodities bear the declaration "not for retail sale", are purchased directly from the manufacturer/importer/wholesale dealer and are for institutional use and not for commercial or trade purposes.

Final Conclusion: The Authority ruled that the Department for Women, Children, Disabled & Senior Citizens qualifies as an "institutional consumer" and supplies of the specified packaged commodities made through the nominated nodal agency (HACA) do not attract CGST & SGST, provided the three cumulative conditions (declaration "not for retail sale", direct purchase from manufacturer/importer/wholesale dealer, and institutional non-commercial use) are satisfied.

Mixed supply - composite supply - principal supply - tax liability on mixed supply - treated as supply attracting highest rate - leasing or rental services - input tax - input tax credit entitlement

Mixed supply - composite supply - principal supply - tax liability on mixed supply - treated as supply attracting highest rate - leasing or rental services - Classification of the hiring of building-installed assets and fit-outs supplied by TCGUIH to the applicant and the rate of tax applicable thereon - HELD THAT: - The authority examined whether the supply constituted a composite supply or a mixed supply. There was no predominant element nor ancillary supplies to establish a composite supply, and the supplies were multiple individual supplies made for a single price; accordingly the supply satisfied the statutory tests of a mixed supply. Section 8 treats a mixed supply as the supply attracting the highest rate of tax. The authority considered classification of individual components (air conditioning system and fire extinguishing system) and relevant tariff entries. Applying the principle that permanently installed systems assimilated into the building cease to be movable goods, and having regard to precedents and tariff classification, the authority held that the installed air conditioning and fire safety systems have lost the character of goods and would not be taxed under the proviso requiring the rate be same as on supply of like goods involving transfer of title. Consequently each of the supplies was held to fall under leasing or rental services (heading 9973) attracting the rate specified for such services, and the mixed supply as received by the applicant was held taxable at the rate applicable to those leasing or rental services (18%). [Paras 1]

The supply received from TCGUIH is a mixed supply and, on classification of the installed systems as having lost the character of movable goods, the hiring services fall under leasing or rental services and attract tax at 18%.

Input tax - input tax credit entitlement - conditions for credit under section 16 - Whether the applicant is eligible to claim input tax credit of GST charged by the supplier - HELD THAT: - The authority noted the statutory definition of 'input tax' and the conditions governing availment of input tax credit. The tax paid on the hiring charges is not excluded under the restriction in section 17(5). Therefore, subject to fulfillment of all conditions laid down in section 16 of the GST Act, the applicant is entitled to claim input tax credit of the tax charged by TCGUIH. [Paras 1]

The applicant is eligible to claim input tax credit of the GST charged by the supplier, subject to fulfillment of all conditions under section 16 of the GST Act.

Final Conclusion: The Authority ruled that the hiring of installed assets and fit outs supplied to the applicant constitutes a mixed supply classified as leasing or rental services and is taxable at 18%; the applicant may avail input tax credit of the tax charged by the supplier subject to compliance with the conditions in section 16 of the GST Act.

Revision petition u/s 264 - validity of Assessment u/s 153A/153C - whether assumption of jurisdiction by the AO u/s 153C was illegal and therefore the entire proceedings were void ab initio - As decided by HC [2017 (5) TMI 1425 - DELHI HIGH COURT] no ground to invalidate the assumption of jurisdiction under Section 153C and CIT's impugned orders are not unfair, unjust or irrational and are consistent with the basic procedural requirements. On none of these counts do the impugned orders of the CIT in the present case warrant interference

Royalty under Section 9(1)(vi) of the Income Tax Act - Article 12 of the Indo US DTAA - transfer of copyright - End User Licence Agreement (EULA) and non exclusive licence - benefit of the DTAA over wider municipal explanations - Engineering Analysis Centre of Excellence precedent [2021 (3) TMI 138 - SUPREME COURT]

HELD THAT:- Issue raised by the Revenue in the present special leave petition is covered against them vide judgment dated 02.03.2021 in the case of “Engineering Analysis Centre of Excellence Private Limited [2021 (3) TMI 138 - SUPREME COURT]

Learned Additional Solicitor General states that a Review Petition has been filed against this judgment, which is currently pending and the right of the Revenue to revive the present special leave petitions may be reserved, in case the Review Petition is allowed.

Recording the aforesaid, the special leave petition is dismissed, as the same is covered by the said decision of this Court. In case the review petition on the issue raised in the present special leave petition is allowed, it will be open to the petitioner(s) to get the present special leave petitions revived.

Rectification under Section 154 - quashing of administrative order - remand for fresh consideration - Garnishee Notice / restraint over bank accounts - provision of security / securitisation of tax demand

Rectification under Section 154 - quashing of administrative order - remand for fresh consideration - Orders dated 10 February 2024 and 12 February 2024 rejecting pending rectification applications pertaining to AY 2022-23 and AY 2016-17 were liable to be quashed and the matters remitted to the jurisdictional Assessing Officer for fresh consideration. - HELD THAT: - The court found that the two impugned orders were impermissibly summarily disposed of after this Court had taken cognisance of the pending rectification applications. The AO, if of the view that he lacked power, ought not to have proceeded to express observations on the merits; likewise, absence of an appeal could not be treated as a bar to entertaining a rectification application where issues fall within the ambit of rectification. For these reasons the orders rejecting the rectification applications were quashed and the matters remitted to the jurisdictional AO to examine and dispose of the rectification applications afresh and in accordance with law, with all rights and contentions kept open. The court therefore directed fresh adjudication rather than deciding the merits itself. [Paras 11, 12]

Orders dated 10 February 2024 and 12 February 2024 quashed; rectification applications relating to AY 2016-17 and AY 2022-23 remitted to the jurisdictional AO for fresh consideration in accordance with law.

Garnishee Notice / restraint over bank accounts - provision of security / securitisation of tax demand - Prayer for modification/lifting of Garnishee Notices and for providing security was left to the jurisdictional AO to consider; the writ petitioner permitted to approach the AO and seek securitisation, to be decided with expedition. - HELD THAT: - Although Garnishee Notices continued to operate, the court recognised the petitioner's request to securitise part of the outstanding demand and observed that questions of lifting or modifying the garnishee restraints and accepting adequate security are matters for the jurisdictional AO in the first instance. The petitioner was given liberty to approach the AO and the AO was directed to consider the request (including the petitioner's offer to maintain a specified proportion of the demand as security) and decide it expeditiously; the court specified that such consideration and disposal should be completed within one week. [Paras 13, 14]

Liberty granted to the petitioner to move the jurisdictional AO for modification/lifting of the Garnishee Notices and for provisioning of security; AO to consider and decide the request with expedition (within one week).

Final Conclusion: Writ petitions concerning the rejection of rectification applications for AY 2016-17 and AY 2022-23 are allowed in part: the impugned orders are quashed and the matters remitted to the jurisdictional AO for fresh adjudication in accordance with law; the challenge to the Garnishee Notices was not upheld by this Court, but the petitioner is permitted to seek modification or provision of security from the AO, who is directed to consider such request urgently.

Time bound disposal of appeals under Section 250(6A) of the Income tax Act - faceless appeal system and transfer of pending appeals to National Faceless Appeal Centre - direction to decide pending appeal forthwith - requirement of a reasoned and speaking order - court not expressing any opinion on merits

Time bound disposal of appeals under Section 250(6A) of the Income tax Act - faceless appeal system and transfer of pending appeals to National Faceless Appeal Centre - direction to decide pending appeal forthwith - requirement of a reasoned and speaking order - Direction issued to Respondent No.2 to decide the petitioner's pending appeal expeditiously and pass a reasoned and speaking order within a specified short time frame - HELD THAT: - The petitioner's appeal against the assessment order for Assessment Year 2010-11 was filed in January 2018 and, after statutory amendments permitting faceless disposal, was transferred to the National Faceless Appeal Centre. The appeal had been heard and reserved for judgment but remained undecided despite the one year outer limit envisaged by Section 250(6A). In view of the pendency since 2018 and that the matter has been heard, the High Court directed Respondent No.2 to decide the appeal forthwith and as expeditiously as possible, preferably within four weeks from receipt of certified copy of the order, and to furnish a reasoned and speaking order to the petitioner. The Court framed no view on the merits of the appeal. [Paras 6, 7]

The National Faceless Appeal Centre is directed to decide the pending appeal and pass a reasoned and speaking order preferably within four weeks; the Court expresses no opinion on the merits.

Final Conclusion: Writ petition disposed by directing the respondent to decide the pending appeal expeditiously (preferably within four weeks) and to communicate a reasoned and speaking order; no opinion expressed on merits.

Addition to income by ledger balance reconciliation - non-application of mind - disclosed income - interest income reflected under TDS - remand for fresh consideration - onus to produce documents - treat assessment order as show cause notice - reasonable opportunity including personal hearing

Addition to income by ledger balance reconciliation - non-application of mind - disclosed income - interest income reflected under TDS - Validity of additions to income derived from difference between opening and closing ledger balances, including sale consideration of agricultural land and interest from Axis Bank - HELD THAT: - The Court found that the Assessing Officer arrived at aggregate additional income by comparing opening and closing balances but failed to take into account material produced by the assessee. The sale consideration from agricultural land was shown in the statement of income and its schedule, and the interest from Axis Bank was reflected under the TDS entry and Schedule 18. Because the Assessing Officer did not consider these materials, the assessment is vitiated by non-application of mind. Consequently, the Court directed that the assessment order be re-considered and that the materials already placed on record by the assessee be taken into account in the fresh exercise. [Paras 6, 8]

Assessment insofar as it relies on the ledger-difference additions is vitiated by non-application of mind and must be re-considered with regard to disclosed sale proceeds and bank interest.

Remand for fresh consideration - onus to produce documents - treat assessment order as show cause notice - reasonable opportunity including personal hearing - Addition on account of alleged loan/receipt and procedure for fresh adjudication - HELD THAT: - The Court noted that the assessee had not placed all necessary documents to verify the genuineness of the loan transaction and had, at the relevant time, stated inability to obtain balance confirmation from the lender. In the interest of justice, the Court remanded the matter for fresh consideration, permitted the assessee to treat the assessment order as a show cause notice and to file a response within four weeks, and directed the Assessing Officer to provide a reasonable opportunity including personal hearing, consider all documents produced, and pass a fresh assessment order within four months. [Paras 7, 8]

Addition relating to the loan is remanded for fresh consideration after the assessee produces all relevant documents and after the Assessing Officer affords a reasonable opportunity; procedural timelines specified.

Final Conclusion: Writ petition disposed by remand: the assessment is set aside for re-consideration because material disclosed by the assessee was not considered; the loan-related addition is remanded for verification; the assessee may treat the assessment order as a show cause notice and respond within four weeks, and the Assessing Officer shall decide afresh after hearing within four months.

Limitation under Section 153(2A) - construction of the word "received" as commencement of limitation - knowledge of departmental officer/appeal-effect as triggering point for limitation - statute of limitation and internal administrative transmission

Limitation under Section 153(2A) - construction of the word "received" as commencement of limitation - knowledge of departmental officer/appeal-effect as triggering point for limitation - Whether the draft and final assessment orders framed by the Assessing Officer are barred by limitation under Section 153(2A) of the Income tax Act - HELD THAT: - The High Court affirmed the ITAT's conclusion that the period of limitation prescribed by Section 153(2A) must be computed from the point at which the Department (through a responsible departmental officer) has knowledge of the appellate order, rather than from the date when the particular jurisdictional Commissioner formally receives a certified copy. The Court relied on the Full Bench reasoning in Odeon Builders that, in the context of limitation, the relevant question is when the Department became aware of the order and not when the concerned Commissioner obtained the copy; once a responsible officer is aware, internal administrative transmission does not delay the commencement of limitation. The Division Bench decision in GE Energy Parts was also held to be analogous: where departmental action (for example, issuance of show cause notices or giving appeal effect) demonstrates awareness of the tribunal order, limitation will run from the date of such departmental knowledge or action rather than a later date of formal receipt by the jurisdictional Commissioner. Applying these principles to the facts - including the Assessing Officer's appeal effect order dated 12.03.2015 - the Court found no reason to interfere with the ITAT's conclusion that the draft (27.12.2016) and final (31.10.2017) assessment orders were time barred under Section 153(2A). The Court treated the precedents as determinative and held that the appeals did not raise any substantial question of law. [Paras 18, 19]

Appeals dismissed; ITAT's finding that the assessment orders are barred by limitation under Section 153(2A) is upheld.

Final Conclusion: The High Court dismissed the appeals, upholding the ITAT's conclusion that the draft and final assessment orders are barred by limitation under Section 153(2A), since limitation commences from departmental knowledge/appeal effect rather than the later formal receipt by the jurisdictional Commissioner.

Taxability of salary of a non-resident for services rendered abroad - scope of total income of a non-resident under Section 5(2)(b) of the Income tax Act - application of Article 16(1) of the India UK Double Taxation Avoidance Agreement - situs of accrual of salary is the situs of services rendered - requirement of Tax Residency Certificate and treaty benefit - treaty overrides domestic law where in conflict

Taxability of salary of a non-resident for services rendered abroad - scope of total income of a non-resident under Section 5(2)(b) of the Income tax Act - application of Article 16(1) of the India UK Double Taxation Avoidance Agreement - situs of accrual of salary is the situs of services rendered - Whether salary and foreign assignment allowance earned by the assessee for services rendered in the United Kingdom are taxable in India or exempt under the India UK DTAA where the assessee is a non resident - HELD THAT: - The Tribunal found as an undisputed fact that the assessee was a non resident employed by an Indian employer and rendered services in the United Kingdom. Applying the scope of taxable income for a non resident under Section 5(2)(b) of the Act, the Tribunal held that only income received or deemed to be received in India, or income which accrues or arises in India, is taxable in India. Salary constitutes remuneration for services rendered and its situs of accrual is the place where services are rendered. Reliance was placed on coordinate decisions, including Arvind Singh Chauhan , ITO v. Sunil Chitaranjan Muncif and other Tribunal and High Court authorities, to support the proposition that remuneration for employment exercised in the foreign State is taxable only in that State under the applicable treaty provision (Article 16(1) of the India UK DTAA as invoked). The Tribunal observed that the assessee had offered the relevant salary to tax in the United Kingdom and produced the income tax return and certificate of residence in the paper book. On these facts and legal principles, the Tribunal concluded that the salary and foreign allowance for services rendered in the UK did not fall within taxable income in India and directed deletion of the addition made by the AO and sustained by the CIT(A). [Paras 5]

Addition of salary and foreign allowance relating to services rendered in the UK is deleted and the appeal is allowed.

Requirement of Tax Residency Certificate and treaty benefit - treaty overrides domestic law - Whether denial of treaty relief solely for non production of a Tax Residency Certificate (TRC) justified withholding the benefit of the DTAA - HELD THAT: - The Tribunal noted authorities recognising that strict insistence on production of a TRC should not defeat treaty relief where the facts show residence and taxation in the other contracting State and where procurement of foreign certificates may be practically difficult. The Tribunal observed that the assessee had placed on record the return and residence certificate for the UK and that, in any event, the treaty entitlement to tax salary in the State where employment is exercised prevails over a domestic technical objection. Accordingly, the AO's disallowance for want of TRC and the CIT(A)'s enhancement on that ground were held to be unsustainable in the facts of this case. [Paras 5]

Denial of DTAA relief merely for non production of TRC (in the circumstances) could not justify taxing the salary in India; the addition was to be deleted.

Final Conclusion: The Tribunal set aside the CIT(A)'s order, deleted the additions of salary and foreign allowance attributable to services rendered in the United Kingdom, and allowed the assessee's appeal.

Treatment of excess physical stock discovered during survey - valuation of stock at selling price versus cost price - adjustment for GST and gross profit to reconcile physical stock with books - onus on Assessing Officer to controvert assessee's reconciliation - classification of unexplained stock difference as business income rather than application of Section 69 and Section 115BBE

Treatment of excess physical stock discovered during survey - valuation of stock at selling price versus cost price - adjustment for GST and gross profit to reconcile physical stock with books - onus on Assessing Officer to controvert assessee's reconciliation - classification of unexplained stock difference as business income rather than application of Section 69 and Section 115BBE - Addition of excess physical stock found during survey reduced to the unreconciled amount of stock difference and assessed as business income (gross profit), rather than the full survey valuation being added under unexplained investment provisions. - HELD THAT: - Physical inventory taken at survey was valued at selling price while books recorded stock at cost; therefore adjustments for GST and gross profit were necessary to make the two comparable. The assessee furnished working during assessment showing adjustment for GST and gross profit and reduced the discrepancy to a small unreconciled amount. The Assessing Officer did not point out any defect in the assessee's reconciliations or produce material to controvert them, instead relying on the survey valuation and the sworn statement. Where the assessee provides a plausible reconciliation and the AO fails to rebut it with specific contrary material, the onus to disprove the reconciliation lies on the AO. The Tribunal upheld the CIT(A)'s conclusion that the residual unreconciled difference represented sales effected but not recorded and that estimating gross profit on that amount and treating it as business income was appropriate. Consequently, invoking Section 69 and taxation under Section 115BBE was not appropriate where the stock difference was satisfactorily explained and reduced to a business income addition. [Paras 5, 6]

Appeal dismissed; CIT(A)'s reduction of the addition to the unreconciled stock difference and its assessment as business income is affirmed.

Final Conclusion: The Tribunal affirms the CIT(A)'s view that the survey valuation required adjustment for GST and gross profit, the assessee's reconciliation stood uncontroverted, and only the small unreconciled difference was assessable as business income; the Assessing Officer's invocation of unexplained investment provisions was not sustained.

Disallowance under section 14A - Rule 8D - Attribution of expenditure to exempt income - Requirement of Assessing Officer's satisfaction after examination of accounts - Restriction of disallowance to amount of exempt income

Disallowance under section 14A - Rule 8D - Requirement of Assessing Officer's satisfaction after examination of accounts - Restriction of disallowance to amount of exempt income - Whether the disallowance made by the Assessing Officer under section 14A read with Rule 8D should be sustained where the AO did not record satisfaction after examining accounts and where the assessee contended that investments were non-dividend bearing, made from interest-free own funds or produced taxable income. - HELD THAT: - The Tribunal found that the AO invoked section 14A read with Rule 8D and made a large disallowance without discharging the statutory obligation to examine and record satisfaction regarding the assessee's suo motu claim of either no disallowance or a limited disallowance. The CIT(A) restricted the disallowance to the amount of exempt dividend but did not address the assessee's specific contentions that several investments did not yield exempt dividends, some investments produced taxable income, and that investments were funded from interest free own funds. Applying the principle that the AO must examine the accounts and give cogent reasons for rejecting the assessee's attribution (as reflected in the jurisdictional precedent quoted by the CIT(A)), the Tribunal concluded that the AO had failed to justify the impugned addition. In consequence, and in absence of the required findings by the AO, the Tribunal directed deletion of the disallowance. [Paras 10, 11]

The disallowance under section 14A read with Rule 8D is deleted and the assessee's appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal for AY 2014-15, holding that the AO failed to examine and record satisfaction before rejecting the assessee's suo motu attribution and therefore the disallowance under section 14A read with Rule 8D is deleted.

Deduction under section 54 (exemption for long term capital gain on sale of residential property) - Acquisition or construction within statutory period (one year before / two years after; three years for construction) - Distinction between agreement/endorsement and effective acquisition/possession for section 54 - Requirement of documentary evidence to substantiate purchase/possession for claiming exemption

Deduction under section 54 (exemption for long term capital gain on sale of residential property) - Acquisition or construction within statutory period (one year before / two years after; three years for construction) - Requirement of documentary evidence to substantiate purchase/possession for claiming exemption - Distinction between agreement/endorsement and effective acquisition/possession for section 54 - Denial of deduction under section 54 in respect of long term capital gain of Rs.35,58,612 for Assessment Year 2017 18. - HELD THAT: - The assessee sold a residential flat on 28/02/2017 and claimed exemption under section 54 by alleging acquisition/possession of a new residential unit by way of an agreement/endorsement dated 18/02/2014 and later claiming possession of a 'bare shell' on 13/08/2016. Section 54 requires that the new house be acquired within one year before or two years after the date of transfer of the old house, or constructed within three years thereafter. The lower authorities found, and the Tribunal agrees, that the claimant's alternate dates and assertions were unsupported by documentary evidence establishing effective acquisition or possession within the statutory periods. The fact that construction of the new property had commenced before the sale of the old property and the absence of cogent documentary proof of acquisition/possession within the statutory timeframe meant the statutory conditions for exemption were not satisfied. Consequently, the Assessing Officer's disallowance, confirmed by the CIT(A), was upheld. [Paras 5, 8, 9]

Claim for deduction under section 54 is rejected and the addition of Rs.35,58,612 is sustained; appeal dismissed.

Final Conclusion: The Tribunal affirms the denial of exemption under section 54 for the long term capital gain in Assessment Year 2017 18 because the assessee failed to establish acquisition/possession of the new residential property within the statutory period and did not produce supporting documentary evidence.

Revenue expenditure vs capital expenditure - Enduring benefit test - Routine repairs - Capitalization and depreciation - Remand for verification of nature and extent of repairs

Revenue expenditure vs capital expenditure - Enduring benefit test - Routine repairs - Capitalization and depreciation - Remand for verification of nature and extent of repairs - Whether amounts claimed as repair & maintenance and stores & spares consumed are capital or revenue expenditure and whether the matter requires remand for verification. - HELD THAT: - The Tribunal applied the established test of enduring benefit to determine whether the impugned expenditures should be capitalized. It observed that expenditure which brings into existence an asset or confers an enduring advantage is capital, whereas routine upkeep is revenue; the assessee bears the onus to show routine maintenance and the Revenue must rebut with credible evidence. Having examined the material, the Tribunal found that the lower authorities recorded items suggesting replacement of entire components and works like laying of roads and other jobs which could confer enduring benefit, but there was no clear, conclusive finding on the nature and extent of the repairs. The Tribunal noted that expenditure on roads outside the assessee's premises would be allowable, indicating that individual items may have differing treatment. In absence of a detailed verification and clear findings, the Tribunal held that simply treating the aggregate amounts as capital was not justified and therefore set aside the orders on this issue and remitted the matter to the Assessing Officer for verification of the correctness and nature of the claims and fresh adjudication consistent with law. [Paras 6, 7]

Impugned capitalization set aside and issue restored to the file of the Assessing Officer for verification and fresh adjudication; appeal allowed for statistical purposes.

Final Conclusion: The Tribunal remitted the question of whether the disputed repair & maintenance and stores & spares expenditures are capital or revenue in nature to the Assessing Officer for detailed verification of the nature and extent of the works (noting that certain items, e.g. roads outside premises, may be allowable), and allowed the appeal for statistical purposes.

Deduction under section 80P(2)(d) - Rectification under section 154 - Re-opening under section 148 - Change of opinion versus mistake apparent from record - Applicability of section 80P(4) - Interest from co-operative banks as investments with another co-operative society - Precedential effect of High Court and coordinate ITAT decisions

Deduction under section 80P(2)(d) - Interest from co-operative banks as investments with another co-operative society - Applicability of section 80P(4) - Precedential effect of High Court and coordinate ITAT decisions - Allowability of deduction claimed under section 80P(2)(d) in respect of interest earned on deposits with co-operative banks - HELD THAT: - The Tribunal examined the characterisation of interest earned by the assessee (a co-operative society registered under State Co operative Societies Act) on deposits made with other co operative banks/societies and applied settled precedents of the coordinate benches and the High Court. Having regard to the line of authority referred to by the assessee and the coordinate decisions of the Jodhpur Bench (and relevant High Court rulings), the Bench concluded that interest earned from deposits with co operative banks (which are registered as co operative societies) falls within the scope of section 80P(2)(d), and that the exclusion in section 80P(4) does not operate to deny the deduction in the facts of these cases. The Tribunal therefore allowed the claim of deduction on the merits for the assessment years in dispute, following the consistent view taken in the cited decisions. [Paras 9, 10]

Deduction under section 80P(2)(d) in respect of interest from the specified co operative banks is allowed for the listed assessment years; appeals allowed on this ground.

Re-opening under section 148 - Rectification under section 154 - Change of opinion versus mistake apparent from record - Consequences for notices issued under sections 148/154 challenging the same deduction after the appellate allowance - HELD THAT: - Because the Tribunal allowed the assessee's claim on merits, the challenge to the validity of the notices issued under section 148 / section 154 (as raised in the specified grounds) became infructuous. The Bench therefore did not need to adjudicate further on the reopening/rectification objections for the assessment years whose quantum was decided in favour of the assessee. [Paras 9]

Challenges to notices under sections 148/154 are rendered infructuous in respect of the assessment years where the deduction was allowed; no separate adverse action sustained.

Penalty under section 271(1)(c) - Adjudication of penalty proceedings raised in the appeals - HELD THAT: - The Tribunal recorded that, since the quantum appeals were decided in favour of the assessee, the ground relating to initiation/levy of penalty under section 271(1)(c) became academic. Consequently that ground was not adjudicated on merits by the Tribunal. [Paras 9]

Penalty ground held academic and not adjudicated.

Final Conclusion: The appeals filed by the assessee for the assessment years 2013-14, 2015-16, 2016-17, 2017-18, 2018-19 and 2020-21 are allowed: the deduction under section 80P(2)(d) in respect of interest earned from the specified co operative banks is permitted and, having allowed the claims on merits, the related challenges to reopening/rectification notices became infructuous; the penalty ground is academic and was not decided.

Defective penalty notice - Non-specification of charge - Penalty under section 271(1)(c)

Defective penalty notice - Omnibus notice - Vagueness of charge - The validity of penalty imposed under section 271(1)(c) where the notice under section 274 did not specify whether the charge was concealment of income or furnishing inaccurate particulars. - HELD THAT: - The Tribunal found from the notice itself that the inapplicable limb had not been struck off and the charge was not specified, making it an omnibus notice. Applying the binding jurisdictional precedent and the Full Bench view noticed in the order, it held that failure to specify the exact charge in the statutory notice is a fatal defect, since the assessee must be informed with clarity of the ground on which penalty proceedings are initiated. [Paras 6, 7]

The penalty was held unsustainable and was directed to be deleted.

Final Conclusion: The Tribunal allowed the appeal and deleted the penalty for Assessment Year 2012-13, holding that the penalty notice was invalid for non-specification of the charge under section 271(1)(c).

Bogus purchases - estimation of income on unverified purchases - estimation of profit element at 12.5% - deduction under section 80-IC - reopening of assessment - change of opinion - notice under section 133(6) and non-compliance - opportunity of hearing and remand for fresh adjudication

Bogus purchases - notice under section 133(6) and non-compliance - estimation of income on unverified purchases - estimation of profit element at 12.5% - Validity of addition of alleged bogus purchases and method of estimating income thereon - HELD THAT: - The Tribunal examined the Assessing Officer's finding that purchases from M/s Samrudhi Corporation aggregating to the alleged amount were bogus, noting the AO's reliance on non-service of the notice issued under section 133(6) and non-production of the vendor for verification. Having considered the facts, the books, payments through banking channels, and judicial precedents from the jurisdictional High Court and other benches, the Tribunal held that the assessing authority's action could not stand untested and that an estimation method adopted in prior decisions was appropriate to meet the ends of justice. Consequently, the Tribunal set aside the CIT(A)'s confirmation on this issue and directed the Assessing Officer to estimate the income attributable to the unapproved/bogus purchases by applying the established profit-element ratio of 12.5% to the disputed purchases, thereby partly allowing the assessee's appeal on this point. [Paras 6]

Set aside the CIT(A) order on the addition; directed AO to estimate income on unapproved/bogus purchases at 12.5% and proceed accordingly.

Deduction under section 80-IC - reopening of assessment - change of opinion - opportunity of hearing and remand for fresh adjudication - Allowability of claim of deduction under section 80-IC and whether denial in reassessment amounts to permissible reopening or impermissible change of opinion - HELD THAT: - The Tribunal noted that the deduction under section 80-IC had been accepted in the original assessment proceedings after the AO had called for and considered Form No. 10CCC and other supporting material. In reassessment proceedings initiated on the basis of information relating to alleged bogus purchases, the AO denied the deduction. The Tribunal observed that the reassessment was primarily triggered by information about purchases and that the denial of the section 80-IC claim in reassessment involved facts and documentation that were not fully addressed: the assessee had furnished some documents but the record was incomplete and explanations were not fully supported. Rather than deciding the claim on merits, the Tribunal found it appropriate in the interests of natural justice to remit the issue to the Assessing Officer for fresh adjudication on merits, directing that the assessee be given adequate opportunity to produce evidence and be heard. [Paras 8]

Set aside the CIT(A) order on the section 80-IC claim and remanded the matter to the Assessing Officer for fresh examination on merits with an opportunity of hearing to the assessee.

Final Conclusion: The appeal is partly allowed for statistical purposes: the addition for alleged bogus purchases is set aside and the AO is directed to estimate income on such purchases at 12.5%; the claim of deduction under section 80-IC is remitted to the AO for fresh adjudication after affording the assessee an adequate opportunity of hearing.

Condonation of delay - construction of 'sufficient cause' for condonation of delay - strict versus liberal approach in exercise of discretion to condone delay - effect of unexplained and inordinate delay on entitlement to appellate remedy - dismissal of appeal as barred by limitation

Condonation of delay - construction of 'sufficient cause' for condonation of delay - effect of unexplained and inordinate delay on entitlement to appellate remedy - Application for condonation of delay of 161 days in filing the appeal was refused and the appeal dismissed as barred by limitation. - HELD THAT: - The Tribunal examined the assessee's explanation that it remained unaware of the CIT(Appeals)/NFAC order dated 21.03.2022 and therefore delayed filing the appeal. The bench found the explanation not bona fide because the memorandum of appeal itself recorded receipt of that order, and the assessee offered no satisfactory justification for waiting until 17 June 2022. Relying on established principles distinguishing inordinate or unexplained delay from short, excusable delay, the Tribunal held that an inordinate delay coupled with negligence or carelessness militates against exercise of discretion in favour of condonation. While acknowledging authority that 'sufficient cause' is to be construed liberally to advance substantial justice, the Tribunal concluded that where the delay is inordinate and unexplained the balance of convenience and legislative intent underlying limitation require a cautious approach. Applying these principles, and noting the absence of a credible, bonafide reason, the Tribunal declined to condone the 161-day delay and dismissed the appeal without adjudicating the merits. [Paras 9, 10, 11, 12, 13]

Delay of 161 days not condoned; appeal dismissed as barred by limitation.

Final Conclusion: The Tribunal refused to condone the 161-day delay on grounds that the explanation was not bona fide and the delay was inordinate; accordingly the appeal was dismissed as barred by limitation without considering merits.

Condonation of delay - dismissal for low tax effect - non-interference in matters involving negligible tax implications - question of law left open for future adjudication

Condonation of delay - Delay in filing the appeal was condoned. - HELD THAT: - The Court, after consideration, recorded satisfaction with the explanation for delay and exercised its discretion to condone the delay. The order condoning delay was operative to admit the appeal for hearing before the merits were considered, and there is no separate substantive legal controversy decided on condonation.

Delay condoned.

Dismissal for low tax effect - non-interference in matters involving negligible tax implications - The appeal was dismissed on the ground that the matter involved a low tax effect and did not merit interference by this Court. - HELD THAT: - The Court declined to entertain the appeal on the merits because the tax effect was deemed low; applying the discretionary principle of judicial restraint in matters where the fiscal consequence is minimal, the Court chose not to interfere. This represents an exercise of the Court's discretion rather than a determination of the underlying legal question framed in the appeal.

Appeal dismissed on the ground of low tax effect; no interference by this Court.

Question of law left open for future adjudication - Any substantive question of law raised in the matter was not decided and is left open to be agitated in other proceedings. - HELD THAT: - Although the appeal was dismissed on discretionary grounds, the Court expressly refrained from deciding any potentially determinative question of law. The order preserves the right of the parties or other litigants to raise and have adjudicated any such legal question in a different matter, thereby remanding the legal issue for fresh consideration elsewhere rather than resolving it on the merits in this appeal.

Question of law not adjudicated and left open for agitation in other proceedings.

Final Conclusion: Delay was condoned; the appeal was dismissed by the Supreme Court on the ground of low tax effect without deciding the substantive legal questions, which are left open for determination in other proceedings. Pending applications stand disposed of.

Liability of transferor on merger/amalgamation - successor company liability - advance authorization export obligation - show cause notice maintainability - responsibility to update Import Export Code (IEC) - no limitation for violations of post-import obligations - corrigendum to show cause notice and adjudication on merits

Liability of transferor on merger/amalgamation - successor company liability - advance authorization export obligation - Merger or amalgamation does not extinguish liabilities of the transferor company arising from non-fulfilment of advance authorization export obligations; the transferee/successor company remains liable. - HELD THAT: - The Court held that under schemes of amalgamation sanctioned by courts or tribunals the transferee company succeeds to both assets and liabilities of the transferor. The benefit of the advance authorization availed by the transferor (noticee) and the corresponding obligation under the authorization and bond cannot be allowed to lapse merely because of merger. Merger or amalgamation is not a device to evade existing tax or duty liabilities; if liabilities of the noticee remain undischarged the transferee must discharge them unless the scheme explicitly preserves the liability with promoters, which was not shown. The petitioner's contention that merger ipso facto extinguished liability was rejected and the authorities were entitled to proceed against the petitioner as successor of the noticee company. [Paras 21, 22, 23, 24, 25]

Liability for non-fulfilment of export obligations under the advance authorization remains enforceable against the petitioner as transferee/successor of the noticee company.

Show cause notice maintainability - responsibility to update Import Export Code (IEC) - advance authorization export obligation - no limitation for violations of post-import obligations - The writ petition challenging the impugned show cause notice is without merit and cannot be sustained as a vehicle to scuttle statutory show cause proceedings; the petitioner must respond to the notice. - HELD THAT: - The Court observed that the petition was premature and that the appropriate remedy was to reply to the show cause notice and have the respondents adjudicate the claims. The record reflected that the IEC remained registered in the name of the authorization holder and that the authorities had communicated with the authorization holder earlier seeking regularisation/payment; the petitioner did not establish that liabilities stood extinguished. Reliance on the legal position concerning limitation for post-import obligation violations (as expounded in prior decisions) supported the respondents' ability to proceed. Consequently the petition challenging the show cause notice was dismissed and the petitioner was directed to file a reply within a stated period. [Paras 18, 19, 20, 26, 27]

The writ petition is dismissed; the petitioner is directed to file a reply to the show cause notice within 30 days.

Corrigendum to show cause notice and adjudication on merits - show cause notice maintainability - The authorities are directed to issue a corrigendum to the show cause notice identifying the petitioner as successor/transferee and to adjudicate the proceedings on merits within prescribed timelines, with opportunity to be heard. - HELD THAT: - For clarity and procedural regularity the Court directed that a corrigendum may be issued to the impugned show cause notice to record the petitioner as transferee/successor of the noticee company. Thereafter the respondents were commanded to adjudicate the matter on merits within three months from receipt of the petitioner's reply, with the entire exercise to be completed within six months of receipt of the order. The petitioner was afforded the right to be heard and to file written submissions; failure to cooperate would permit the respondents to confirm and recover the demand on available material. [Paras 27, 28, 29, 30, 31]

Corrigendum may be issued and respondents shall adjudicate the show cause proceedings on merits within the specified timelines, permitting the petitioner to be heard.

Final Conclusion: The writ petition is dismissed. The petitioner, as transferee/successor of the noticee company, remains liable for non-fulfilment of advance authorization obligations; it is directed to reply to the show cause notice within 30 days, a corrigendum to identify the petitioner as successor may be issued, and the respondents shall adjudicate the matter on merits within the timeframes ordered.

Amendment of bill of entry under Section 149 - Documentary evidence existing at time of clearance (first proviso to Section 149) - Certificate of origin as evidence for preferential tariff - Reliance on public notice quashed by court - Remand for re-examination and opportunity to be heard

Amendment of bill of entry under Section 149 - Documentary evidence existing at time of clearance (first proviso to Section 149) - Impugned orders rejecting amendment applications were issued without examination of documentary evidence and require reconsideration under Section 149. - HELD THAT: - The first proviso to Section 149 permits amendment of a bill of entry after clearance only on the basis of documentary evidence which was in existence at the time of clearance. Whether the certificate of origin and other relevant documents were in existence and support the claim for exemption is a question of fact and documentary scrutiny for the proper officer; it is not to be determined by this Court in exercise of writ jurisdiction. The impugned orders record rejection without examining the certificate of origin and related documents, thereby failing to apply the statutory proviso and undertake the required documentary verification. [Paras 6, 8]

Quashed; matters remanded for the proper officer to examine the documentary evidence and reconsider the amendment applications in accordance with Section 149.

Certificate of origin as evidence for preferential tariff - The existence and sufficiency of the certificate of origin to establish origin for claiming preferential treatment must be determined by the Customs officer on documentary review. - HELD THAT: - The Court emphasised that the requirement that the importer establish origin by appropriate documents entails examination of the certificate of origin and any other relevant materials by the officer. The impugned orders did not undertake such examination and therefore cannot stand. The Court refrained from adjudicating on the substantive question of origin, leaving it for the statutory authority to decide after document scrutiny and opportunity to the petitioner. [Paras 6, 8]

Determination of whether the certificate of origin establishes entitlement to exemption is for the respondent to decide after documentary verification; remand directed for that purpose.

Reliance on public notice quashed by court - Impugned orders impermissibly relied on a public notice that has been quashed by this Court. - HELD THAT: - The Assistant Commissioner relied on public notice No.88/2019 dated 18.10.2019 in rejecting the amendment applications. This Court has earlier quashed that public notice; reliance upon a quashed notice in the impugned orders undermines their validity. Consequently, the matter requires fresh consideration uninfluenced by the quashed public notice. [Paras 8]

Orders set aside insofar as they rely on the quashed public notice; fresh adjudication required.

Remand for re-examination and opportunity to be heard - Matters remanded to the 1st respondent for fresh consideration in accordance with law, with directions to afford opportunity and conclude within a fixed time. - HELD THAT: - Given the absence of documentary examination and the reliance on a quashed public notice, the Court quashed the impugned orders and remanded the matters to the Assistant Commissioner to reconsider the amendment applications under Section 149 and other applicable provisions. The petitioner must be given a reasonable opportunity to be heard. The Court directed that the fresh exercise be completed within two months from receipt of this order. [Paras 9]

Matters remanded with direction to reconsider in accordance with Section 149 after providing a reasonable opportunity to the petitioner and to conclude the exercise within two months.

Final Conclusion: Impugned orders rejecting amendment of the bills of entry are quashed and the matters are remanded to the Assistant Commissioner for fresh consideration under Section 149 and other applicable provisions after examining the certificate of origin and other documentary evidence and after affording the petitioner a reasonable opportunity; the exercise is to be completed within two months. No order as to costs.

Classification of imported goods - essential characteristics of the finished product - nature and condition of goods at time of import - reliance on bill of entry description - remand for fresh consideration

Classification of imported goods - essential characteristics of the finished product - nature and condition of goods at time of import - reliance on bill of entry description - Whether the imported unfinished cold forge should be classified under CTH 8714 as bicycle parts or under CTH 73269099 as other forged articles, and whether the matter requires fresh factual verification. - HELD THAT: - The Tribunal found that the adjudicating authorities had not properly examined the nature and characteristics of the imported goods and had relied principally on the description in the bills of entry. The Tribunal accepted that the condition of the goods at the time of import is a material factor for classification and that it must be determined whether the products presently possess the essential characteristics of bicycle parts. The record showed no evidence placed by the department to establish that the imported items already represented bicycle parts. Given these factual lacunae, the Tribunal concluded that classification cannot be finally decided on the record before it and that the question requires factual verification of the features and processing state of the goods before applying the appropriate tariff heading. Accordingly the matter was remitted to the adjudicating authority for fresh consideration of classification, leaving the merits open and without recording any final finding on classification. [Paras 4, 5]

The appeal is allowed by way of remand; the matter is set aside and returned to the adjudicating authority to reconsider classification of the imported goods after verifying their nature, characteristics and condition at import.

Final Conclusion: The Tribunal did not decide the substantive question of classification on merits; instead it remitted the issue to the adjudicating authority for fresh factual examination of whether the imported unfinished cold forge possesses the essential characteristics of bicycle parts and thus falls under the tariff heading claimed by the department or that claimed by the appellant.

Classification of goods under Customs Tariff - animal feed additives versus chemical/medicinal classification - relevance of manufacturer's literature and certification in tariff classification - absence of chemical testing and its effect on classification - CBIC Instruction No. 34/2022 regarding Animal Feed Additive/Supplement - long standing practice of assessment and requirement to refer change of practice to the Board

Classification of goods under Customs Tariff - animal feed additives versus chemical/medicinal classification - relevance of manufacturer's literature and certification in tariff classification - CBIC Instruction No. 34/2022 regarding Animal Feed Additive/Supplement - absence of chemical testing and its effect on classification - Classification of imported Betaine Hydrochloride as animal feed grade under CETH 2309 90 90 rather than under chemical/medicinal heading (CETH 2923...). - HELD THAT: - The Tribunal upheld the Commissioner (Appeals) finding that the product literature and manufacturer certification identify the imported Betaine Hydrochloride as a feed additive produced to feed grade standards (FAMI QS), registered for animal nutrition and not intended for human or medicinal use. The Commissioner (Appeals) found that the Department had not drawn samples or obtained chemical expert opinion before altering the longstanding assessment practice and classifying the goods under the chemical/medicinal heading; such absence of testing undermined the Department's case. The Tribunal also took note of CBIC Instruction No. 34/2022 and its Annexure listing Betaine HCL (93-98%) as classifiable under Animal Feed Grade, which supported the view that the goods fall within animal feed additives. In the light of the documentary evidence, the lack of chemical analysis, and the departmental instruction, the Tribunal found no reason to disturb the classification under heading 2309 and dismissed the Revenue appeals while allowing the importer appeals. [Paras 13, 14, 15, 18, 20]

Classification of Betaine Hydrochloride as animal feed grade under sub heading 2309 90 90 is upheld; Revenue appeals dismissed and importer appeals allowed with consequential relief as per law.

Final Conclusion: The Tribunal affirmed the Commissioner (Appeals) conclusion that the imported Betaine Hydrochloride is classifiable as an animal feed additive under sub heading 2309 90 90, having regard to manufacturer literature, absence of chemical testing by the Department, and CBIC Instruction No. 34/2022; Revenue appeals dismissed and importer appeals allowed.

Classification under General Rules for the Interpretation of the Import Tariff (GIR) - Scope and exclusion in Chapter 25 (Note 1: effect of roasting/calcination) - HSN Explanatory Notes on heading 2522 and 2825 (purity threshold for calcium oxide) - Essential character and trade parlance in classification - Applicability of exemption entry tied to tariff description

Classification under General Rules for the Interpretation of the Import Tariff (GIR) - Scope and exclusion in Chapter 25 (Note 1: effect of roasting/calcination) - HSN Explanatory Notes on heading 2522 and 2825 (purity threshold for calcium oxide) - Essential character and trade parlance in classification - Imported quicklime is classifiable under Customs Tariff Item 2522 10 00 and not under 2825 90 90. - HELD THAT: - The Tribunal applied GIR 1 as the starting point and examined the Chapter and Heading notes. Chapter 25 expressly covers quicklime (2522) and excludes calcium oxide and hydroxide of heading 2825; Chapter Note 1 excludes products which have been roasted or calcined only where such processing converts a mineral to a chemical product. The HSN explanatory notes explain that only calcium oxide in the pure state (practically no clay, iron oxide, manganese oxide, etc.) - exemplified by products of approximately 98% CaO - falls under heading 2825, while quicklime (an impure calcium oxide) is covered by heading 2522. The sample test reports for the 28 consignments show available CaO in the range ~91.7%-92.8% (total CaO ~93.8%-94.8%) with measurable impurities; this composition falls short of the high-purity threshold identified in the HSN notes. There was no factual basis to treat the consignments as chemically transformed calcium oxide falling exclusively within Chapter 28; GIR 2/3 did not mandate reclassification. Applying these principles, the Tribunal concluded that the goods retain the essential character of quicklime and are therefore classifiable under 2522 10 00. [Paras 10, 12, 14, 20]

Classification under CTI 2522 10 00 confirmed; reclassification under 2825 90 90 set aside.

Applicability of exemption entry tied to tariff description - HSN Explanatory Notes on heading 2522 - The appellants' claim to exemption benefits linked to heading 2522 is permissible once the goods are held to be classifiable under 2522. - HELD THAT: - The Tribunal noted that the integrated tax notification grants rate/exemption by reference to the description 'quicklime, slaked lime and hydraulic lime, other than calcium oxide and hydroxide of heading 2825' placed at serial no.131. Since the imported goods were held to fall within heading 2522 by application of tariff rules and HSN explanatory notes, the appellants' entitlement to claim the specified exemption/IGST treatment under the notification is not vitiated. The Tribunal relied on the principle that exemption entries operate according to their descriptive fitment in the Schedule and found no infirmity in the appellants' claim. [Paras 15, 21]

Exemption claim under the notification is not disallowed on the basis of reclassification; demands premised on classification under 2825 are set aside.

Final Conclusion: Appeal allowed. The adjudication confirming reclassification to 2825 90 90 and demanding differential duties is set aside; the imported quicklime is held to be classifiable under Customs Tariff Item 2522 10 00 for the period 30.07.2019 to 22.04.2021 and the appellants' claim under the relevant exemption entry stands; impugned demands are dropped.

Validity of SEBI Exit policy under Section 5 of the Securities Contracts (Regulation) Act - Obligation to apply for continuance of clearing house under SECC Regulations - Closure of clearing house business and principles of natural justice - Compulsory derecognition and regulatory power to enforce exit policy - Requirement to corporatize/demutualize and separate clearing corporation

Validity of SEBI Exit policy under Section 5 of the Securities Contracts (Regulation) Act - The Exit policy promulgated by SEBI vide circular dated 30th May, 2012 is in consonance with Section 5 of the SCR Act. - HELD THAT: - The court upheld the Single Judge's finding that SEBI, exercising statutory powers under the SEBI Act and concurrently with the Central Government under the SCR Act, was entitled to prescribe grounds on which an opinion for withdrawal of recognition may be formed. The prescribed turnover threshold was justified by reference to the Bimal Jalan Committee recommendations and SEBI's regulatory experience; the circular was held to have the force of law, to relate to all stock exchanges and not to be arbitrary or capricious, and thus not de hors Section 5 of the SCR Act. The court observed that regulations defining conditions for recognition and governance do not infringe legal rights of a stock exchange where public interest and market regulation are implicated. [Paras 4, 22, 23, 24]

Exit policy valid and consistent with Section 5 of the SCR Act; prescription of turnover threshold not arbitrary.

Obligation to apply for continuance of clearing house under SECC Regulations - Requirement to corporatize/demutualize and separate clearing corporation - An existing inbuilt clearing house was obliged to apply for continuance or comply with SECC Regulations and could not continue as an inbuilt clearing house beyond the prescribed period. - HELD THAT: - The court agreed with the Single Judge that the second proviso to Regulation 3 of the SECC Regulations required existing clearing houses to apply for continuance under the Regulations. Although CSE previously obtained an exemption from transferring clearing and settlement duties, that exemption was not perpetual; the SECC Regulations mandated compliance and CSE admitted the need to comply. The Regulations, having been validly framed in aid of market regulation and public interest, legitimately required either establishment of a separate clearing corporation or tying up with an eligible recognized clearing corporation. [Paras 5, 26]

CSE was bound to comply with SECC Regulations and to seek continuance or restructure clearing operations as mandated.

Closure of clearing house business and principles of natural justice - The procedure undertaken by SEBI to close down the clearing house business of CSE did not violate the principles of natural justice. - HELD THAT: - The court found that CSE had not applied for permission under the SECC Regulations and that SEBI closed down CSE's clearing business after expiry of the prescribed period, invoking Section 12A of the SCR Act. The letter of 3rd April, 2013 reflected prior correspondence and opportunities afforded; accordingly, it could not be said that CSE had not been heard prior to issuance of the closure notice. The court therefore sustained the Single Judge's conclusion rejecting a natural justice violation challenge. [Paras 6]

SEBI's closure of CSE's clearing operations was not vitiated by breach of natural justice.

Compulsory derecognition and regulatory power to enforce exit policy - SEBI was justified in taking steps to effect compulsory exit of CSE where CSE failed to meet regulatory requirements. - HELD THAT: - The court upheld the finding that closure of the clearing house business was distinct from derecognition of the stock exchange but, given CSE's failure to arrange for a recognized clearing house or to comply with the Exit policy and SECC Regulations, SEBI was entitled to initiate derecognition proceedings. While noting the long-standing existence and regional importance of CSE and the equities of the case, the court did not interfere with the Single Judge's answer in favour of SEBI but exercised discretion to afford CSE a further opportunity to comply before SEBI takes final action. [Paras 7, 28, 29]

SEBI justified in initiating compulsory exit steps; court granted a limited opportunity to CSE to comply before derecognition proceeds.

Requirement to corporatize/demutualize and separate clearing corporation - CSE was directed to establish a clearing corporation or tie up with an eligible recognized clearing corporation within a specified period as a condition to forestall compulsory derecognition. - HELD THAT: - Although the court affirmed SEBI's regulatory powers and the validity of the Exit policy and SECC Regulations, having regard to the institutional history of CSE and interlocutory conduct between the parties, the court exercised equitable discretion to direct that CSE be given six months from the date of the judgment to establish a clearing corporation in compliance with SECC Regulations or to tie up with an eligible recognized clearing corporation. Failure to comply would permit SEBI to take lawful steps thereafter. [Paras 30]

CSE granted six months to achieve required clearing arrangements; non-compliance will enable SEBI to proceed in accordance with law.

Final Conclusion: The appeals were dismissed on merits: the Exit policy and SECC Regulations were held valid and SEBI's actions in suspending clearing operations and pursuing compulsory exit were justified; however, the court directed that CSE be afforded six months to comply with SECC Regulations by establishing or tying up with an eligible clearing corporation, failing which SEBI may proceed in accordance with law; no order as to costs.

Impleadment of parties - necessary party - proper party - dominuss litis - discretion to add parties - order in rem - representation of creditors and stakeholders by liquidator

Impleadment of parties - necessary party - proper party - dominuss litis - discretion to add parties - representation of creditors and stakeholders by liquidator - Whether LICHFL, a secured financial creditor and member of the stakeholders consultative committee, should be impleaded as a third respondent in the company appeal. - HELD THAT: - The Tribunal applied established principles that impleadment is discretionary and that only a person who is a necessary or proper party should be added; impleadment is procedural and not a substantive right. The dominus litis principle precludes coercing an appellant to join a party whom it does not wish to contest unless required by law. A necessary party is one without whom no effective order can be passed; a proper party is one whose presence enables complete adjudication but is not indispensable. The fact that the petitioner is a creditor with significant voting share and participated in a committee which furnished an action plan does not, by itself, render it a necessary or proper party. The committee constituted by the Adjudicating Authority to make recommendations and the petitioner's role in formulating the action plan do not establish a legal compulsion for impleadment when the interests of creditors and stakeholders are represented by the liquidator and the resolution professional in the appeal. Having considered the facts and cited authorities, the Tribunal concluded that the petitioner is neither a necessary nor a proper party and that the appeal can proceed to final hearing on the existing record without impleadment. [Paras 34, 35, 38, 42, 43]

Application for impleadment dismissed as the petitioner is neither a necessary nor a proper party to the appeal.

Final Conclusion: IA 57 of 2024 seeking impleadment is dismissed. No costs. Connected pending IAs, if any, are closed.

Threshold limit for initiation of CIRP under Section 4 of the IBC - definition of "financial debt" under Section 5(8) of the IBC - computation of financial debt - inclusion of interest and commission - inflation of claim to cross jurisdictional threshold and misuse of IBC - imposition and confirmation of costs for frivolous or reproachable litigation

Threshold limit for initiation of CIRP under Section 4 of the IBC - computation of financial debt - inclusion of interest - Whether the Adjudicating Authority correctly held that the claimed default did not meet the minimum threshold for initiating CIRP because the Appellant's interest computation was inflated - HELD THAT: - The Tribunal examined the two Section 7 petitions filed by the Appellant and noted that the principal, rate and date of default remained the same in both petitions, while the interest component was enhanced in the later petition. The Adjudicating Authority compared the computations and found the enhancement arose from claiming "interest up to the date of Demand Notice" without specifying period and, given that the Agreement's duration was one year, concluded interest should be computed for one year only. Applying the one-year limit at the agreed rate of 1% per month (12% p.a.) on the undisputed principal produced a total unpaid financial debt below the statutory threshold. The Tribunal agreed that the later, higher interest calculation lacked rational basis and was prima facie designed to cross the threshold; accordingly the Adjudicating Authority's conclusion that the claim did not meet the threshold was justified. [Paras 8, 9, 10, 11, 16]

The Adjudicating Authority correctly found the claimed default below the threshold after rejecting the inflated interest calculation.

Definition of "financial debt" under Section 5(8) of the IBC - computation of financial debt - exclusion of commission on sale - Whether the "commission on sale" claimed by the Appellant qualifies as a "financial debt" for the purpose of computing default under the IBC - HELD THAT: - The Tribunal reproduced and applied the statutory elements of "financial debt" - disbursal of money against consideration for time value of money and the categories enumerated in sub-clauses (a)-(i). The Adjudicating Authority found that the security deposit with interest fell within the definition, but the "commission on sale" did not involve disbursal against the time value of money, was not akin to borrowing nor covered by the listed sub-clauses; it did not bear the commercial effect of a borrowing. The Tribunal found no reason to disagree with that interpretation and upheld exclusion of commission from the financial debt computation. [Paras 12, 15, 16]

The "commission on sale" is not a financial debt under Section 5(8) and properly excluded from the debt computation.

Inflation of claim to cross jurisdictional threshold and misuse of IBC - imposition and confirmation of costs for frivolous or reproachable litigation - Whether the Appellant's conduct in re-agitating the same claim with an inflated computation warranted reproach and imposition of costs - HELD THAT: - The Tribunal agreed with the Adjudicating Authority that the Appellant, having earlier filed and lost a Section 7 petition on threshold grounds, presented a second petition with an enhanced interest claim lacking rational basis to surmount the threshold. The practice of re-agitating the same contractual dispute with an inflated claim was held to be misuse of IBC provisions and reproachable. Given this finding, the imposition of costs by the Adjudicating Authority was appropriate and the Tribunal affirmed the costs order. [Paras 16, 17]

Appellant's conduct amounted to misuse of IBC; imposition of costs was justified and is affirmed.

Final Conclusion: The appeal is dismissed. The Adjudicating Authority's findings that the claimed debt (after excluding the inflationary interest calculation and commission on sale) did not meet the statutory threshold, and the imposition of costs for misuse of the Code, are affirmed.

Condonation of delay - No interference with High Court order - Dismissal of Special Leave Petition - Question of law reserved

No interference with High Court order - Dismissal of Special Leave Petition - Impugned order of the High Court is not interfered with and the Special Leave Petition is dismissed. - HELD THAT: - The Court, after hearing counsel, found no ground to interfere with the impugned order passed by the High Court. The petition was therefore dismissed. Although delay in filing was condoned, the substantive challenge to the High Court's order did not merit interference by this Court.

Special Leave Petition dismissed; impugned High Court order upheld without interference.

Condonation of delay - Question of law reserved - A question of law arising in the matter is left open for future consideration. - HELD THAT: - While the petition was dismissed on the grounds indicated, the Court explicitly refrained from deciding a question of law raised in the proceedings. Delay in filing was condoned, but the substantive legal question was reserved and not adjudicated by this order.

Question of law left open for determination on a future occasion.

Final Conclusion: Delay in filing condoned; on the merits the Supreme Court declined to interfere with the High Court's order and dismissed the Special Leave Petition, while expressly leaving the identified question of law undecided.

Cognizance and issuance of summons - summons under Section 61 Cr.P.C. and warrant under Section 70 Cr.P.C. - summons case and warrant case under Section 204 Cr.P.C. - release on bail under Section 437 Cr.P.C.

Cognizance and issuance of summons - summons under Section 61 Cr.P.C. and warrant under Section 70 Cr.P.C. - Validity of issuance and service of summons on the appellant when the Special Court's cognizance order expressly stated that summons for the other accused would be issued at a later stage. - HELD THAT: - The Special Court, on taking cognizance, recorded that summons in respect of the other eleven accused would be issued at a later stage. Notwithstanding that specific direction, a summons in the prescribed form was issued and served on the appellant, who thereafter surrendered. The Court held that when cognizance is taken the Court may issue either summons (for a summons case) or a warrant (for a warrant case) in terms of the Cr.P.C., but issuance and service of summons cannot properly occur where there is no order for issuance of process. The proceedings before the Special Court were thus flawed because no order had been passed directing issuance of summons or warrant against the appellant, and yet summons was issued and acted upon (paras 6-7, 9). [Paras 6, 7, 9]

Issuance and service of the summons on the appellant was not valid in the absence of any order by the Special Court directing issuance of process.

Release on bail under Section 437 Cr.P.C. - summons case and warrant case under Section 204 Cr.P.C. - Whether the appellant's bail application could be entertained under Section 437 Cr.P.C. where there was no arrest, detention, or order for issuance of summons or warrant. - HELD THAT: - Section 437 Cr.P.C. operates when an accused is arrested or detained without warrant or when a summons or warrant has been issued to cause the accused to appear before the Court. In the present case the appellant was not arrested during investigation nor was there any order for issuance of summons or warrant under Section 204 Cr.P.C.; therefore, the bail application ought not to have been entertained. Although the appellant appeared and surrendered under a misconception of fact and law, the legal precondition for Section 437 to apply was missing, rendering the Special Court's consideration of the bail application procedurally flawed. The Court nonetheless permitted the point to be raised despite it not having been pressed before the High Court because it raised a question of law (paras 8-11). [Paras 8, 9, 10, 11]

The bail application under Section 437 Cr.P.C. could not have been validly entertained in the absence of arrest, detention, or an order issuing summons or warrant; the proceedings suffered from a basic flaw.

Release on bail under Section 437 Cr.P.C. - Relief to be granted in consequence of the identified procedural infirmity. - HELD THAT: - Without expressing any opinion on the merits of the underlying charges, the Court accepted the appeal on the legal question identified and directed that the appellant (accused No.10) be released on bail. The Court left it open to the Special Court to impose such terms and conditions as it may deem appropriate and observed that the respondent may pursue any proceedings permissible under law (paras 11-15). [Paras 11, 12, 13, 15]

The appeal is allowed and the appellant is directed to be released on bail subject to terms to be imposed by the Special Court.

Final Conclusion: The Special Court's proceedings were procedurally flawed because summons were issued and acted upon despite there being no order directing issuance of process; Section 437 Cr.P.C. could not validly be invoked in those circumstances, and accordingly the appeal is allowed and the appellant ordered released on bail subject to conditions to be fixed by the Special Court, without expressing any view on merits.

Summary order. Special Leave Petition dismissed; observations in the impugned order were confined to the lis and shall not have any bearing on subsequent proceedings; pending applications disposed of.

Condonation of delay - power to condone delay under the proviso to Section 85(3A) of the Finance Act, 1994 - right to be afforded opportunity to explain delay before rejection on limitation grounds - remand for fresh consideration

Condonation of delay - power to condone delay under the proviso to Section 85(3A) of the Finance Act, 1994 - right to be afforded opportunity to explain delay before rejection on limitation grounds - Whether the Appellate Commissioner erred in rejecting the appeal as barred by limitation without giving the petitioner an opportunity to explain the delay and/or to seek condonation under the proviso to Section 85(3A) of the Finance Act, 1994. - HELD THAT: - The Court found that the Appellate Commissioner had numbered the appeal but proceeded to dismiss it solely on the ground that it was filed beyond the prescribed two months without recording any request by the appellant for condonation or having called upon the appellant to explain the delay. The proviso to Section 85(3A) permits condonation of delay of up to one month if the Commissioner is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within two months. In the circumstances, the petitioner ought to have been given an opportunity to explain the delay and to seek condonation; denial of that opportunity rendered the impugned order unsustainable. Accordingly, the impugned order was set aside and the matter remitted for consideration of a condonation application and, if condoned, for adjudication on merits in accordance with law. [Paras 4, 5]

Impugned order set aside; matter remitted to the Appellate Commissioner to permit the petitioner to file an application for condoning delay and, if condoned, to decide the appeal on merits within the time specified by this Court.

Final Conclusion: Writ petition allowed in part: the appellate order dismissing the appeal as time-barred without affording the petitioner an opportunity to explain delay is set aside; petitioner to file application for condoning the delay within 15 days of receipt of this order, and the Appellate Commissioner to decide the condonation and, if condoned, dispose of the appeal on merits within 75 days. No costs.

Extended period of limitation - intention to evade tax - classification of taxable services - opportunity for cross-examination - reverse charge mechanism - sub-contractor liability - de-novo adjudication

Extended period of limitation - intention to evade tax - Validity of invocation of the extended period of limitation for the period 2008-09 to 2012-13 - HELD THAT: - The Tribunal observed that whether the extended period of limitation under the proviso to Section 73(1) could be invoked is a fact-sensitive question requiring proper examination of the record to establish any positive act of suppression or intention to evade tax. The adjudicating authority did not properly address limitation and failed to establish suppression or willful misstatement. In view of these deficiencies, the Tribunal did not decide the substantive question on merits but remitted the issue for fresh consideration by the Adjudicating Authority. [Paras 4, 5]

Remitted to the Adjudicating Authority for fresh consideration; issue kept open

Classification of taxable services - Service-wise classification and bifurcation of the demand - HELD THAT: - The Tribunal found that the adjudication order lacked the requisite service-wise bifurcation of the demand, particularly for periods prior to 01.07.2012 when correct classification is essential. The adjudicating authority did not clearly specify or explain how amounts were classified under various service categories or how Annexures interrelated. Given this defect, the Tribunal directed that classification and bifurcation be re-examined afresh. [Paras 4]

Matter remitted for de-novo adjudication on service-wise classification and bifurcation

Opportunity for cross-examination - Denial of opportunity to cross-examine the departmental witnesses or client-officers whose data formed the basis of demand - HELD THAT: - The Tribunal held that the appellant's request to cross-examine officers or representatives of its clients, whose statements/documents were relied upon for quantification, ought to have been considered to ensure fair adjudication. The absence of such opportunity was a procedural defect which requires the Adjudicating Authority to afford appropriate opportunity during reconsideration. [Paras 4]

Directed that the Adjudicating Authority afford opportunity for cross-examination as part of the de-novo adjudication

Reverse charge mechanism - Applicability of partial payment percentages (25% for manpower supply; 50% for works contract) and treatment under reverse charge for 01.07.2012 to 31.03.2013 - HELD THAT: - The Tribunal noted submissions that after the negative list regime and applicable notifications the appellant claimed entitlement to partial liability (25% or 50%) or had invoices showing partial reverse charge treatment. The adjudicating authority did not properly examine these contentions. The Tribunal therefore remitted the question of correct tax incidence, applicability of partial liability and reverse charge, and related classification for fresh adjudication. [Paras 2, 4]

Remitted for fresh adjudication on applicability of partial liability and reverse charge treatment

Sub-contractor liability - Liability of the appellant as sub-contractor vis-a -vis main contractor for payment of service tax - HELD THAT: - The appellant contended that amounts relating to work performed as a sub-contractor should not attract separate service tax liability to avoid double taxation and had produced certificates and invoices in support. The Tribunal recorded that this contention was not properly verified by the adjudicating authority and that verification with main contractors was necessary. The matter on this aspect was therefore left open for fresh consideration. [Paras 2, 4]

Remitted to the Adjudicating Authority for verification and fresh decision on subcontractor liability

De-novo adjudication - Validity of the adjudication order and remedial direction - HELD THAT: - Having identified multiple material deficiencies-absence of service-wise bifurcation, failure to allow cross-examination, inadequate treatment of limitation and statutory incidence-the Tribunal concluded that the impugned Order-in-Original is vitiated. Rather than decide the contested issues on merits, the Tribunal set aside the impugned order and directed a de-novo adjudication by the Adjudicating Authority, uninfluenced by the present observations. [Paras 4, 5]

Impugned order set aside; appeal allowed by remand for de-novo adjudication with all issues kept open

Final Conclusion: The impugned Order-in-Original is set aside and the matter is remitted to the Adjudicating Authority for de-novo adjudication. All contested issues including limitation, service-wise classification, applicability of partial liability/reverse charge, subcontractor liability and procedural opportunities such as cross-examination are to be reconsidered afresh.

Cleaning Activity Services - service tax liability for evacuation of ash from ash ponds and nuisance-free transportation and disposal - definition of cleaning activity under Section 65(24b) - transportation contract versus cleaning service - saleable nature of fly ash and its exclusion from waste removal as cleaning

Cleaning Activity Services - service tax liability for evacuation of ash from ash ponds and nuisance-free transportation and disposal - definition of cleaning activity under Section 65(24b) - transportation contract versus cleaning service - saleable nature of fly ash and its exclusion from waste removal as cleaning - Whether the activity of evacuation of ash from ash ponds and nuisance-free transportation and disposal in defined area provided by the plant is liable to service tax as a 'Cleaning Activity Service'. - HELD THAT: - The Tribunal held that the appellants' contracts for excavation, loading, transportation and disposal of ash are not contracts for cleaning within the meaning of the statutory definition. Relying on earlier decisions of the Bench, the Tribunal noted that the definition of cleaning activity under Section 65(24b) covers cleaning of commercial or industrial buildings or premises or factory, plant, machinery, tank or reservoir of such premises, and does not extend to excavation and removal of material where the activity is essentially transportation and disposal. The Bench accepted the reasoning that the appellants were engaged to remove and transport ash to specified disposal sites and were not performing cleaning of premises with the objective of decontamination. The Tribunal further observed that fly ash has marketable utility and is capable of being sold or used in manufacture, and therefore the activity cannot be equated to removal of waste as a cleaning service. Applying these principles and following earlier Kolkata Bench precedents, the Tribunal concluded that the demands of service tax, interest and penalty under the head of Cleaning Activity Services could not be sustained and were to be set aside. [Paras 6, 7]

The activity of evacuation of ash from ash ponds and nuisance-free transportation and disposal in the defined area provided by the plant is not liable to service tax as a Cleaning Activity Service; the demands, interest and penalties confirmed in the impugned orders are set aside.

Final Conclusion: All four appeals are allowed; the impugned orders confirming service tax, interest and penalty under the category of Cleaning Activity Services are set aside.

Resolution plan approved by NCLT - Extinguishment of operational creditors' claims under IBC - Effect of NCLT-approved resolution plan on recovery of government dues - Tribunal's competence to decide recoverability of dues - No provision in Central Excise Act for giving effect to NCLT proceedings - Infructuousness of appeal

Resolution plan approved by NCLT - Extinguishment of operational creditors' claims under IBC - Effect of NCLT-approved resolution plan on recovery of government dues - Whether the NCLT approved resolution plan prima facie extinguishes the appellant's liability for pre closing date dues including government claims. - HELD THAT: - The Tribunal noted that the resolution plan approved by the NCLT expressly treats claims of Operational Creditors (including Governmental Authorities and claims relating to Taxes) in respect of the period prior to the Closing Date as "claims" under the IBC and provides that such claims shall stand fully and finally discharged, settled, abated and extinguished. On the basis of the reproduced terms of the approved plan, it prima facie appears that the appellant does not have liability to pay such pre Closing Date dues and that the adjudged dues cannot be recovered by the department. The Tribunal, however, recorded this as a prima facie legal position derived from the resolution plan and the relevant Supreme Court authority cited in the earlier order rather than as a final determination by the Tribunal itself. [Paras 4]

On the materials before it, the resolution plan prima facie extinguishes the appellant's liability for the period prior to the Closing Date.

Tribunal's competence to decide recoverability of dues - No provision in Central Excise Act for giving effect to NCLT proceedings - Infructuousness of appeal - Whether this Tribunal can finally adjudicate the recoverability of the adjudged dues and the appropriate disposition of the present appeals. - HELD THAT: - The Tribunal held that, notwithstanding the overriding effect of the Insolvency and Bankruptcy Code, there is no provision in the Central Excise/Customs law vesting this Tribunal with power to give operative effect to NCLT proceedings; consequently, it is not competent to finally decide on recovery of dues pursuant to the resolution plan. Relying on its earlier decision in the appellant's own case, the Tribunal concluded that the appropriate course is for the department to determine recoverability in light of the NCLT order. Since that administrative determination had not been made, and the resolution plan prima facie extinguished pre Closing Date claims, the appeals have become infructuous. The parties were granted liberty to approach the Tribunal to revive the appeals if an amicable resolution is not reached, and the Revenue was given liberty to act in accordance with the relevant CBIC circular. [Paras 4, 5]

The Tribunal is not the proper forum to finally decide recovery; the appeals are dismissed as infructuous with liberty to revive if necessary.

Final Conclusion: The appeal is disposed of as infructuous: the NCLT approved resolution plan prima facie extinguishes pre Closing Date government claims, but the Tribunal declined to make a final determination on recoverability for want of statutory competence under Central Excise/Customs law and permitted the parties and the department to take appropriate steps, with liberty to revive the appeals if required.

CENVAT credit on inputs used in relation to finished goods - deemed manufacture by packing or re-labelling - acceptance of duty on final products as reversal of credit

CENVAT credit on inputs used in relation to finished goods - deemed manufacture by packing or re-labelling - acceptance of duty on final products as reversal of credit - Whether the denial of CENVAT credit availed by the appellant on goods received from Unit I is sustainable where Unit II cleared the finished goods on payment of duty without carrying out packing/re packing or labelling/re labelling. - HELD THAT: - The Tribunal held that where finished goods received from Unit I were cleared by Unit II on payment of duty and such duty payment was accepted by the department, the department cannot sustain a demand by merely alleging that the activity at Unit II did not amount to "manufacture" under the deeming limb for packing/re labelling. The Tribunal applied the established principle that acceptance of duty on final products by the revenue operates as reversal of the credit so that the assessee need not further reverse the CENVAT credit even if the process does not qualify as "manufacture"; earlier decisions following that principle were treated as determinative. On the facts, having found duty paid and accepted and relevant returns and duty particulars verified, the demand for recovery of the CENVAT credit was held unsustainable and set aside. [Paras 3, 4]

Demand for recovery of the CENVAT credit disallowed; impugned order set aside and appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, set aside the impugned order and held that once duty on the finished products cleared by Unit II was paid and accepted by the department, the demand disallowing the CENVAT credit on goods received from Unit I could not be sustained; consequential reliefs were granted if any.

Applicability of valuation under section 4A (retail sale price) versus section 4 (transaction value) - Scope of Central Government's power under section 4A(1) and 4A(2) - Meaning of "packages intended for retail sale" in the Packaged Commodities Rules - Effect of declaration "not for retail sale" as evidence of intent - Exception for industrial consumers under the Packaged Commodities Rules - Penalty liability under section 11AC of the Central Excise Act, 1944

Applicability of valuation under section 4A (retail sale price) versus section 4 (transaction value) - Meaning of "packages intended for retail sale" in the Packaged Commodities Rules - Effect of declaration "not for retail sale" as evidence of intent - Whether goods cleared by the appellant were assessable under section 4A (retail sale price) or under section 4 (transaction value) for the periods before and after 1 April 2011. - HELD THAT: - The Court analysed the interaction between section 4A of the Central Excise Act, 1944 and the declaration requirements under the Packaged Commodities Rules (Standards of Weights and Measures (Packaged Commodities) Rules, 1977 and the Legal Metrology (Packaged Commodities) Rules, 2011). For the period prior to the commencement of the 2011 Rules the Court held that the expression of the Chapter as applying only to "packages intended for retail sale" (rule 3 and rule 2A of the 1977 Rules) circumscribes the Central Government's power under section 4A(1) to notify goods for retail-sale-price valuation; intent to sell at retail is to be construed from compliance with predicate requirements and may be displaced by contrary evidence. The manufacturer's marking "not for retail sale" was held to be adequate evidence of overriding intent for the pre-2011 period and therefore section 4A did not apply to those clearances. By contrast, from the date the Legal Metrology (Packaged Commodities) Rules, 2011 applied (after 1 April 2011) the statutory scheme removed the curtailed meaning of "package" and the Court held that all pre-packaged commodities incorporated in the impugned notification fall within section 4A(1) and are therefore subject to retail-sale-price assessment (less prescribed abatement). The Court rejected the adjudicating authority's approach of importing a notion of "ultimate consumer" or denying consumer-protection coverage to bakeries as a basis to substitute transaction value for retail-sale-price valuation. [Paras 11, 12, 13, 14]

Section 4A valuation does not apply to the appellant's clearances prior to 1 April 2011 (manufacturer's 'not for retail sale' marking sufficient to negativate retail-intent), but applies to the impugned pre-packaged commodities incorporated in the notification after 1 April 2011.

Applicability of valuation under section 4A (retail sale price) versus section 4 (transaction value) - Exception for industrial consumers under the Packaged Commodities Rules - Penalty liability under section 11AC of the Central Excise Act, 1944 - Whether the demand (including interest) and penalty imposed on the appellant are sustainable for the disputed period. - HELD THAT: - Applying the temporal conclusion above, the Court sustained the differential duty demand for the period prior to 1 April 2011 because the appellant was not entitled to assess under section 4A for that period and had in fact discharged only a portion of the liability during investigations. The Court found no reason to interfere with the penalty imposed under section 11AC for that period. Conversely, for clearances after 1 April 2011 the Court set aside the demand because section 4A valuation (retail sale price less abatement) governs those clearances in light of the 2011 Rules and the impugned notification. The Court also rejected the adjudicating authority's reasoning that bakeries were not consumers or that the manufacturer's option to not comply with declaration obligations curtailed the scope of the notification; such conclusions were inappropriate bases for altering assessment methodology. [Paras 15, 16, 19]

Demand and penalty upheld for the period prior to 1 April 2011; demand set aside for the period after 1 April 2011.

Final Conclusion: Appeal partly allowed: the differential duty demand (and penalty) is sustained for the period prior to 1 April 2011 and is set aside for the period after 1 April 2011; the tribunal rejected the adjudicating authority's reliance on an 'ultimate consumer' test and gave effect to the temporal distinction created by the Packaged Commodities Rules and section 4A.

CENVAT Credit entitlement - retention of credit versus utilization - deletion of rule 6(5) of the CENVAT Credit Rules, 2004 - vested right in accrued credit - prospective operation of amending provision - misuse or unlawful utilization of credit - recovery under rule 14 of the CENVAT Credit Rules, 2004

Deletion of rule 6(5) of the CENVAT Credit Rules, 2004 - CENVAT Credit entitlement - prospective operation of amending provision - Whether deletion of rule 6(5) with effect from 1st April 2011 entitled revenue to recover credit validly availed prior to 31st March 2011 and to apply post-amendment eligibility rules retrospectively. - HELD THAT: - The Tribunal held that credit validly taken under rule 3 prior to 31st March 2011 could not be annulled by the subsequent deletion of rule 6(5). Rule 6(5) was an exclusion permitting retention notwithstanding use for exempted goods/services; its erasure withdrew a prospective privilege of retention but did not affect the legality of credits already availed. The scheme in rules 3, 4 and 6 shows that rule 6(1) governs reversal upon later utilization, whereas rule 6(5) was a special carve out for retention; deletion of that carve out operates only from the date of deletion. Consequently, where inputs or input services were procured and, as on 31st March 2011, their utilisation did not fall exclusively for exempted output, the post deletion rule cannot be invoked to claw back previously admissible credit. The Tribunal relied on precedent recognising that statutory rights acquired under earlier rules are not taken away retrospectively unless the amending provision expressly or by necessary implication so provides, and noted absence of evidence that the impugned services were utilized only after 31st March 2011. [Paras 6, 7, 8, 9]

Deletion of rule 6(5) did not justify recovery of credit validly availed prior to 31st March 2011; the impugned recovery and penalty were set aside.

Final Conclusion: The appeal was allowed: the Tribunal held that credits lawfully taken before deletion of rule 6(5) could not be retrospectively invalidated by that deletion, and the impugned order directing recovery and penalty was quashed.

Time-barred demand - extended period of limitation cannot be invoked without establishing suppression of facts - burden on department to prove suppression - classification of goods as automobile - audit objection as basis for demand

Time-barred demand - extended period of limitation cannot be invoked without establishing suppression of facts - burden on department to prove suppression - audit objection as basis for demand - Whether the demand for automobile cess for the period 2008-09 to 2011-12 is barred by limitation and whether the Department was justified in invoking the extended period by alleging suppression of facts. - HELD THAT: - The Tribunal found that the demand originated from an audit objection and records maintained by the appellant and that the Department had ample time to investigate the liability; the appellant had in any event paid cess for February 2010 to February 2011 under protest. The Department did not establish any tests or ingredients showing why the product should be classified as an automobile for cess liability and relied merely on Notification 67/88 dated 09/01/1989 without demonstrating suppression. The lower authorities' conclusion that there was suppression of facts was held to be incorrect in view of contemporaneous records. In these circumstances the Tribunal held that the extended period of limitation could not be invoked because the necessary ingredients to demonstrate suppression were not proved, and therefore the entire demand was time-barred. The Tribunal expressly left the merits of classification and liability open for adjudication. [Paras 4, 5]

Demand for automobile cess for 2008-09 to 2011-12 is time-barred; invocation of extended limitation period is unsustainable for want of proof of suppression.

Final Conclusion: Impugned order set aside; appeal allowed insofar as the demand was found to be barred by limitation; merits of liability and classification left open for consideration.

Penalty under Rule 26 of the Central Excise Rules, 2002 - Penalty for dealing with goods liable to confiscation - Penalty for issuing excise duty invoice without delivery / enabling wrongful CENVAT credit - Scope of Rule 26 - not a mechanism to penalise non-payment or short payment of duty - Confiscation proceedings and separate adjudication for duty recovery

Penalty under Rule 26 of the Central Excise Rules, 2002 - Scope of Rule 26 - not a mechanism to penalise non-payment or short payment of duty - Validity of the penalty of Rs. 10,00,000/- imposed on the appellant under Rule 26 in proceedings relating to the second show cause notice (demand of duty). - HELD THAT: - Rule 26 prescribes penalty where a person is concerned with excisable goods which he knows or has reason to believe are liable to confiscation, or where a person issues invoices/documents without delivery so as to enable ineligible benefit such as wrongful CENVAT credit. The proceedings under the first show cause notice involved confiscation of goods but no penalty was imposed on the appellant in that adjudication. The second show cause notice related solely to recovery of duty; it did not involve confiscation nor allegation of issuing invoices without delivery or enabling CENVAT credit. Therefore the penalty imposed under Rule 26 in the second proceedings was beyond the scope of the provision. As the impugned penalty was not sustainable on the basis invoked in the second SCN, it had to be set aside.

Penalty imposed under Rule 26 in the demand proceedings (second SCN) is unsustainable and is set aside.

Final Conclusion: The appeal is allowed; the impugned order confirming and imposing the penalty under Rule 26 in the demand proceedings is set aside, with consequential relief, if any, to the appellant.

Treatment of defective or scrap output for fulfilment of Standard Input Output Norms (SION) - applicability of an amendment to SION (Note 2) to earlier production periods - invocation of extended period of limitation on ground of suppression - remand for re-quantification of output and computation of demand

Treatment of defective or scrap output for fulfilment of Standard Input Output Norms (SION) - Defective PET chips and PET lumps arising in manufacture are to be considered as part of total manufactured output for SION compliance. - HELD THAT: - The Tribunal found that some proportion of manufactured PET will inevitably be defective and that such defective goods in the present case were recorded in ER-2/ER-5 returns and, where cleared to DTA, excise duty was paid. Notification No.52/2003-Cus permits clearance of waste/scrap to domestic market. The Adjudicating Authority erred in ignoring the defective PETs when assessing fulfilment of SION norms; those quantities should have been treated as part of total production and allowed to be set off against input consumption for norm compliance. [Paras 8]

Adjudicating Authority erred; defective PETs must be considered as part of total manufactured quantity for SION purposes.

Applicability of an amendment to SION (Note 2) to earlier production periods - Amendment by insertion of Note 2 in the SION is not a prospective-only norm and, having been issued after verification of technical details, can be applied to the past production for purposes of assessing norms. - HELD THAT: - The Tribunal accepted that Note 2 was inserted by the Committee after examination of technical material furnished by the appellant and that it reflects the practical production norm being followed by the appellant. The Adjudicating Authority's view that Note 2 could not be applied to prior periods was rejected; the Note does not constitute a new future-only prescription but records the norm applicable to normal production and therefore benefit of the amendment should be granted for the relevant earlier period. [Paras 8, 11]

Note 2 of the SION is applicable to the past production periods and the Adjudicating Authority must consider it and grant benefit.

Invocation of extended period of limitation on ground of suppression - Extended period provisions cannot be invoked because there was no suppression; the Department itself used the appellant's ER-2/ER-5 returns to issue the Show Cause Notices. - HELD THAT: - The Tribunal noted that the appellant was a registered EOU filing ER-2/ER-5 returns regularly and that the departmental data for issuing SCNs was drawn from those returns, negating any allegation of suppression. Reliance by the Adjudicating Authority on earlier larger-bench authority was misplaced, and the larger-bench decision relied upon had been subsequently overruled by the Supreme Court. Consequently, invocation of the extended period was held legally unsustainable for both Show Cause Notices. [Paras 9, 10]

Confirmed demands cannot be sustained for the extended period; extended-period invocation quashed.

Remand for re-quantification of output and computation of demand - Matter remanded to Adjudicating Authority for verification of defective PET quantities, application of Note 2, re-quantification of net demand, with interest if any demand remains; penalties waived. - HELD THAT: - The Tribunal directed the Adjudicating Authority to obtain details of defective PET manufactured during the relevant remanded period and to treat those quantities as part of total production, to consider the SION Note 2 amendment and grant benefits accordingly, and then to re-quantify the net demand. The Tribunal further held that if any demand remains after re-quantification, interest would be payable, but having regard to interpretational difficulties and facts, no penalties should be imposed. [Paras 11, 12, 13]

Remand for re-quantification and verification; interest payable on any confirmed demand; no penalties.

Final Conclusion: Appeal partly allowed: extended-period demands set aside; Adjudicating Authority directed to re-quantify net demand for the remanded period after treating defective PET as part of output and applying SION Note 2; interest payable if demand is confirmed on re-quantification; penalties waived.

Applicability of Section 5 of the Limitation Act, 1963 - Appeal against acquittal under Section 378 of the Code of Criminal Procedure - Interpretation of Section 29(2) of the Limitation Act, 1963 in relation to special statutes - Power to condone delay in appeals filed by public prosecutor or State in criminal matters

Applicability of Section 5 of the Limitation Act, 1963 - Appeal against acquittal under Section 378 of the Code of Criminal Procedure - Interpretation of Section 29(2) of the Limitation Act, 1963 in relation to special statutes - Power to condone delay in appeals filed by public prosecutor or State in criminal matters - Section 5 of the Limitation Act, 1963 is available to permit condonation of delay in an appeal against acquittal under Section 378 CrPC. - HELD THAT: - The Court held that, unlike the old Limitation Act, 1908, Section 29(2) of the Limitation Act, 1963 makes the provisions of Sections 4 to 24 (which include Section 5) applicable to periods of limitation prescribed by special or local laws unless such applicability is expressly excluded by the special law. Consequently Kaushalya Rani (decided under the 1908 Act) was distinguishable. Relying on Mangu Ram, the Court observed that Section 5 may be invoked to extend the period prescribed by a special law if that special law does not expressly exclude Section 5. Decisions under other special statutes (for example election petitions or the West Bengal Land Reforms Act) where the special enactment either expressly or by necessary implication precludes extension were noted as distinguishable because those statutes either command dismissal or otherwise exclude the operation of Section 5. Applying these principles, the Court found no provision in Section 378 CrPC or elsewhere in the Code that expressly excludes the applicability of Section 5; therefore the High Court had jurisdiction to entertain and condone the delay in the belated appeal against acquittal. The appellant's challenge to the High Court's allowance of condonation of delay was rejected and the order under Section 482 was affirmed by dismissal of the present appeal. [Paras 7, 11, 12]

The appeal is dismissed; Section 5 of the Limitation Act, 1963 applies to appeals under Section 378 CrPC and the High Court properly condoned the delay; interim order vacated and the matter returned to the Delhi High Court for continuation.

Final Conclusion: The Supreme Court dismissed the appeal, holding that Section 5 of the Limitation Act, 1963 is available to condone delay in appeals against acquittal under Section 378 CrPC; the Delhi High Court's order condoning the belated appeal was sustained and the matter is remitted to that Court for further proceedings.

Presumption under Section 139 of the Negotiable Instruments Act - Rebuttable presumption under Section 118 of the Negotiable Instruments Act - Dishonour of cheque constituting offence under Section 138 of the Negotiable Instruments Act - Timeliness of presentation, statutory notice and filing under the proviso to Section 138 and Section 142(1)(b) of the Negotiable Instruments Act - Onus and standard for rebutting statutory presumptions - preponderance of probabilities

Timeliness of presentation, statutory notice and filing under the proviso to Section 138 and Section 142(1)(b) of the Negotiable Instruments Act - Complaint was filed within the statutory periods prescribed under the proviso to Section 138 read with Section 142(1)(b) of the N.I. Act and therefore was maintainable. - HELD THAT: - Both cheques dated 06.03.2014 and 08.03.2014 were presented and dishonoured on 27.03.2014; the statutory demand notice was issued on 07.04.2014 and received by the accused on 10.04.2014; the accused failed to make payment within 15 days and the cause of action arose on 24.04.2014. The complaint was filed on 15.05.2014, which is within thirty days from the date of the arising of cause of action. Accordingly, the requirements of presentation within six months, service of notice within thirty days of receipt of information of dishonour, and filing the complaint within the period mandated by Section 142(1)(b) were satisfied, rendering the complaint legally maintainable. [Paras 15]

Timeliness requirements under Sections 138 and 142 of the N.I. Act were met and the complaint is maintainable.

Presumption under Section 139 of the Negotiable Instruments Act - Rebuttable presumption under Section 118 of the Negotiable Instruments Act - Onus and standard for rebutting statutory presumptions - preponderance of probabilities - Presumptions under Sections 118 and 139 arose in favour of the complainant and the accused failed to rebut them, warranting conviction under Section 138. - HELD THAT: - The complainant produced the original signed cheques, return memos showing dishonour, and evidence of service of the statutory notice. Section 118 presumption as to consideration and related matters and Section 139 presumption that the cheque was issued for discharge of a debt or liability arose. The accused admitted his signature but did not lead any oral or documentary evidence to rebut those presumptions; his lone plea that the cheques were taken in good faith on account of friendship was unsupported by evidence. Reliance on the settled position of higher courts shows that once execution is admitted the burden shifts to the accused to prove a probable defence on the preponderance of probabilities, which the accused did not discharge. Accordingly the prosecution was held to be proved beyond reasonable doubt. [Paras 15, 17]

Presumptions under Sections 118 and 139 stood unrebutted and support conviction under Section 138 of the N.I. Act.

Final Conclusion: Criminal Revision dismissed; the conviction and sentence under Section 138 of the Negotiable Instruments Act and the direction for compensation affirmed.

Discharge under Section 239 Cr.P.C. - Prima facie case / strong suspicion test - Criminal liability for cheating versus civil breach of contract (mens rea at inducement) - Section 138 Negotiable Instruments Act - requirement of statutory notice and elements of offence - Limitation on exercise of inherent jurisdiction under Section 482 Cr.P.C. - interference after dismissal of revision

Section 138 Negotiable Instruments Act - requirement of statutory notice and elements of offence - Whether the case under Section 138 of the Negotiable Instruments Act is made out against the petitioner - HELD THAT: - The Court found that the cheque though issued was not encashed and the statutory notice and remedy under the Negotiable Instruments Act were not availed of by the complainant, indicating that the ingredients of Section 138 were not established. The Court noted omission of statutory notice and the factual position that the cheque bore a stop-payment instruction, concluding that the statutory requirements for prosecution under Section 138 are not made out on the materials before the Court. Consequently the petitioner was discharged from liability under Section 138. [Paras 13, 19]

Petitioner discharged from liability under Section 138 of the Negotiable Instruments Act.

Discharge under Section 239 Cr.P.C. - Prima facie case / strong suspicion test - Criminal liability for cheating versus civil breach of contract (mens rea at inducement) - Whether there is a prima facie case to proceed against the petitioner for offences under Sections 406 and 420 IPC - HELD THAT: - Applying the established test that the trial court must examine whether materials disclose strong suspicion sufficient to frame a charge and not act as a mere post office to the prosecution, the Court examined the allegations that the petitioner induced payment on pretext of Chinese technology, remained absconding for months, and issued a cheque which was subject to stop-payment. The Court observed disputed questions of fact (forgery, authenticity of documents, and factual assertions regarding technology) but held that such disputes are ordinarily not amenable to inquiry under Section 482 Cr.P.C. and that on the material placed before it a prima facie case for offences under Sections 406 and 420 is made out to warrant proceeding with the trial. [Paras 14, 18, 20]

Proceedings under Sections 406 and 420 IPC are maintained and the trial court shall proceed in accordance with law.

Limitation on exercise of inherent jurisdiction under Section 482 Cr.P.C. - interference after dismissal of revision - Whether the High Court should exercise its inherent jurisdiction under Section 482 Cr.P.C. to disturb orders after dismissal of the revisional remedy - HELD THAT: - The Court reiterated the limited scope of Section 482 and observed that where a revisional remedy has been dismissed, the High Court will not ordinarily entertain a second revision under the garb of Section 482 unless injustice is shown. The Court applied this principle but exercised the power insofar as it found that Section 138 was not made out and therefore quashed that aspect of the proceedings while leaving the criminal charges under the IPC intact. [Paras 15, 19, 21]

The petition under Section 482 Cr.P.C. is entertained in part - Section 138 proceedings quashed; criminal proceedings under Sections 406 and 420 IPC left to continue.

Final Conclusion: The petition is allowed in part: liability under Section 138 Negotiable Instruments Act is quashed and the petitioner is discharged therefrom, but the trial shall proceed on the prima facie established charges under Sections 406 and 420 IPC; interim orders, if any, are vacated.

Commencement of arbitral proceedings - party agreement on tribunal composition - appointment of presiding arbitrator - maintainability of challenge under Section 11(6) of the Arbitration and Conciliation Act, 1996 - effect of contractual procedure for three-member tribunal where claim exceeds threshold

Commencement of arbitral proceedings - effect of contractual procedure for three-member tribunal where claim exceeds threshold - Arbitral proceedings do not commence merely on receipt of a claim notice where the contract prescribes constitution of a three-member Tribunal for claims exceeding the prescribed threshold and the Tribunal has not been constituted. - HELD THAT: - The Court considered Section 21 of the Act and the contractual Clause 15(5) governing constitution and replacement of arbitrators. Although Section 21 uses the expression "commencement of the proceeding" on receipt of a request for reference to arbitration, the Court held that where the contract stipulates that a three-member Arbitral Tribunal must be constituted for claims above the threshold, the question of commencement does not arise until such constitution has occurred. The contractual requirement that the Tribunal be constituted in a specified manner is determinative in the facts of this case and precludes treating the mere receipt of a claim notice as commencement of proceedings when the requisite Tribunal has not been formed. [Paras 4, 8]

In the present facts, the arbitral proceeding had not commenced simply by receipt of the claimant's notice because the three-member Tribunal required by contract for claims above the threshold was not constituted.

Appointment of presiding arbitrator - maintainability of challenge under Section 11(6) of the Arbitration and Conciliation Act, 1996 - A challenge to the appointment of the presiding arbitrator of the nature raised cannot be maintained under Section 11(6) of the Act in the present circumstances. - HELD THAT: - The Court examined whether Section 11(6) provided a proper forum to challenge the appointment in these facts and observed that the petitioner did not possess the order of appointment of the Presiding Arbitrator. The Court proceeded on the presumption that the nominee arbitrators had consented to the appointment (since otherwise the Presiding Arbitrator would not assume jurisdiction), but concluded that a challenge of this nature is not maintainable under Section 11(6). The Court noted that the Supreme Court decision relied upon by the petitioner (Huawei Technologies Co. Ltd. v. Sterlite Technologies Ltd.) did not assist the petitioner on the facts and that the present challenge must be pursued, if at all, under the appropriate provision of law before the appropriate forum. [Paras 6, 7, 9, 10]

The petition under Section 11(6) is not maintainable and cannot be entertained to challenge the appointment in the circumstances of this case.

Final Conclusion: The petition under Section 11(6) is dismissed; the Court finds that arbitral proceedings had not commenced for want of constitution of the three-member Tribunal required by contract and that the present challenge to the appointment is not maintainable under Section 11(6).