TaxTMI Updates e-Newsletter
Feb 24,2022

Authority to re-assess where there is an error apparent on the face of the record - re-assessment under Section 161 of the U.P. Goods and Services Tax Act, 2017 - appeal under Section 107 of the U.P. Goods and Services Tax Act, 2017 - variance between documents produced by driver and GST portal records

Re-assessment under Section 161 of the U.P. Goods and Services Tax Act, 2017 - appeal under Section 107 of the U.P. Goods and Services Tax Act, 2017 - variance between documents produced by driver and GST portal records - Whether the Officer was justified in taking action under Section 161 instead of invoking the departmental appeal process under Section 107 when documents produced by the driver differed from GST portal records; matter directed to be explained and verified. - HELD THAT: - The Court recorded that vehicles were intercepted and the driver produced tax documents which were at variance with records on the GST portal. The Officer initially seized the vehicle and ultimately imposed tax and penalties, and thereafter issued a further notice and imposed penalties based on valuations. The petitioner contended that the Officer had authority to re-assess where an error was apparent on the face of the record. The Additional Chief Standing Counsel submitted that the correct course would have been to inform superiors who could have filed departmental appeals under Section 107, rather than taking action under Section 161. The Court observed that a perusal of Section 107 shows that an appeal could be filed by the assessee and questioned why action under Section 161 was taken when there was an apparent discrepancy between the physical documents and GST portal records. In view of this unresolved issue the Court directed the Additional Chief Standing Counsel to file a short affidavit explaining the procedural and legal basis for the action taken, thereby seeking material necessary for fresh consideration.

Directed the Additional Chief Standing Counsel to file a short affidavit explaining why action was taken under Section 161 instead of following the appeal route under Section 107; matter listed for further consideration on 25.2.2022.

Final Conclusion: Interlocutory order directing the State to file a short affidavit addressing the legality and propriety of invoking Section 161 in view of discrepancies with GST portal records; matter posted for fresh hearing on 25.2.2022.

Refund of unutilized input tax credit - Rule 89(4B) of the CGST Rules - Rule 89(4) of the CGST Rules - input-output ratio - quashing of recovery and penalty order - remand for fresh adjudication

Refund of unutilized input tax credit - Rule 89(4B) of the CGST Rules - Rule 89(4) of the CGST Rules - input-output ratio - Applicability of Rule 89(4B) (rather than Rule 89(4)) for adjudication of the writ applicant's refund claim and the manner of quantification of refund. - HELD THAT: - The Court held that the appellant's refund claim is to be adjudicated under Sub rule (4B) of Rule 89 and not under Sub rule (4). While Sub rule (4B) does not itself incorporate the formula set out in Sub rule (4), the quantification of refund under (4B) must take into account the portion of ITC that has gone into making the exported goods. The Court accepted the administrative stance that input output ratios and allocation of inputs used in exports are ascertainable and held that the Assistant Commissioner should determine the claim under Rule 89(4B) keeping in mind the input/output ratio principle articulated in the Principal Commissioner's affidavit. The Court declined to decide the constitutional challenge to Sub rule (4B) and proceeded on this short legal ground to direct fresh adjudication accordingly. [Paras 26, 28, 30, 32]

Refund claim to be adjudicated under Rule 89(4B) with quantification guided by input/output ratio; constitutional challenge left open.

Quashing of recovery and penalty order - recovery under Section 74(1) of the CGST Act - Validity of the order of the Joint Commissioner dated 19th July 2021 which confirmed demand, interest and penalty for amounts alleged to be erroneously sanctioned. - HELD THAT: - The Court found it necessary to set aside the impugned order dated 19th July 2021 which confirmed demand, interest and penalty on the premise that refunds were not due under Rule 89(4). Given the remand to the adjudicating authority to determine eligibility and quantification under Rule 89(4B) (with input/output analysis), the recovery and penalty order premised on the earlier conclusion cannot stand and is accordingly quashed and set aside. [Paras 31, 32]

Order dated 19th July 2021 confirming demand, interest and penalty quashed and set aside.

Remand for fresh adjudication - time-bound direction - Direction to remit the matter to the Assistant Commissioner for fresh adjudication and timeline for completion. - HELD THAT: - The Court remitted the matter to the Assistant Commissioner for fresh consideration of the refund claim in accordance with the directions of the appellate authority and this Court's guidance (i.e., application of Rule 89(4B) while applying input/output ratio principles). The adjudicating authority is required to give the appellant opportunity to produce records and to pass a speaking order on merits. The Court directed that the exercise be completed and the claim determined and paid, if due, within eight weeks from receipt of the writ of this order; earlier claims shall not be treated as time barred for this fresh adjudication, subject to clearance of any deficiency memo. [Paras 20, 32, 33]

Matter remanded to Assistant Commissioner for fresh adjudication under Rule 89(4B) with input/output ratio to be applied; adjudication to be completed within eight weeks; previous claims not to be treated as time barred for this purpose.

Final Conclusion: Writ succeeds in part: the order dated 19th July 2021 confirming demand, interest and penalty is quashed and set aside; the refund claims for the period January 2018 to October 2019 are remitted to the Assistant Commissioner for fresh adjudication under Rule 89(4B) applying input/output ratio principles, with determination and payment, if due, to be completed within eight weeks; the constitutional challenge to Sub rule (4B) is left open.

Direction to consider and dispose of application - opportunity of hearing - correction/revision of GST returns - binding precedents to be borne in mind

Direction to consider and dispose of application - opportunity of hearing - Petition for a direction to respondents to consider and dispose of Ext.P6 expeditiously and to grant an opportunity of hearing to the petitioner - HELD THAT: - The High Court found that the writ petition could be disposed of by issuing a direction to the competent officer among respondents 1 and 2 to consider and dispose of Ext.P6. The court directed that Ext.P6 be disposed of as expeditiously as possible and, in any event, within two months from receipt of a copy of the judgment. The court also required that the petitioner be granted an opportunity of hearing before disposal. The court did not decide the merits of the claims in Ext.P6 but confined its order to mandating expeditious consideration and an oral hearing, noting that binding judgments are to be kept in mind when disposing of the application. [Paras 4, 5]

Respondents directed to consider and dispose of Ext.P6 within two months after granting opportunity of hearing; binding judgments to be borne in mind.

Correction/revision of GST returns - binding precedents to be borne in mind - Merits of the petitioner's request to correct or revise the GST returns for January and March, 2018 (Ext.P6) - HELD THAT: - The court did not adjudicate the substantive claim for correction or revision of the returns. Instead, the matter was left for the competent authority to decide on consideration of Ext.P6. The authority is to apply relevant and binding judicial precedents while adjudicating the application and to afford the petitioner a hearing prior to passing a decision. Thus, the substantive issue of whether the returns should be corrected was remitted to respondents for fresh consideration in accordance with law and precedent. [Paras 3, 4, 5]

Substantive claim for correction/revision not decided on merits and remitted to respondents for fresh consideration in accordance with binding decisions and after hearing the petitioner.

Final Conclusion: Writ petition disposed by directing the competent respondent to consider and dispose of Ext.P6 (seeking correction/revision of GST returns for January and March, 2018) expeditiously and within two months, after granting the petitioner an opportunity of hearing; the merits of the correction claim are remanded for decision by the authority in accordance with binding precedents.

High Court jurisdiction under Section 482 Cr.P.C. - summons under Section 70 of the CGST Act - authorization for arrest under Section 69 of the CGST Act - summons/notice stage not amounting to criminal proceedings - territorial jurisdiction of the investigating officer - presence of an advocate at a visible but not audible distance during recording/videography - prohibition on blanket orders of 'no coercive steps' without reasons

High Court jurisdiction under Section 482 Cr.P.C. - summons under Section 70 of the CGST Act - summons/notice stage not amounting to criminal proceedings - prohibition on blanket orders of 'no coercive steps' without reasons - Whether the petition under Section 482 Cr.P.C. could be entertained to quash the summons issued under Section 70 CGST Act and to grant pre-emptive protection against arrest or other coercive steps at the summons/inquiry stage. - HELD THAT: - The Court held that at the stage of issuance of summons or inquiry (show cause/notice stage) constitutional courts should not ordinarily interpose to impede the investigation. Summons issued under Section 70 and authorisations under Section 69 do not fall within the definition of 'criminal proceedings' insofar as prosecution is launched only after initiation of prosecution; therefore, the Court should exercise Section 482 jurisdiction with caution and not adjudicate disputed factual issues best left to investigation or trial. Blanket interim directions restraining arrest or coercive steps without reasons would impede investigation; any protection must be supported by reasons showing application of mind. Applying these principles to the facts, the Court found no material of such sterling quality as to justify quashing the summons or granting pre-emptive protection at this stage. [Paras 18, 19, 20, 21, 24]

Petition under Section 482 Cr.P.C. to quash the summons and to interdict coercive action was dismissed; no blanket protection granted.

Territorial jurisdiction of the investigating officer - summons under Section 70 of the CGST Act - presence of Central Tax Officers with all-India jurisdiction - Whether the territorial jurisdiction of the Ghaziabad Regional Unit (Respondent No.3) to conduct the inquiry and issue summons was flawed and required quashing or transfer. - HELD THAT: - The Court declined to probe disputed factual contentions on territorial nexus at the interlocutory stage, observing that questions of fact regarding locus of alleged transactions and related conduct (including bank account openings and factory location) are matters for investigation and trial. Reliance on authorities recognising that officers appointed by notifications may exercise territorial or all-India powers was noted, and the Court found no jurisdictional infirmity in the Ghaziabad Regional Unit conducting the inquiry on the material before it. [Paras 15, 20, 23, 24]

No flaw found in the territorial jurisdiction of the Ghaziabad Regional Unit; relief for transfer or quash on territorial grounds refused.

Presence of an advocate at a visible but not audible distance during recording/videography - prohibition on blanket orders of 'no coercive steps' without reasons - Whether the petitioner was entitled, as a matter of course, to directions for audio/video recording and presence of his advocate at a visible but not audible distance during recording of statements/videography. - HELD THAT: - The Court reiterated that permission for an advocate to be present at a visible but not audible distance and directions for videography are exceptional remedies to be granted only upon credible material showing a real and bonafide apprehension of coercion. Precedents permitting such attendance arise in special facts where coercion is genuinely feared. The petitioner failed to establish a reasonable basis for such apprehension; consequently, the extraordinary relief of mandated videography and advocate presence was not warranted. [Paras 22]

Prayer for mandatory audio/video recording and advocate's presence at visible but not audible distance denied.

Final Conclusion: The petition under Section 482 Cr.P.C. is dismissed. The summons issued by the Ghaziabad Regional Unit are not quashed, the territorial jurisdiction of the investigating unit is upheld, and the request for mandatory videography and presence of counsel at visible but not audible distance is refused; no interim protection against arrest or coercive steps is granted without reasoned justification.

Violation of principles of natural justice - Procedure for sanction of refund under Rule 92(3) of the Central Goods and Service Tax Rules, 2017 - Quashing of orders and remand for reconsideration - Laches and delay in invoking Article 226 jurisdiction

Procedure for sanction of refund under Rule 92(3) of the Central Goods and Service Tax Rules, 2017 - Violation of principles of natural justice - The portion of the refund claim rejected without issuance of FORM GST RFD-08 and without affording an opportunity to reply was invalid and the rejected portion of the impugned orders is vitiated. - HELD THAT: - The Court examined sub-rule (3) of Rule 92 which mandates that where the proper officer is satisfied that whole or any part of the claimed refund is not admissible, a notice in FORM GST RFD-08 must be issued requiring a reply in FORM GST RFD-09 within fifteen days and only thereafter an order in FORM GST RFD-06 may be passed; the proviso expressly bars rejection without an opportunity of being heard. The impugned orders contained no indication that such notice or opportunity was afforded, nor did they furnish reasons for the inadmissibility of the quoted portion. Given the statutory procedure and the concomitant requirements of natural justice, the Court held that the rejected portion of the refund claims was passed in violation of Rule 92(3) and principles of natural justice and therefore is infirm. The portions of the impugned orders sanctioning refund were left undisturbed. The Court quashed the rejection of the inadmissible portion and remitted the matters for fresh consideration in accordance with the statutory procedure, directing the respondents to follow Rule 92(3) and to give a reasonable opportunity of being heard before passing fresh orders. [Paras 18, 19, 20, 21, 22]

Rejected portions of the refund orders quashed; sanctioning portions sustained; matters remitted for reconsideration strictly following Rule 92(3) with opportunity of being heard.

Laches and delay in invoking Article 226 jurisdiction - Quashing of orders and remand for reconsideration - The belated invocation of writ jurisdiction after about two years did not bar relief by way of Article 226 in the facts of these cases where statutory procedure and principles of natural justice were breached. - HELD THAT: - Respondents urged that the petitioner should have preferred an appeal within three months and that the writ petitions filed after two years are barred by laches. The Court acknowledged that although Article 226 has no fixed limitation, the doctrine of laches applies to belated invocations of extraordinary jurisdiction; whether delay is excessive depends on the facts. Here, because the statutory mandate under Rule 92(3) and the requirement of an opportunity of being heard had been flagrantly violated and there was no compliance or record of notice, the Court found that the two years' delay did not constitute such laches as to preclude exercise of writ jurisdiction. Accordingly, the petitions were entertained and relief granted on the statutory and natural justice failings. [Paras 11, 12, 13, 16, 21]

Delay of about two years held not a bar to entertain writ petitions under Article 226 in these facts; petitions entertained and relief granted due to statutory and natural justice violations.

Final Conclusion: Impugned orders are quashed only insofar as they reject specified portions of the refund claims; the portions sanctioning refunds are sustained. Matters are remitted to the jurisdictional GST officer for fresh consideration strictly in accordance with Rule 92(3) of the CGST Rules, 2017, after giving the petitioner a reasonable opportunity of being heard.

Provisional attachment of bank accounts - formation of opinion that attachment is necessary to protect the government revenue - draconian nature of provisional attachment power - tangible material as basis for attachment - dual procedural safeguards under Rule 159(5) - objections and opportunity of being heard - non-application of mind

Provisional attachment of bank accounts - formation of opinion that attachment is necessary to protect the government revenue - tangible material as basis for attachment - Whether the orders of provisional attachment record the requisite satisfaction/opinion that attachment was necessary to protect the interest of the government revenue. - HELD THAT: - On a prima facie reading of the three provisional attachment orders impugned in the writ, the Court observed that the orders do not record any satisfaction or opinion that it was necessary to provisionally attach the bank accounts to protect the revenue. The Court referred to the settled principle that the power to order provisional attachment is draconian and must be exercised only after formation of an opinion, based on tangible material, that attachment is necessary to protect the government revenue. The Court noted the contention that such satisfaction must appear not only in the file or notings but should be reflected in the order itself. Having found this deficiency on a prima facie basis, the Court issued notice and directed further steps for adjudication on merits. [Paras 5]

Prima facie the provisional attachment orders do not record the requisite satisfaction/opinion; matter notice issued for full adjudication.

Provisional attachment of bank accounts - cessation of search proceedings and absence of show-cause notice - proportionality and business continuity - Whether the provisional attachments can remain in force when search proceedings under Section 67 have concluded and no show-cause notice has been issued. - HELD THAT: - The writ-applicant contended that at the time the attachment powers were exercised the search proceedings had already concluded and that no show-cause notice has been issued to date; accordingly the attachments ought not to remain in force. The Court did not decide this question on the merits but treated it as a live issue requiring adjudication. The Court directed notice to respondents, permitted direct service, called for production of the paper-book to the Additional Solicitor General, and recorded that it will consider a recent CBIC circular which advises that attachment should not bring the assessee's business to a standstill. These directions indicate the issue is listed for determination on the returnable date rather than being finally adjudicated at this stage. [Paras 6, 7, 8]

Issue not finally decided; remanded for consideration on merits after notice and hearing, with interim directions for service, production of records and consideration of CBIC guidance.

Final Conclusion: Notice issued to respondents; on prima facie consideration the provisional attachment orders appear not to record the requisite satisfaction that attachment was necessary to protect the revenue, and the question whether attachments can continue post-conclusion of search proceedings without issuance of show-cause notice is directed to be adjudicated on the returnable date after service, production of records and consideration of the CBIC circular.

Provisional attachment to protect revenue - taxable person - joint and several liability of partners - vicarious liability for offences by a firm - formation of opinion based on tangible material - attachment should not hamper normal business activities - CBIC guidelines for provisional attachment

Provisional attachment to protect revenue - taxable person - joint and several liability of partners - vicarious liability for offences by a firm - Validity of provisional attachment of immovable property owned personally by a partner of the LLP under Section 83 of the CGST Act, 2017 - HELD THAT: - Section 83 permits provisional attachment only of property belonging to a "taxable person". The Act separately defines a "taxable person" and recognises an LLP (the firm) as the taxable entity distinct from its individual partners. Section 90 reproduces the principle of joint and several liability of partners (akin to Section 25 of the Partnership Act) which becomes operative once liability of the firm is determined; Section 137 addresses vicarious liability for offences by a firm. Absent any adjudication fixing liability of the LLP, the departmental invocation of Sections 90 and 137 to attach immovable property owned personally by a partner was misplaced. Judicial precedent and statutory scheme require that proceedings and provisional attachment under Section 83 be directed to the taxable person against whom proceedings under the specified sections are pending; a separate determination against partners may follow after liability of the firm is fixed. Applying these principles, the provisional attachment of the partner's personal immovable property could not be sustained. [Paras 27, 28, 29, 31]

Form GST DRC-22 dated 27.11.2021 attaching immovable property of Shri Niraj Jaydev Arya is quashed and set aside.

Provisional attachment to protect revenue - CBIC guidelines for provisional attachment - attachment should not hamper normal business activities - formation of opinion based on tangible material - Validity of provisional attachment of stock lying at factory premises and attachment of sundry debtors (receivables) - HELD THAT: - The CBIC guidelines and Supreme Court authority stress that provisional attachment is a drastic remedy to be exercised only where the Commissioner forms an opinion, based on tangible material, that attachment is necessary to protect government revenue, and that such attachment should, as far as possible, not hamstring normal business operations; raw materials, inputs or finished goods should not normally be attached. In the present case the goods, stock and receivables were pledged and subject to a floating charge with the bank to secure cash credit; attaching them would effectively paralyse the business. Applying the statutory scheme and guidelines, provisional attachment of the stock and sundry debtors was inappropriate. [Paras 33, 38, 39]

Form GST DRC-22 dated 25.11.2021 (stock at factory) and Form GST DRC-22 dated 26.11.2021 (sundry debtors) are quashed and set aside.

Provisional attachment to protect revenue - formation of opinion based on tangible material - Status of all other provisional attachments made by the department - HELD THAT: - The Court limited its interference to those attachments found to be unlawful or unwise in the circumstances (the partner's immovable property, stock and receivables). For the remaining properties, the Court declined to interfere and left them attached in accordance with law, thereby recognising the department's power to provisionally attach where the statutory conditions are met and the attachment is not shown to be impermissible. [Paras 40]

All other provisional attachments shall remain in force and continue in accordance with law.

Final Conclusion: Writ petition allowed in part: provisional attachment orders in respect of the partner's immovable property, the stock at the factory and the sundry debtors are quashed; all other provisional attachments remain in force in accordance with law. The writ application is disposed of accordingly.

Transition of input tax credit - transitional credit under Section 140 read with Rule 117 - substantial compliance - denial of input tax credit on technical grounds - beneficial scheme of input tax credit - remand for consideration of representation

Transition of input tax credit - transitional credit under Section 140 read with Rule 117 - denial of input tax credit on technical grounds - substantial compliance - Respondent to consider and dispose of the petitioner's representation concerning failure to transition input tax credit due to technical glitches, and the legal proposition that transitional input tax credit should not be denied where there has been substantial compliance or successful transition. - HELD THAT: - The Court observed that the amount eligible for transition under the GST enactments by filing TRAN-I/TRAN-II ought to be allowed and that credit available under the earlier excise/CENVAT regime cannot be denied unless the law permits lapsing of such credit. The Court relied on the Division Bench's consistent view that denial of input tax credit, which is a beneficial scheme designed to avoid tax cascading, ought not to be frustrated by technicalities where there is substantial compliance; the Division Bench had directed enabling of the portal to permit filing/revision of TRAN-I. In the circumstances of the petitioners' representation dated 26.11.2019 (relating to attempted TRAN-I filing dated 30.08.2017 and earlier communications from the GSTN about resolution), the Court directed that the representation be considered and disposed of afresh within a specified time-frame, in light of the Division Bench observations and the principle that successful transition (or substantial compliance) should preserve the availability of input tax credit. [Paras 6, 7, 8, 9]

Respondent to consider the petitioner's representation dated 26.11.2019 and dispose of it within three months from receipt of a copy of this order, having regard to the Division Bench's observations that transitional input tax credit should not be denied on technical grounds where there is substantial compliance.

Final Conclusion: Writ petitions disposed by directing the respondents to consider and dispose of the petitioners' representation within three months in light of the Division Bench's view that transitional input tax credit should not be denied on technicalities; no costs.

Transitional input tax credit - entitlement to transitional credit - TRAN-1 - power to reverse wrongly transitioned credit under Section 75 and 74 - direction to issue notice and decide entitlement

Transitional input tax credit - TRAN-1 - The Pondicherry GST Act did not prohibit the petitioners from transitioning input tax credit available under the Pondicherry VAT returns. - HELD THAT: - The court examined the statutory scheme and the impugned communications and held that the provisions of the Pondicherry GST Act did not, by themselves, bar the petitioners from availing transitional input tax credit or from filing TRAN 1 to claim such credit. The communications issued by the respondent directing production of books and advising not to avail transitional credit did not amount to a statutory prohibition under the Act. [Paras 6]

No statutory prohibition was found on transitioning the input tax credit under the Pondicherry GST Act.

Power to reverse wrongly transitioned credit under Section 75 and 74 - The respondents had the statutory power to reverse transitional credits if those credits were wrongly transitioned or utilised. - HELD THAT: - The court noted that even if TRAN 1 had been filed on time, the respondents were not without power under the GST enactments to examine the correctness of transitioned credits and to reverse any credit wrongly availed, invoking the procedures and powers available under the relevant provisions dealing with assessment and recovery. [Paras 6]

Respondents retain power under the GST enactments to reverse wrongly transitioned credits.

Entitlement to transitional credit - direction to issue notice and decide entitlement - Whether the petitioners were entitled to the transitional input tax credit which they could not transition by the due date on account of the impugned communications was remitted to the respondents for fresh decision after hearing the petitioners. - HELD THAT: - The court found that, because the petitioners failed to file TRAN 1 by the due date-partly ascribable to the impugned communications-the appropriate relief was to direct the respondents to examine, by issuing notice, whether the petitioners were in fact entitled to the transitional credit that was not transitioned. The respondents were directed to give the petitioners an opportunity to be heard and, if it is concluded that the petitioners were entitled to the credit which could not be transitioned in TRAN 1 due to the impugned communications, to release the amount either in cash or by permitting an appropriate entry in the electronic ledger. A timeline of forty five days from receipt of the order was fixed for issuance of notice. [Paras 7, 8]

Issue of entitlement remanded to respondents to decide after issuing notice and hearing; if entitlement is established, respondents to release the credit in cash or electronic ledger entry.

Final Conclusion: Writ petitions disposed directing respondents to issue notice within forty five days, decide whether the petitioners were entitled to the transitional input tax credit not transitioned due to the impugned communications, and if so to release the amount in cash or by suitable electronic ledger entry; no costs.

Taxability of reimbursement of electricity charges by lessor - Value of taxable supply under Section 15 - Pure agent exclusion under Rule 33 - Composite supply and principal supply - Scope of supply under Section 7 - Renting and leasing of immovable property as taxable supply

Taxability of reimbursement of electricity charges by lessor - Value of taxable supply under Section 15 - Composite supply and principal supply - Reimbursement of electricity expenses collected by the lessor from the lessee forms part of the taxable value. - HELD THAT: - The Authority found that the principal supply by the lessor is renting and leasing of immovable property and that electricity and incidental charges are ancillary to that principal supply. In view of the provisions of Section 15, incidental charges and any amount charged in respect of the supply form part of the value of the taxable supply. The agreement provided for the lessor to issue an invoice for electricity collected from the lessee and the collection was integrated with invoicing, indicating supply for consideration rather than a mere disbursement. On these facts the reimbursement was held to be includible in taxable value as it was not shown to be a separate, bona fide disbursement outside the supplier's consideration for the principal supply. [Paras 5, 9, 10]

Reimbursement of electricity expenses collected by the lessor is includible in the taxable value of the supply.

Pure agent exclusion under Rule 33 - Taxability of reimbursement of electricity charges by lessor - Value of taxable supply under Section 15 - The lessor did not act as a 'pure agent' under Rule 33 and therefore could not exclude the electricity reimbursement from the value of supply. - HELD THAT: - The Authority examined the conditions of Rule 33 and observed the absence of clear authorisation by the lessee constituting the lessor as a pure agent. The rent agreement did not expressly use the term 'reimbursement' or otherwise document that the lessor was acting on the lessee's authorisation to incur and pay third party charges as a pure agent. The manner of collection-advance inclusion with rent and issuance of invoices by the lessor-indicated that the amounts were not mere pass through disbursements meeting the Rule 33 conditions. Accordingly, the pure agent exclusion was not available on the facts. [Paras 7, 9]

The lessor is not a 'pure agent' in the present facts; Rule 33 exclusion does not apply.

Renting and leasing of immovable property as taxable supply - Scope of supply under Section 7 - Taxability of reimbursement of electricity charges by lessor - GST is leviable on the reimbursement of electricity expenses in the instant case and the applicable rate is 18% being ancillary to renting and leasing of immovable property. - HELD THAT: - Having held that the electricity charges form part of the value of the taxable supply and that the lessor is not a pure agent, the Authority applied the classification of the principal supply as renting and leasing of immovable property (SAC 997212). As the electricity reimbursement is part of the composite supply value, GST is leviable on that value at the rate applicable to the principal supply. The Authority therefore stipulated the rate as 18% (CGST + SGST) in conformity with the applicable rate for renting and leasing of immovable property. [Paras 6, 9, 10]

GST is leviable on the reimbursement and the applicable rate is 18% as the amounts form part of the composite supply of renting and leasing of immovable property.

Final Conclusion: Advance Ruling: On the given facts the Authority rules that the electricity charges collected by the lessor from the lessee are includible in the taxable value of the supply, the lessor is not a 'pure agent' for purposes of Rule 33, and GST is leviable on those amounts at 18% as ancillary to renting and leasing of immovable property.

Value that represents the margin - difference between selling price and purchase price - purchase price not purchase cost - interpretation of Notification No. 08/2018-CT(Rate) Explanation (ii) - tax on margin for old and used motor vehicles - plain and ordinary meaning rule of statutory interpretation

Difference between selling price and purchase price - purchase price not purchase cost - interpretation of Notification No. 08/2018-CT(Rate) Explanation (ii) - Whether refurbishment costs and amounts paid to the owner are includible in the purchase price for computing the margin under Explanation (ii) to Notification No. 08/2018-CT(Rate) dated 25.01.2018. - HELD THAT: - The Authority examined the language of Notification No. 08/2018-CT(Rate) and its Explanation (ii), which defines the margin as the difference between the selling price and the purchase price. The Explanation expressly uses the term "purchase price" and not "purchase cost." Applying the settled rule that where statutory words are clear and unambiguous they are to be given their natural and ordinary meaning, the Authority concluded that the notification contemplates only the amount actually paid as the purchase price. There is no provision in the notification to treat ancillary or directly attributable refurbishment expenses as part of the "purchase price" for the purpose of computing the margin under Explanation (ii). Consequently, inclusion of refurbishment costs in the purchase price would be inconsistent with the plain text of the Explanation and the scheme of the notification. [Paras 4, 5, 6, 7]

Refurbishment costs and amounts incurred over and above the amount paid to the owner are not includible in the purchase price for calculating the margin under Explanation (ii) to Notification No. 08/2018-CT(Rate); margin is the difference between the selling price and the purchase price (amount paid).

Final Conclusion: Advance Ruling: No - the amount paid to the owner and the refurbishment costs are not includible in the purchase price for deduction from the selling price to arrive at the margin under Notification No. 08/2018-CT(Rate) (Explanation (ii)).

Classification of goods - Glass-fibre Reinforced Gypsum Board (GRG) - distinction by raw material and reinforcement - Entry 92 of Schedule II of Notification No. 1/2017-Central Tax (Rate) - tariff heading 6809 and tariff item 6809 19 00 - rule of literal interpretation and common parlance test

Classification of goods - Glass-fibre Reinforced Gypsum Board (GRG) - Entry 92 of Schedule II of Notification No. 1/2017-Central Tax (Rate) - distinction by raw material and reinforcement - Whether the proposed new variant of gypsum board is classifiable as Glass-fibre Reinforced Gypsum Board (GRG) and chargeable to GST at 12% under Entry 92 of Schedule II of Notification No. 1/2017-Central Tax (Rate). - HELD THAT: - The Authority examined the composition and manufacturing differences between conventional gypsum plaster board and GRG. GRG, as described in the material before the Authority and industry guidance, is made predominantly from phosphogypsum (a by product of phosphoric acid plants) with glass fibre reinforcement incorporated through a specific manufacturing process. The applicant's proposed product is made mainly from mined gypsum with glass fibre and additives but not from phosphogypsum and does not follow the described GRG manufacturing process. Given the material and process distinctions, the product does not fall within the description of 'Glass fibre Reinforced Gypsum Board' as understood for the purposes of Entry 92 of Schedule II. Because the product is not GRG, the special concessional classification and rate under Entry 92 cannot apply. The Authority therefore did not find it necessary to decide whether conformance to BIS IS 2095 is required, since the product itself is not GRG.

The proposed new variant of gypsum board is not classifiable as Glass fibre Reinforced Gypsum Board (GRG) for the purposes of Entry 92 of Schedule II and therefore is not eligible for the 12% GST rate under that entry.

Final Conclusion: The Authority rules that the new variant of gypsum board proposed by the applicant is not a Glass fibre Reinforced Gypsum Board (GRG) within the meaning of Entry 92 of Schedule II to Notification No.1/2017 Central Tax (Rate); accordingly the concessional 12% rate under that entry does not apply, and the question of mandatory conformance to BIS IS 2095 was not adjudicated as it became immaterial.

Anticipatory bail - Section 132(1)(a) offences - clandestine manufacture and sale - Investigation hampered by non-cooperation and influence over witnesses - Documentary evidence versus ocular evidence - Habitual tax evasion and prior penalty

Anticipatory bail - Section 132(1)(a) offences - clandestine manufacture and sale - Investigation hampered by non-cooperation and influence over witnesses - Documentary evidence versus ocular evidence - Habitual tax evasion and prior penalty - Grant of anticipatory bail to the accused persons in proceedings alleging clandestine manufacturing and sale under Section 132(1)(a). - HELD THAT: - The court held that anticipatory bail was not warranted. The offence pleaded falls under Section 132(1)(a), relating to clandestine manufacture and sale, where evidence is largely ocular and arises from persons involved in production, transportation and sale. Such evidence is susceptible to being influenced if witnesses, employees or directors do not cooperate. In the present case two of the applicants initially failed to appear despite repeated summons; the Directors on record and several employees are not cooperating; statements recorded subsequently under protection have not been retracted; and investigative material (including decoded diary entries and accounting codes recovered from a witness's mobile) indicates a network of firms used for clandestine manufacture and supply without invoices. Further, there is a past history of similar proceedings culminating in a substantial penalty, indicating habitual evasion. Taken together, these factors create a real possibility that grant of anticipatory bail would seriously hamper or prejudice the investigation. The court distinguished cases where offences under clauses (b) and (c) of Section 132(1) involve documentary returns and invoices, noting that the evidentiary character differs from clandestine-manufacture cases and therefore the approach to anticipatory bail must account for the risk to investigation in the latter class of cases.

Anticipatory bail applications were dismissed as the applicants were not entitled to protection in view of the nature of the offence, non-cooperation of witnesses and the likelihood of hampered investigation.

Final Conclusion: Applications for anticipatory bail were refused; the court concluded that, given the clandestine-manufacture allegations, non-cooperation of key persons, documentary and testimonial material pointing to a network of firms and a history of similar evasion, anticipatory protection would impede the investigation.

Condonation of delay - exclusion under Section 14 of the Limitation Act, 1963 - revision under Section 264 of the Income-tax Act, 1961 - appeal under Section 248 of the Income-tax Act, 1961 - time-bar - remand for decision on merits

Condonation of delay - exclusion under Section 14 of the Limitation Act, 1963 - revision under Section 264 of the Income-tax Act, 1961 - appeal under Section 248 of the Income-tax Act, 1961 - time-bar - Whether the delay in filing the Revision Petition under Section 264 was liable to be condoned by excluding the period spent prosecuting an appeal under Section 248 which was not maintainable, and whether the matter should be remitted for decision on merits. - HELD THAT: - The Court applied the principle in Section 14 of the Limitation Act, 1963 to exclude the time spent by the petitioner in bona fide prosecution of an appeal in a forum which lacked jurisdiction or where the appeal was not maintainable. The petitioner had pursued an appeal under Section 248 in the bona fide belief it was appealable and only after discovering it was not maintainable withdrew that appeal and filed the Revision Petition within four days. Excluding the period spent prosecuting the appeal under Section 248 renders the Revision Petition under Section 264 within time. The Court therefore found the impugned order dismissing the Revision Petition as time-barred to be unsustainable on that basis, while expressly refraining from adjudicating the substantive merits of the controversy. The matter is remitted to the Commissioner for a merits determination in accordance with law, leaving all parties' rights and contentions open. [Paras 6, 7, 8]

The petition is allowed; time spent prosecuting the appeal under Section 248 is excluded under Section 14 Limitation Act, 1963, the Revision Petition under Section 264 is to be considered on merits by the CIT(IT) and the matter is remanded for such decision.

Final Conclusion: Writ petition allowed; impugned order dismissing the Revision Petition as time-barred set aside and the matter remanded to the CIT(IT) to decide the Revision Petition on merits after treating the time spent prosecuting the appeal under Section 248 as excluded under Section 14 of the Limitation Act, 1963; no observation on merits.

Eligibility for deduction under section 80IB(10) - developer versus facilitator - assumption of development risk and sharing of profits - operative date of project approval where approval granted more than once - validity and lapse of Intimation of Disapproval / Commencement Certificate and effect on subsequent approvals

Developer versus facilitator - assumption of development risk and sharing of profits - eligibility for deduction under section 80IB(10) - Assessee's status as developer for the project and consequent entitlement to claim deduction under section 80IB(10). - HELD THAT: - The Tribunal found as a fact, accepted by this Court, that the assessee and its partner were involved from the inception: the assessee's partner had signed the principal agreement and acquired development rights, the IOD and Commencement Certificate were in the assessee's name, taxes related to the land were paid by the assessee from 1998 onwards, and the assessee made payments for development rights. The Tribunal concluded that these facts, together with the commercial arrangement whereby the joint-venture partner agreed to share 50% of gross sale proceeds, demonstrated that the assessee had a substantive role in the development and had assumed interests sufficient to characterise it as a developer rather than a mere facilitator. The Court found no perversity in the Tribunal's fact-finding and accepted its conclusion that the assessee was entitled to claim the deduction under section 80IB(10). [Paras 8]

Assessee was correctly treated as developer and entitled to claim deduction under section 80IB(10).

Operative date of project approval where approval granted more than once - validity and lapse of Intimation of Disapproval / Commencement Certificate and effect on subsequent approvals - eligibility for deduction under section 80IB(10) - Whether the project was to be treated as commenced before 01.10.1998 because of an earlier IOD/plan, thereby disqualifying the assessee from deduction under section 80IB(10). - HELD THAT: - The Tribunal found as a matter of fact that the project as ultimately completed differed from the original plan for which an IOD was granted in 1997; the original lay-out plan lapsed after the statutory four-year period and became invalid after 07.01.2001. The assessee applied afresh for IOD on 22.11.2001 and permission for the revised proposal was granted on 21.07.2002; the second proposal covered fewer buildings and was thus not the same project as the earlier lapsed approval. Applying the statutory scheme and the Explanation to section 80IB(10), the Tribunal concluded, and this Court upheld, that the operative approval date for the project as completed is the later approval and not the earlier lapsed approval, so the project cannot be treated as commenced prior to 01.10.1998 for disqualification purposes. The Court found no error or perversity in the Tribunal's application of these facts to the legal test. [Paras 9, 10, 11]

Project was not to be treated as commenced before 01.10.1998; the later approval governs eligibility and the assessee's claim under section 80IB(10) stands.

Final Conclusion: The appeals are without merit; the Tribunal's factual findings that the assessee acted as developer and that the operative approval date was the later approval (so the project was not deemed commenced before 01.10.1998) are upheld, and the claim of deduction under section 80IB(10) was correctly allowed. The appeal is dismissed with no order as to costs.

Deduction under section 80IA - initial assessment year under section 80IA(5) - assessee's option to select the year of claim - set-off of prior losses/unabsorbed depreciation against 80IA deduction - administrative clarification by CBDT Circular No.1/2016

Deduction under section 80IA - set-off of prior losses/unabsorbed depreciation against 80IA deduction - Assessee entitled to deduction under section 80IA notwithstanding earlier set off of losses/unabsorbed depreciation relating to windmill against other business income in prior years. - HELD THAT: - The Court accepted the Revenue's concession that the substantial questions are covered by the coordinate-bench decision in Prabhu Spinning Mills following Velayudhaswamy Spinning Mills , and accordingly held that the Tribunal's conclusion in favour of the assessee must be upheld. Having applied the precedent relied upon by the parties and noted the board-level clarification, the Court answered this controversy against the Revenue and in favour of the assessee.

Tribunal's view allowing section 80IA deduction without requiring reversal of earlier set offs is sustained; question decided for the assessee.

Initial assessment year under section 80IA(5) - assessee's option to select the year of claim - administrative clarification by CBDT Circular No.1/2016 - The term 'initial assessment year' in section 80IA(5) means the first year opted for by the assessee for claiming deduction under section 80IA, not necessarily the year of commencement of the eligible business. - HELD THAT: - Relying on the coordinate-bench authority and the explicit explanation in CBDT Circular No.1/2016, the Court held that subsection (2) gives the assessee the option to choose the first year for the ten consecutive years of deduction and that 'initial assessment year' in subsection (5) refers to the year so opted. The Assessing Officer must permit deduction consistent with this interpretation after satisfaction of statutory conditions.

Interpretation of 'initial assessment year' as the year elected by the assessee is accepted; question decided for the assessee.

Assessee's option to select the year of claim - deduction under section 80IA - Assessee has the option to choose the first/initial assessment year of claim for deduction under section 80IA. - HELD THAT: - The Court noted that the coordinate-bench decision and the CBDT circular clarify that an assessee eligible under section 80IA may elect the year from which the ten-year deduction period runs (subject to the overall slab of fifteen or twenty years and continuity). The Tribunal's holding that the assessee may select the initial year of claim was therefore upheld.

Assessee's option to elect the initial year of claim is recognised; question decided for the assessee.

Final Conclusion: Appeal dismissed. All substantial questions of law raised by the Revenue answered against the Revenue and in favour of the assessee in accordance with the coordinate-bench authority and the CBDT clarification; no costs.

Violation of principles of natural justice - maintainability of writ petition under Article 226 of the Constitution - availability of alternative and efficacious statutory remedies - rectification under section 154 of the Income Tax Act - consequences of non-response to statutory notices

Violation of principles of natural justice - consequences of non-response to statutory notices - Assessment order was not vitiated for breach of natural justice. - HELD THAT: - The Court found that the assessment order was preceded by multiple opportunities and notices issued to the petitioner (including on 28.09.2019, 24.12.2019, 04.03.2020, 28.07.2020, 17.12.2020 and 18.02.2021) and that the petitioner failed to respond to any of those notices. The last notice dated 12.03.2021 seeking reply by 14.03.2021, considered in the context of the petitioner's repeated non compliance, could not be viewed in isolation; the petitioner did not even request more time. The petitioner's omission to disclose receipt of the earlier notices in the writ petition further undermined its contention. On these facts the Court held there was no justifiable breach of the principles of natural justice warranting interference under Article 226. [Paras 7, 8, 9, 10]

Petitioner's challenge that the assessment was bad for violation of natural justice is rejected.

Maintainability of writ petition under Article 226 of the Constitution - availability of alternative and efficacious statutory remedies - Writ petition under Article 226 was not maintainable in the circumstances. - HELD THAT: - The Court emphasised that exceptional circumstances are required to invoke writ jurisdiction in taxation matters and that Article 226 should not be used to short circuit statutory procedures. Since alternative and efficacious remedies under the Income Tax Act were available to the assessee, and there was no established breach of fundamental rights or jurisdictional excess, exercise of discretionary writ jurisdiction was not justified on the facts of the case. [Paras 6, 11, 12, 14]

Discretionary writ relief under Article 226 is declined; petition is not maintainable in the facts presented.

Rectification under section 154 of the Income Tax Act - Apparent technical error in the assessment computation is amenable to rectification under section 154 and need not be entertained in the writ petition. - HELD THAT: - The Court accepted the respondents' concession that there was a technical/arithmetical error in the computation which can be corrected under the statutory rectification mechanism. Such a matter is appropriate for resolution by the assessing authority under section 154 rather than by exercise of writ jurisdiction. [Paras 5, 13]

Technical computation issue to be addressed under section 154; not a ground for interference under Article 226.

Final Conclusion: Writ petition dismissed; no interference with the assessment order on grounds of violation of natural justice or otherwise, with liberty reserved to the petitioner to pursue statutory remedies (including rectification under section 154).

Draft assessment procedure under section 144C including non obstante clause and Dispute Resolution Panel objections - Treatment of an order as a draft assessment order where an eligible foreign assessee is governed by section 144C - Jurisdictional infirmity in passing final assessment under section 143(3) for an eligible assessee - Stay of demand pending disposal of objections by the Dispute Resolution Panel

Draft assessment procedure under section 144C including non obstante clause and Dispute Resolution Panel objections - Jurisdictional infirmity in passing final assessment under section 143(3) for an eligible assessee - Impugned assessment order passed under section 143(3) is to be treated as a draft assessment order because the petitioner, a foreign company, is an eligible assessee governed by the section 144C procedure. - HELD THAT: - The Court found that a foreign company, being an eligible assessee, is entitled to the procedural protections under the non obstante provision of section 144C, which requires the Assessing Officer to forward a draft assessment order when any prejudicial variation is proposed and affords the assessee the right to place objections before the Dispute Resolution Panel (DRP). In light of settled precedent of this Court, the Assessing Officer could not have lawfully passed a final assessment under section 143(3) in respect of such an assessee; the impugned order must therefore be treated as a draft assessment order, enabling the statutory DRP process to be invoked. [Paras 3, 4, 5, 8, 9]

Impugned order dated September 22, 2021 to be treated as a draft assessment order and not a final assessment under section 143(3).

Stay of demand pending disposal of objections by the Dispute Resolution Panel - Remand for adjudication by the Dispute Resolution Panel - Objections to the draft assessment order are to be entertained by the Dispute Resolution Panel and the demand stayed until disposal of those objections. - HELD THAT: - The Court directed that the petitioner be permitted to file objections to the draft assessment order with the DRP within thirty days and mandated that the DRP decide those objections in accordance with law. While the matter remains pending before the DRP, enforcement of the demand purportedly arising from the draft assessment order is to remain stayed. The direction therefore remits the controversy for fresh statutory adjudication by the DRP rather than deciding the merits of the claimed DTAA exemption at this stage. [Paras 6, 9, 10]

Liberty granted to file objections with the DRP within thirty days; the DRP to decide the objections; the demand shall remain stayed until the DRP disposes of the objections.

Final Conclusion: The writ petition is disposed by treating the impugned order as a draft assessment order; the petitioner may file objections with the Dispute Resolution Panel within thirty days, the DRP is directed to decide the objections in accordance with law, and the demand imposed by the impugned order shall remain stayed until the DRP disposes of the objections.

Settlement under the Direct Tax Vivad se Vishwas Act, 2020 - declarant's option to settle appellant's appeal or department's appeal - binding effect of CBDT circular clarifications - computation of disputed tax under DTVSV scheme - issue and upload of Form No.3 by the Designated Authority

Declarant's option to settle appellant's appeal or department's appeal - settlement under the Direct Tax Vivad se Vishwas Act, 2020 - binding effect of CBDT circular clarifications - Declarant is entitled to opt to settle only the appeal filed by the declarant under the DTVSV Act and is not obliged to include the department's appeal on the same assessment year. - HELD THAT: - The Court relied on CBDT Circular No.9 of 2020 (Question No.40 and its answer) which expressly provides that where two appeals exist for an assessment year-one by the appellant and one by the department-the appellant has an option to settle the appeal filed by it, or the department's appeal, or both, and that the declarant must specify the choice in Form No.1 filed assessment year wise. The circular clarification is binding on the Department and the officer concerned cannot adopt an interpretation contrary to that clarification. The Department's contention in its affidavit that a declarant has no choice and must settle both appeals was rejected as inconsistent with the CBDT clarification and with the terms of the DTVSV declaration process.

Petitioner entitled to file declaration in respect of its own appeal and to avail DTVSV benefit without being required to include the Department's appeal.

Computation of disputed tax under DTVSV scheme - settlement under the Direct Tax Vivad se Vishwas Act, 2020 - issue and upload of Form No.3 by the Designated Authority - Form No.3 issued by the Designated Authority, which demanded a higher amount by applying a 62.5% rate on disputed tax as if it were a search case, was erroneous and liable to be set aside. - HELD THAT: - The Designated Authority's Form No.3 recorded a demand much higher than the amount stated in the declarant's Form No.1 because it applied a 62.5% rate treating the matter as search-related. The Department, in its affidavit, conceded that the 62.5% computation was an error arising from wrongly treating the case as a search case and acknowledged the correct computation should be at 50% in light of the Court's earlier decision in Bhupendra H. Mehta v. PCIT-19, Mumbai and Others. Having accepted the declarant's option to settle only his appeal and given the Department's concession regarding the erroneous computation, the Court found interference warranted and set aside the impugned Form No.3.

Impugned Form No.3 set aside and the Designated Authority directed to reconsider the declaration in Form No.1 and issue a revised Form No.3.

Issue and upload of Form No.3 by the Designated Authority - settlement under the Direct Tax Vivad se Vishwas Act, 2020 - Designated Authority to issue and upload revised Form No.3 for the declared assessment year and for Assessment Years 2007-2008 and 2010-2011 in conformity with this order. - HELD THAT: - The Court directed the Designated Authority to consider the Petitioner's declaration in Form No.1 and to issue and upload a revised Form No.3 within two weeks of the upload of this order, and ordered that the Petitioner shall pay the amount shown in the revised Form No.3 within two weeks thereafter. The direction was extended to require issuance of revised Form No.3 for the other two assessment years mentioned in the petitions, noting that the Department remains free to pursue its independent appeals on merits.

Designated Authority directed to issue and upload revised Form No.3 for Assessment Year 2006-2007 and for Assessment Years 2007-2008 and 2010-2011 within the timelines specified; petitioner to pay the amount in the revised Form No.3 accordingly.

Final Conclusion: Form No.3 issued to the petitioner for Assessment Year 2006-2007 was set aside; the petitioner may elect to settle only its own appeal under the DTVSV Act in accordance with CBDT Circular No.9 (Question No.40), and the Designated Authority is directed to issue and upload revised Form No.3 for the declared assessment year and for Assessment Years 2007-2008 and 2010-2011 within the timelines ordered, with liberty to the Department to pursue its separate appeals.

Faceless assessment - Right to personal hearing in faceless assessment - Section 144B(7) - request for personal hearing in faceless assessment - Standards, procedures and processes for approving personal hearing requests - Non est assessment for non-compliance with prescribed procedure - Remand for fresh decision after personal hearing

Right to personal hearing in faceless assessment - Section 144B(7) - request for personal hearing in faceless assessment - Failure to enable the video-conferencing option on the e-portal and technical inability of the petitioner to place a formal request did not disentitle the petitioner to the opportunity of personal hearing under Section 144B(7). - HELD THAT: - The Court observed that clause (vii) of Section 144B(7) permits an assessee, when a variation is proposed, to request a personal hearing. Having regard to the factual finding that the portal option to request personal hearing was not enabled and that the petitioner repeatedly sought enablement and notified the respondent, the petitioner could not be said to have forfeited the right to seek personal hearing merely because a formal request was not recorded on the e-portal. The Division Bench's decision in Sanjay Aggarwal v. National Faceless Assessment Centre Delhi was relied upon to hold that the revenue is obliged to consider and, where appropriate, accord a request for personal hearing; absence of framed procedures did not absolve the respondent from considering such requests. Applying these principles, the Court found that the petitioner's inability to request personal hearing due to technical glitches disentitled no relief and required remedial action by the revenue. [Paras 10, 11]

The petitioner was entitled to the opportunity of personal hearing by video conferencing despite the absence of a formal request on the e-portal due to technical non-availability of the option.

Remand for fresh decision after personal hearing - Non est assessment for non-compliance with prescribed procedure - Validity of the impugned assessment order and the appropriate remedy where personal hearing was not provided in accordance with Section 144B. - HELD THAT: - Given the Court's finding that the petitioner was effectively prevented from requesting a personal hearing and that Section 144B(7) contemplates such a hearing when requested, the impugned assessment could not stand. The Court set aside the assessment order, consequential demand and penalty, and remitted the matter to the Assessing Officer with a direction to grant a personal hearing by video conferencing and thereafter pass a reasoned order in accordance with law. The remand was for fresh consideration and decision after granting the mandated opportunity of personal hearing; the AO is to consider the petitioner's oral and written submissions and record reasons in the fresh order. [Paras 12]

The assessment order dated 22nd April, 2021 (and consequential demand and penalty) was set aside and the matter remanded to the Assessing Officer to grant a video-conference personal hearing and pass a reasoned order.

Final Conclusion: Impugned assessment order for Assessment Year 2018-2019 set aside; matter remitted to the Assessing Officer to grant personal hearing by video conferencing and thereafter pass a reasoned order in accordance with law.

Rectification under section 154 - revised return under section 139(4) - glaring and patent mistake - maintainability of rectification application - consistency between returned income and tax liability

Rectification under section 154 - revised return under section 139(4) - glaring and patent mistake - consistency between returned income and tax liability - Application filed under section 154 seeking correction of an apparent clerical error in the revised return of income was maintainable and required rectification. - HELD THAT: - The Tribunal examined the original return filed under section 139(1) and the revised return under section 139(4) and found that apart from the variance in the returned gross total income, all other figures including the tax liability remained unchanged. The assessee's Form 16 corroborated salary income of Rs. 4,04,297.90, which matched the original return, and the identical tax liability in both returns made the inflated figure in the revised return (obtained by suffixing a zero) manifestly inconsistent and a mistake apparent on the face of the record. Given that the error was patent, obvious and verifiable from the returns and supporting Form 16, the mistake fell squarely within the scope of rectification under section 154. The Tribunal therefore found that the Assessing Officer's summary rejection of the rectification application, upheld by the CIT(A), was erroneous and required setting aside. (See findings and reasoning in paragraphs 6, 7 and 8.) [Paras 6, 7, 8]

The order rejecting the application under section 154 was quashed and the Assessing Officer was directed to rectify the apparent mistake in the revised return as claimed by the assessee.

Final Conclusion: The appeal is allowed: the orders of the Assessing Officer and the CIT(A) rejecting the section 154 rectification application are set aside and the Assessing Officer is directed to rectify the patent clerical error in the revised return for Assessment Year 2010-11.

Capital asset (agricultural land) under Section 2(14) - revision under section 263 - erroneous and prejudicial to revenue - effect of purchaser's subsequent change of land use on seller's tax liability - onus on assessing officer to verify allowability of agricultural land classification

Capital asset (agricultural land) under Section 2(14) - effect of purchaser's subsequent change of land use on seller's tax liability - onus on assessing officer to verify allowability of agricultural land classification - revision under section 263 - erroneous and prejudicial to revenue - Whether the Principal Commissioner of Income Tax was justified in invoking revision under section 263 to treat sale proceeds of the subject land as taxable capital gain by holding the land to be non agricultural despite the Assessing Officer's enquiries and the assessee's production of records - HELD THAT: - The Tribunal found that the assessee had purchased and held the land as agricultural land, shown agricultural income in the return and furnished supporting records including Form 8A, return showing agricultural income and extract of 7/12. The Assessing Officer had issued specific queries and made enquiries during assessment (including requests for sale deed, computation of capital gains, cost of acquisition and bank evidence). Having considered those enquiries and the materials filed, the Tribunal held that the subsequent intention or action of the purchaser to convert the land for industrial use cannot retroactively alter the character of the land in the hands of the seller at the time of sale. Applying the principle that the AO must verify allowability of the agricultural classification and noting that such verification had been undertaken during assessment, the Tribunal concluded that the PCIT was not justified in holding the AO's order to be erroneous and prejudicial to the revenue so as to invoke revision under section 263. The Tribunal also relied on the High Court precedent favouring the assessee where similar facts led to holding that mere intent of purchaser is not determinative of seller's tax liability. On these grounds the PCIT's action under section 263 was set aside and the appeal of the assessee was allowed. [Paras 5]

The appeal is allowed; the revision under section 263 was not justified and the profit on sale retained the character asserted by the assessee.

Final Conclusion: The Tribunal allowed the assessee's appeal for AYs. 2016-17, holding that the PCIT was not justified in invoking section 263 since the Assessing Officer had made detailed enquiries and the assessee established the agricultural character of the land; the purchaser's subsequent change of use did not convert the seller's receipt into taxable capital gain.

Unexplained cash credit - burden of proof on assessee to prove source of cash introduction - exemption of agricultural income and its proof - addition to income under section 68 - natural justice - interest and penalty consequences flowing from assessment

Unexplained cash credit - addition to income under section 68 - burden of proof on assessee to prove source of cash introduction - exemption of agricultural income and its proof - Addition of capital introduced (Rs. 22,00,000/- originally made by AO; appellant contested Rs. 12,00,000/- as agricultural proceeds) was correctly treated as unexplained cash credit and confirmed. - HELD THAT: - The Tribunal noted that the assessee did not produce any documentary evidence before the Assessing Officer, the CIT(A) or the Tribunal to substantiate the claim that the cash introduction arose from agricultural receipts. The assessee's contention that agricultural income (being exempt) was inadvertently not reflected in the return was unsupported by documents; merely stating that evidence would be submitted on remand or making oral assertions did not discharge the statutory burden to prove the source. The assessee also failed to explain maintenance of the personal account from which part of the capital was said to have arisen, and proper books of account were not maintained. In these circumstances the Assessing Officer's addition under the provision treating unexplained cash credits as income was upheld. [Paras 3, 5, 7]

Addition under section 68 confirmed; ground No.1 dismissed.

Rental income - Claimed error in adding rental income was not pressed and therefore dismissed. - HELD THAT: - The assessee did not pursue the ground relating to rental income before the Tribunal and the matter was not pressed, leading to dismissal of that ground without further adjudication. [Paras 8]

Ground No.2 dismissed as not pressed.

Natural justice - Allegation that lower authorities breached principles of natural justice was rejected. - HELD THAT: - On the record the Tribunal found that the Assessing Officer and the CIT(A) followed the principles of natural justice. The appellant's contention that submissions and explanations were ignored did not persuade the Tribunal. [Paras 9]

Ground No.3 dismissed.

Interest and penalty consequences flowing from assessment - Contentions against levy of interest under sections 234A/B/C and initiation of penalty under section 271(1)(c) were dismissed as they arose from the assessment order which was maintained. - HELD THAT: - The Tribunal observed that the contentions on interest and penalty stemmed from the assessment order. Since the additions in the assessment were upheld, the consequential levy of interest and the initiation of penalty proceedings were not separately sustained by the Tribunal. [Paras 10]

Grounds Nos.4 and 5 dismissed.

Final Conclusion: The appeal is dismissed; the Tribunal upheld the Assessing Officer's addition treating the unexplained cash introduction as income, found no breach of natural justice, and dismissed consequential challenges to interest and penalty for Assessment Year 2013-14.

Penalty under section 271BA for failure to furnish report under section 92E - Report under section 92E in respect of international transactions - Reasonable cause for failure to furnish report - section 273B - Bonafide belief negating deliberate non compliance - Obliteration of penalty where no intention to evade tax

Penalty under section 271BA for failure to furnish report under section 92E - Reasonable cause for failure to furnish report - section 273B - Bonafide belief negating deliberate non compliance - Whether penalty imposed under section 271BA for non furnishing of the report under section 92E was sustainable. - HELD THAT: - The Tribunal found on the material on record that MTNL had bona fide believed that the payments relating to employees deputed to its Mauritius entity (MTML) were not international transactions requiring a report under section 92E. The deputed employees were under the control of MTML and MTNL made salary payments in India as reimbursements on MTML's account. Upon realization that the transactions fell within the ambit of international transactions, MTNL filed the Form 3CEB and cooperated with the authorities; adjustments were made and the assessment was completed. Applying section 273B, the Tribunal held that a reasonable cause for initial non furnishing was established and that, in the circumstances of a government public sector undertaking acting without evasion or deliberate concealment, imposition of penalty under section 271BA was not justified. The Tribunal accepted the precedents invoked to the effect that a venial or technical breach arising from a bona fide belief does not warrant penalty, and therefore directed obliteration of the penalty. [Paras 8, 10, 11, 16, 18]

Penalty levied under section 271BA set aside on account of reasonable cause and bona fide belief; appeal allowed.

Final Conclusion: The Tribunal allowed the assessee's appeal and directed obliteration of the penalty under section 271BA, holding that reasonable cause and bona fide belief (reinforced by subsequent filing of Form 3CEB and absence of any intent to evade tax) disentitled the Revenue to levy the penalty.

Disallowance under section 40(a)(ia) - fees for technical services / managerial services - taxability under section 9(1)(vii) - interpretation of DTAA - disallowance under section 14A and Rule 8D - absence of exempt income - no application of section 14A

Disallowance under section 40(a)(ia) - fees for technical services / managerial services - taxability under section 9(1)(vii) - interpretation of DTAA - Whether payments made in foreign currency for on-line information subscription and reimbursement of inspection/travel expenses constitute taxable fees for technical services attracting disallowance under section 40(a)(ia) read with section 9(1)(vii) and the relevant DTAA. - HELD THAT: - The Tribunal examined the nature and supporting documentation of the foreign payments. The on-line subscription for Iron & Steel prices was a renewal of an earlier subscription already admitted in prior assessment years and, on facts and evidence, could not be treated as a payment attracting TDS under section 40(a)(ia). Amounts reimbursed by the vendor in relation to employees' visits for examination of shipments related to inspection of quality, quantity and weight pre-shipment; such routine pre-shipment inspection was held not to be a technical or managerial service within the meaning of section 9(1)(vii) or the DTAA. In light of the factual materials and nature of services, the Tribunal did not uphold the CIT(A)'s characterization of these payments as fees for technical services and therefore did not sustain the disallowance under section 40(a)(ia).

Addition/disallowance on account of legal and professional charges under section 40(a)(ia) is not sustained; the payments are not fees for technical/managerial services chargeable under section 9(1)(vii) or the DTAA.

Disallowance under section 14A and Rule 8D - absence of exempt income - no application of section 14A - Whether disallowance under section 14A read with Rule 8D is called for where the assessee has not earned any exempt income during the year. - HELD THAT: - Relying on the principle in the cited authority (Cheminvest Ltd. v. ITO (Delhi HC)), the Tribunal held that where no exempt income is earned in the year, no disallowance under section 14A is warranted. The assessee had not earned exempt income in the year under reference; accordingly, the invocation of Rule 8D to make a disallowance was unwarranted on the facts of the case.

Disallowance under section 14A/Rule 8D is not justified and is disallowed since the assessee earned no exempt income in the relevant year.

Final Conclusion: The appeal is allowed: the additions/disallowances confirmed by the CIT(A) under section 40(a)(ia) for alleged fees for technical services and under section 14A/Rule 8D are set aside on the facts and applicable law.

Disallowance of cash payments as unverifiable - maintenance of books of account and absence of specific defects - verification of bills and proof of payment - follow-on effect of tribunal's earlier decision in assessee's own case

Disallowance of cash payments as unverifiable - verification of bills and proof of payment - maintenance of books of account and absence of specific defects - follow-on effect of tribunal's earlier decision in assessee's own case - Validity of the addition of 6.5% of cash job-work payments as unverifiable for AY 2014-15 - HELD THAT: - The AO made an addition of 6.5% of cash payments for job work on the ground that there were discrepancies in the bills and payments were unverifiable. The CIT(A) upheld the AO's addition after noting defects in bills. The Tribunal examined the assessment file and the paper book and noted that in the assessee's own earlier appeal for AY 2012-13 the Tribunal had considered identical facts, found that books of account were maintained and no specific defects or TDS violations had been shown, and had deleted the large addition relating to cash fabrication charges. As the facts in the present year were found to be identical to those adjudicated for AY 2012-13, the Tribunal, respectfully following its earlier decision in the assessee's own case, held that there was no justification to sustain the ad hoc disallowance and directed deletion of the addition. The Tribunal therefore set aside the CIT(A)'s order and directed the AO to delete the addition in respect of AY 2014-15. [Paras 7, 8]

The addition of 6.5% of cash job-work payments held unsustainable and directed to be deleted; CIT(A) order set aside.

Final Conclusion: The Tribunal allowed the appeal for AY 2014-15, set aside the CIT(A) order upholding the disallowance and directed the Assessing Officer to delete the addition.

Treatment of loss as capital expenditure in the nature of intangible asset/goodwill - predatory pricing and creation of marketing intangibles - acceptance of book results declared in return of income - binding effect of coordinate bench decision on identical facts - scope of power under Section 254(2) to rectify mistakes apparent on the face of the record

Treatment of loss as capital expenditure in the nature of intangible asset/goodwill - predatory pricing and creation of marketing intangibles - acceptance of book results declared in return of income - binding effect of coordinate bench decision on identical facts - scope of power under Section 254(2) to rectify mistakes apparent on the face of the record - Whether the addition made by the AO treating the shortfall on sales as capital expenditure for creation of intangible asset/goodwill could be sustained. - HELD THAT: - The AO concluded that sales made below purchase price represented predatory pricing to create marketing intangibles and accordingly computed a notional expenditure, treated it as capital and made an addition. The CIT(A) deleted that addition by following the coordinate bench Tribunal decision in the assessee's own case for AY 2015-16 which held that disregarding the book results and presuming expenditure for creation of intangibles without basis was unsustainable and the returned loss should be accepted. The Revenue's Miscellaneous Petition against that Tribunal order seeking to place new agreements and to invoke lifting of the corporate veil was dismissed on the ground that those documents were not the basis of the assessment or CIT(A)'s conclusions and that a MA cannot be used to raise a new basis or to review a debatable conclusion; the power under Section 254(2) is confined to rectification of mistakes apparent on the face of the record and cannot be used for review. In view of the dismissed MP and the binding coordinate-bench decision on identical facts, the Tribunal upheld the CIT(A)'s deletion of the addition. [Paras 11, 13, 15]

The deletion of the addition treating the loss as capital expenditure for creation of intangibles/goodwill is upheld and the Revenue's appeal is dismissed.

Final Conclusion: Following the binding decision of a coordinate bench on identical facts and after noting that the Revenue's Miscellaneous Petition seeking review/rectification was dismissed as not constituting a mistake apparent on the record, the Tribunal upheld the CIT(A)'s deletion of the addition treating the shortfall as capital expenditure and dismissed the Revenue's appeal for AY 2012-13.

Dividend stripping - application of section 94(7) - treatment of dividend from mutual funds - deletion of disallowance of business expenditure

Dividend stripping - application of section 94(7) - treatment of dividend from mutual funds - Addition of Rs. 1,45,547/- made under section 94(7) on account of exempt dividend income was unsustainable and directed to be deleted. - HELD THAT: - The Tribunal examined the material placed before the CIT(A) and found that the assessee had furnished the break-up of dividend receipts and details of mutual fund dividends which were held as investment and not as trading stock. The CIT(A)'s conclusion that the assessee had not provided breakup was therefore erroneous. The Tribunal accepted the assessee's submissions that a portion of the dividend related to mutual funds held since earlier years and thus was not caught by the provisions of section 94(7). As the Revenue did not rebut these particulars, the addition under section 94(7) could not be sustained and the Assessing Officer was directed to delete the addition. [Paras 9]

Addition under section 94(7) of Rs. 1,45,547/- deleted.

Deletion of disallowance of business expenditure - Disallowance of business expenditure of Rs. 29,532/- was deleted and that deletion was sustained. - HELD THAT: - The CIT(A) had examined the Assessing Officer's disallowance of certain delayed payment charges, DP charges and auction charges as not related to business and deleted that disallowance. The Tribunal noted this deletion in the appellate history and there being no contrary finding required, the deletion stands. [Paras 3, 10]

Disallowance of expenses of Rs. 29,532/- deleted.

Final Conclusion: The assessee's appeal is allowed: the addition made under section 94(7) is deleted and the earlier deletion of the disallowance of business expenditure is sustained.

Seizure and restoration under Section 110(2) of the Customs Act - Requirement of issuance of show cause notice under Section 124 before confiscation - Effect of failure to issue show cause notice within six months - Extension of the six month period by Principal Commissioner/Commissioner on sufficient cause - Service of notice as required by Section 153 - Exception where provisional release under Section 110A applies

Seizure and restoration under Section 110(2) of the Customs Act - Requirement of issuance of show cause notice under Section 124 before confiscation - Effect of failure to issue show cause notice within six months - Extension of the six month period by Principal Commissioner/Commissioner on sufficient cause - Service of notice as required by Section 153 - Exception where provisional release under Section 110A applies - Validity of show cause notice issued after the statutory six month period and consequent right to return of seized cash and articles - HELD THAT: - The Court examined whether the show cause notice issued beyond six months of seizure could be sustained and whether the respondents complied with the statutory regime governing seizure, notice and service. The statutory mandate in Section 110(2) produces a right to restoration of seized goods if no notice under Section 124(a) is given within six months, subject only to a reasoned extension by the Principal Commissioner/Commissioner for a further period not exceeding six months. The Court treated service requirements under Section 153 and the settled precedents cited (including decisions applying the principle that a notice is not 'given' unless it reaches the person) as integral to compliance. On the facts, there was no provisional release under Section 110A, no reasoned or recorded extension order by the prescribed authority before expiry of the statutory period, and no adequate explanation or proof of compliant service. Reliance on earlier High Court and Delhi High Court decisions was applied to hold that mere delayed issuance or dispatch of a notice does not cure the statutory bar. In consequence, the statutory six month limitation operated to dissolve the seizure and entitlement to return accrued; however, the respondents retain the procedural liberty to initiate fresh adjudication in accordance with law if permissible. [Paras 10, 11, 12, 13, 14]

Show cause notice issued after the statutory period is unsustainable; seized cash and articles are to be returned to the petitioner within eight weeks, while respondents remain free to initiate fresh adjudication in accordance with law.

Final Conclusion: Writ petition allowed: seized cash and mobile phones ordered returned to petitioner within eight weeks for failure to issue a show cause notice within the six month period; respondents may, if legally permissible, commence fresh adjudication in accordance with law.

Provisional assessment of duty - provisional release of goods - security/bond for provisional assessment - seizure under Section 110 of the Customs Act - provisional assessment under Section 18 of the Customs Act

Provisional assessment of duty - provisional assessment under Section 18 of the Customs Act - seizure under Section 110 of the Customs Act - Applicability of provisional assessment/Regulation 2 where the proper officer is unable to make a final assessment and the goods have not been seized under Section 110. - HELD THAT: - The Court noted Regulation 2 of the Customs (Provisional Duty Assessment) Regulations, 1963 applies where the proper officer, for any of the reasons in subsection (1) of Section 18 of the Customs Act, is not able to make a final assessment and may provisionally assess duty subject to security. It was recorded that, in the present case, the goods have not been seized under Section 110; had there been a seizure, remedies under Section 110-A relating to provisional release of seized goods would have been available. Thus Regulation 2 and Section 18 operate where the proper officer is unable to make a final assessment for the statutory reasons listed, and the absence of a seizure distinguishes the present remedy profile from one under Section 110-A. [Paras 6]

Regulation 2 applies when the proper officer cannot make a final assessment under Section 18; there has been no seizure under Section 110 and therefore the specific provisional-release mechanism under Section 110-A is not engaged at this stage.

Provisional release of goods - security/bond for provisional assessment - Whether the goods should be provisionally released pending the DRI inquiry and on what terms. - HELD THAT: - The Court recorded that the DRI has been conducting an inquiry into the origin of the imported manganese ore and that the inquiry may take time. The Court referred to prior authorities addressing conditions for provisional release and observed some conditions imposed in other cases to be harsh. Given the ongoing inquiry, the Court declined to grant unconditional release at the present hearing. The Court indicated that, depending on the DRI report and if the Department's apprehensions about import origin are shown to be well-founded, the writ applicant may be put to terms and conditions for release. Conversely, absent such credible material, the Court stated it may order provisional release subject to the writ applicant furnishing a bond equivalent to twice the duty leviable on the goods. The matter was adjourned for further consideration after receipt of the inquiry report. [Paras 17, 18]

Matter reserved pending receipt of the DRI inquiry report; no unconditional release granted now; release may be ordered on specified conditions after the report, including potentially a bond equal to 200% of the duty.

Final Conclusion: The Court has not granted immediate unconditional release of the imported goods. It held that Regulation 2 and Section 18 govern provisional assessment where the proper officer cannot complete final assessment and noted the absence of seizure under Section 110 (so Section 110-A remedies are not presently engaged). The matter is posted for further hearing after the DRI inquiry report, and provisional release may be ordered thereafter subject to appropriate terms, including a bond equivalent to 200% of the duty, depending on the findings.

Proper officer - jurisdiction to issue show cause notice under Section 28 and Section 124 of the Customs Act, 1962 - show cause notice issued by Directorate of Revenue Intelligence - entertainment of writ petition under Article 226 despite availability of alternative remedy - application of Canon India Private Ltd. on competence of DRI officers - invalidity and nullity of proceedings initiated without authority

Entertainment of writ petition under Article 226 despite availability of alternative remedy - violation of principles of natural justice - Maintainability of writ petitions challenging show cause notices and adjudication when alternative statutory remedy (appeal) exists. - HELD THAT: - The Court accepted that ordinarily an efficacious alternative remedy precludes exercise of writ jurisdiction but reiterated the settled exceptions: where fundamental rights are involved, principles of natural justice are violated, or the action is wholly without jurisdiction or vires of an Act is challenged. Noting that the adjudicating authority had ignored binding Supreme Court precedent (Canon India) and had passed the original order without addressing the jurisdictional challenge, the High Court held it appropriate to exercise jurisdiction under Article 226 to decide the legality of proceedings initiated by DRI officers. [Paras 7, 8, 10]

Writ petitions entertained notwithstanding availability of appeal because the proceedings raised jurisdictional and natural justice issues that required constitutional adjudication.

Proper officer - jurisdiction to issue show cause notice under Section 28 and Section 124 of the Customs Act, 1962 - show cause notice issued by Directorate of Revenue Intelligence - application of Canon India Private Ltd. on competence of DRI officers - invalidity and nullity of proceedings initiated without authority - Validity of show cause notices and consequent proceedings issued by DRI officers under Sections 28 and 124 of the Customs Act, 1962. - HELD THAT: - Relying on the analysis in Canon India Pvt. Ltd., the Court examined the statutory definition of 'proper officer' (Section 2(34)), the mechanism for entrustment of functions (Section 6), and the scheme of Section 28 which contemplates exercise of recovery powers by a 'proper officer' specifically entrusted with those functions. The Court held that notifications relied upon do not validly bring DRI officers within the statutory concept of 'proper officer' because the Central Government alone could entrust customs functions under Section 6 and the Board could not expand that definition by misapplying Section 2(34). Consequently, show cause notices issued and proceedings initiated by DRI officers under Sections 28/124 lacked jurisdiction, were void ab initio, and the ensuing demands and confiscation proceedings could not stand. [Paras 11, 12, 13]

Show cause notices and consequent adjudication/demands/confiscation proceedings initiated by DRI officers under Sections 28 and 124 are without jurisdiction and are set aside; consequential reliefs including refund/release of seized goods granted.

Final Conclusion: Writ petitions allowed: High Court entertained the petitions despite alternate remedy and held that show cause notices and consequent proceedings initiated by DRI officers under Sections 28 and 124 of the Customs Act, 1962 were without jurisdiction because DRI officers are not 'proper officers' entrusted with those functions; the impugned proceedings and demands were set aside and consequential reliefs allowed.

Classification of goods - parts of base station - machine for reception, transmission and conversion of data - meaning of "machine" under Note 5 to Section XVI - classification rule for parts under Note 2(a) and 2(b) to Section XVI - weight of Harmonized System (HS) Committee opinion - interpretation of Heading 8517 of the Customs Tariff

Classification of goods - parts of base station - machine for reception, transmission and conversion of data - interpretation of Heading 8517 of the Customs Tariff - meaning of "machine" under Note 5 to Section XVI - classification rule for parts under Note 2(a) and 2(b) to Section XVI - weight of Harmonized System (HS) Committee opinion - Antenna imported for use with base station is classifiable as parts of base station under sub-heading 85177090 and not as a machine under sub-heading 85176290. - HELD THAT: - The Tribunal considered whether the imported antenna is an independent "machine" under the scope of Heading 8517 or a passive part of a base station classifiable under the parts entry. The Tribunal followed its earlier Mumbai Bench decision in the appellant's own case, which examined the evolution and scope of Heading 8517 and concluded that antennas used with base stations have been treated as parts under sub-heading 85177090. Technical material produced in the present proceedings - including the manufacturer's declaration and a chartered engineer's certificate - established that the antenna is a passive element that transmits and receives electromagnetic signals but does not perform functions of conversion, regeneration, switching or routing independently. The Tribunal interpreted the expression "machine" in Note 5 to Section XVI in the context of Heading 8517 and held that an article must perform independent functions akin to machines enumerated in Chapter 84/85 to attract classification as a machine under 8517.62. The Tribunal further applied Note 2 to Section XVI, observing that parts which are goods included in headings of Chapter 84 or 85 are to be classified in their respective headings and that antennas, being parts of base transceiver stations, fall within Heading 8517 as parts. The opinion of the Harmonized System Committee classifying base station antennas under 8517.70 was treated as having substantial weight and supportive of classification as parts. Having addressed the main classification issue on these grounds, ancillary claims regarding exemption notifications were left unexamined as academic. [Paras 4, 5]

Impugned order set aside; appeal allowed and the antenna held classifiable under sub heading 85177090 as parts of base station, with consequential relief as per law.

Final Conclusion: The Tribunal allowed the appeal, holding that the imported antenna is a part of a base station and is classifiable under sub heading 85177090; the impugned order was set aside and consequential relief granted.

Financial creditor - financial debt - guarantee agreement - co extensive liability of surety under Section 128 of the Indian Contract Act, 1872 - initiation of CIRP against a corporate guarantor - service by registered company email and electronic modes - ex parte proceedings for non appearance

Service by registered company email and electronic modes - ex parte proceedings for non appearance - Validity of service of the Section 7 petition on the corporate debtor and consequent ex parte orders - HELD THAT: - The Tribunal examined the record of service and Company Master Data and held that notice was sent to the registered company email as reflected in MCA records and that the appellant was also separately served by email and WhatsApp. In view of these electronic communications, the Adjudicating Authority was justified in treating the corporate debtor as served and in proceeding ex parte when no one appeared on the listed hearing dates. The Tribunal found no illegality in the Adjudicating Authority setting the appellant ex parte for non appearance. [Paras 6]

Service by email on the registered company email and additional electronic communication to the appellant was legally sufficient; the ex parte proceedings were valid.

Financial creditor - financial debt - guarantee agreement - co extensive liability of surety under Section 128 of the Indian Contract Act, 1872 - initiation of CIRP against a corporate guarantor - Whether the respondent bank is a financial creditor entitled to invoke Section 7 against the appellant corporate guarantor - HELD THAT: - The Tribunal analysed the guarantee agreement which expressly provided that as between the bank and the guarantor the guarantor would be the principal debtor jointly with the borrower and waived typical rights of a surety. Applying Section 128 of the Indian Contract Act and precedents discussed in the judgment, the Tribunal held that the guarantor's liability is co extensive with the principal borrower and that non payment by the borrower converts the guarantor into a corporate debtor in respect of the financial debt. The facts showed disbursement to principal borrowers, default by them and existence of tripartite guarantee; accordingly the bank qualifies as a financial creditor entitled to claim the outstanding financial debt from the guarantor and to initiate CIRP against the corporate guarantor. [Paras 11, 15, 16]

The respondent is a financial creditor vis a vis the appellant guarantor; the guarantee creates co extensive liability making the appellant liable and amenable to Section 7 proceedings.

Initiation of CIRP against a corporate guarantor - guarantee agreement - Whether withdrawal of earlier Section 7 petitions against the principal borrowers bars initiation of CIRP against the guarantor - HELD THAT: - The Tribunal reiterated the settled principle that a creditor is not obliged to exhaust remedies against the principal borrower before proceeding against a guarantor, unless the guarantee deed provides otherwise. The earlier withdrawal of Section 7 petitions against the principal borrowers under Section 12A did not operate as a bar to instituting fresh CIRP against the corporate guarantor. The record showed the withdrawals were on account of practical considerations regarding the principal borrowers' assets and did not negate the bank's independent right to proceed against the guarantor under the guarantee agreement. [Paras 12, 14]

Withdrawal of proceedings against the principal borrowers does not preclude initiation of CIRP against the guarantor; the bank retains an independent right to proceed against the guarantor.

Final Conclusion: The Tribunal dismissed the appeal: service by electronic modes was valid and the Adjudicating Authority rightly admitted the Section 7 petition; on the merits the guarantee created co extensive liability rendering the appellant a corporate debtor and the bank a financial creditor entitled to initiate CIRP; withdrawal of earlier proceedings against the principal borrowers did not bar the present action.

Limitation for filing Section 7 application under the Insolvency and Bankruptcy Code - effect of a recovery certificate/judgment as a fresh cause of action - acknowledgement of debt and extension of limitation under Section 18 of the Limitation Act - exclusion of period of SARFAESI proceedings from computation of limitation under Section 14 of the Limitation Act - application of Sections 14 and 18 of the Limitation Act to IBC proceedings

Limitation for filing Section 7 application under the Insolvency and Bankruptcy Code - effect of a recovery certificate/judgment as a fresh cause of action - application of Sections 14 and 18 of the Limitation Act to IBC proceedings - Whether the Section 7 application was barred by limitation. - HELD THAT: - The Tribunal applied the principles in Dena Bank and related Supreme Court authorities and held that a decree/order of the DRT and the issuance of a recovery certificate constitute a fresh cause of action for the financial creditor. Where a recovery certificate is issued and the judgment/decree remains unpaid, the financial creditor is entitled to initiate proceedings under Section 7 within three years from the date of the judgment/decree or from issuance of the recovery certificate. On the facts, the DRT allowed O.A. No. 461 of 2015 by order dated 02/07/2019 and the Section 7 application was filed on 18/11/2019; accordingly the petition was within the three year limitation period. The Tribunal therefore set aside the Adjudicating Authority's dismissal on limitation grounds, relying on the applicability of Sections 14 and 18 of the Limitation Act to IBC proceedings and the principle that recovery certificate/judgment restarts limitation. [Paras 4, 6]

The Section 7 application is not barred by limitation as it was filed within three years from the DRT order/issuance of the recovery certificate.

Admission under Section 7 IBC - mandate to adjudicating authority to decide admission expeditiously - Proceedings on admission before the Adjudicating Authority directed to be decided afresh. - HELD THAT: - Having held that the Section 7 application is within limitation, the Tribunal remitted the matter to the Adjudicating Authority for consideration of admission under the Code. The Adjudicating Authority is directed to proceed in accordance with law and decide the admission expeditiously, within the time specified by the Tribunal, on the basis of the material on record and in accordance with the Code and applicable jurisprudence. [Paras 7]

Matter remitted to the Adjudicating Authority to decide admission under the Code expeditiously (within the timeline specified by the Tribunal).

Final Conclusion: Appeal allowed; impugned order dismissed to the extent it held the Section 7 application barred by limitation. The Section 7 application was held within limitation (filed within three years of the DRT order/issuance of recovery certificate) and the Adjudicating Authority is directed to decide admission under the Code expeditiously as ordered by the Tribunal.

Liquidation on committee of creditors' decision before confirmation of a resolution plan - non-cooperation of suspended management as a ground for liquidation - appointment of liquidator under section 34(1) of the Insolvency and Bankruptcy Code, 2016 - commencement and effect of moratorium on liquidation under section 33(5) of the Insolvency and Bankruptcy Code, 2016 - duties of the liquidator including public announcement and submission of preliminary report - intimation to statutory and regulatory authorities upon commencement of liquidation

Liquidation on committee of creditors' decision before confirmation of a resolution plan - non-cooperation of suspended management as a ground for liquidation - The committee of creditors' resolution to liquidate the corporate debtor prior to confirmation of any resolution plan was a valid basis to initiate liquidation proceedings. - HELD THAT: - The Tribunal accepted the Resolution Professional's account that the sole COC member, with 100% voting share, approved liquidation in the 6th COC meeting and that the COC had explored revival possibilities but concluded the corporate debtor was defunct and the CIRP timeline had expired. The Tribunal found the persistent non-cooperation of the suspended directors, failure to furnish records and statutory filings, and attempts to delay the CIRP (including belated OTS proposals and appeals contrary to assurances) furnished sufficient grounds for liquidation. In view of sub section (2) of section 33 of the Code, a COC decision approved by the requisite voting share warrants a liquidation order from the Adjudicating Authority where made before confirmation of a resolution plan. [Paras 4, 6]

Liquidation proceedings against M/s. Paramex Transformers Limited were validly commenced on the basis of the COC resolution and the observed non-cooperation of the suspended management.

Appointment of liquidator under section 34(1) of the Insolvency and Bankruptcy Code, 2016 - The Resolution Professional was appointed as Liquidator of the corporate debtor. - HELD THAT: - Having passed the liquidation order, the Tribunal appointed the existing Resolution Professional, Mr. Sumit Shukla, as Liquidator and recorded that he had submitted his written consent to act. The appointment was made pursuant to the powers under section 34 read with the liquidation provisions of the Code and the applicable regulations. [Paras 7]

Mr. Sumit Shukla, the Resolution Professional, is appointed as Liquidator of the corporate debtor.

Duties of the liquidator including public announcement and submission of preliminary report - intimation to statutory and regulatory authorities upon commencement of liquidation - commencement and effect of moratorium on liquidation under section 33(5) of the Insolvency and Bankruptcy Code, 2016 - The Tribunal issued directions as to the liquidator's duties, statutory intimation, the effect and commencement of moratorium on liquidation, and consequential procedural steps. - HELD THAT: - The Tribunal directed the liquidator to issue the public announcement in accordance with the Liquidation Process Regulations, to communicate the order to the Registrar of Companies and the Insolvency and Bankruptcy Board of India, and to intimate fiscal and regulatory authorities (including the Income Tax Department) as required. The earlier moratorium under section 14 was declared to cease and a fresh moratorium under section 33(5) was to commence; the order was deemed a notice of discharge to officers, employees and workmen under section 33(7). The liquidator was further directed to proceed in accordance with Chapter III of the Code and to submit a Preliminary Report within the time specified by the regulations. [Paras 7]

The Liquidator is to carry out the statutory duties, make required intimation to authorities, give public notice, observe the change in moratorium status, treat the order as notice of discharge to employees, and submit the preliminary report within the regulatory timeframe.

Final Conclusion: The Tribunal, having found that the sole COC member validly resolved to liquidate the defunct corporate debtor in view of expired CIRP timelines and sustained non cooperation by the suspended management, ordered liquidation of M/s. Paramex Transformers Limited, appointed the Resolution Professional as Liquidator, and directed statutory notifications and liquidator actions in accordance with the Code and relevant regulations; the connected IA is disposed of accordingly.

Pre-existing dispute - existence of dispute vitiating application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 - rejection under Section 9(5)(ii)(d) of the Insolvency and Bankruptcy Code, 2016 - operational creditor's claim for initiation of CIRP

Pre-existing dispute - notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 - rejection under Section 9(5)(ii)(d) of the Insolvency and Bankruptcy Code, 2016 - Existence of a pre-existing dispute was established and the Section 9 petition was liable to be rejected. - HELD THAT: - The Tribunal examined correspondence between the parties, including emails exchanged from 28.11.2017 to 22.02.2019 and the reply to the demand notice dated 15.05.2019. The email of 22.02.2019 - sent prior to the issuance of the Section 8 demand notice on 06.05.2019 - set out contemporaneous complaints regarding quality, deficiencies, non adherence to best coding practices, failures in integration, repeated outages, non compliance with delivery timelines, and instances where invoices lacked purchase orders. These communications, together with earlier emails, constituted material evidentiary basis of a bona fide dispute existing before the Section 8 notice. Applying the statutory scheme, particularly the criteria in Section 9(5)(ii)(d), the Tribunal held that there was notice or a record of dispute and therefore the application under Section 9 could not be admitted. [Paras 6, 7, 8, 9]

Application under Section 9 dismissed for being barred by the pre-existing dispute; petition rejected under Section 9(5)(ii)(d).

Final Conclusion: The Tribunal found that contemporaneous correspondence demonstrated a pre-existing dispute prior to the Section 8 demand notice and, relying on Section 9(5)(ii)(d), dismissed the petition seeking initiation of CIRP against the corporate debtor. No order as to costs.

Demand Notice under Section 8(1) of the Insolvency and Bankruptcy Code, 2016 - Service/Delivery of demand notice - Maintainability of an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Initiation of Corporate Insolvency Resolution Process

Demand Notice under Section 8(1) of the Insolvency and Bankruptcy Code, 2016 - Service/Delivery of demand notice - Maintainability of an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Whether the Section 9 petition was maintainable in view of non-delivery of the demand notice to the corporate debtor. - HELD THAT: - The Tribunal examined the material placed on record concerning dispatch and delivery of the demand notice. The applicant produced a postal receipt and a tracking report, but the tracking report related to a different PIN code than the corporate debtor's registered address and showed non-delivery. The mere production of a postal receipt indicating dispatch, without a tracking record evidencing delivery to the corporate debtor's registered address, did not satisfy the requirement of service contemplated by Section 8(1) of the Code. Since delivery of the demand notice prior to filing a Section 9 application is a pre-condition, and that pre-condition was not fulfilled on the evidence before the Tribunal, the petition was held to be not maintainable and liable to be dismissed on that ground. [Paras 8, 9, 10]

Petition under Section 9 dismissed as not maintainable for failure to prove delivery of the demand notice to the corporate debtor.

Final Conclusion: The application under Section 9 of the Insolvency and Bankruptcy Code, 2016, was dismissed because the applicant failed to establish that the statutory demand notice was delivered to the corporate debtor as required by Section 8(1), rendering the petition not maintainable.

Liquidation of corporate debtor in terms of Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - committee of creditors' commercial wisdom not to be interfered with - appointment of resolution professional as liquidator under Section 34(1) of the Insolvency and Bankruptcy Code, 2016 - commencement of fresh moratorium under Section 33(5) of the Insolvency and Bankruptcy Code, 2016 - liquidator's duty to investigate undervalued and preferential transactions - public announcement and procedural directions under the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - submission of preliminary report pursuant to Regulation 13 of the Insolvency and Bankruptcy (Liquidation Process) Regulations, 2016

Liquidation of corporate debtor in terms of Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - committee of creditors' commercial wisdom not to be interfered with - Order for liquidation of the corporate debtor pursuant to the CoC decision during CIRP. - HELD THAT: - The Tribunal held that the Committee of Creditors, after constitution and meetings, resolved in its commercial wisdom to liquidate the corporate debtor prior to confirmation of any resolution plan. Applying the statutory scheme embodied in Section 33(2), and having considered the documents and submissions, the Adjudicating Authority should not interfere with the commercial decision of the CoC. Consequently, the application by the resolution professional for liquidation was allowed and a liquidation order under the Code was passed. [Paras 4]

Application for liquidation allowed and liquidation order passed in terms of Chapter III of Part II of the Code.

Appointment of resolution professional as liquidator under Section 34(1) of the Insolvency and Bankruptcy Code, 2016 - Appointment of the resolution professional as the liquidator. - HELD THAT: - The Tribunal appointed the then resolution professional as liquidator after recording his written consent. The appointment was made under Section 34(1) of the Code and the liquidator was directed to assume functions prescribed for liquidation, consistent with the CoC resolution recommending his appointment. [Paras 5]

Mr. Keyur J. Shah appointed as liquidator with his consent and registration details noted.

Commencement of fresh moratorium under Section 33(5) of the Insolvency and Bankruptcy Code, 2016 - Effect of liquidation on moratorium: cessation of CIRP moratorium and commencement of liquidation moratorium. - HELD THAT: - The Tribunal recorded that, on admission of the liquidation application, the moratorium operative under Section 14 during CIRP ceases and a fresh moratorium as contemplated by Section 33(5) commences for the liquidation process. This procedural consequence follows from the change in the corporate debtor's status from CIRP to liquidation. [Paras 6]

The prior moratorium under Section 14 ceases and a fresh moratorium under Section 33(5) commences upon admission of the liquidation application.

Public announcement and procedural directions under the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - liquidator's duty to investigate undervalued and preferential transactions - submission of preliminary report pursuant to Regulation 13 of the Insolvency and Bankruptcy (Liquidation Process) Regulations, 2016 - Directions to the liquidator regarding procedural steps, investigation and reporting obligations. - HELD THAT: - The Tribunal issued specific directions to the appointed liquidator to carry out the statutory duties: make a public announcement of liquidation in accordance with the Liquidation Process Regulations; proceed with the liquidation in conformity with Chapter III of Part II of the Code and relevant rules and regulations; continue investigations into the corporate debtor's financial affairs to identify undervalued or preferential transactions; and submit a preliminary report to the Adjudicating Authority within seventy-five days of the liquidation commencement date as required by Regulation 13. Administrative directions were also given to communicate the order to the RP, corporate debtor, IBBI and ROC for necessary updates and compliance. [Paras 5]

Liquidator directed to follow the Liquidation Process Regulations, investigate antecedent transactions, issue public announcement and file the preliminary report within the prescribed period; registry to notify relevant authorities.

Final Conclusion: The Adjudicating Authority allowed the RP's application and ordered liquidation of M/s. Nizamiya Construction Private Limited in accordance with the Code; the RP was appointed as liquidator with directions to follow the liquidation regulations, conduct investigations into antecedent transactions, make requisite public announcements and submit the preliminary report, and the statutory moratorium regime was adjusted accordingly.

Constitutionality of twin-conditions in Section 45(1) of the PMLA - Presumption of innocence and personal liberty under Article 21 - Application of Nikesh Tarachand Shah precedent - Effect of post-judgment amendment to Section 45(1) PMLA - Delay in trial and prolonged detention as ground for bail - Grant of bail subject to conditions and supervision

Constitutionality of twin-conditions in Section 45(1) of the PMLA - Application of Nikesh Tarachand Shah precedent - Effect of post-judgment amendment to Section 45(1) PMLA - Validity and applicability of the twin conditions in Section 45(1) of the PMLA for grant of bail and whether the post-Nikesh Tarachand Shah amendment revived those conditions - HELD THAT: - The Court applied the Supreme Court's decision in Nikesh Tarachand Shah, which declared the twin conditions in Section 45(1) unconstitutional as violative of Articles 14 and 21, and noted that matters previously denied bail because of those conditions were to be reconsidered without their application. Having regard to subsequent High Court decisions and the specific analysis in the cited coordinate bench decision, the Court held that the amendment to sub section (1) does not revive or validate the twin conditions; indiscriminate application of Section 45 would make drastic inroads into personal liberty and presumption of innocence and therefore cannot be used to deny bail in the manner struck down by the Supreme Court. The petitioner's bail application was to be considered on merits without applying the twin conditions. [Paras 7, 8, 9]

The twin conditions in Section 45(1) were not applied; the petitioner's bail was considered without those conditions in reliance on Nikesh Tarachand Shah and subsequent High Court precedents.

Delay in trial and prolonged detention as ground for bail - Grant of bail subject to conditions and supervision - Whether prolonged pre-trial detention and delay in commencement of trial, together with co-accused being released on bail, justified releasing the petitioner on bail and on what conditions - HELD THAT: - The Court noted that the petitioner had been in custody for a prolonged period (since 30.5.2013 in relation to earlier proceedings and since 16.10.2017 in the present case) and that trial had not commenced despite long detention. The Court also observed that two co-accused had been released on bail by coordinate benches following the legal position set out in Nikesh Tarachand Shah. Balancing the prolonged deprivation of liberty, the absence of trial progress, and the precedential landscape, the Court concluded that bail was appropriate. The Court imposed customary supervisory conditions to protect the integrity of the process, including exigent sureties, one surety being a relative, prohibition on committing offences while on bail, and prohibition on dissuading or tampering with witnesses or evidence. [Paras 11]

The petitioner was released on bail subject to specified sureties and conditions, and the bail application was allowed.

Final Conclusion: Bail allowed: relying on the Supreme Court's ruling in Nikesh Tarachand Shah and subsequent High Court decisions that the twin conditions in Section 45(1) PMLA are not to be applied, and having regard to prolonged detention and delay in trial, the petitioner was directed to be released on bail on specified sureties and conditions.

Application of twin conditions for grant of bail under section 45(1) PMLA - Validity/effect of amendments after constitutional declaration of invalidity - Revival of statutory provisions by legislative amendment - Presumption of constitutionality of statutes - Scope and limits of High Court reference jurisdiction

Application of twin conditions for grant of bail under section 45(1) PMLA - Validity/effect of amendments after constitutional declaration of invalidity - Revival of statutory provisions by legislative amendment - Presumption of constitutionality of statutes - Whether the twin conditions in section 45(1) of the Prevention of Money-Laundering Act, 2002, which were declared unconstitutional in Nikesh T. Shah, stand revived by Amendment Act 13 of 2018. - HELD THAT: - The reference was confined to the limited question of the effect of the 2018 amendment on the operability of the twin conditions and did not permit a full adjudication of the constitutional validity of the Amending Act, which is pending before the Supreme Court. The Court reviewed competing authorities and legislative intent, noting that Parliament amended the provision to substitute the earlier predicate-based criterion with applicability to offences "under this Act" and introduced a monetary threshold for lesser offences. The Court applied the principle that statutes remain on the statute-book unless struck down and that there is a presumption in favour of constitutionality of legislative amendments. Citing authorities on the legislature's competence to cure causes of invalidity by amendment, the Court held that where an amendment removes the foundational defect identified by a judicial pronouncement, the amended provision may be read as revived and operative. Given that the Amending Act has not been judicially struck down, and the amendment materially altered the criterion for applicability of the twin conditions, the Court concluded that the basis for the declaration of invalidity in Nikesh T. Shah has been removed insofar as the operation of section 45(1) is concerned and, therefore, the twin conditions stand revived and operate subject to the pending challenge before the Supreme Court. The Court emphasised that it was not deciding the constitutional challenge to the Amending Act itself and limited its conclusion to the effect of the amendment on the twin conditions. [Paras 45, 47, 48, 49]

The twin conditions in section 45(1) of the PMLA, as declared unconstitutional in Nikesh T. Shah, stand revived by Amendment Act 13 of 2018 and operate until and unless the Amending Act is struck down.

Scope and limits of High Court reference jurisdiction - Presumption of constitutionality of statutes - Whether the Larger Bench may decide the constitutional validity of the Amending Act in the course of answering the reference arising from a bail application. - HELD THAT: - The Court held that the reference arose from a bail proceeding and was confined to the limited advisory question whether the twin conditions stand revived by the legislative amendment. The High Court cannot, in that reference, undertake a full adjudication of the constitutional validity of the Amending Act in the absence of pleadings and an appropriate challenge; doing so would exceed the scope of the reference jurisdiction. The Court therefore refrained from deciding the Amending Act's constitutional validity and limited its conclusion to the effect of the amendment on the twin conditions, noting that any challenge to the Amending Act must be raised by proper proceedings. [Paras 39, 40, 41, 44]

The Larger Bench will confine itself to the referred question and will not adjudicate the constitutional validity of the Amending Act absent proper pleadings; the reference does not permit indirect determination of that validity.

Final Conclusion: The Larger Bench answered the reference by holding that, for the limited purpose of the bail-related reference, the twin conditions in section 45(1) PMLA-previously struck down in Nikesh T. Shah-stand revived by Amendment Act 13 of 2018 and operate until the Amending Act is judicially set aside; the High Court refrained from deciding the Amending Act's constitutional validity and directed that the bail application be placed before the concerned court for further consideration.

Pre-consultation under CBEC Master Circular - binding nature of administrative circulars - jurisdiction to issue show cause notice under Section 73 of the Finance Act, 1994 - competent authority to initiate show cause proceedings

Pre-consultation under CBEC Master Circular - binding nature of administrative circulars - Validity of the show cause notice challenged on the ground that pre-consultation required by the CBEC Master Circular was not carried out. - HELD THAT: - The Court held that the Master Circular relied upon by the petitioner does not oust the statutory power to issue show cause notices. The circular is intended to facilitate settlement and pre-consultation where large amounts are involved, but its non-compliance does not render show cause proceedings illegal or without jurisdiction. Circulars are not binding on the Court, and the authority to initiate proceedings under the statute cannot be defeated merely by non-adherence to an administrative circular; the Court relied on the principle that administrative circulars do not bind courts. [Paras 8, 9]

The challenge to the notice on the ground of non-compliance with the Master Circular is rejected.

Jurisdiction to issue show cause notice under Section 73 of the Finance Act, 1994 - competent authority to initiate show cause proceedings - Whether the impugned show cause notice was issued by a competent authority and whether the proceedings were maintainable. - HELD THAT: - The Court observed that the impugned show cause notice was issued by the Commissioner, Office of the Commissioner of GST and Central Excise, Chennai Outer Commissionerate, and that the notice was issued under the statutory scheme (Section 73, Finance Act, 1994). Having found the notice to have been issued by a competent authority, the Court declined to interfere with the show cause proceedings and directed the noticees to file separate replies to meet the allegations on merits. [Paras 9, 10, 11]

The show cause proceedings are maintainable; the noticees are directed to file separate replies and the writ petition is dismissed.

Final Conclusion: Writ petition dismissed; impugned show cause notice sustained as issued by a competent authority and not rendered illegal by non-compliance with the CBEC Master Circular; noticees directed to file separate replies; no order as to costs.

Commercial or Industrial Construction Service - Works Contract Service - binding precedent of the Hon'ble Supreme Court in Commissioner of Central Excise & Customs, Kerala v. Larsen & Toubro Ltd - demand of service tax unsustainable if not raised under correct service category

Commercial or Industrial Construction Service - Works Contract Service - binding precedent of the Hon'ble Supreme Court in Commissioner of Central Excise & Customs, Kerala v. Larsen & Toubro Ltd - Validity of demand of service tax framed under Commercial or Industrial Construction Service when the demand was not raised under Works Contract Service for the period in dispute. - HELD THAT: - The Tribunal held that the issue is squarely governed by the decision of the Hon'ble Supreme Court in Commissioner of Central Excise & Customs, Kerala v. Larsen & Toubro Ltd, which establishes that a demand of service tax will not legally sustain where it has not been raised under the category of Works Contract Service. The Tribunal noted that this principle has been consistently followed by subsequent Tribunal decisions. Given that the present demand was confirmed under the category of Commercial or Industrial Construction Service and not under Works Contract Service, the demand could not be sustained in view of the binding Supreme Court precedent. The Tribunal therefore did not find it necessary to examine the other grounds urged by the appellant. [Paras 6]

Impugned order confirming the demand under Commercial or Industrial Construction Service is set aside and the appeal is allowed with consequential relief.

Final Conclusion: Appeal allowed; demand confirmed under Commercial or Industrial Construction Service quashed as unsustainable for having not been raised under Works Contract Service, in view of the Supreme Court precedent; consequential relief granted.

Reimbursement of expenses - pure agent - asset management service including portfolio and fund management - reverse charge mechanism - taxable value - inclusion of reimbursements and book adjustments between associated enterprises - double taxation on the same amount - SEBI (Mutual Funds) Regulations, Regulation 52 - entitlement to charge scheme expenses - extended period of limitation and wilful suppression/mis-statement

Reimbursement of expenses - pure agent - asset management service including portfolio and fund management - reverse charge mechanism - double taxation on the same amount - SEBI (Mutual Funds) Regulations, Regulation 52 - entitlement to charge scheme expenses - Whether amounts shown as 'Brokerage recoverable from Mutual Fund schemes' are reimbursable expenses (pure agent receipts) and therefore not includible in the taxable value of Asset Management Services for the period prior to the 14.05.2015 amendment. - HELD THAT: - The Tribunal examined the contractual and regulatory matrix, including the Investment Management Agreement and Regulation 52 of the SEBI (Mutual Funds) Regulations, 1996, which permits the Asset Management Company to charge the mutual fund with recurring expenses such as brokerage and transaction costs. The appellant had discharged service tax on brokerage under the reverse charge mechanism. Imposition of service tax again on the same amounts as part of asset management service value would result in levy of tax twice on the same service. For the period prior to the amendment of the valuation provision on 14.05.2015, reimbursement of expenses paid as a pure agent of the service recipient is not includible in the value of taxable services, a position supported by the Supreme Court decision in M/s. Intercontinental Consultants and Technocrats Pvt. Ltd. The Tribunal accepted that the brokerage payments were made and recovered in conformity with SEBI regulation and accounting necessities, and therefore were reimbursements rather than consideration for the appellant's own taxable output services. Consequently the demand of service tax on such reimbursable brokerage charges cannot be sustained for the period before the 14.05.2015 amendment. [Paras 7, 8]

Brokerage recoverable amounts constituted reimbursable expenses (pure agent receipts) and, for the period prior to 14.05.2015, are not includible in the taxable value of the appellant's asset management services.

Extended period of limitation and wilful suppression/mis-statement - Whether invocation of the extended period of limitation based on alleged wilful suppression or mis-statement by the appellant is sustainable. - HELD THAT: - The Tribunal reviewed the sequence of departmental communications and earlier proceedings in which the Department had been engaged with the appellant on accounting and availability of credit in respect of brokerage and reimbursements. The record showed that the Department was aware of the manner in which brokerage charges were accounted and had itself questioned CENVAT credit in related proceedings which culminated in orders decided in favour of the appellant. No material was produced to demonstrate fraud, wilful suppression or deliberate mis-statement by the appellant. Given ongoing correspondence and litigation on the same subject-matter, the Tribunal held there was no factual or legal basis to invoke the extended period of limitation. [Paras 3, 9]

Invocation of the extended period of limitation was not justified; the appellant succeeds on the ground of limitation.

Final Conclusion: The demand and penalties confirmed by the Original Authority are set aside: brokerage amounts recovered from the mutual fund were reimbursable expenses not includible in taxable value for the period prior to 14.05.2015, and the invocation of extended limitation is without basis; the appeal is allowed with consequential reliefs.

Statutory obligation - sovereign/public authority - compulsory levy - taxable service - management, maintenance or repair service - renting of immovable property

Statutory obligation - sovereign/public authority - compulsory levy - taxable service - management, maintenance or repair service - Whether the service charges collected by MIDC from plot holders for providing maintenance, management and repair of amenities are exigible to Service Tax or represent fees collected in discharge of statutory obligations and hence not taxable. - HELD THAT: - The Tribunal held that the issue is squarely covered in favour of the appellant by the decision of the Hon'ble Bombay High Court which construed the Board's circular dated 18.12.2006 to the effect that activities performed by a sovereign or public authority pursuant to statutory obligations, where fees collected are in the nature of a compulsory levy and used to discharge statutory functions, do not constitute a taxable service. The Tribunal noted that Section 14 of the MID Act makes establishment, management and maintenance of industrial estates, and provision of amenities (roads, water, street lighting, drainage etc.) part of MIDC's statutory functions, and that the service charges collected were used in discharging those statutory obligations. There was no finding in the Order in Original that the services for which Service Tax was sought to be levied were not statutory in nature. The Board has accepted the Bombay High Court view. For these reasons the Tribunal concluded that Service Tax could not be levied on the service charges in question. [Paras 6, 7, 8]

Service Tax demand confirmed by the adjudicating authority cannot be sustained; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the service charges levied by MIDC for maintenance and related amenities are fees in discharge of statutory obligations of a sovereign/public authority and consequently not exigible to Service Tax for the period in question.

Valuation of taxable services requiring nexus between consideration and the service - taxability of reimbursements and out-of-pocket expenses - pure agent exclusion under the valuation rules - ultra vires character of subordinate rule expanding valuation beyond section 67 - liquidated damages and declared service of tolerating an act

Valuation of taxable services requiring nexus between consideration and the service - taxability of reimbursements and out-of-pocket expenses - ultra vires character of subordinate rule expanding valuation beyond section 67 - Whether amounts received from State Government Departments and paid onward to vendors form part of the taxable value of services provided by the appellant. - HELD THAT: - The Tribunal held that section 67 requires the taxable value to be the gross amount charged "for such service", thereby necessitating a direct nexus between the consideration charged and the service rendered by the provider. Reimbursed expenditures or amounts not charged as consideration for the appellant's supervisory/implementing services cannot be included in the value of taxable service. The Tribunal relied on the Supreme Court and Delhi High Court authorities which struck down or limited the scope of rule 5(1) to the extent it purported to include reimbursable expenses beyond the consideration for the service. Factual materials (MOUs, tenders, contracts, invoices, utilization certificates and invoices raised by vendors) established that the appellant received separate service charges for supervision on which it discharged service tax and that the larger project sums were received and paid as reimbursements on behalf of Departments. As such those sums were not consideration "for such service" provided by the appellant and could not be subjected to service tax. [Paras 33, 36, 37, 38, 41]

Amount received from the State Government for payment to vendors are reimbursements not constituting consideration for the appellant's services and are not taxable.

Pure agent exclusion under the valuation rules - taxability of reimbursements and out-of-pocket expenses - Whether the appellant acted as a "pure agent" so as to exclude amounts collected for vendors from taxable value under valuation rules. - HELD THAT: - The Tribunal examined the conditions in sub-rule (2) of rule 5 and found on the material that the appellant satisfied those conditions: it acted as agent appointed by Government Departments; payments to vendors were authorized and borne by the Departments; payments were separately indicated; the appellant recovered only amounts paid to third parties; and the services procured by vendors were in addition to services the appellant provided on its own account (for which separate service charges were levied and taxed). Taking these facts together, and having regard to the clarificatory CBEC letter and prior tribunal authority, the Tribunal concluded that the appellant was a pure agent and the reimbursed amounts are excludable from taxable value. [Paras 36, 37, 38, 39, 40]

All conditions of the "pure agent" exclusion are satisfied; amounts collected for payment to vendors are excludable from taxable value.

Liquidated damages and declared service of tolerating an act - valuation of taxable services requiring nexus between consideration and the service - Whether liquidated damages/amounts collected by the appellant from vendors for breach of contract are taxable as a declared service under the clause dealing with agreeing to tolerate an act. - HELD THAT: - The Tribunal analysed the definition of "service" and the declared service clause covering agreeing to refrain from, or tolerate, an act. It held that for an activity to fall within that declared service there must be a flow of consideration specifically for agreeing to tolerate or refrain from an act. Liquidated damages recovered on breach are penal in character, intended as a deterrent and not agreed consideration for tolerating an act; contracts did not contemplate payment as consideration for toleration. Reliance was placed on tribunal precedent which distinguished contractual penal clauses from consideration for a declared service. Accordingly, liquidated damages recovered on breach or non-performance could not be treated as consideration for a declared service and were not taxable. [Paras 44, 45, 46, 47, 48]

Liquidated damages/penal sums recovered from vendors are not consideration for a declared service and are not taxable.

Procedural consequence of setting aside demand - Whether the Commissioner's appeal against waiver of penalty should succeed where the substantive demands are set aside. - HELD THAT: - The Tribunal observed that since the substantive demands have been set aside, it was unnecessary to decide whether the benefit of waiver under the omitted section was available to the appellant. In consequence, the appeal filed by the Commissioner against the waiver was dismissed as there was no surviving demand to which the penalty question would attach. [Paras 50, 51]

Commissioner's appeal against dropping penalty is dismissed in view of setting aside the underlying demands.

Final Conclusion: The Tribunal set aside the impugned orders confirming service tax demands for the periods 01.04.2011 to 30.09.2014 and 01.10.2014 to 31.03.2016, holding that project amounts paid to vendors were reimbursements and/or excluded as amounts of a pure agent and that liquidated damages were not taxable; appeals filed by the appellant are allowed and the Commissioner's appeal on penalty is dismissed.

Interest on delayed refund under Section 11BB - date of receipt of refund application as triggering point for interest - liability of department for delayed sanction of refund - irrelevance of subsequent submission to negate initial filing date

Interest on delayed refund under Section 11BB - date of receipt of refund application as triggering point for interest - entitlement to interest under Section 11BB where refund application filed in 2009 was sanctioned in 2017 - HELD THAT: - The Tribunal examined Section 11BB and held that once a refund ordered under Section 11B(2) is not paid within three months from the date of receipt of the application under Section 11B(1), interest becomes payable from the expiry of that three-month period until the date of actual refund. The record shows the appellant's refund application of 29.06.2009 was considered and the refund sanctioned in 2017. The department did not follow CBEC guidance to communicate defects within 48 hours, and the delay in sanction is therefore attributable to the department. Reliance on Supreme Court precedents confirming that interest is payable on delayed refunds was held to be directly applicable. The Tribunal rejected Revenue's contention that the refund was not delayed because documents were later submitted, noting the original order itself recorded consideration of the 2009 application and sanctioned refund only in 2017. [Paras 7, 8, 9]

Interest under Section 11BB is payable to the appellant for the period from expiry of three months after receipt of the refund application of 29.06.2009 until actual sanction of refund.

Irrelevance of subsequent submission to negate initial filing date - liability of department for delayed sanction of refund - whether the revised application and documents filed in 2017 reset the date for computation of interest - HELD THAT: - The Tribunal found no merit in Revenue's submission that the revised application filed on 24.03.2017 should be treated as the effective date of filing. The original adjudication order expressly records that the refund application filed on 29.06.2009 was considered and the refund sanctioned in 2017. Consequently, subsequent submissions do not absolve the department of liability for delay where the earlier application was pending and the department did not comply with prescribed defect-communication guidelines. [Paras 8]

The date of the original application (29.06.2009) governs the computation of interest; the later submission in 2017 does not preclude payment of interest for the intervening delay.

Final Conclusion: The impugned orders denying interest are set aside; the Appeals are allowed and the appellant is entitled to consequential interest under Section 11BB for the period of delayed sanction of the refund.

Transaction value - additional consideration - Rule 6 of the Valuation Rules - Rule 9 of the Valuation Rules - brand name/goodwill not includable in manufacturer's assessable value - contract manufacturing - independent manufacturer vs hired labourer - statutory disclosure of formulations under the Drugs and Cosmetics Rules - extended period of limitation for suppression - revenue neutrality and limitation

Transaction value - additional consideration - Rule 6 of the Valuation Rules - brand name/goodwill not includable in manufacturer's assessable value - statutory disclosure of formulations under the Drugs and Cosmetics Rules - Specifications, formulations, artwork and approval rights provided by the buyer are not additional consideration so as to vitiate transaction value and require valuation under Rule 6. - HELD THAT: - The Tribunal found that the agreement between the parties recorded a principal-to-principal manufacture-and-sale arrangement and that the statements relied on by revenue merely reiterated that contractual relationship (paras 6-7). Formulations and ingredients are required to be declared on product packaging under the Drugs and Cosmetics Rules and thus are in the public domain; provision of such specifications by the buyer is a contractual condition of manufacture rather than a flow of additional consideration to the manufacturer (para 8). Authorities and the Board Circular cited in the record establish that enhancement in market value attributable to a buyer's brand/goodwill accrues to the buyer and cannot be taxed as additional consideration in the hands of the manufacturer; consequently the Tribunal held Rule 6 inapplicable to include the buyer's brand value in the manufacturer's assessable value (para 8). [Paras 6, 7, 8]

Specifications, formulations and brand-related approvals supplied by the buyer do not constitute additional consideration; excise valuation cannot be enhanced by including the buyer's brand/goodwill under Rule 6.

Rule 9 of the Valuation Rules - manufacturer vs hired labourer (contract manufacturing) - brand name/goodwill not includable in manufacturer's assessable value - Levy of excise on the buyer's selling price is not permissible in the absence of the statutory precondition for Rule 9 (relationship between manufacturer and buyer) and there is no contention that the buyer is the manufacturer. - HELD THAT: - The Tribunal emphasised that excise is a levy on manufacture and revenue did not contend that the buyer was the manufacturer; Rule 6 permits inclusion only of additional consideration flowing from buyer to manufacturer and does not authorise valuation with reference to the buyer's selling price. Recovery with reference to the buyer's realization would be permissible only under Rule 9 and that requires the existence of a relationship between the parties which is not alleged here (para 9). [Paras 9]

Valuation cannot be raised to the buyer's selling price; Rule 9 is inapplicable where parties are not related and the buyer is not the manufacturer.

Extended period of limitation for suppression - revenue neutrality and limitation - Invocation of extended period of limitation on the ground of suppression is not sustained where the assessee's transactions were revenue neutral and the relevant agreement and refund claims were known to authorities. - HELD THAT: - The Tribunal accepted that the appellant was entitled to refunds under Notification No. 32/1999 and that refund orders and audits were on record; the agreement was shared with jurisdictional authorities and records were routinely audited. Applying the principle that revenue neutrality negatives intention to evade, the Tribunal held that allegation of suppression did not justify invoking extended limitation (para 10). [Paras 10]

Extended period of limitation cannot be invoked; the demand is barred on limitation given revenue neutrality and disclosure to authorities.

Contract manufacturing - independent manufacturer vs hired labourer - personal penalty under Central Excise Rules - Personal penalties imposed on the directors are not sustainable once the main appeal by the company is allowed on merits and limitation. - HELD THAT: - Having quashed the differential duty demand both on merits and limitation, the Tribunal found it unnecessary to examine alternate contentions and allowed the connected appeals filed by the directors against personal penalty (para 10). [Paras 10]

Personal penalties on the directors are set aside as consequential relief to allowance of the main appeal.

Final Conclusion: The Tribunal allowed the appeals: the goods were correctly valued on the manufacturer's transaction value; specifications/formulations and brand-related matters supplied by the buyer did not amount to additional consideration under Rule 6; valuation with reference to the buyer's selling price under Rule 9 was inapplicable; extended limitation was not attracted; and connected personal penalties were set aside. All three appeals were allowed with consequential relief.

Mutuality of interest - related person - transaction value - valuation of excisable goods between inter-connected undertakings under Rule 10 of the Central Excise (Valuation) Rules, 2000 - rejection of transaction value and application of Rule 9 valuation - Atic Industries principle requiring reciprocal interest in each other's business

Mutuality of interest - related person - transaction value - valuation of excisable goods between inter-connected undertakings under Rule 10 of the Central Excise (Valuation) Rules, 2000 - rejection of transaction value and application of Rule 9 valuation - Atic Industries principle requiring reciprocal interest in each other's business - Whether M/s EWAC Alloys Ltd. and M/s Larsen & Toubro Ltd. are 'related persons' so as to justify rejection of the claimed transaction value and valuation under Rule 9/Rule 10 of the Valuation Rules for the periods in dispute. - HELD THAT: - The Tribunal found as an undisputed fact that the two companies are inter-connected undertakings. However, for the purposes of treating transactions between inter-connected undertakings as 'related' and thereby rejecting transaction value under the Valuation Rules, what is required (under sub-clause (iv) of clause (b) of sub-section (3) of Section 4 and established authority) is mutuality of interest - i.e., each party must have a direct or indirect interest in the business of the other. The adjudicating authority relied on common directors, shareholding, a sole selling agency arrangement and commercial arrangements (such as sharing of advertising expenses, training, and promotional support) to infer mutuality. Applying the legal principle in Atic Industries and subsequent authorities, the Tribunal held that these factors - unilateral shareholding, commercial covenants, purchase at list price, promotional support and the existence of common directors - do not by themselves establish the requisite reciprocal interest of each in the other's business. The Tribunal observed that many of the factual recitals in the impugned order were verbatim from the show cause notice, and that the Commissioner had not adequately addressed contrary material (including a cost auditor report indicating no relatedness). On merits, therefore, mutuality of interest was not established and the transaction value could not be rejected under Rule 10/Rule 9; accordingly the demand based on rejection of transaction value could not be sustained. Because the Tribunal decided the appeal on merits, it did not consider limitation and penalty issues.

Mutuality of interest between the parties was not established; they are not 'related persons' for valuation purposes and the demand founded on rejection of the transaction value is unsustainable.

Final Conclusion: The impugned adjudication confirming the duty demand and penalties was set aside on merits and the appeals were allowed.

Liability to pay entry tax attaches on entry of goods into the local area - cessation of liability where goods did not enter the local area in a fit state for consumption, use or sale - no remission of entry tax for goods lost or destroyed after receipt into the local area - value of goods for levy of entry tax excluding activities performed after receipt into the local area (post-entry packing) - fourth proviso to Section 2(h) of the U.P. Value Added Tax Act, 2008 and its Explanation regarding assumed or estimated value

Liability to pay entry tax attaches on entry of goods into the local area - cessation of liability where goods did not enter the local area in a fit state for consumption, use or sale - no remission of entry tax for goods lost or destroyed after receipt into the local area - Liability to pay entry tax on quantities of damaged/lost cement - HELD THAT: - The levy of entry tax attaches at the point when goods enter the local area for purposes of consumption, use or sale and does not depend on subsequent consumption, use or sale. To avoid liability the assessee must establish that the goods did not enter the local area in a fit state that rendered them capable of consumption, use or sale. In the present case the assessee only asserted that goods were lost or damaged after receipt but did not plead or prove the time when the loss or damage occurred; it was therefore not shown that the goods failed to enter the local area in a fit state. Further, there is no provision in the U.P. Value Added Tax Act, 2008 permitting remission of entry tax on goods lost or destroyed after their receipt into the local area. On these grounds the claim that liability ceased was untenable. [Paras 5, 6, 7]

Answered in favour of the revenue and against the assessee; liability to entry tax was not shown to have ceased.

Value of goods for levy of entry tax excluding activities performed after receipt into the local area (post-entry packing) - fourth proviso to Section 2(h) of the U.P. Value Added Tax Act, 2008 and its Explanation regarding assumed or estimated value - Whether cost of packing of loose cement carried out within the local area after receipt can be included in the value of goods for levy of entry tax - HELD THAT: - The assessee claimed that loose cement received inside the local area was packed there and that the cost of packing should not be included in the value for entry tax. The Assessing Officer disbelieved the claim on lack of substantiation and the appellate authority rejected it on principle; the Tribunal did not give independent reasoning. Under the fourth proviso to Section 2(h) read with the Explanation, value may be assumed or estimated on the basis of goods of like kind or quality, and expenses incurred after transporting goods inside the local area would not form part of the 'value of goods' for tax liability. This interpretation, accepted by a Division Bench decision cited in the judgment, leads to exclusion of post-entry packing costs from the value of goods for entry tax purposes. [Paras 8, 9]

Answered in favour of the assessee and against the revenue; post-entry packing costs cannot be included in the value of goods for entry tax.

Final Conclusion: Revision partly allowed: question no.1 upheld for the revenue; question no.2 allowed for the assessee, and the Tribunal's decision on the second point is set aside to the stated extent.

Vicarious liability of directors under Section 141 of the Negotiable Instruments Act - requirement of specific averments in complaint to fasten liability on directors - power of High Court under Section 482 CrPC to quash criminal proceedings - maintainability of complaint under Section 138 of the Negotiable Instruments Act

Requirement of specific averments in complaint to fasten liability on directors - vicarious liability of directors under Section 141 of the Negotiable Instruments Act - Sufficiency of averments in the complaint to proceed against the petitioner as a director for offences under Section 138 read with Section 141 of the NI Act. - HELD THAT: - The court applied the settled principle that criminal liability of a director under Section 141 can be fastened only if the complaint contains specific averments that the accused was in charge of and responsible for the conduct of the company's business at the relevant time. Having regard to the allegations that the company had two directors and that both the petitioner and his son were responsible for day-to-day affairs and were actively controlling operations from the start of the channel's operations, the complaint, read as a whole, contains the requisite averments. Reliance was placed on the ratio in the Supreme Court decisions emphasising that, absent unimpeachable or incontrovertible evidence to the contrary, the High Court should not ordinarily quash proceedings where the basic averment is present. [Paras 6, 7, 8, 9]

The averments in the complaint are sufficient to proceed against the petitioner and sustain issuance of summons.

Power of High Court under Section 482 CrPC to quash criminal proceedings - maintainability of complaint under Section 138 of the Negotiable Instruments Act - Whether the High Court should exercise its inherent jurisdiction under Section 482 CrPC to quash the complaint and the order issuing summons to the petitioner. - HELD THAT: - The court considered whether interference was warranted at the pre-summoning stage. Noting precedent that interference is permissible only in exceptional cases where there is unimpeachable evidence or totally clear circumstances showing abuse of process, the court found no such exceptional circumstances. The petitioner did not demonstrate incontrovertible material to displace the complaint's averments that he was responsible for the company's conduct. The court therefore declined to exercise its inherent jurisdiction to quash the complaint or the summons issued on 03.02.2021. [Paras 6, 8, 9, 10]

No interference under Section 482 CrPC; the petition to quash the complaint and summons is dismissed.

Role and capacity of a director in criminal proceedings - effect of age and infirmity on liability of a director - Whether the petitioner's advanced age and alleged infirmity justify quashing the complaint at this stage. - HELD THAT: - The petitioner asserted that being over 80 years old with physical ailments he was not involved in day-to-day affairs. The court held that such assertions amount to ipse dixit and cannot be accepted at the threshold to defeat the complaint where specific averments attribute active control to the petitioner. The court confined its observation to the threshold question of quashing and left open the petitioner's right to lead evidence at trial to substantiate non-involvement. [Paras 4, 9, 10, 11]

Advanced age and unsubstantiated assertions of infirmity do not warrant quashing; the petitioner may raise and prove non-involvement at trial.

Final Conclusion: The petition to quash the complaint and the order issuing summons dated 03.02.2021 is dismissed: the complaint contains specific averments sufficient to proceed against the petitioner as a director under Section 138 read with Section 141 of the NI Act, there is no exceptional basis for interference under Section 482 CrPC at this stage, and the petitioner's assertions as to age and infirmity must be proved at trial.