TaxTMI Updates e-Newsletter
Feb 26,2024

Jurisdiction - order under Section 73 of the CGST Act, 2017 - Circular No.31/05/2018-GST dated 9th February, 2018 - input tax credit wrongly availed or utilized - monetary limit for issuance of show cause notice and passing of orders - setting aside for lack of jurisdiction

Jurisdiction - order under Section 73 of the CGST Act, 2017 - Circular No.31/05/2018-GST dated 9th February, 2018 - monetary limit for issuance of show cause notice and passing of orders - Validity of the impugned order dated 20.11.2023 passed by the Superintendent under Section 73 of the CGST Act in light of the departmental circular prescribing monetary limits for exercise of jurisdiction - HELD THAT: - The respondents conceded on instructions that Circular No.31/05/2018-GST dated 9.2.2018 prescribes the monetary limits for authorities to issue show cause notices and pass orders under Sections 73 and 74 where liability arises from input tax credit wrongly availed or utilized. The circular limits the Superintendent's jurisdiction to matters within the prescribed monetary threshold; in the present case the amount involved exceeded that threshold. On that basis the court found the impugned order to have been passed by an officer lacking jurisdiction. Consequently the order was set aside and the respondents were permitted to proceed afresh in accordance with law. [Paras 4, 5]

Impugned order of 20.11.2023 is without jurisdiction and is set aside; respondents granted liberty to initiate proceedings afresh in accordance with law.

Final Conclusion: Writ petition allowed; impugned order set aside for lack of jurisdiction and respondents permitted to proceed afresh in accordance with law.

Exclusion of pre-GST period turnover - non-application of mind - assessment order vitiated by patent errors - quashing and remand for fresh consideration - natural justice / reasonable opportunity / personal hearing

Exclusion of pre-GST period turnover - quashing and remand for fresh consideration - Purchase turnover for the period 01.04.2017 to 30.06.2017 was not excluded from assessment and requires re-consideration. - HELD THAT: - The Court noted that the GST laws became effective on 01.07.2017 while the financial year ran from 01.04.2017 to 31.03.2018. The assessing officer correctly excluded sales turnover for the pre-GST period but failed to exclude purchase turnover for 01.04.2017 to 30.06.2017 when computing alleged tax liability. This omission indicates a selective or inconsistent application of the relevant requirement and amounts to a material error in the assessment process. In view of this patent error, the assessment order cannot stand and the matter is remanded for fresh consideration with directions to exclude the pre-GST period purchase turnover where applicable, after affording the assessee an opportunity of hearing. [Paras 4, 5]

Quash the impugned assessment insofar as it includes purchase turnover for 01.04.2017 to 30.06.2017; remand for fresh assessment after affording opportunity including personal hearing.

Non-application of mind - assessment order vitiated by patent errors - quashing and remand for fresh consideration - Liabilities dropped in the body of the order (discrepancy between GSTR-1 and GSTR-3B; RCM on inward supplies) were nonetheless reflected in the revenue abstract and therefore require rectification on remand. - HELD THAT: - The Court observed that the assessing officer had, on the petitioner's explanation, dropped proceedings in respect of liability arising from the alleged discrepancy between GSTR-1 and GSTR-3B and in respect of RCM on inward supplies; nevertheless, the revenue abstract at the foot of the impugned order continued to record liability on these heads. This inconsistency reflects non-application of mind and a patent error in the assessment record. Consequently, the assessment order is quashed and the matter is sent back for reconsideration so that the assessing officer may correct the revenue abstract and determine liabilities consistently with the findings after giving the petitioner a reasonable opportunity to be heard. [Paras 4, 5]

Quash the impugned assessment insofar as it inconsistently records liabilities dropped in the order; remand for correction and fresh assessment after opportunity of hearing.

Final Conclusion: The impugned assessment order dated 19.12.2023 for assessment period 2017-18 is quashed and the matter is remanded for fresh consideration. The respondent shall afford the petitioner a reasonable opportunity, including a personal hearing, and pass a fresh assessment order within two months from receipt of this order. Writ disposed of; no costs.

Mens rea for evasion of tax - penalty under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 - technical breach of e-way bill expiry - extension of e-way bill on portal - refund of tax and penalty

Mens rea for evasion of tax - penalty under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 - technical breach of e-way bill expiry - Imposition of penalty under Section 129(3) where the e-way bill had expired but goods were accompanied by invoice and e-way bill and delay in movement was explained - HELD THAT: - The Court found that mens rea to evade tax is an essential prerequisite for imposing the penalty under the provision relied upon. The factual matrix-production of e-invoice and e-way bill, explanation that the vehicle's engine overheated causing slow and intermittent movement, and GPS tracking corroborating movement along the original route-does not demonstrate an intention to evade tax. The lapse in extending the e-way bill on the portal amounted to a technical breach but, absent any culpable intent to evade tax, could not sustain a penalty under the statute. The authorities' conclusion as to intention was therefore unsupported by the material on record. [Paras 3, 4, 5, 6]

The penalty imposed under Section 129(3) was quashed as there was no mens rea to evade tax and the expired e-way bill constituted only a technical breach.

Refund of tax and penalty - Whether the amounts deposited by the petitioner should be refunded following quashing of the penalty and related orders - HELD THAT: - Having set aside the impugned orders that upheld the penalty, the Court directed restitution to the petitioner. The respondents were ordered to refund the tax and penalty amounts deposited by the petitioner within four weeks from the date of the order. [Paras 6, 7]

Respondents directed to refund the tax and penalty deposited by the petitioner within four weeks.

Final Conclusion: The writ petition is allowed: the penalty and appellate orders are quashed for lack of mens rea to evade tax where only a technical lapse in e-way bill extension occurred; respondents are directed to refund the deposited tax and penalty within four weeks.

Breach of principles of natural justice - ex parte adjudication - communication of hearing date / notice to the party - requirement of reasoned order after hearing

Breach of principles of natural justice - ex parte adjudication - communication of hearing date / notice to the party - Validity of the order dated 20.11.2023 in view of alleged ex parte conclusion of proceedings and breach of natural justice - HELD THAT: - The Court found that proceedings were fixed for hearing on 06.11.2023 but no order was passed that day and no subsequent date was communicated to the petitioner. A reminder dated 31.10.2023 had given only five days to produce documents and the matter had remained pending for about four months after the petitioner filed his reply. By not passing the order on 06.11.2023 and by failing to fix and communicate any fresh date, the assessing authority effectively concluded the matter ex parte. In the absence of any statutory provision permitting such a result in the factual matrix, the Court concluded that there was a real breach of the rules of natural justice. Reliance on the availability of an appeal did not cure the procedural infirmity. For these reasons the impugned order could not be sustained and was set aside.

Order dated 20.11.2023 set aside on grounds of breach of natural justice caused by ex parte conclusion of proceedings; impugned order to be treated as final notice permitting further reply by the petitioner.

Requirement of reasoned order after hearing - communication of hearing date / notice to the party - Relief and further course to be adopted by the authority after setting aside the impugned order - HELD THAT: - The Court directed that the order dated 20.11.2023 shall be treated as the final notice to the petitioner and granted two weeks' time to file reply with supporting documents. Thereafter the authority is required to fix a short date for hearing after giving at least one week's notice to the petitioner and to pass an appropriate reasoned order after hearing him. The matter is therefore remanded for fresh consideration limited to hearing the petitioner and disposing of the matter by a reasoned order; the Court did not adjudicate the merits of the underlying tax dispute.

Proceedings remanded for fresh hearing: petitioner to file reply within two weeks; authority to give at least one week's notice, hear the petitioner and pass a reasoned order.

Final Conclusion: Writ petition allowed to the extent that the order dated 20.11.2023 is set aside for breach of natural justice; the order is treated as final notice, the petitioner given two weeks to file reply, and the matter remanded to the authority to fix a hearing date with at least one week's notice and to pass a reasoned order after hearing the petitioner.

Cancellation of registration - application of mind - reasoned order - opportunity of hearing - quashing and remand for de novo adjudication - appeal barred by time under Section 107 of the Uttar Pradesh Goods and Services Tax Act, 2017

Cancellation of registration - application of mind - reasoned order - opportunity of hearing - quashing and remand for de novo adjudication - Validity of the order cancelling the petitioner's GST registration in view of absence of reasons and apparent contradiction in the adjudicating order, and appropriate remedy. - HELD THAT: - The Court found that the order of cancellation contained an internal contradiction - one part recording that a reply dated 21/10/2021 had been filed while another part recorded that no reply was submitted - demonstrating that the adjudicating authority did not apply its mind to the material facts and did not furnish reasons. Reliance was placed on precedents of this Court emphasising that reasons are the heart of any quasi-judicial order and that an order affecting the right to conduct business must disclose application of mind. Although the appeal was time-barred under Section 107 of the Act, the Division Bench approach in Surendra Bahadur Singh (supra) was followed: where an original order cancelling registration is non-reasoned and without application of mind, it may be quashed and the affected party given an opportunity to file reply so that the adjudicating authority can reconsider the matter on merits. In consequence, both the original cancellation order and the appellate order were set aside; the petitioner was permitted to file a reply to the show-cause notice within three weeks and the adjudicating authority was directed to proceed afresh after affording opportunity of hearing and passing a reasoned order. [Paras 3, 6, 7, 8]

Impugned original and appellate orders quashed; petitioner permitted to file reply within three weeks and adjudicating authority directed to proceed de novo after granting opportunity of hearing and passing a reasoned order.

Final Conclusion: Writ petition allowed; original order of cancellation and the appellate order set aside for lack of application of mind and absence of reasons, with directions to permit filing of reply and for fresh adjudication after hearing.

Cancellation of GST registration with retrospective effect - Objective satisfaction for retrospective cancellation - Requirement of reasons in show cause notice and order - Consequences of retrospective cancellation on input tax credit - Duty to furnish details under Section 29

Requirement of reasons in show cause notice and order - Impugned show cause notice and cancellation order did not specify cogent reasons and the order was internally contradictory and thus defective - HELD THAT: - The Court found that the show cause notice merely contained an observation about failure to furnish returns and did not specify cogent reasons for cancellation. The cancellation order failed to give reasons for retrospective cancellation, was contradictory (referring to a reply yet stating no reply was submitted) and did not properly qualify as an order of cancellation. For these reasons the impugned order was unsustainable in its original form. [Paras 4, 5, 6, 13]

Show cause notice and order found defective for failing to set out cogent reasons and for internal contradiction; cannot stand as issued

Cancellation of GST registration with retrospective effect - Objective satisfaction for retrospective cancellation - Consequences of retrospective cancellation on input tax credit - Retrospective cancellation cannot be mechanical; proper officer must have objective satisfaction and take into account consequences before fixing a retrospective effective date - HELD THAT: - The Court held that while Section 29(2) empowers cancellation from such date as the proper officer may deem fit, the power to cancel with retrospective effect is not to be exercised mechanically or subjectively. Satisfaction must be founded on objective criteria. Retrospective cancellation has consequences, including potential denial of input tax credit to customers, which must be considered and warranted before fixing a retrospective date. [Paras 11, 12]

Retrospective cancellation permissible only upon objective satisfaction and consideration of its consequences; cannot be applied mechanically

Duty to furnish details under Section 29 - Petitioner required to furnish details as mandated by Section 29 in consequence of cancellation - HELD THAT: - Although the Court modified the effective date of cancellation, it directed the petitioner to furnish the details required under Section 29 of the Act, thus maintaining the statutory procedural requirement post-cancellation. [Paras 15]

Petitioner directed to furnish details as required by Section 29

Consequences of retrospective cancellation on input tax credit - Petitioner permitted to apply to concerned authorities to claim amounts standing to credit despite modification of cancellation date - HELD THAT: - The Court recognised that amounts stood to the credit of the predecessor in the electronic cash ledger and, while it modified the cancellation date, it clarified that the petitioner may make an appropriate application to the authorities to claim said amounts and that the authorities shall consider such application in accordance with law. [Paras 10, 16]

Petitioner entitled to apply to recover credited amounts; authorities to consider claims in accordance with law

Cancellation of GST registration with retrospective effect - Effective date of cancellation modified to the date of death of proprietor - HELD THAT: - Given that the petitioner does not intend to carry on business and the proprietor died on 15.08.2021, the Court modified the impugned order so that the GST registration would be treated as cancelled with effect from 15.08.2021 instead of the retrospective date fixed by the authority. [Paras 7, 8, 15]

Registration treated as cancelled with effect from 15.08.2021

Requirement of reasons in show cause notice and order - Succession question left open for competent authority to consider at appropriate stage (remanded) - HELD THAT: - The Court expressly left the issue of succession open for consideration by the competent authority at the appropriate stage, declining to decide succession in the present petition and entrusting factual/administrative determination to the relevant authority. [Paras 18]

Succession issue remanded to competent authority for consideration

Final Conclusion: The High Court held the show cause notice and cancellation order to be defective for lack of cogent reasons and internal contradiction, explained that retrospective cancellation under Section 29(2) requires objective satisfaction and consideration of consequences, modified the effective date of cancellation to 15.08.2021, directed the petitioner to furnish details under Section 29, permitted the petitioner to apply for recovery of credited amounts and left the question of succession to the competent authority.

Cancellation of GST registration from retrospective date under Section 29(2) of the Central Goods and Services Tax Act, 2017 - Requirement of objective satisfaction before retrospective cancellation - Requirement of adequate notice and opportunity to be heard for retrospective cancellation - Defects in Show Cause Notice for alleged wrongful availment of Input Tax Credit - Revocation of cancellation - procedural sufficiency of notice - Authority to issue fresh Show Cause Notice and rights to recovery of tax, interest and penalty

Cancellation of GST registration from retrospective date under Section 29(2) of the Central Goods and Services Tax Act, 2017 - Requirement of objective satisfaction before retrospective cancellation - Requirement of adequate notice and opportunity to be heard for retrospective cancellation - Validity of retrospective cancellation of the petitioner's GST registration and appropriate effective date of cancellation - HELD THAT: - The Court held that cancellation of registration with retrospective effect under Section 29(2) cannot be mechanically applied; the proper officer must form an objective satisfaction based on material before him and must consider consequences of retrospective cancellation. The impugned order cancelling registration retrospectively from 31.10.2017 was unsustainable because there was no material on record to justify retrospective cancellation and the petitioner was not put on notice that retrospective effect was being contemplated. Both parties desired cancellation but for different dates; the petitioner had applied for cancellation effective 01.02.2021 on account of discontinuation of business. In view of these facts and the absence of objective material or notice about retrospective effect, the Court modified the cancellation to operate from 01.02.2021, the date of discontinuation of business. [Paras 16, 18, 20]

Cancellation of registration modified to operate with effect from 01.02.2021; retrospective cancellation from 31.10.2017 set aside

Defects in Show Cause Notice for alleged wrongful availment of Input Tax Credit - Requirement of adequate particulars in Show Cause Notices - Validity of the Show Cause Notice dated 19.03.2021 and the consequent order of cancellation insofar as they lacked particulars of alleged wrongful Input Tax Credit - HELD THAT: - The Court found the Show Cause Notice of 19.03.2021 to be ex facie defective because it did not state the particulars or quantum of alleged wrongful availment of input tax credit or the reasons supporting the allegation. The order dated 20.05.2021 relied on non-receipt of a reply and stated that liability would be calculated later; it also referred inconsistently to a reply dated 28.03.2021. Because the notice and order failed to give particulars and did not inform the petitioner that retrospective cancellation was being sought, they could not be sustained in their present form. The Court permitted the respondent to issue a proper Show Cause Notice in accordance with law. [Paras 10, 11, 12, 15, 21]

Show Cause Notice dated 19.03.2021 and the order of 20.05.2021 are defective for lack of particulars; respondent may issue a fresh, legally adequate Show Cause Notice

Revocation of cancellation - procedural sufficiency of notice - Requirement of specifying officer/time/place in personal appearance directions - Validity of the Show Cause Notice dated 17.05.2023 and rejection order dated 06.06.2023 relating to revocation of cancellation - HELD THAT: - The Show Cause Notice issued on 17.05.2023 in the revocation proceedings alleged non-existence at the given address and noted presence of another firm, but it directed the petitioner to appear without specifying the name of the officer, place or time. The Court observed that the notice and the order rejecting revocation were bereft of necessary details and therefore could not be sustained. The petitioner's reply dated 26.05.2023 was on record but the revocation was rejected without issuance of a legally sufficient notice. [Paras 13, 14, 15]

Show Cause Notice dated 17.05.2023 and the revocation rejection order dated 06.06.2023 are procedurally defective and cannot be sustained

Authority to issue fresh Show Cause Notice and rights to recovery of tax, interest and penalty - Verification of alleged wrongful availment of Input Tax Credit - Whether the respondent may proceed to verify alleged wrongful Input Tax Credit claims and recover tax, interest or penalty - HELD THAT: - While invalidating the defective notices and modifying the effective date of cancellation, the Court expressly permitted the respondent to issue a proper Show Cause Notice to examine the alleged wrongful claim of input tax credit and to take steps for recovery of tax, penalty or interest in accordance with law. The Court also directed the petitioner to comply with the requirements of Section 29(3). This leaves the substantive claim of wrongful ITC and any recovery to be considered afresh in accordance with statutory procedure. [Paras 21, 22]

Respondent permitted to issue a fresh, legally adequate Show Cause Notice and to proceed with verification and recovery in accordance with law; petitioner to comply with statutory requirements

Final Conclusion: The petition is disposed of by setting aside the retrospective cancellation from 31.10.2017 and modifying the cancellation to operate from 01.02.2021; defective Show Cause Notices and the revocation rejection order are held unsustainable and the respondent is permitted to issue fresh, properly particularised Show Cause Notices and to proceed with verification and recovery in accordance with law.

Unauthorised use of registration credentials - migration from DVAT to GST - wrongful availing of input tax credit - production of records for verification - stay of proceedings

Wrongful availing of input tax credit - unauthorised use of registration credentials - Interim protection against further action under the Show Cause Notice - HELD THAT: - The petitioner challenged the Show Cause Notice dated 27.02.2023 alleging wrongful availing of input tax credit through migration purportedly effected from his erstwhile DVAT registration. The petitioner maintained that his DVAT registration was cancelled on 01.04.2017 and that he never applied for migration to the GST scheme, asserting that third parties wrongfully used his credentials. The court recorded these contentions and, without adjudicating the merits, stayed further proceedings on the Show Cause Notice pending further hearing. [Paras 1, 2, 3, 5]

Further proceedings on the Show Cause Notice are stayed until the next listed date.

Migration from DVAT to GST - production of records for verification - Direction to respondent to place on record migration-related material - HELD THAT: - Respondent No.3 was directed to take instructions and place on record the documents and material available in their records relating to the alleged migration of the petitioner from the DVAT scheme to GST. The court required factual material relating to the purported migration and any tracing of individuals who allegedly misused the petitioner's registration, so that the contentions can be examined on the next date of hearing. [Paras 3, 4]

Respondent No.3 to place on record relevant documents and material regarding the alleged migration for verification on the next date.

Final Conclusion: Interim order staying further proceedings on the Show Cause Notice; respondent No.3 directed to place on record migration-related documents and matter listed for further consideration on 21.02.2024.

Bona fide inadvertent error - rectification of GST return / amendment of Form DRC 03 - reversal of Input Tax Credit under Rule 42 of the CGST Rules, 2017 - No loss of revenue to the Government - permissive correction by the Department when no revenue prejudice

Bona fide inadvertent error - rectification of GST return / amendment of Form DRC 03 - No loss of revenue to the Government - reversal of Input Tax Credit under Rule 42 of the CGST Rules, 2017 - Petitioner permitted to amend Form DRC 03 dated 26th August 2022 and 1st September 2022 to change the financial year from 2019-20 to 2018-19. - HELD THAT: - The Court found that the incorrect entry of the financial year in two Form DRC 03 submissions was a bona fide clerical mistake, the correct narration in the forms demonstrating that the payments related to reversal of ITC for unsold units as on 31st March 2019 (Financial Year 2018-19). The petitioner's case showed that no ITC was available or availed in Financial Year 2019-20, and consequently there was no possibility of reversal for that year, indicating absence of revenue prejudice. Applying the principle affirmed in Star Engineers (I) Pvt. Ltd. that bona fide inadvertent errors in GST filings should be permitted to be rectified by the Department where there is no loss of revenue and to promote an assessee-friendly, pragmatic approach, the Court directed respondents to permit amendment of the two DRC 03 forms. The Court recognised that the portal did not provide an online amendment facility and therefore allowed correction either online or by manual means, fixing a four-week period for compliance from intimation of the order. The direction implements the ratio that departmental discretion must be exercised to allow correction of inadvertent errors in returns when revenue is not prejudiced. [Paras 17, 18, 19, 20]

Respondents directed to permit amendment of the two Form DRC 03 submissions to reflect Financial Year 2018-19 within four weeks; petition allowed and disposed of.

Final Conclusion: Petition allowed; respondents directed to permit correction of the bona fide clerical error in Form DRC 03 (changing the year to Financial Year 2018-19) either online or manually within four weeks; no order as to costs.

Cancellation of GST registration for non-furnishing of returns for continuous six months - revocation of cancellation upon furnishing pending returns and payment of tax, interest and late fee - procedure under Rule 22 of the CGST Rules governing show cause, reply and dropping of proceedings

Cancellation of GST registration for non-furnishing of returns for continuous six months - Validity of the order cancelling the petitioner's GST registration dated 02.03.2023 under Section 29(2)(c) for non-furnishing of returns. - HELD THAT: - The Court examined the cancellation made under Section 29(2)(c) and the procedural framework in Rule 22 of the CGST Rules. Although the petitioner had not filed returns for a period exceeding six months and had not replied to the show cause notice within the prescribed time, the Court considered the factual backdrop including the petitioner's subsequent filing of returns up to March 2023 and his stated inability earlier to comply due to the Covid-19 pandemic. Having regard to the statutory scheme and the coordinate-bench precedents in similarly situated matters, the Court found that no useful purpose would be served by keeping the petition pending and interfered with the impugned order. The cancellation was set aside and the matter directed to be reconsidered by the concerned authority in accordance with the directions given by the Court. [Paras 6, 10, 11]

Impugned order dated 02.03.2023 cancelling the petitioner's GST registration is set aside and the petition disposed of with directions for reconsideration.

Revocation of cancellation upon furnishing pending returns and payment of tax, interest and late fee - procedure under Rule 22 of the CGST Rules governing show cause, reply and dropping of proceedings - Whether the registration cancellation should be revoked upon the petitioner furnishing pending returns and making payment of statutory dues as contemplated by Rule 22(4) proviso. - HELD THAT: - The Court construed the proviso to sub-rule (4) of Rule 22 to mean that where a noticee, instead of merely replying to the notice, furnishes all pending returns and makes full payment of tax dues with applicable interest and late fee, the proper officer is required to drop the proceedings and pass the prescribed order in FORM GST REG-20. Applying that principle, and having noted the petitioner's undertaking to comply, the Court directed the petitioner to approach the concerned authority within one month to seek revocation. The authority was directed to intimate the total outstanding statutory dues standing in the petitioner's name up to the date of cancellation and any other outstanding GST dues; upon deposit of such amounts within the time stipulated by the authority, the authority shall pass an appropriate order revoking the cancellation and restoring registration. [Paras 6, 11]

Petitioner to seek revocation within one month; authority to intimate dues and, upon payment of outstanding statutory dues, revoke the cancellation and restore registration.

Final Conclusion: The writ petition is disposed of by setting aside the cancellation order dated 02.03.2023 and directing the petitioner to apply for revocation within one month; the authority shall quantify outstanding dues and, upon payment by the petitioner, revoke the cancellation and restore the GST registration.

Jurisdictional fact - assessment under Section 63 of the GST Act (assessment of unregistered persons) - service of notice under Section 169 of the GST Act - opportunity of being heard / principles of natural justice - condonation of delay in filing appeals under Section 107 - writ of certiorari under Article 226 of the Constitution

Jurisdictional fact - assessment under Section 63 of the GST Act (assessment of unregistered persons) - writ of certiorari under Article 226 of the Constitution - Validity of assessment framed under Section 63 where the assessing authority proceeded despite the assessee being a registered person. - HELD THAT: - The Court held that Section 63 empowers assessment of unregistered persons only where a taxable person "fails to obtain registration even though liable to do so" or registration has been cancelled; that pre existence of a valid registration is a jurisdictional fact whose absence vitiates the exercise of power. The record showed the petitioner held an original and amended Registration Certificate effective from 01.07.2017 and the Assessing Authority was aware of that fact yet proceeded under Section 63. Established authorities on "jurisdictional fact" were applied to conclude that the assessment was founded on a glaring error of jurisdictional fact and therefore amenable to certiorari. The Court distinguished mere procedural or curable irregularities from absence of jurisdiction and held that the present exercise of power went to the root of jurisdiction and was consequently vulnerable to writ relief. [Paras 6, 7, 11]

Assessment order passed under Section 63 is vitiated for lack of the requisite jurisdictional fact and is liable to be set aside by certiorari.

Condonation of delay in filing appeals under Section 107 - opportunity of being heard / principles of natural justice - Whether the Appellate Authority erred in rejecting the appeal for delay without adequately considering the petitioner's explanation, earlier writ proceedings and the subsequent central notification enabling revival/restoration. - HELD THAT: - The Court found the Appellate Authority had not given due weight to the petitioner's explanation for delay - namely, non knowledge of the assessment until bank attachment and pendency of W.P.(C) No. 27502 of 2022 (where this Court permitted lifting of attachment to enable pre deposit). The Appellate Authority's rejection for delay was held to be inconsistent with material on record; the Court observed that the benevolent Notification dated 02.11.2023 and the petitioner's pending actions before authorities should have been considered in a pragmatic manner. Given the underlying jurisdictional defect in the assessment, the Appellate Authority ought to decide the appeal on merits after due consideration rather than mechanically rejecting it for delay. [Paras 6, 8, 9]

Appellate Order rejecting the appeal for delay is unsustainable and must be set aside; the appeal is to be adjudicated on merits after due compliance with law.

Service of notice under Section 169 of the GST Act - opportunity of being heard / principles of natural justice - Whether the notice issued under Section 63 was validly served on the petitioner in view of Section 169, and whether mere 'issue' of notice suffices as 'service'. - HELD THAT: - The Court construed Section 169 alongside the proviso in Section 63 and held that a mandatory requirement of opportunity to be heard cannot be satisfied by mere issuance of notice unless valid service is shown. Reliance was placed on precedents that issuance does not substitute for service; statutory modes of service (including registered post, e mail, portal upload, etc.) must be established or presumed service must be rebutted. Here, the record only reflected that a notice was 'issued' in relation to a temporary registration number and there was no proof of valid service on the petitioner; that fact supported the conclusion that the assessment proceedings were vitiated for failure to afford effective notice and hearing. [Paras 10]

Notice under Section 63 was not shown to have been validly served; absence of service/meaningful opportunity to be heard vitiates the assessment proceedings.

Final Conclusion: The Order dated 09.08.2023 rejecting Appeal No. AD210223003708N is set aside. In view of the patent jurisdictional defect in the assessment under Section 63 and deficiencies in service and consideration of delay, the matter is remitted to the Additional Commissioner of State Tax (Appeal), Central Zone II, Odisha at Cuttack for fresh adjudication in accordance with law after due compliance with the principles of natural justice.

Direction to decide pending appeals - exercise of discretionary jurisdiction - writ petition for judicial direction to revenue to adjudicate appeals - delay in disposal of statutory appeals - recovery made pending appeal

Direction to decide pending appeals - delay in disposal of statutory appeals - recovery made pending appeal - Petition seeking direction to respondent to decide pending departmental appeals - HELD THAT: - The Court exercised its discretionary writ jurisdiction on the facts that the departmental appeals have been pending since 2016 and 2019 and recoveries in respect of the demands were made long ago. Rather than keeping the petition pending, the Court directed the respondent to conclude the pending appeals within a specified outer limit. The direction is prospective and administrative: it orders final adjudication of the appeals within three months from receipt of a copy of the order, thereby addressing undue delay and the consequences of recovery made while appeals remained undecided.

Writ petition disposed by directing the respondent to decide the pending appeals within three months from receipt of copy of the order.

Final Conclusion: The writ petition is disposed of by issuing a direction to the respondent to decide the pending departmental appeals within an outer limit of three months from the date of receipt of a copy of this order.

Eligibility for exemption under sections 11 and 12 - intimation under Section 143(1) and its rectification - rectification under Section 154 - condonation of delay in filing Form 10B - technicalities not to defeat substantive rights

Eligibility for exemption under sections 11 and 12 - intimation under Section 143(1) and its rectification - Addition of the trust's receipts confirmed by CPC and upheld by the CIT(A) for Assessment Year 2017-18 was liable to be deleted and the claim for application of income for charitable purposes under sections 11 and 12 accepted. - HELD THAT: - The Tribunal found that the assessee had filed its return showing 12AA registration and that the audit report in Form No.10B was ready on 29/09/2017, i.e. prior to filing the return. The intimation under Section 143(1) was issued without verification of registration and without allowing the substantive claim of application of income for charitable purposes. The Revenue did not contend that the audit report was not ready on the date of filing or that the trust was ineligible on merits. Relying on the principle that Revenue authorities should not deny eligible deductions on mere technicalities, the Tribunal held that the addition made by the A.O. and confirmed by the CIT(A) ought to be deleted and the exemption allowed. [Paras 3, 7, 9]

Addition of Rs. 3,34,32,351/- deleted and benefit of exemption under sections 11 and 12 allowed.

Rectification under Section 154 - condonation of delay in filing Form 10B - technicalities not to defeat substantive rights - Rectification/relief was justified despite technical failure in electronic upload of Form 10B and the delay in formal uploading/acceptance ought not to defeat the assessee's substantive claim. - HELD THAT: - The Tribunal recorded that the Form No.10B was prepared on 29/09/2017 but due to a technical software error the upload was neither accepted nor rejected and no intimation was received from the Department. The Form was subsequently uploaded on 06/09/2019 and a condonation request along with auditor's certificate and hard copy was sent to the jurisdictional authority. The Tribunal relied on the High Court's decision in Pawan Kumar Agarwal to the effect that Section 154 empowers amendment of an intimation under Section 143(1) to rectify mistakes apparent from the record and that technicalities should not defeat justice where the audit report existed on the relevant date. Applying that principle, the Tribunal concluded that the Revenue's reliance on procedural non-adherence could not bar the assessee from claiming exemption. [Paras 7, 8, 9]

Assessee's plea based on technical failure in uploading and subsequent condonation accepted; rectification remedy available and ought to be given effect to allow exemption.

Final Conclusion: The appeal is allowed: the addition confirmed by the CIT(A) is deleted and the assessee's claim for exemption for Assessment Year 2017-18 under sections 11 and 12 is accepted, the Tribunal directing relief in view of the technical failure in uploading Form 10B and the power of rectification under Section 154.

Reopening of assessment under section 147/148 - jurisdiction of Assessing Officer to make additions beyond reasons recorded in the notice under section 148 - scope of Explanation 3 to section 147 - where AO accepts or abandons the original ground in reassessment proceedings, fresh jurisdiction is required to assess other income

Jurisdiction of Assessing Officer to make additions beyond reasons recorded in the notice under section 148 - where AO accepts or abandons the original ground in reassessment proceedings, fresh jurisdiction is required to assess other income - Whether the Assessing Officer had jurisdiction in reassessment proceedings to make an addition of Rs. 72,47,912/- when the notice under section 148 was issued only to reopen assessment on income of Rs. 15,884/- and no addition was made in respect of that specified item. - HELD THAT: - The reasons recorded for issuance of the notice under section 148 demonstrate that the AO sought to reopen the assessment specifically in respect of profit of Rs. 15,884/- arising from commodity transactions. In the reassessment order the AO did not make any addition in respect of that specified profit but proceeded to make an independent addition of Rs. 72,47,912/- under the presumption that the commodity transactions were dubious. The Tribunal applied the settled principle, as expounded by the Hon'ble Bombay High Court in CIT v. Jet Airways (I) Ltd. and consistent High Court precedents, that Explanation 3 to section 147 does not obliterate the substantive requirement that the AO's jurisdiction to assess "such income" is founded on the reason which gave rise to the notice; if the AO accepts the assessee's contention or otherwise does not proceed on the original ground of reopening, he cannot, in the same proceedings, assess other income which was not the basis of the reason to believe without fresh jurisdiction. The Tribunal found no material in the reasons recorded suggesting doubts about the genuineness of the commodity transactions such as would embed the large addition within the originally recorded reason; on the contrary, the initiation was squarely for the small profit amount. Consequently, the addition of Rs. 72,47,912/- could not be sustained for want of jurisdiction in the reassessment proceedings and had to be deleted. [Paras 3, 8]

Addition of Rs. 72,47,912/- deleted; AO lacked jurisdiction to make that addition in the reassessment proceedings initiated for Rs. 15,884/-. Appeal allowed.

Final Conclusion: The appeal is allowed. The reassessment addition of Rs. 72,47,912/- is directed to be deleted as the AO had no jurisdiction to make that addition in proceedings reopened solely on the basis of disputed income of Rs. 15,884/-. The AO shall give effect accordingly.

Deduction under section 80P(2)(a)(i) for interest income arising from investment of funds by a credit co-operative society - deduction under section 80P(2)(d) for interest/dividend received from investments in other co-operative societies (including co-operative banks) - surplus fund theory

Deduction under section 80P(2)(a)(i) for interest income arising from investment of funds by a credit co-operative society - surplus fund theory - Allowability of deduction under section 80P(2)(a)(i) in respect of interest earned on fixed/term deposits placed with other banks by a registered credit co-operative society - HELD THAT: - The Tribunal accepted the assessee's contention that the interest generated from investing liquid funds in fixed/term deposits or lending to members forms part of the business income of a credit co-operative society because such investments arise in the course of and are incidental to its principal business of providing credit facilities to members. The Tribunal held that the surplus fund theory, as applied in decisions concerning non-credit co-operative societies, does not apply to credit co-operative societies which, by reason of regulatory supervision, operate with liquid funds that are business funds. Consequently, interest earned on such liquid investments partakes the character of business income and satisfies the test under section 80P(2)(a)(i), entitling the assessee to deduction. [Paras 7]

Deduction under section 80P(2)(a)(i) allowed in respect of interest earned on investments of liquid funds by the credit co-operative society.

Deduction under section 80P(2)(d) for interest/dividend received from investments in other co-operative societies (including co-operative banks) - Entitlement to deduction under section 80P(2)(d) for interest received from co-operative banks (being co-operative societies) on investments made with them - HELD THAT: - The Tribunal interpreted section 80P(2)(d) to cover interest and dividend income derived by one co-operative society from investments made with other co-operative societies, irrespective of the paying society's nomenclature. A co-operative bank, being a co-operative society registered under state law and holding a banking licence, falls within this description. The Tribunal examined precedent distinctions and followed co-ordinate bench reasoning that the ratio in certain High Court decisions rejecting deduction in other factual matrices is not germane where the assessee is a credit co-operative society and the paying entity is a co-operative bank. Applying this principle to the facts, the interest income received from co-operative banks qualifies for deduction under section 80P(2)(d). [Paras 8, 9, 10]

Deduction under section 80P(2)(d) allowed in respect of interest earned from investments placed with co-operative banks (treated as co-operative societies).

Final Conclusion: Both appeals are allowed; the impugned orders denying deduction under section 80P(2) are set aside and the assessee is entitled to the claimed deduction for the assessment years 2018-19 and 2020-21.

Revisionary power under section 263 of the Income Tax Act - assessment order passed under section 143(3) of the Income Tax Act - deduction under section 80P(2) - penal interest vis-a -vis interest from co-operative bank - quashing of a section 263 order for lack of material

Revisionary power under section 263 of the Income Tax Act - deduction under section 80P(2) - penal interest vis-a -vis interest from co-operative bank - quashing of a section 263 order for lack of material - Order passed by the Principal Commissioner of Income Tax under section 263 setting aside the assessment on the ground that certain interest represented interest from a co operative bank and was not eligible for deduction under section 80P(2). - HELD THAT: - The Tribunal examined the record including the notice under section 142(1) and the assessee's replies which identified the impugned amount as interest received from members (penal interest) and not interest from a co operative bank. The PCIT's conclusion that the disputed sum of Rs. 25,419 represented bank interest was founded on an unexplained difference in ledger figures and was not supported by material on record. The assessee's contention that the amount was penal interest charged on delayed payment by members was demonstrated in the papers and was not controverted by the Revenue at the hearing. In absence of any material to substantiate the PCIT's inference, the exercise of revisionary jurisdiction was held to be based on a wrong assumption of fact. Accordingly, the Tribunal held that the order under section 263 was unsustainable and liable to be quashed. [Paras 7]

Order under section 263 quashed; appeal allowed in favour of the assessee and deduction position restored.

Application of findings to co ordinate appeals - assessment order passed under section 143(3) of the Income Tax Act - Whether the findings recorded in respect of one assessee (ITA No. 149/Rjt/2023) apply to a co ordinate appeal (ITA No. 177/Rjt/2023) raising identical grounds for the same assessment year. - HELD THAT: - The Tribunal noted that the grounds and factual controversy in ITA No. 177/Rjt/2023 are identical to those decided in ITA No. 149/Rjt/2023 for Assessment Year 2018-19. Both parties agreed that the earlier findings would govern the co ordinate appeal. In consequence, the Tribunal applied the reasoning and result from ITA No. 149/Rjt/2023 to ITA No. 177/Rjt/2023 without separate adjudication. [Paras 8]

Findings in ITA No. 149/Rjt/2023 applied to ITA No. 177/Rjt/2023; appeal allowed.

Final Conclusion: Both appeals for Assessment Year 2018-19 are allowed; the revisionary orders under section 263 quashing the assessments were set aside because the PCIT's conclusion that the impugned interest was bank interest was unsupported by material, and the Tribunal applied the same result to the co ordinate appeal.

Tax collection at source (TCS) liability on sale of tendu leaves - Applicability of CBDT Circular No. 660 dated 15.09.1993 exempting second-stage sale from TCS - Effect of valid buyer declarations in prescribed forms (Form 27C / Form 27BA) on TCS liability - Treatment as assessee in default for non-collection of TCS and consequential interest

Tax collection at source (TCS) liability on sale of tendu leaves - Applicability of CBDT Circular No. 660 dated 15.09.1993 exempting second-stage sale from TCS - Effect of valid buyer declarations in prescribed forms (Form 27C / Form 27BA) on TCS liability - Treatment as assessee in default for non-collection of TCS and consequential interest - Whether the assessee was liable to collect TCS on sales of tendu leaves made at the second stage and could be treated as assessee in default with interest for non-collection. - HELD THAT: - The assessee sold tendu leaves at the second stage; the first-stage sales were effected by a Government Undertaking. The Tribunal applied CBDT Circular No. 660 dated 15.09.1993, holding that TCS is not required to be collected on second-stage sales of tendu leaves. The assessee had obtained and placed on record declarations in the prescribed forms (Form 27BA and Form 27C) from the purchasers, who stated the leaves were for use in manufacturing and that purchases were accounted for in their books. Reliance was placed on coordinate and High Court authorities to the effect that a valid declaration in the prescribed form defeats the liability to collect TCS under the relevant provisions, and that where such declarations are genuine, minor delays would not defeat the claim. On these facts the Tribunal concluded that the provisions attracting TCS did not apply to the assessee and that the demand and interest imposed by the Assessing Officer and confirmed by the CIT(A) were not sustainable. For the subsequent assessment years the Tribunal applied the same reasoning mutatis mutandis and allowed the appeals similarly. [Paras 5, 6]

Order of the CIT(A) confirmed demand for TCS and interest set aside; the demand deleted and the appeals allowed for the stated assessment years.

Final Conclusion: The Tribunal allowed the appeals for AYs 2006-07 to 2008-09, holding that TCS was not collectible on the assessee's second-stage sales of tendu leaves in view of CBDT Circular No. 660 and valid purchaser declarations, and directed deletion of the demand and interest.

Requirement of incriminating material arising from search to support additions in assessments not abated at time of search - telecoping/telescoping of cash deposits with prior cash withdrawals - application and quantification under peak of balance theory - dependence of penalty under 271(1)(c) and 271AAA on sustaining underlying assessments/additions - restoration/remand for fresh examination where appellate order does not disclose working of peak amount

Requirement of incriminating material arising from search to support additions in assessments not abated at time of search - Deletion of additions of cash deposits and saving bank interest for Assessment Year-2008-09 as not based on any incriminating material found during search - HELD THAT: - The Assessing Officer added unexplained cash deposits and bank interest relying solely on bank statements without referring to any incriminating material seized during the search. The Tribunal applied the principle that, where the assessment had not abated on the date of search, additions consequential to a search require connection to incriminating material discovered in the search. Revenue failed to produce any material to show the additions were based on incriminating material; following the Supreme Court ratio in PCIT v. Abhisar Buildwel (P.) Ltd., the Tribunal deleted the additions. [Paras 7, 8, 9]

The additions of Rs. 17,20,000 and Rs. 1,340 for AY-2008-09 are deleted.

Application and quantification under peak of balance theory - restoration/remand for fresh examination where appellate order does not disclose working of peak amount - Remand of the addition relating to alleged undisclosed investment in shares for Assessment Year-2008-09 for fresh examination and opportunity to the assessee - HELD THAT: - The First Appellate Authority enhanced the addition by applying the peak theory to arrive at a higher figure, but the order did not set out the working or explain how the peak amount was computed. The Tribunal found the method/working not discernible and, with the Revenue consenting, restored the matter to the Assessing Officer to examine afresh and decide after providing due and reasonable opportunity to the assessee. [Paras 10, 11, 12]

The issue of alleged undisclosed investment in shares is restored to the file of the Assessing Officer for fresh examination and decision after affording opportunity.

Dependence of penalty under 271(1)(c) and 271AAA on sustaining underlying assessments/additions - Deletion of penalty imposed under section 271(1)(c) for Assessment Year-2008-09 because the underlying additions do not survive - HELD THAT: - Since the Tribunal deleted the additions of cash deposits and bank interest and remanded the share-investment issue (leaving no sustained additions at present), the penalty levied under section 271(1)(c) could not be sustained. The Tribunal therefore set aside the penalty. [Paras 16]

Penalty under section 271(1)(c) for AY-2008-09 is deleted.

Telescoping of cash deposits with prior cash withdrawals - requirement of material to show withdrawals were utilised for other purposes - Deletion of addition of cash deposits for Assessment Year 2011-12 on finding that deposits were adequately explained by prior withdrawals and proximity of transactions - HELD THAT: - The assessee established cash withdrawals and deposits showing close temporal proximity and aggregate cash available exceeding deposits. Departmental authorities did not produce material to demonstrate that withdrawals were expended for other purposes. On applying precedents and the principle of telescoping deposits against prior withdrawals where credible, the Tribunal accepted the explanation and deleted the addition. [Paras 22]

The addition of Rs. 13,50,000 for AY-2011-12 is deleted.

Dependence of penalty under 271(1)(c) and 271AAA on sustaining underlying assessments/additions - Deletion of penalty under section 271(1)(c) for Assessment Year 2011-12 consequent to deletion of the underlying addition - HELD THAT: - As the Tribunal deleted the addition which formed the basis for the penalty, the penalty could not survive and was accordingly deleted. [Paras 24]

Penalty under section 271(1)(c) for AY-2011-12 is deleted.

Telescoping of cash deposits with opening cash balance and prior withdrawals - requirement of material to show cash was used for other purposes - Deletion of addition of cash deposits for Assessment Year 2012-13 on finding deposits explained by opening cash balance and withdrawals - HELD THAT: - Records showed opening cash balance plus withdrawals exceeded total cash deposits in the year; the Assessing Officer accepted part of deposits but disputed a portion. In absence of any material to show that cash available had been otherwise utilised, the assessee's explanation that deposits arose from available cash was accepted and the disputed addition deleted. [Paras 31]

The addition of Rs. 7,22,000 for AY-2012-13 is deleted.

Dependence of penalty under 271(1)(c) and 271AAA on sustaining underlying assessments/additions - Deletion of penalty under section 271AAA for Assessment Year 2012-13 consequent to deletion of the underlying addition - HELD THAT: - The penalty under section 271AAA was founded on the addition which the Tribunal deleted; accordingly, the penalty could not subsist and was deleted. [Paras 34]

Penalty under section 271AAA for AY-2012-13 is deleted.

Final Conclusion: The Tribunal partly allowed the appeals: additions based solely on bank statements for AY-2008-09 (cash deposits and bank interest) and the cash-deposit additions for AY-2011-12 and AY-2012-13 were deleted; the share-investment addition for AY-2008-09 was remanded to the Assessing Officer for fresh examination because the appellate order did not disclose the working of the peak amount; consequential penalties under sections 271(1)(c) and 271AAA were deleted.

Revenue expenditure versus capital expenditure - Percentage Completion Method (POCM) - Advertising and brokerage expenses as deductible business expenses - Application of Accounting Standards / ICAI Guidance Note (AS-7 guidance) to classification of expenses - Year of deduction versus capitalisation (revenue neutrality) - Verification of TDS credit as per Form 26AS

Revenue expenditure versus capital expenditure - Percentage Completion Method (POCM) - Advertising and brokerage expenses as deductible business expenses - Application of Accounting Standards / ICAI Guidance Note (AS-7 guidance) to classification of expenses - Year of deduction versus capitalisation (revenue neutrality) - Disallowance of advertisement, business promotion and brokerage expenses as capital in nature and added to income - HELD THAT: - The assessee, a real estate developer following the Percentage Completion Method, did not recognise project revenue in the year as the project was completed only to the extent of 0.14%. The AO and the DRP treated advertising, business promotion and brokerage as capital/project costs on the sole ground that they were not incurred for earning revenue during the year. The Tribunal held that this reason is not valid given the nature of the assessee's business and accounting method. The expenses were genuinely incurred for marketing and selling flats and for carrying on the business; Revenue did not dispute their genuineness or that they were business expenses. Applying the guidance in the Delhi High Court decision in Somnath Buildtech (which applies the ICAI Guidance Note/AS-7 principles and recognises such costs as general selling or administrative expenses), the Tribunal found these to be revenue expenditures deductible in the hands of the assessee in the year of account, and that capitalisation merely postpones the year of deduction without denying admissibility. Consequently, the disallowances were deleted and the additions set aside. [Paras 9, 10, 11, 12, 13]

Impugned disallowances of advertisement, business promotion and brokerage expenses deleted; Grounds No. 2 and 3 allowed.

Verification of TDS credit as per Form 26AS - Assessee's claim for credit of TDS appearing in Form 26AS - HELD THAT: - The Tribunal observed that the correctness of TDS credit as claimed in Form 26AS requires verification by the AO. It directed the AO to examine the assessee's claim and, if found correct, to take remedial action and grant appropriate relief to the assessee. The direction is administrative and remits factual verification to the assessing authority rather than deciding the credit on merits. [Paras 14]

Matter remitted to the AO for verification of TDS credit shown in Form 26AS and for grant of relief if claim is found correct.

Final Conclusion: The appeal is allowed: the disallowances of advertisement, business promotion and brokerage expenses are deleted; the AO is directed to verify the assessee's claim of TDS credit as per Form 26AS and grant relief if justified.

Authentication and validity of assessment orders - Deemed authentication under section 282A read with Rule 127A - Document Identification Number (DIN) and electronic uploading - Evidentiary value of admissions and electronic records; presumption under section 292C - Best judgment assessment under section 144 vis a vis regular assessment under section 143(3) - Application of presumptive taxation under section 44AD - Burden of proof on the assessee to substantiate returned income

Document Identification Number (DIN) and electronic uploading - Authentication and validity of assessment orders - Validity of the assessment for AY 2015-16 challenged on the ground of absence of DIN and invalidity of the order. - HELD THAT: - The assessee contended that the assessment order was invalid for want of a Document Identification Number. The Tribunal examined the assessment record and the Revenue's communication showing that the order and the intimation were uploaded on the Revenue portal on the date of the order and that an intimation bearing a DIN was issued. The intimation and the notice of demand formed part of the appeal file and complied with the Board Circular. The objection that the assessment order lacked DIN was not sustained when the assessment and related intimation were electronically uploaded and made available in accordance with the Revenue's procedure. No other grounds were pressed by the assessee for this year. [Paras 4]

Objection on account of absence of DIN is rejected and the appeal for AY 2015-16 is dismissed.

Authentication and validity of assessment orders - Deemed authentication under section 282A read with Rule 127A - Validity of the assessment for AY 2016-17 challenged on the ground that the assessment order was unsigned. - HELD THAT: - The Tribunal considered the objection that the assessment order was not physically or digitally signed. The assessment record produced contained a physically signed copy. The Revenue explained that technical difficulties with digital signatures sometimes necessitate manual signing after extracting the order from the system, and that fields such as name, designation, DIN and dates are system generated. The Tribunal analysed section 282A (as amended) and Rule 127A, holding that printing of the officer's name and office on the electronic record and transmission from the designated email/website satisfies the statutory and procedural requirements and leads to deemed authentication. There was no dispute that the order was uploaded and transmitted in accordance with the procedure; hence Kilasho Devi Burman did not apply to invalidate the order. [Paras 5]

Assessment for AY 2016-17 is valid; the plea of non authentication is rejected and the appeal is dismissed.

Best judgment assessment under section 144 vis a vis regular assessment under section 143(3) - Evidentiary value of admissions and electronic records; presumption under section 292C - Application of presumptive taxation under section 44AD - Burden of proof on the assessee to substantiate returned income - Validity of assessment for AY 2019-20 and the correctness of adopting a 5% net profit rate instead of the 2% rate sought by the assessee. - HELD THAT: - The Tribunal noted that the assessment for AY 2019-20 was under section 143(3) and accepted the return filed by the assessee. The assessee alternatively sought adoption of a lower net profit rate of 2% (as applied for earlier years), but he had admitted sales suppression during survey; the manager's statement and the assessee's software records demonstrated higher turnover and an admission of offering 5% of turnover as profit. The Tribunal treated the electronic records and subsequent affidavit as corroborative evidence and observed that such material attracts the presumption under section 292C. Comparisons with large public companies were of limited utility because of significant scale differences and resulting variations in profit rates. The assessee had also voluntarily filed returns showing a higher profit rate (8%), which carried evidentiary weight. Given the admitted suppression, the software data, the manager's contemporaneous statement, and the fact that the return for AY 2019-20 was accepted under section 143(3), there was no factual or legal basis to reduce the profit rate to 2%; application of the 5% rate and confirmation of the assessed income were held to be justified. [Paras 6]

Alternate plea for a 2% profit rate is rejected; assessment for AY 2019-20 is sustained and the appeal is dismissed.

Final Conclusion: All three appeals filed by the assessee for AYs 2015-16, 2016-17 and 2019-20 are dismissed; the Tribunal upheld the validity and authentication of the assessment orders and confirmed the assessed income for AY 2019-20 on the facts and evidentiary materials.

Exemption under section 54EC of the Income-tax Act - filing return under section 139(1) as a precondition to claim exemption - allowability of investment in specified bonds (REC) for capital gains exemption despite non-filing

Exemption under section 54EC of the Income-tax Act - filing return under section 139(1) as a precondition to claim exemption - allowability of investment in specified bonds (REC) for capital gains exemption despite non-filing - Assessee is eligible for exemption under section 54EC of the Act notwithstanding non-filing of return under section 139(1). - HELD THAT: - The Tribunal examined section 54EC read with section 139(1) and found no statutory requirement that filing a return under section 139(1) is a precondition for claiming exemption under section 54EC. The Revenue failed to point to any provision making filing mandatory for claiming the exemption. On the basis of the statutory scheme and the materials on record regarding investment in REC bonds, the Tribunal concluded that the exemption must be allowed in accordance with law even if the return was not filed, and directed the Assessing Officer to grant the exemption for the investment in REC Ltd. as per the provisions of section 54EC. [Paras 8, 9]

Exemption under section 54EC allowed despite non-filing of return; AO directed to grant exemption for investment in REC Ltd.

Final Conclusion: The appeal is allowed: the Tribunal held that non-filing of return under section 139(1) is not a bar to claiming exemption under section 54EC and directed the Assessing Officer to allow the exemption in respect of investment in REC Ltd. for Assessment Year 2013-14.

Assessment under Section 153A in relation to incriminating material - scope of assessment/reassessment of completed (unabated) assessments - use of valuation report of Departmental Valuation Officer (DVO) for additions under Section 69B - power of Authorised Officer to refer for valuation under Section 132(9D)/Section 142A - requirement of corroborative/seized incriminating material for post-search additions

Assessment under Section 153A in relation to incriminating material - scope of assessment/reassessment of completed (unabated) assessments - requirement of corroborative/seized incriminating material for post-search additions - Addition based on DVO valuation in respect of alleged unexplained investment in construction could not be sustained for a completed assessment in absence of incriminating material found during search. - HELD THAT: - The Tribunal applied the settled ratio that Section 153A is linked to search/requisition and, while it confers block assessment powers, completed (unabated) assessments can be interfered with only when some incriminating material relating to the concerned assessment year is unearthed during the search. The facts show the valuation reference and consequent addition rested primarily on the outward appearance and the statement of a family member; no corroborative incriminating material connected to the completed assessment year was placed on record. In that factual matrix and following authorities holding that a statement not relatable to seized material cannot by itself trigger reassessment under Section 153A, the Tribunal held the addition (even though initially made and later reduced by rectification) to be based on estimation without nexus to incriminating documents and therefore directed deletion of the addition for AY 2013-14. [Paras 11, 12, 13]

Addition made on the basis of DVO valuation is deleted for AY 2013-14 for want of any incriminating material; appeal allowed.

Power of Authorised Officer to refer for valuation under Section 132(9D)/Section 142A - use of valuation report of Departmental Valuation Officer (DVO) for additions under Section 69B - Reference to the DVO by the authorised officer was legally permissible under Section 132(9D)/Section 142A, but reliance on the resultant valuation cannot sustain an addition to a completed assessment in absence of incriminating material. - HELD THAT: - The Tribunal accepted that the statutory amendment (via substitution of Section 142A w.e.f. 01/04/2017 and insertion of powers under Section 132(9D)) removed earlier pre-requisites such as prior rejection of books before making a valuation reference; thus the authorising officer could lawfully refer the properties for valuation. However, legality of the reference does not dispense with the requirement of nexus/corroboration for altering a completed assessment. Given the factual finding that no incriminating material was seized and the valuation operated only as an estimation (and employed CPWD rates), the valuation report could not by itself justify the impugned addition under Section 69B for the completed assessment year. [Paras 5, 10, 13]

Reference to DVO was lawful; notwithstanding that, the addition based on the DVO's valuation was not sustainable against a completed assessment absent incriminating material.

Use of valuation report of Departmental Valuation Officer (DVO) for additions under Section 69B - Valuation methodology and rates adopted by the DVO (CPWD rates) being estimative and not reconciled with the assessee's objections (including contention for State PWD rates) undermined the nexus between valuation and seized incriminating material, supporting deletion of the addition. - HELD THAT: - The Tribunal noted that the DVO employed CPWD rates while the assessee claimed the appropriate benchmark was State PWD rates; the objections by the assessee were not satisfactorily addressed by the lower authorities. The DVO's valuation thus remained an exercise of estimation without demonstrable connection to any incriminating documents. In absence of such nexus, the valuation could not form a valid basis to enhance income in respect of a completed assessment. [Paras 8, 13]

DVO valuation (as applied) did not sustain the addition; addition deleted.

Final Conclusion: The appeals are allowed: the addition made (and partly sustained by the lower authorities) for the assessed year 2013-14 based on the DVO valuation and statements recorded during search is deleted because no incriminating material linking the valuation to the completed assessment was found; the decision is applied mutatis mutandis to the connected appeals.

Applicability of Supreme Court's COVID 19 exclusion to computation of limitation - Time bar and condonation of delay in filing appeal to CIT(A) - Treatment of statement processed under section 200A as a fresh return for imposition of fee - Levy of late filing fee under section 234E for corrected/re filed TDS statements arising from technical error - Judicial approach favouring deletion of fee where no loss to Revenue and error is purely technical

Applicability of Supreme Court's COVID 19 exclusion to computation of limitation - Time bar and condonation of delay in filing appeal to CIT(A) - Appeal was not time barred as filed within the extended limitation period granted by the Supreme Court in relation to COVID 19 exclusions. - HELD THAT: - The Tribunal accepted that the relevant order was dated 30.11.2020 and the appellant filed the appeal on 27.10.2021. Applying the Supreme Court's exclusion of the COVID period (period from 15.03.2020 until the date restored/extended) and the consequential 90 day period from 03.10.2021, the appellant's filing on 27.10.2021 fell within the extended limitation. The Tribunal therefore held that the CIT(A)'s conclusion that the appeal was time barred and void for lack of condonation was incorrect. The Tribunal noted the factual position regarding service/communication dates and applied the Supreme Court directions rather than the narrower view adopted by the CIT(A).

Appeal held to be within extended time and therefore not dismissed as time barred.

Treatment of statement processed under section 200A as a fresh return for imposition of fee - Levy of late filing fee under section 234E for corrected/re filed TDS statements arising from technical error - Judicial approach favouring deletion of fee where no loss to Revenue and error is purely technical - Levy of late filing fee under section 234E on the corrected/re filed TDS statement (processed under section 200A) was deleted because the filing arose from a technical error and there was no loss to Revenue. - HELD THAT: - The Tribunal examined the factual matrix: the trust had deducted and deposited TDS and initially filed in Form 24Q within time; technical limitations of the TRACES portal necessitated filing a corrected Form 24Q and a separate Form 26Q which was processed as a fresh return under section 200A. Relying on the principle that machinery provisions should not override substantive justice and following the coordinate ITAT bench decision (Ahmedabad) on materially similar facts, the Tribunal held that a purely technical error, corrected without causing loss to Revenue, did not justify sustaining a fee under section 234E. A judicious, justice oriented approach was applied and the demand for late filing fee was directed to be deleted.

Levy of late filing fee under section 234E deleted; appeal allowed on merits.

Final Conclusion: Tribunal allowed the appeals: the appeals were held to be within the Supreme Court extended limitation period and, on merits, the late filing fee under section 234E imposed on corrected/re filed TDS statements processed under section 200A was deleted in view of the technical nature of the error and absence of loss to Revenue.

Condonation of delay in filing appeal - revisional jurisdiction under section 263 - erroneous and prejudicial to the interest of revenue - failure to make enquiries or verification - application of mind by the assessing officer - scope of Explanation 2 to section 263

Condonation of delay in filing appeal - substantial justice - Whether the delay of eight days in filing the appeal should be condoned. - HELD THAT: - The Tribunal examined the affidavit and oral submissions that the delay was due to unavoidable medical emergency of the assessee's counsel and relied on settled principles favouring a liberal approach where there is no mala fide or dilatory intent. Having considered the rival contentions and precedents cited, the Bench found the reasons sufficient and, in the interest of substantial justice, exercised its discretion to condone the eight-day delay and admit the appeal for hearing on merits. [Paras 2]

Delay of eight days condoned and appeal admitted.

Revisional jurisdiction under section 263 - erroneous and prejudicial to the interest of revenue - failure to make enquiries or verification - application of mind by the assessing officer - scope of Explanation 2 to section 263 - Whether the Principal Commissioner (PCIT) was justified in invoking section 263 to set aside the assessment for alleged failure to disallow interest from co-operative banks under section 80P(2)(d). - HELD THAT: - The Tribunal reviewed the assessment record and found that the Assessing Officer had raised specific queries (notably notices dated 22.09.2019 and 12.11.2020) calling for documents and explanations on the claim of deduction under section 80P, and that the FAO had examined the issue and allowed the deduction after considering material on record. Applying the established tests for exercise of revisional jurisdiction-whether the order is "erroneous" and "prejudicial to the interest of revenue"-the Bench held that mere disagreement by the PCIT with a plausible view taken by the AO does not sustain a section 263 order. The Tribunal relied on authorities and principles that section 263 cannot be used to re open or substitute a considered view taken by the AO unless the view is unsustainable in law or the AO failed to make enquiries which were plainly called for. On the facts, the Tribunal concluded that the AO had applied his mind and made requisite inquiries, and therefore the PCIT's invocation of section 263 was not justified; consequently the revisional order was quashed. [Paras 8, 10, 11, 12]

Order passed by the PCIT under section 263 quashed; assessment order not set aside by reason of the PCIT's action.

Final Conclusion: The appeal is allowed: the Tribunal condoned the eight day delay in filing the appeal and quashed the Principal Commissioner's revisionary order under section 263, holding that the Assessing Officer had made requisite enquiries and applied his mind to the deduction claimed under section 80P for AY 2018 19.

Revision jurisdiction under section 263 - reassessment under section 147 - notice under section 148 - reason to believe for reopening - erroneous and prejudicial to the interest of revenue - scope of reassessment and Explanation 3 to section 147

Revision jurisdiction under section 263 - reassessment under section 147 - reason to believe for reopening - erroneous and prejudicial to the interest of revenue - Ld. Principal Commissioner of Income Tax had validly assumed jurisdiction under section 263 to revise the reassessment order for the Assessment Year 2011-12. - HELD THAT: - The Tribunal held that the Assessing Officer, although having recorded reasons to reopen the assessment, accepted the explanations and documentary evidence produced by the assessee and made no additions in the reassessment order in respect of the matters that prompted reopening. Once the AO did not make any addition on those items, the foundational 'reason to believe' on which reassessment was initiated effectively vanished and the reassessment framed by the AO could not be sustained. Consequently, a revision under section 263 directed at correcting an order that is itself unsustainable cannot stand. The Tribunal relied on precedents interpreting the limits of proceedings under sections 147/148 and Explanation 3 to section 147, which recognise that if the AO, in the course of reassessment proceedings, concludes that the items forming the basis of the reopening did not escape assessment, he cannot thereafter validly base further taxation on unrelated matters without fresh jurisdictional basis. Applying that reasoning, the Tribunal concluded that the PCIT erred in invoking section 263 and that the revision order is liable to be quashed; other factual and legal contentions were left open as the revision order was quashed on this legal ground. [Paras 7, 8]

Ld. PCIT's order under section 263 is quashed and the assessment/reassessment order of the Assessing Officer is restored.

Final Conclusion: The appeal is allowed: the Principal Commissioner erred in assuming jurisdiction under section 263 because the reassessment order was not sustainable where the Assessing Officer had accepted the returned income and made no additions on the issues that prompted reopening; the revision order is quashed and the AO's order is restored.

Application of seized assets under section 132B - release of seized assets after expiry of 120 days under section 132B proviso - adjustment of seized cash/FDRs against existing tax liability - interest under section 234B for non-payment of self-assessment tax - interest payable under section 132B(4) on seized money - distinction between "money" and other seized assets (FDRs) for section 132B(4)

Application of seized assets under section 132B - release of seized assets after expiry of 120 days under section 132B proviso - adjustment of seized cash/FDRs against existing tax liability - interest under section 234B for non-payment of self-assessment tax - Adjustment of seized cash/FDRs against the assessee's self-assessment tax liability and consequence for levy of interest under section 234B where the Assessing Officer retained seized assets beyond the 120-day period - HELD THAT: - The Tribunal held that the assessees made timely applications for release/adjustment of seized cash and FDRs within the 30-day window and the Assessing Officer did not act on those applications and retained the seized assets beyond the 120-day period prescribed by the second proviso to section 132B(1)(i). Section 132B(1) permits adjustment of seized assets against any existing liability and, had the AO applied the seized amounts while framing the regular assessment, there would be no question of levy of interest under section 234B. The Tribunal found that the AO's failure to adhere to section 132B(1) entitled the assessees to adjustment of seized cash/FDRs against the self-assessment tax from the date the 120-day period expired and directed the AO to recompute the tax consequences after giving the assessees an opportunity of hearing. The Tribunal therefore set aside the interest charged under section 234B for the period up to expiry of the 120 days and allowed the appeals for statistical purposes in the lead group of cases. [Paras 9, 10, 11]

Assessees entitled to adjustment of seized cash/FDRs against self-assessment tax from the date on which 120 days expired; AO directed to rework computation and grant credit accordingly; appeals allowed for statistical purposes.

Interest payable under section 132B(4) on seized money - distinction between "money" and other seized assets (FDRs) for section 132B(4) - Whether interest under section 132B(4) is payable on seized FDRs where FDRs were not encashed and continued to earn interest in bank - HELD THAT: - The Tribunal agreed with the lower authorities that section 132B(4) contemplates payment of interest by the Government only on 'money' seized (cash) or assets reduced into money. FDRs seized but not prematurely encashed remain as 'other valuable article or things' under section 132(1)(c) and continue to earn interest with the bank; thus the assessee did not suffer pecuniary loss by mere seizure. The Tribunal held that FDRs in the factual matrix are not to be treated as 'money' for the purpose of section 132B(4) and therefore interest under that provision is not payable. Reliance on the Madras High Court authority was accepted and the contrary decision relied upon by the assessee was found inapplicable as it concerned seizure of cash. Accordingly the appeals on this point were dismissed. [Paras 14, 15, 16, 18, 19]

No interest under section 132B(4) is payable on seized FDRs that were not encashed; appeals on this ground dismissed.

Final Conclusion: For Assessment Year 2010-11 the Tribunal directed adjustment of seized cash/FDRs against self-assessment tax from the date the 120-day period under section 132B expired and set aside the corresponding interest under section 234B (group appeals allowed for statistical purposes); however, claims for interest under section 132B(4) on seized FDRs were rejected as FDRs were not treated as 'money' for that provision (group appeals dismissed).

Interest on delayed refunds - Deposit under Section 129-E - Interest on delayed refund of amount deposited under Section 129-EE - Refund of pre-deposit - Case property versus Government Exchequer - Right to interest on wrongful retention of public funds

Case property versus Government Exchequer - Interest on delayed refunds - Entitlement to interest on the seized currency of Rs. 14,10,990/- - HELD THAT: - The Court recorded that the seized cash was held as case property with the Disposal Branch and was never deposited in the Government Exchequer. On that basis, and having noted that the seized cash was remitted to the petitioner by a sanction order dated 08.11.2023, the Court held that the petitioner is not entitled to interest on the seized currency. Section 27-A provides for interest on delayed refund of duty and is confined to duties; it does not apply to case property or currency held as such. The Court therefore declined the claim for interest on the seized cash. [Paras 14]

No interest payable on the seized currency which was held as case property; amount remitted to petitioner.

Deposit under Section 129-E - Interest on delayed refund of amount deposited under Section 129-EE - Refund of pre-deposit - Right to interest on wrongful retention of public funds - Whether interest is payable to the petitioner on the entire amount of Rs. 9,30,000/- (redemption fine and penalty) deposited/paid and not merely on the statutory pre-deposit portion - HELD THAT: - Section 129-EE and CBIC Circular No. 984/08/2014-CX clarify that interest is payable on amounts deposited for filing appeal, and the Circular distinguishes pre-deposit from payment of duty. The respondent contended interest should be restricted to the statutory pre-deposit amount (7.5%), but the Court observed that the redemption money and penalty were in fact paid/encashed prior to filing the appeal and ultimately held refundable by the Tribunal. Relying on the principle that the Revenue which has retained monies without right is obliged to refund with interest (as recognised by the Supreme Court in Tata Chemicals Ltd.), the Court held that revenue cannot be allowed to enrich itself by retaining redemption and penalty amounts which were ultimately found refundable. Accordingly, the Court found that interest must be paid on the whole amount deposited/paid (redemption and penalty) and not only on the statutory pre-deposit portion. Applying this principle, the impugned corrigendum that limited interest to the pre-deposit was quashed and interest on the full amount was directed at the rate ordered by the Court. [Paras 21, 22, 25, 27, 28]

Interest payable on the entire amount of Rs. 9,30,000/- (redemption and penalty) at 6% per annum from date of deposit until refund; corrigendum quashed and refund to be processed within two weeks.

Final Conclusion: The petition succeeds in part: the claim for interest on the seized cash is dismissed as the currency was case property and has been remitted; the corrigendum limiting interest is quashed and the respondent is directed to refund Rs. 9,30,000/- with interest at 6% per annum from deposit to refund, to be processed within two weeks.

Principles of judicial discipline - binding effect of appellate orders on subordinate authorities - filing of an appeal does not operate as a stay - release of goods pending appeal subject to bond for differential duty - waiver of demurrage and detention charges pending compliance

Principles of judicial discipline - binding effect of appellate orders on subordinate authorities - filing of an appeal does not operate as a stay - Whether a subordinate/adjudicating authority is bound to give effect to an appellate order in the absence of a stay. - HELD THAT: - The Court applied established precedent to hold that orders of higher appellate authorities must be followed unreservedly by subordinate authorities. The mere fact that an appellate order is the subject matter of a further appeal does not justify non-compliance unless its operation has been stayed by a competent authority. Reliance was placed on the Supreme Court's reasoning in Kamlakshi Finance Corporation Ltd., and subsequent Division Bench authorities of this Court, which emphasise that non-compliance undermines administrative discipline and causes harassment. Applying these principles to the facts, the Commissioner of Customs (Appeals) had set aside confiscation and ordered release of the goods; no stay on that order existed, and therefore the original authority was obliged to release the machinery notwithstanding the department's pending appeal. [Paras 18, 19, 21, 22, 23]

The subordinate authority must comply with the appellate order and cannot withhold release of the goods in the absence of a stay.

Release of goods pending appeal subject to bond for differential duty - waiver of demurrage and detention charges pending compliance - Whether the petitioner was entitled to release of the imported machinery and waiver of demurrage/detention charges, and on what conditions. - HELD THAT: - Applying the settled legal position that appellate orders must be implemented unless stayed, the Court directed release of the Friction Testing Machine for home consumption. The release was ordered to be effected within one week of intimation, subject to the petitioner furnishing a bond to secure payment of any differential duty in the event the department succeeds in its appeal. The Court also directed issuance of a waiver certificate in respect of demurrage and detention charges to be provided along with release of the goods. The release was ordered expressly without prejudice to the department's contentions in the pending appeal. [Paras 22, 23, 24]

The machinery is to be released for home consumption subject to a bond for differential duty; demurrage and detention charges are to be waived; release is without prejudice to the department's pending appeal.

Final Conclusion: Writ petition allowed: respondents directed to release the imported Friction Testing Machine for home consumption within one week on furnishing a bond for payment of differential duty if required; respondents to issue a waiver certificate for demurrage and detention charges; the release to be without prejudice to the department's pending appeal; no order as to costs.

Non-declaration of duty in invoice - Rebuttable presumption regarding availability of credit - Condition 2(b) of Notification No.102/2007-Cus - Chartered Accountant's certificate - verification and curability - Power of appellate authority to direct production of documents and further enquiry - Requirement of reasoned order and opportunity of hearing

Non-declaration of duty in invoice - Rebuttable presumption regarding availability of credit - Condition 2(b) of Notification No.102/2007-Cus - Effect of absence of the mandatory declaration/stamp in buyer's sales invoice on the refund claim for Special Additional Duty (SAD). - HELD THAT: - The Tribunal applied the Larger Bench's reasoning in Chowgule & Company (supra) that non-declaration of the duty in the invoice issued to the buyer operates as an affirmation that credit would not be available. In the present case the sample invoice produced by the appellant did not mention the 4% SAD and this omission gives rise to a rebuttable presumption that the buyer could not avail credit. The absence of the mandatory endorsement or printed declaration under Condition 2(b) thus bears on the veracity of the refund claim and must be verified by the adjudicating authority against the invoices on record. [Paras 5]

The omission of the 4% SAD in the sample invoice creates a rebuttable presumption that the buyer could not claim credit; the invoices must be verified by the original authority in accordance with the Larger Bench view.

Chartered Accountant's certificate - verification and curability - Power of appellate authority to direct production of documents and further enquiry - Requirement of reasoned order and opportunity of hearing - Whether the Commissioner (Appeals) correctly rejected the refund claim for non-submission of the Chartered Accountant's certificate to the original authority and whether the matter required fresh consideration. - HELD THAT: - The Tribunal found that the appellant had in fact obtained a Chartered Accountant's certificate (dated 06/06/2014) and had submitted it to the Commissioner (Appeals). Relying on Board instructions that a Commissioner (Appeals) may, after making further enquiry, direct production of documents and examine witnesses, the Tribunal held that the Commissioner (Appeals) should have examined the certificate and other documents on merits instead of rejecting the claim as non-curable. Accordingly, the matter was remanded to the original authority for consideration of the Chartered Accountant's certificate and verification of invoices, with written communication of any discrepancies and an opportunity of hearing to the appellant. [Paras 5]

The rejection by the Commissioner (Appeals) for non-submission of the Chartered Accountant's certificate was not proper; the matter is remanded to the original authority to consider the certificate and other documents, verify the invoices, point out discrepancies in writing and afford a hearing.

Final Conclusion: Impugned order set aside; appeal disposed by remanding the matter to the original authority to consider the Chartered Accountant's certificate dated 06/06/2014 and to verify invoices for presence or absence of SAD declaration in conformity with the Larger Bench view, communicate discrepancies in writing, afford a hearing and complete the process within ninety days.

Principles of natural justice - cross-examination where statements recorded under Section 108 are used as evidence - verification of documentary evidence to establish legitimacy of seized goods - remand for fresh adjudication and opportunity to be heard - adjudication to be completed after granting statutory opportunities

Principles of natural justice - cross-examination where statements recorded under Section 108 are used as evidence - Adjudicating Authority failed to afford opportunity of cross-examination in respect of persons whose statements under Section 108 were relied upon, thereby violating principles of natural justice. - HELD THAT: - The Tribunal found that the Appellant had specifically requested cross-examination of several persons whose statements recorded under Section 108 were relied upon by the Department. Where a statement recorded under Section 108 is used as evidence before the Adjudicating Authority, the person who gave the statement should reiterate it before the Authority and, if the noticee seeks cross-examination, that opportunity must be granted before concluding adjudication. The records did not show that such opportunity was provided and the Adjudicating Authority made no record of reasons for denying the request. For these reasons the Tribunal held that the principles of natural justice were not followed and remitted the matter for fresh adjudication after granting the requested opportunity of cross-examination. [Paras 5, 7]

Remand to Adjudicating Authority with direction to allow the cross-examination sought and to complete adjudication thereafter.

Verification of documentary evidence to establish legitimacy of seized goods - remand for fresh adjudication and opportunity to be heard - Documentary evidence produced by the Appellant to show legitimate commercial transactions in gold was not properly considered and must be verified afresh by the Adjudicating Authority. - HELD THAT: - The Appellant had placed voluminous ledgers, invoices and banking transaction records to support the claim that the seized gold formed part of normal commercial dealings. The Tribunal recorded that these documents require proper verification before any conclusion can be reached about the legitimacy of the seized gold. Consequently, rather than deciding the matter on the existing record, the Tribunal remitted the case for re-examination of the documentary evidence and directed the Appellating Authority to allow the Appellant to place all supporting documents and for those documents to be considered in the fresh adjudication. [Paras 6, 7]

Remand to Adjudicating Authority to permit production and verification of documentary evidence and to pass a considered decision thereafter.

Final Conclusion: The Tribunal set aside the impugned order to the extent that natural justice was not complied with and the documentary evidence was not verified; the matter is remanded to the Adjudicating Authority to allow the requested cross-examination, to permit production and verification of documents supporting the Appellant's claim, and to pass a considered decision within four months from receipt of this order.

Classification of goods - parts and accessories of motor vehicles - suitability for use solely or principally - HSN Explanatory Notes to Section XVII - Note 2 to Section XVII - Note 3 to Section XVII (scope limited to chapters 86-88) - general Rules of interpretation - Rule 1 - remand for fresh adjudication

Classification of goods - parts and accessories of motor vehicles - suitability for use solely or principally - HSN Explanatory Notes to Section XVII - Impugned order failed to examine and record whether the disputed items satisfied all three conditions in the HSN Explanatory Notes to Section XVII for classification under heading 8708 and did not decide classification item wise. - HELD THAT: - The Tribunal found that the Commissioner (Appeals) recorded only selective consideration of criteria and remained silent on whether the disputed goods met the three cumulative conditions set out in the HSN Explanatory Notes (not excluded by Note 2, suitable for use solely or principally with articles of chapters 86-88, and not more specifically included elsewhere). The lower authority also did not give item wise findings despite the appellant having produced a list of fourteen items. Because the determinative legal aspects were not examined or recorded, the Tribunal set aside the impugned order and remanded the matter to the Commissioner (Appeals) for fresh adjudication applying all three conditions and deciding the classification for each item individually. [Paras 4, 5]

Impugned order set aside and matter remanded to the Commissioner (Appeals) for fresh adjudication applying all three HSN conditions and determining item wise classification.

Note 2 to Section XVII - Note 3 to Section XVII (scope limited to chapters 86-88) - classification of goods - Note 3 to Section XVII does not override Note 2 and its operation is confined to resolving classification disputes within chapters 86 to 88; it does not apply to disputes involving chapters outside 86-88. - HELD THAT: - The Tribunal observed that the impugned order proceeded on the presumption that Note 3 could displace Note 2. The Tribunal clarified that Note 3 merely distinguishes classification conflicts within chapters 86-88 and cannot be read as overriding Note 2 where classification involves chapters other than 86-88. Consequently, where an article can be used in vehicles and in other equipment (for example, railway locomotives), classification must be determined by the heading for which the article is used solely or principally, applying the full set of Section XVII provisions. [Paras 3, 4]

Clarified that Note 3 does not override Note 2 and is limited in scope to disputes confined to chapters 86-88; the impugned reliance on Note 3 was incorrect.

Final Conclusion: The appeal is allowed by way of remand: the impugned order is set aside and the matter is remitted to the original adjudicating authority (Commissioner (Appeals)) for fresh adjudication and item wise classification after applying all three HSN Explanatory Notes criteria and having regard to the limited scope of Note 3 to Section XVII.

Confiscation for removal from customs area or warehouse without permission - Liability under bond and Warehoused Goods (Removal) Regulations, 1963 - Distinction between liability of bond-executor and recipient of goods - Inapplicability of Manufacture and Other Operations in Warehouse Regulations, 1966 where bond/permission regime under removal regulations applies - Requirement to issue show cause to and investigate the party who executed the transshipment/removal bond - Admissibility and consideration of forensic evidence in adjudicatory proceedings

Confiscation for removal from customs area or warehouse without permission - Liability under bond and Warehoused Goods (Removal) Regulations, 1963 - Distinction between liability of bond-executor and recipient of goods - Whether confiscation, redemption fine and penalties under provisions invoked (including Section 111(j)) could be sustained against the appellants who received, repaired and returned goods when the transshipment/removal bond was executed by ONGC and the removal regime under Warehoused Goods (Removal) Regulations, 1963 applied. - HELD THAT: - The Tribunal found that the authorities relied on irrelevant provisions and wrongly invoked provisions applicable to manufacture in warehouse (Manufacture and Other Operations in Warehouse Regulations, 1966) and Section 54/warehouse control provisions whereas the correct regime for removal between warehouses/places in this factual matrix is provided by the Warehoused Goods (Removal) Regulations, 1963. Those Regulations impose liability primarily on the person executing the bond and prescribe procedure for enforcement where proof of receipt at destination is not produced. Section 111(j) becomes applicable only where goods are removed from a customs area or warehouse without permission or contrary to its terms; it is not the statutory mechanism to impose confiscation on alleged recipients where the bond-executor (ONGC) undertook liability and was not investigated or proceeded against. The Tribunal also noted that critical parties (ONGC and intermediary Vetco) were not examined and that service tax had been shown and paid on the invoices, which undercuts the department's case of evasion. In these circumstances, sustaining confiscation, redemption fine and personal penalties against alleged recipients was legally unsustainable. The Tribunal further observed that forensic evidence produced by appellants to rebut testimonial statements was not considered by the adjudicating authority merely because a criminal proceeding was pending; excluding such evidence from the adjudicatory evaluation was improper when it bore on the factual foundation of the show-cause. On these grounds the impugned proceedings under the wrongly invoked provisions were set aside and the appeals allowed. [Paras 7, 8, 9]

Proceedings and penalties/confiscation imposed under the cited provisions quashed; appeals allowed with consequential relief.

Admissibility and consideration of forensic evidence in adjudicatory proceedings - Requirement to investigate and issue show-cause to the bond-executor - Whether the adjudicating authority erred in disregarding forensic evidence and in failing to investigate or issue show-cause to the party who executed the bond (ONGC) and intermediary (Vetco), thereby affecting the sustainability of penalties. - HELD THAT: - The Tribunal found it improper for the adjudicating authority to refuse consideration of the forensic expert opinion on the ground that such evidence should be evaluated only in criminal proceedings. Since the forensic evidence was produced to rebut testimonial statements forming the basis of the show-cause, it was relevant to the adjudicatory fact finding and ought to have been considered. Equally, the department's failure to investigate or issue show cause to the party who executed the transshipment/removal bond (and the intermediary) meant that the statutory liability under the bond regime was not properly enforced against the liable person. In consequence, imposing penalties and confiscation against the recipients without proceeding against the bond executor and without proper evaluation of defense evidence rendered the impugned orders untenable. [Paras 7, 8]

Failure to consider forensic evidence and to proceed against bond-executor/intermediary vitiated the adjudication; orders set aside.

Final Conclusion: The Tribunal set aside the confiscation, redemption fine and penalties imposed on the appellants, holding that the removal/bond regime under the Warehoused Goods (Removal) Regulations, 1963 rather than the provisions relied upon applied, that liability primarily lay on the bond-executor who was not proceeded against, and that the adjudicating authorities erred in disregarding relevant forensic evidence; appeals allowed with consequential relief.

Classification under Customs Tariff - Input/output units of Automatic Data Processing machines - Electronic machines and apparatus having individual function - Chapter Note 5(E) to Chapter 84 - Chapter Note 5(D) to Chapter 84 - Explanatory notes to heading 8543

Input/output units of Automatic Data Processing machines - Electronic machines and apparatus having individual function - Chapter Note 5(E) to Chapter 84 - Explanatory notes to heading 8543 - Classification of imported student interactive response system as falling under CTH 8471 60 29 rather than CTH 8543 70 99. - HELD THAT: - The Tribunal accepted the finding that the impugned equipment are teaching accessories used along with an ADP machine and function as input/output units for the ADP system rather than independent electrical appliances with individual functions. The features required for classification under heading 8543 - namely appliances having individual functions and typically comprising assemblies of electrical parts operating independently - are not satisfied by the student response system. Chapter Note 5(E) (and the Explanatory Notes to heading 8543) therefore do not attract classification under 8543, while the characteristics of the goods make them apt for classification under heading 84.71 as input/output units of ADP machines. The Tribunal also noted consistent treatment of similar items in other Customs formations and upheld the reasoning of the Commissioner (Appeals).

Department appeal rejected; classification under CTH 8471 60 29 upheld.

Final Conclusion: The appeal by the Department is dismissed and the classification of the student interactive response system as an input/output unit of an ADP machine under CTH 8471 60 29 is affirmed.

Classification of petroleum hydrocarbon solvent under Customs Tariff Headings - Interpretation of "90% or more by volume distil at 210 C" in Chapter 27 Note 4 - Application of distillation test results to tariff classification - Validity of confiscation and penalties for restricted imports

Interpretation of "90% or more by volume distil at 210 C" in Chapter 27 Note 4 - Application of distillation test results to tariff classification - Classification of petroleum hydrocarbon solvent under Customs Tariff Headings - Validity of confiscation and penalties for restricted imports - Whether the goods tested (90% distilling at 195 C and 95% at 207 C) are correctly classifiable under CTH 2710 19 90 or are restricted under CTH 2710 12 90, and whether confiscation and penalties imposed are justified. - HELD THAT: - The Customs laboratory report recorded 90% distillation at 195 C and 95% at 207 C. The Tribunal applied the interpretation of the phrase in sub heading Note 4 of Chapter 27 as construed by the Supreme Court in Commissioner of Central Excise v. Krishna Technochem Pvt. Ltd., namely that the word "at" in the note must be understood so as to permit classification where 90% (or more) distill at temperatures up to 210 C. The Tribunal also relied on a prior decision of this Bench (Kunjal Synergies Pvt. Ltd.) adopting the same approach where 95% distillation occurred below 210 C. Applying that principle, the measured distillation profile falls within the scope of "light oils and preparations" as interpreted to allow classification outside the restricted sub heading 2710.12 only where the specified distillation threshold is not exceeded; here the critical 90% threshold occurs below 210 C and the 95% point likewise is below 210 C, supporting the appellant's classification under CTH 2710.19. Consequently, the departmental classification under CTH 2710.12 (which would render the goods restricted) was rejected, and the consequential confiscation and penalties imposed by the adjudicating authority were not sustained.

The appellant's classification under CTH 2710 19 90 is correct; the departmental classification under CTH 2710 12 90, and the consequent confiscation and penalties, are set aside and the appeal is allowed with consequential relief.

Final Conclusion: Appeal allowed; tribunal accepts the Supreme Court's construction of the Chapter 27 note and the appellant's classification under CTH 2710 19 90 is upheld, with consequent reversal of confiscation and penalties.

Transaction value - procedure under Section 14 and Valuation Rules - rejection of transaction value without valid reasons - NIDB data - pick and choose approach - enhancement of assessable value

Transaction value - procedure under Section 14 and Valuation Rules - rejection of transaction value without valid reasons - NIDB data - pick and choose approach - enhancement of assessable value - Enhancement of assessable value based on selective adoption of NIDB data without following valuation procedure and without valid reasons for rejecting the declared transaction value. - HELD THAT: - The Tribunal found that the Department did not follow the procedure mandated by Section 14 and the Valuation Rules and merely adopted NIDB data to enhance value. The Commissioner (Appeals) recorded that the assessing officer rejected the transaction value without any valid reasons or a speaking order and that there was no evidence that the declared invoice value did not represent the price actually paid, or that buyer and seller were related. The lower authority also supplied only a subset of the comparative NIDB records to the importer, manifesting a pick and choose approach, contrary to the requirement of a fair and reasoned valuation exercise. Reliance on higher-end comparables without considering contemporaneous lower values and without following the statutory procedure was held to be impermissible. In these circumstances the enhancement was held to be without sanction of law and liable to be set aside; the impugned bills of entry were to be assessed at the invoice value declared by the importer. [Paras 2, 3]

The appeal filed by the Revenue is dismissed; the enhancement of value is set aside and the impugned bills of entry are to be assessed at the invoice value declared by the importer.

Final Conclusion: The Tribunal upheld the Commissioner (Appeals) finding that enhancement of customs value by selectively adopting NIDB data without following the valuation procedure and without valid reasons for rejecting the declared transaction value was unsustainable; the Revenue's appeal is dismissed and the entries are to be assessed at invoice value.

Confiscation for attempted illegal export - presumption insufficient without corroborative evidence - burden of proof to establish attempt to export goods illegally - redemption fine and penalty consequent to confiscation

Confiscation for attempted illegal export - presumption insufficient without corroborative evidence - Confiscation of goods alleged to have been attempted to be exported illegally - HELD THAT: - The adjudicating authority's finding rested on a presumption that the goods were being exported to Nepal through an unauthorized route without valid documents. The Tribunal found that Revenue produced no corroborative evidence to support that presumption. The appellant's statement recorded during investigation admitted ownership of the goods and of the bicycles recovered, but did not establish an illegal export attempt. In the absence of independent or corroborative material proving an attempt to export the goods illegally, the confiscation cannot be sustained. [Paras 7, 8]

Confiscation set aside as unsustainable for want of corroborative evidence.

Redemption fine and penalty consequent to confiscation - burden of proof to establish attempt to export goods illegally - Validity of redemption fine and penalty imposed in consequence of confiscation - HELD THAT: - The redemption fine and penalty were imposed because the goods were held to have been illegally attempted to be exported. Having held the confiscation unsustainable for lack of corroborative evidence and proof of illegal export, the Tribunal concluded that there is no basis to sustain either the redemption fine or the penalty. Consequently, both monetary sanctions fall with the setting aside of the confiscation order. [Paras 8, 9]

Redemption fine and penalty quashed as they cannot be sustained without the confiscation being upheld.

Final Conclusion: Impugned order set aside in toto; appeal allowed and consequential relief, if any, granted.

Classification under Customs Tariff Item 8525 89 00 - eligibility for exemption under Serial Number 502 of Notification No. 50/2017-Cus. - Digital Still Image Video Camera - principal function test for classification - General Rules for Interpretation (GRI) - Rule 1 and Rule 6 - admissibility of advance ruling despite prior imports under Section 28H/Section 28E(b) and proviso to Section 28-I(2)

Admissibility of advance ruling despite prior imports under Section 28H/Section 28E(b) and proviso to Section 28-I(2) - ongoing activity doctrine - Application for advance ruling by the applicant is maintainable despite prior imports and is to be decided by CAAR. - HELD THAT: - The Authority considered the objection that prior commercial imports of the model would bar the grant of an advance ruling under the statutory scheme. Noting precedent and prior CAAR practice, the Authority observed that an application remains admissible where the activity is ongoing and the proviso to Section 28-I(2) does not oust jurisdiction. The Authority relied on the applicant's declaration about the timing of imports and earlier rulings addressing similar facts to conclude that the application should be entertained so as to provide certainty on classification and notification benefit. Consequently the application was allowed for consideration on merits. [Paras 9]

Application for advance ruling is allowed and not barred by prior imports; CAAR will decide the questions on merits.

Classification under Customs Tariff Item 8525 89 00 - General Rules for Interpretation (GRI) - Rule 1 and Rule 6 - principal function test for classification - Nikon Camera Model No. N2120 with standard accessories is classifiable under sub-heading 8525 89 00. - HELD THAT: - Applying the GRI framework and having regard to Section/Chapter notes and the features of the device, the Authority found that the model is a digital camera primarily suited to still photography despite having video-recording capability. The Authority noted the device does not meet the special sub-heading definitions (high-speed, radiation-hardened or night-vision) and that its design, sensor characteristics and lack of dedicated cooling point to a principal function of still-image capture. The Authority also observed that standard accessories presented together fall to be assessed with the camera under the relevant sub-heading while optional accessories are to be classified separately under their appropriate headings. [Paras 10, 11]

Nikon Camera Model No. N2120 with standard accessories is correctly classifiable under sub-heading 8525 89 00.

Digital Still Image Video Camera - eligibility for exemption under Serial Number 502 of Notification No. 50/2017-Cus. - principal function test for notification benefit - C.B.E.&C. Circular No. 32/2007 - interpretive guidance - The Nikon Camera Model No. N2120 is eligible for exemption under Serial Number 502 of Notification No. 50/2017-Cus. - HELD THAT: - Considering the Circular issued by the Central Board and the history of the notification entries, the Authority interpreted the term 'Digital Still Image Video Camera' in light of the principal function test. Although the circular describes such cameras as primarily still-image devices that may record moving images for a limited period, the Authority held that the emphasis is on principal function rather than an absolute time limitation on video recording. On the facts, the Authority accepted the applicant's submissions about design and functional characteristics establishing that the principal function is still photography and therefore the model falls within the scope of the exemption entry. The Authority therefore allowed the claim of benefit under S. No. 502 subject to the usual application at import. [Paras 10, 11]

Benefit under Serial Number 502 of Notification No. 50/2017-Cus. is available on import of the Nikon Camera Model No. N2120.

Final Conclusion: The Authority allowed the advance ruling application, held that Nikon Camera Model No. N2120 with standard accessories is classifiable under sub-heading 8525 89 00, and ruled that the model is eligible for exemption under Serial Number 502 of Notification No. 50/2017-Cus.; optional accessories are to be classified separately and confidentiality protection was not invoked.

Extended period of limitation under the proviso to section 73(1) of the Finance Act - suppression of facts with intent to evade payment of service tax - commercial training or coaching service exclusion for degree courses - vocational training exemption under Notification No. 24/2004-ST - franchise service versus revenue sharing principal to principal arrangement - accrual basis for computation versus best judgment assessment - penalty under section 78 linked to invocation of extended limitation - penalty under section 77 for non filing/incorrect filing of periodical returns

Extended period of limitation under the proviso to section 73(1) of the Finance Act - suppression of facts with intent to evade payment of service tax - Whether the extended five year limitation could be invoked against the assessee - HELD THAT: - The Tribunal held that invocation of the extended period under the proviso to section 73(1) requires deliberate, willful suppression of facts with the intent to evade tax and cannot be presumed merely because an assessee self assessed and did not discharge tax as per the Revenue's view. The show cause notice relied on the fact of non payment and investigation discovery, and the Commissioner treated non payment as suppression; however, consistent authorities require mens rea for invocation. On the facts, the Tribunal concluded the extended period could not be invoked in this case and therefore amounts confirmed solely on that basis could not be sustained. [Paras 31, 34, 35, 41, 48]

Extended period of limitation under the proviso to section 73(1) could not be invoked and demands confirmed solely on that basis are set aside.

Accrual basis for computation versus best judgment assessment - Whether the demand computed on best judgment assessment instead of accrual basis was sustainable - HELD THAT: - The Tribunal agreed with the Commissioner that during the relevant period computation was required on accrual basis and that amounts assessed by way of best judgment assessment where actual accrual figures were available had been rightly set aside. Consequently, portions of demand based on best judgment assessment were liable to be re quantified or set aside. [Paras 56, 64]

Demands computed on best judgment assessment in place of accrual basis figures are not sustainable and have been set aside.

Commercial training or coaching service exclusion for degree courses - vocational training exemption under Notification No. 24/2004-ST - Whether receipts from degree and diploma courses were exigible to service tax as commercial training or coaching services - HELD THAT: - The Tribunal upheld the Commissioner's finding that fees for degree courses affiliated to Punjab Technical University constituted education outside the ambit of 'commercial training or coaching' and thus were not taxable as such. For the diploma animation courses, the Tribunal accepted the Commissioner's conclusion that those courses qualified as vocational training and were exempt under Notification No. 24/2004-ST up to 26.02.2010; post 27.02.2010 the exemption conditions were not met and taxability arose. Amounts falling within the exemption period or barred by limitation were to be set aside; the appellant admitted and agreed to pay the limited amount for April 2010-March 2011. [Paras 57, 60, 61]

Degree course receipts are outside commercial training and not taxable; diploma course receipts are exempt up to 26.02.2010 (and taxable thereafter), and amounts covered by exemption or limitation are set aside while the admitted post exemption liability stands confirmed.

Franchise service versus revenue sharing principal to principal arrangement - Whether payments to Centennial College, Canada attracted service tax under franchise service on reverse charge basis - HELD THAT: - The Tribunal accepted the finding that the arrangement with Centennial College was a revenue sharing model on a principal to principal basis and did not constitute grant of a representational right or a franchisor franchisee service. There was no fixed quid pro quo for grant of representational rights; remittances were transfer of revenue share under the agreement. Reliance was placed on earlier Tribunal authority that revenue sharing models do not normally give rise to a service between the parties. Accordingly, the reverse charge franchise demand was unsustainable and set aside. Separately, a portion of the reverse charge demand that was assessed by best judgment (instead of accrual) was also set aside. [Paras 65, 67, 68]

No franchise service was rendered under the revenue sharing agreement; reverse charge franchise demand is set aside.

Penalty under section 78 linked to invocation of extended limitation - penalty under section 77 for non filing/incorrect filing of periodical returns - Validity of penalties imposed under sections 78 and 77 of the Finance Act - HELD THAT: - Because the extended period of limitation could not be invoked, the Tribunal held that the foundational basis for imposing penalty under section 78 (which mirrors the same ingredients) failed and set aside the section 78 penalty. However, penalty under section 77 was sustained: the appellant had not filed correct periodical ST 3 returns, and a limited portion of tax was confirmed for the normal period which supported imposition of penalty under section 77. [Paras 69, 71]

Penalty under section 78 set aside; penalty under section 77 maintained.

Final Conclusion: The Tribunal allowed the appellant's appeals largely by holding that the extended five year limitation could not be invoked, that certain demands were incorrectly computed by best judgment rather than on accrual basis, that degree course receipts were not taxable as commercial coaching and certain diploma receipts were exempt up to 26.02.2010, and that the Centennial College remittances were a revenue sharing arrangement not attracting franchise reverse charge. Consequentially, only the limited demands for the normal period (admitted/confirmed amounts) were upheld, the section 78 penalty was set aside and the section 77 penalty was sustained.

Taxability of support services of business or commerce - Precedential consistency in assessee's own case

Support services of business or commerce - Assessee's own case - The demand of service tax on the appellant under the category of support services of business or commerce, in relation to the marketing agency arrangement, was not sustainable in view of the earlier decision in the appellant's own case on identical facts. - HELD THAT: - The Tribunal found that, on an identical factual position in the appellant's own case for an earlier period, it had already held that no amount had been received by the appellant towards the marketing agency agreement and, therefore, no service tax demand could arise on that basis. As the present dispute was stated to be on the same set of facts, the Tribunal followed the earlier order and applied the same result to the present demand. [Paras 5, 6]

Following the earlier order in the appellant's own case, the demand was set aside.

Final Conclusion: The Tribunal set aside the impugned order and allowed the appeal, following its earlier decision in the appellant's own case on identical facts.

Condonation of delay on sufficient cause - limitation for filing appeal under proviso to sub section 3A of Section 85 of the Finance Act, 1994 - exclusion of time during pendency of writ where liberty granted to pursue statutory remedy - restoration of appeal for adjudication on merits

Limitation for filing appeal under proviso to sub section 3A of Section 85 of the Finance Act, 1994 - condonation of delay on sufficient cause - exclusion of time during pendency of writ where liberty granted to pursue statutory remedy - Whether the delay in filing Appeal No.752 ST/2018 before the Commissioner (Appeals) should be condoned under the proviso to sub section 3A of Section 85 of the Finance Act, 1994 by excluding the period during which the writ petition was pending before the High Court and liberty was granted to pursue the statutory remedy. - HELD THAT: - The Adjudicating Authority's order dated 28.12.2017 was received on 08.01.2018. The appellant instituted W.P. No.5452/2018 before the High Court and subsequently withdrew that petition on 12.03.2018 with express liberty to file the statutory appeal. The period during which the matter was pending before the High Court and in particular the interval up to the order granting liberty to pursue the statutory remedy must be excluded for computation of limitation. When that period (from commencement of the High Court proceedings until 12.03.2018) is excluded, the appeal filed on 11.04.2018 falls within the additional one month period available under the proviso to sub section 3A. Applying these principles, the Court held that the interest of justice required condonation of the delay and that the Appellate Commissioner ought to have condoned the delay in the circumstances disclosed.

Delay in filing the appeal is condoned under the proviso to sub section 3A of Section 85 of the Finance Act, 1994 by excluding the period during which the writ was pending with liberty to pursue the statutory remedy.

Restoration of appeal for adjudication on merits - Whether Appeal No.752 ST/2018 should be restored to the file of the Commissioner (Appeals) for decision on merits after condonation of delay. - HELD THAT: - Having condoned the delay, the Court found it appropriate to set aside the orders of the Appellate Commissioner, the Tribunal and the High Court insofar as they refused to entertain the appeal on the ground of delay. The appeal is therefore restored to the Commissioner (Appeals), Bhopal, for consideration and disposal on merits. The Court directed that the appeal be considered on its own merits and disposed of as expeditiously as possible.

Appeal No.752 ST/2018 is restored to the file of the Commissioner (Appeals) for adjudication on merits.

Final Conclusion: The orders of the Appellate Commissioner, the Tribunal and the High Court dismissing or rejecting the appellant's remedy on the ground of delay are set aside; the delay is condoned under the proviso to sub section 3A of Section 85 of the Finance Act, 1994 and Appeal No.752 ST/2018 is restored to the Commissioner (Appeals), Bhopal, for fresh disposal on merits.

Extended period of limitation - suppression of facts - wilful misstatement - proviso to Section 73 - bona fide belief in law - filing of return under Section 71A - remand for computation limited to period under Section 73(1)

Proviso to Section 73 - suppression of facts - wilful misstatement - bona fide belief in law - Whether the proviso to Section 73 extending the period of limitation could be invoked against the respondent for non-disclosure of service tax by the sub-contractor - HELD THAT: - The Court applied settled principles that the extended period under the proviso to Section 73 requires proof of mens rea-fraud, collusion, wilful misstatement or suppression of facts with intent to evade tax. Where a disputed question of law existed as to the liability of a sub-contractor to pay service tax and competing views prevailed until the larger bench decision in M/s Melange Developers (decided 23-5-2019), the respondent's conduct in not declaring the tax in ST-3 could be attributable to a bona fide belief rather than deliberate suppression. Reliance was placed on Supreme Court authorities holding that mere omission or an incorrect view does not amount to suppression unless deliberate intent to evade is shown; a bona fide belief founded on then-prevailing views precludes invocation of the extended limitation. Applying these principles to the admitted facts, including production of certificates showing payment by the main contractor and the existence of an interpretational dispute, the Court held that the proviso could not be pressed into service against the respondent. [Paras 11, 12, 13]

Proviso to Section 73 not attracted; extended period of limitation cannot be invoked against the respondent.

Filing of return under Section 71A - remand for computation limited to period under Section 73(1) - Legitimacy of remitting the matter to the Commissioner to compute service tax liability only for the period prescribed under Section 73(1) without invoking the proviso - HELD THAT: - The Tribunal had remitted the case to the Commissioner to recompute the liability for the statutory thirty-month period under Section 73(1), expressly directing that the proviso extending limitation not be invoked. The High Court examined the material including certificates indicating payment by the main contractor and the admitted existence of an interpretational dispute which supported a bona fide stance by the respondent. In that factual and legal matrix the Tribunal's direction to confine recovery to the period under Section 73(1) without extending limitation was found to be justified. The Court therefore affirmed the remand for recalculation confined to the regular limitation period. [Paras 1, 6, 13]

Tribunal's order remitting the case for computation under Section 73(1) without invoking the proviso is justified and is upheld.

Final Conclusion: The departmental appeal is dismissed; the Tribunal's order remitting the matter to the Commissioner to calculate service-tax liability for the period under Section 73(1) without invoking the proviso extending limitation is upheld.

Valuation of taxable service - gross amount charged - consideration for taxable service - reimbursable expenditure not part of valuation prior to statutory amendment - rules cannot exceed statute - prospectivity of statutory amendment - reverse charge mechanism

Valuation of taxable service - gross amount charged - consideration for taxable service - reimbursable expenditure not part of valuation prior to statutory amendment - Whether the expenses incurred by the appellant for accommodation, travel and food of visiting engineers of a foreign consulting service provider form part of the taxable value of consulting engineering services under Section 67 for the period prior to the 2015 amendment. - HELD THAT: - Relying on the decisions in Intercontinental Consultants and Technocrats (as affirmed by the Supreme Court), the tribunal held that valuation under Section 67 is confined to the gross amount charged by the service provider 'for such service' and cannot include amounts that are not consideration for the taxable service itself. Expenditures incurred on visiting personnel of the service provider (accommodation, travel, food) are not consideration charged by the service provider for rendering the consulting engineering service and therefore do not form part of the taxable value under Section 67 as it stood prior to its amendment. The tribunal noted that subordinate rules or classifications cannot expand the scope of valuation beyond the statutory mandate, and that only by the 2015 amendment did reimbursable expenditures become includible prospectively in the valuation formula; consequently such reimbursable expenses prior to amendment could not be treated as part of the gross value liable to service tax. [Paras 3]

Expenses incurred by the appellant on visiting engineers do not form part of the taxable value under Section 67 for the period before the 2015 amendment; the impugned order is unsustainable.

Rules cannot exceed statute - prospectivity of statutory amendment - Whether valuation rules or departmental view could extend the taxable value to include such expenses in absence of statutory provision prior to amendment. - HELD THAT: - Applying the principle that subordinate legislation cannot extend the statute, the tribunal accepted the precedent that Rule 5 (and similar administrative positions) cannot enlarge the statutory concept of 'value' beyond what Section 67 permits. The tribunal further observed that the Legislature expressly amended Section 67 in 2015 to include reimbursable expenditures, which is a substantive, prospective change and cannot be applied retrospectively to bring prior transactions within valuation. [Paras 3]

Departmental reliance on rules or valuation mechanims to include such expenses prior to the statutory amendment is impermissible; the contention is rejected.

Final Conclusion: The adjudication confirming demand for service tax on the accommodation, travel and food expenses of visiting engineers is set aside; the appeal is allowed.

Banking and other financial services - financial leasing including equipment leasing and hire-purchase - ejusdem generis - extended period of limitation for suppression / wilful misstatement - value of service - exclusion of interest under Section 67 - examination of true nature of sale versus lease transactions

Banking and other financial services - financial leasing including equipment leasing and hire-purchase - Demand of service tax under BOFS on amounts received in respect of agreements entered into prior to 16.08.2002 - HELD THAT: - The Tribunal held that financial leasing services provided by a body corporate were taxable only w.e.f. 16.08.2002. The impugned demand sought to tax receipts under agreements executed prior to 16.08.2002 and therefore was unsustainable. On this ground alone the demand confirmed by the Commissioner was set aside. [Paras 22]

Demand under BOFS in respect of contracts prior to 16.08.2002 set aside

Examination of true nature of sale versus lease transactions - value of service - exclusion of interest under Section 67 - Whether the amounts classified as Interest Income-Rental, Interest Income-Funding and Finance Income-Facility Management constituted taxable financial leasing or were of a different character exempt/chargeable elsewhere - HELD THAT: - On examination of sample agreements and transaction documents, the Tribunal found that: (a) amounts shown as interest income-rental arose from equipment rented on operating-lease terms where ownership remained with the appellant and lessee had no purchase right, hence not financial leasing; (b) agreements classed as equipment finance involved installment sale arrangements where ownership was not initially transferred and the arrangement could not be taxed as financial leasing; (c) interest income on loans is excluded from the value for service tax computation under Section 67 and circular No. 80/10/2004 was applicable; and (d) amounts for facility management related to provision of equipment with operator and were accepted by the department to be taxable under Business Support Service from 01.05.2006 (order dated 30.11.2010 attained finality). The Commissioner had not examined the true nature of transactions and proceeded on a presumption that all receipts were for financial leasing; that approach was rejected and the demand set aside. [Paras 23, 24, 25, 26]

Demand framed by treating the said receipts as financial leasing not sustained; relevant receipts not taxable as charged in the impugned order

Extended period of limitation for suppression / wilful misstatement - ejusdem generis - Validity of invoking extended limitation period/proviso to Section 73 based on alleged suppression by the appellant - HELD THAT: - The Tribunal held that extended limitation could not be invoked because there was no deliberate suppression, misrepresentation or wilful conduct to evade tax. The appellant had obtained registration and paid tax under amnesty for agreements post 16.08.2002, maintained records, and engaged with the department through audits and correspondence; hence the department had knowledge of transactions. Further, where complex questions of law and factual classification were involved, invocation of extended period on the basis of alleged suppression was not warranted. The Circular of 04.07.2006 (ejusdem generis guidance) and judicial authority on the need for deliberate suppression were relied upon. [Paras 20, 27]

Invocation of extended period of limitation held not justified; related demand and penalties not sustainable

Final Conclusion: The appeal is allowed. The order-in-original confirming service tax demand, interest and penalties under banking and other financial services is set aside: the demand in respect of contracts prior to 16.08.2002 and the classification of the claimed receipts as financial leasing are rejected, and invocation of the extended limitation period is held unjustified; consequential relief, if any, to follow as per law.

Erection, Commissioning and Installation Service (ECIS) - Works Contract Service (WCS) - Commercial or Industrial Construction Service (CICS) - Turnkey/EPC contracts - Essential character test for classification of turnkey/EPC - Exclusion for non commercial, non industrial purpose

Erection, Commissioning and Installation Service (ECIS) - Works Contract Service (WCS) - Commercial or Industrial Construction Service (CICS) - Turnkey/EPC contracts - Exclusion for non commercial, non industrial purpose - Essential character test for classification of turnkey/EPC - Classification and exigibility of service tax for laying of pipeline and allied works executed under composite/turnkey contract for Government irrigation projects during the period in question - HELD THAT: - The appellant executed composite turnkey contracts for laying pipelines and allied civil and electro mechanical works for Government irrigation projects. The adjudicating authority taxed the receipts as Erection, Commissioning and Installation Service (ECIS). Relying on the Larger Bench decision in Lanco Infratech Ltd., the Tribunal held that construction or laying of pipelines/conduits for transmission of water for irrigation or water supply undertaken for Government/Government undertakings is classifiable under the definition of Works Contract Service as clause (b) (i.e., akin to Commercial or Industrial Construction Service) and, importantly, that such works when provided to Government/Government undertakings are for a non commercial, non industrial purpose and fall within the exclusion in clause (b) of the WCS definition. The Larger Bench further directed that turnkey/EPC contracts on and after 1 6 2007 must be classified by their essential character and, when the essential character corresponds to construction of pipelines/conduits for Government irrigation or water supply, such activities are not exigible to service tax by reason of the exclusion. Applying that ratio, the Tribunal found the show cause demand based on ECIS unsustainable and set aside the entire demand. The Tribunal also observed that, for periods prior to 1 6 2007, the Apex Court's decision in Larsen & Toubro supports characterising the contracts as works contracts and precludes taxation prior to that date. The appeal was allowed accordingly. [Paras 6, 7, 9]

The demand of service tax framed as ECIS on the composite turnkey contracts for laying pipelines and allied works for Government irrigation projects is unsustainable and is set aside; the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal and set aside the show cause demand: laying of pipelines and allied works under composite/turnkey contracts for Government irrigation projects (period 01.01.2011 to 31.12.2011) is not exigible to service tax as ECIS and, by application of the Larger Bench ratio, falls within the excluded ambit of WCS/CICS when rendered for non commercial, non industrial purposes.

Excise duty equal to Special Additional Duty (SAD) - Exemption under Notification No.23/2003-CE - Proviso to Section 3(1) of the Central Excise Act 1944 - Limitation and applicability of Section 11A(1) and Section 11A(5) - Fraud, collusion, wilful mis-statement, suppression of facts or intent to evade - No Dues Certificate and de-bonding

Excise duty equal to Special Additional Duty (SAD) - Exemption under Notification No.23/2003-CE - Proviso to Section 3(1) of the Central Excise Act 1944 - Excise duty equal to SAD was payable on Intraocular Lens cleared into DTA by the 100% EOU during 2009-2010 to June-2012. - HELD THAT: - The Tribunal concluded that the excise liability equal to SAD under the Proviso to Section 3(1) would be effectively nil because the goods in question, when imported, were exempt from SAD by the relevant customs notifications. Consequently, the exemption under Notification No.23/2003-CE (which relieved excise duty equal to SAD subject to conditions including non-exemption from State VAT) was not required for the appellant. On this basis the foundational premise for demanding excise equal to SAD did not sustain and the demand on merits was held unsustainable.

No excise duty equal to SAD was payable; the demand on merits is set aside.

Limitation and applicability of Section 11A(1) and Section 11A(5) - Fraud, collusion, wilful mis-statement, suppression of facts or intent to evade - No Dues Certificate and de-bonding - The Show Cause Notice dated 2-6-2015 issued purportedly under Section 11A(1)/(5) was not maintainable and was time-barred; the extended limitation could not be invoked. - HELD THAT: - The Tribunal held that if the notice was issued under Section 11A(1) it was barred by the one-year limitation applicable thereto. If it was issued under Section 11A(5) it was not maintainable because that provision had been omitted with effect from 14-5-2015. Further, the enlarged period under Section 11A(4)/(5) (for fraud, collusion, wilful mis-statement, suppression or intent to evade) was inapplicable: the appellant had disclosed the benefit in ER-2 returns, had been audited, and the department had issued a No Dues Certificate on de-bonding, evidencing absence of fraud or suppression. Reliance of the Tribunal on precedents led to the conclusion that the larger period of limitation could not be invoked in these circumstances.

The Show Cause Notice was not maintainable and, in any event, barred by limitation; therefore the demand is unsustainable on limitation grounds.

Final Conclusion: Impugned Order in Original confirming demand and penalties is set aside; appeals allowed.

100% Export Oriented Unit (EOU) de-bonding and duty on finished goods in stock - Proviso to Section 3(1) - valuation for excise equal to aggregate of customs duties and requirement to adopt value as per Customs law - transaction value under Section 14 of the Customs Act, 1962 - abatement for computation of CVD under Notification No.49/2008-CE (NT) - double counting of Education Cess and Secondary and Higher Secondary Education Cess - maintainability of show cause notice issued under a provision omitted from statute - limitation - inapplicability of extended limitation where department had prior verification and issued 'No Dues' certificate

Proviso to Section 3(1) - valuation for excise equal to aggregate of customs duties and requirement to adopt value as per Customs law - transaction value under Section 14 of the Customs Act, 1962 - 100% Export Oriented Unit (EOU) de-bonding and duty on finished goods in stock - Assessable value for computation of Basic Customs Duty could not be taken as local MRP and must follow the value prescribed by Customs law (transaction value), therefore Basic Customs Duty calculated on MRP was ex facie erroneous. - HELD THAT: - The Proviso to Section 3(1) requires that the excise duty on goods of a 100% EOU brought to any place in India shall be an amount equal to the aggregate of customs duties leviable on like goods when imported, and the value for that purpose is to be determined in accordance with the Customs Act and the Customs Tariff Act. The Tribunal found that the Principal Commissioner adopted local MRP instead of the transaction value as per Section 14 of the Customs Act, 1962 (the value appearing in the column preceding MRP in the departmental calculation). Taking MRP in place of the transaction value is contrary to the proviso and therefore the Basic Customs Duty computation is prima facie incorrect. [Paras 5]

Basic Customs Duty calculation based on local MRP is incorrect and the assessable value must conform to the transaction value under the Customs law.

Abatement for computation of CVD under Notification No.49/2008-CE (NT) - 100% Export Oriented Unit (EOU) de-bonding and duty on finished goods in stock - CVD was wrongly computed on MRP instead of on MRP less abatement under the relevant notification, and therefore the value adopted for CVD is ex facie erroneous. - HELD THAT: - The Tribunal held that the Principal Commissioner computed Countervailing Duty on the full MRP rather than applying the statutory abatement provided by Notification No.49/2008-CE (NT) dated 24-12-2008. Because the abatement is applicable, computing CVD on MRP overstates the duty payable; accordingly the calculation of CVD in the impugned order is prima facie erroneous. [Paras 5]

CVD calculation on MRP is incorrect; CVD must be computed after applying the abatement prescribed by the notification.

Double counting of Education Cess and Secondary and Higher Secondary Education Cess - 100% Export Oriented Unit (EOU) de-bonding and duty on finished goods in stock - Education Cess and Secondary and Higher Secondary Education Cess were wrongly levied again on the aggregate of customs duties even though they had already been included in the aggregate, contrary to Tribunal precedents. - HELD THAT: - The Principal Commissioner added Education Cess and Secondary and Higher Secondary Education Cess on the aggregate of customs duties despite those cesses having been already considered while arriving at that aggregate. The Tribunal noted this practice is contrary to earlier decisions of the Tribunal (as cited in the order) and concluded that such re-imposition constitutes an erroneous calculation of duty. [Paras 5]

Re-levy of Education Cess and Secondary and Higher Secondary Education Cess on the aggregate of customs duties is incorrect and the impugned calculations are liable to be corrected.

Maintainability of show cause notice issued under a provision omitted from statute - limitation - inapplicability of extended limitation where department had prior verification and issued 'No Dues' certificate - The Show Cause Notice dated 27-05-2015 issued purportedly under Section 11A(5) was not maintainable because that provision had been omitted with effect from 14-05-2015; additionally, the extended period of limitation was inapplicable because the department had earlier verified stock and calculations and issued a 'No Dues' certificate. - HELD THAT: - The Tribunal observed that Section 11A(5) of the Central Excise Act stood omitted with effect from 14-05-2015, and a show cause notice issued under a non-existent provision is not maintainable. Furthermore, the scheme of Sections 11A(4) and 11A(5) applies only in cases involving fraud, collusion, wilful mis-statement, suppression of facts or intent to evade, none of which were present. The record (letter dated 22-05-2012) shows departmental officers had visited, verified stock and duty calculations and a No Dues Certificate had been issued prior to de-bonding; on that basis the Tribunal held the larger period of limitation could not be invoked and the demand had to be within ordinary limitation. [Paras 5]

Show Cause Notice under the omitted provision is not maintainable and the extended limitation cannot be invoked where the department had prior verification and issued a No Dues Certificate.

Final Conclusion: Impugned order of the Principal Commissioner is set aside; appeals are allowed, the departmental demand as computed in the order is held to be unsustainable for the reasons stated and the duty calculation requires correction in accordance with the determinations above.

Eligibility of Cenvat credit for goods used in or in relation to manufacture of final products - inputs used in manufacture of capital goods (Explanation 2 to Rule 2(k) of Cenvat Credit Rules, 2004) - definition and scope of "capital goods" for Cenvat credit (Rule 2(a) of Cenvat Credit Rules, 2004) - relevance of immovability of fabricated plant/machinery to admissibility of Cenvat credit - time bar or delay in availment of Cenvat credit under Rule 4(1) of Cenvat Credit Rules - legality of ignoring Chartered Engineer's certificate after remand by Tribunal - scope and applicability of Board circular clarifying excisability of immovable structures

Inputs used in manufacture of capital goods (Explanation 2 to Rule 2(k) of Cenvat Credit Rules, 2004) - definition and scope of "capital goods" for Cenvat credit (Rule 2(a) of Cenvat Credit Rules, 2004) - Whether H.R., M.S. and S.S. plates used in fabrication of storage tanks, chimneys, pipes, ducts, machinery and supporting structures qualify as inputs/capital goods eligible for Cenvat credit. - HELD THAT: - The Tribunal held that the definition of "inputs" under Rule 2(k) covers goods used in or in relation to manufacture of final products and expressly includes goods used in the manufacture of capital goods which are further used in the factory. The definition of "capital goods" under Rule 2(a) specifically includes storage tanks, pollution control equipment (chimneys), tubes and pipes and their fittings, components, spares and accessories and other specified items. Where H.R., M.S. and S.S. plates were used in fabrication of such specified capital goods (storage tanks, chimneys, pipes, ducts, supporting structures and plant/machinery), they are inputs within the meaning of Rule 2(k) and eligible for Cenvat credit under Explanation 2. Precedents treating fabricated storage tanks, chimneys and ducting as capital goods and allowing credit were held applicable. The Tribunal rejected the departmental view that fabrication into immovable works dispels eligibility when the goods fall within Rule 2(a)'s ambit. [Paras 7]

H.R., M.S. and S.S. plates used in fabrication of the specified capital goods and supporting structures are inputs eligible for Cenvat credit under Rule 2(k) read with Rule 2(a).

Relevance of immovability of fabricated plant/machinery to admissibility of Cenvat credit - scope and applicability of Board circular clarifying excisability of immovable structures - Whether the fact that fabricated plant or storage tanks become immovable or fixed to earth prevents them from being capital goods or bars Cenvat credit on materials used for their fabrication. - HELD THAT: - The Tribunal found the Commissioner's reliance on immovability to deny credit to be perverse and incorrect. There is no restriction in Rule 2(k) that prohibits credit merely because capital goods, once fabricated, become immovable. The Board circular relied upon by the Commissioner relates to excisability of immovable structures and does not address eligibility of credit under the Cenvat Credit Rules; it therefore cannot override the specific statutory scheme for Cenvat credit. Judicial precedents and High Court/Tribunal decisions holding that immovability does not defeat entitlement to credit for materials used to fabricate specified capital goods were followed. [Paras 7]

Immovability of fabricated plant/machinery or storage tanks is irrelevant to the admissibility of Cenvat credit where such fabricated items fall within the statutory definition of capital goods; the Board circular relied upon is not applicable to deny credit.

Time bar or delay in availment of Cenvat credit under Rule 4(1) of Cenvat Credit Rules - Whether inordinate or delayed availment of Cenvat credit (credit taken after erection/installation) disentitles the assessee to credit under Rule 4(1). - HELD THAT: - The Tribunal held that Rule 4(1) is an enabling provision permitting credit to be taken immediately on receipt of inputs and does not prescribe a strict time limit for availment. Authorities were cited holding there is no time bar to avail credit, and the impugned order's reliance on delay to deny credit was not supported by law. [Paras 7]

Delay in availment per se does not bar Cenvat credit under Rule 4(1); the denial of credit on the ground of inordinate delay was rejected.

Legality of ignoring Chartered Engineer's certificate after remand by Tribunal - Whether the Commissioner complied with this Tribunal's remand direction regarding proper consideration of the Chartered Engineer's certificate and whether summary rejection of that certificate vitiates the de novo adjudication. - HELD THAT: - The Tribunal noted that the matter had earlier been remanded with an express observation that the adjudicating authority had not appreciated the Chartered Engineer's certificate correctly and required reconsideration. In the de novo order the Commissioner merely stated agreement with earlier findings and summarily rejected the certificate without independent reasoning. The Tribunal found such summary rejection contrary to the purpose of the remand and not sustainable. [Paras 7]

The Commissioner's summary rejection of the Chartered Engineer's certificate, without independent consideration despite the Tribunal's remand, was unsustainable and vitiated the impugned order.

Final Conclusion: The impugned order denying Cenvat credit and imposing penalty was set aside. The Tribunal allowed the appeal holding that H.R., M.S. and S.S. plates used in fabrication of specified capital goods and supporting structures are eligible inputs for Cenvat credit, immovability of fabricated goods is not a ground to deny credit, delay in availment did not bar credit under Rule 4(1), and the adjudicating authority's summary rejection of the Chartered Engineer's certificate after remand was unsustainable.

Production and verification of original records - rejection of refund application - setting aside administrative order - remand to competent authority for consequential orders

Production and verification of original records - rejection of refund application - setting aside administrative order - Rejection of the petitioner's refund application confirmed by order dated 24.02.2022 on the ground of non-availability of records, in light of subsequent production and verification of original documents. - HELD THAT: - The Court recorded that the impugned confirmation of rejection rested on the asserted non-availability of the assessment order and related F-Forms on departmental records. The petitioner produced the original assessment order, a certified copy and original F-Forms before the competent authority, and the department verified those documents. Given that the foundational reason for upholding the rejection has been removed by verification of the original records, the Court found no subsisting basis to sustain the impugned order. Accordingly, the Court set aside the order dated 24.02.2022 and remitted the matter to the competent authority for reconsideration and passage of consequential orders in respect of the refund application. [Paras 4, 5, 6, 7]

Order dated 24.02.2022 set aside and matter remitted to the competent authority to pass consequential orders on the petitioner's refund application within four weeks.

Final Conclusion: The confirmation of rejection of the refund was set aside because the petitioner produced and the department verified the original assessment order and F-Forms; the matter is remitted to the competent authority to pass consequential orders within four weeks, and the petition is disposed of.

Date of offer of possession for fit outs - grace period for delivery of possession - date of offer of possession linked to Occupation Certificate - part occupancy certificate not equivalent to statutory Occupancy Certificate - right to terminate on delay under contractual clause - refund in instalments with contractual rate of interest - construction and enforcement of written contract - court cannot rewrite or novate contract

Date of offer of possession for fit outs - grace period for delivery of possession - right to terminate on delay under contractual clause - Appellants validly terminated the Agreement under Clause 11.3 after expiry of the date of offer of possession for fit outs (including the one-year grace period) and were entitled to refund as provided in the Agreement. - HELD THAT: - The Agreement separately contemplated a 'date of offer of possession for fit outs' (with an express one-year grace period) and a distinct 'date of offer of possession' linked to the Occupation Certificate. The contractual scheme in Clause 11.3 gave the purchaser an absolute right to elect termination within 90 days from expiry of the grace period if possession for fit outs was not offered. It is admitted that possession for fit outs was not offered by the respondent by 30.06.2017 (the date including the grace period). The appellants therefore exercised the contractual right by legal notice dated 01.07.2017. There was no novation in writing and no unilateral power vested in the seller to alter those contractual dates; consequently the appellants' termination was in accordance with the clear terms of the Agreement. [Paras 8, 11, 12]

Termination effected by the appellants under Clause 11.3 was valid and in accordance with the Agreement.

Part occupancy certificate not equivalent to statutory Occupancy Certificate - date of offer of possession linked to Occupation Certificate - The 'Part Occupancy Certificate' relied upon by the respondent did not constitute the 'Occupancy Certificate' contemplated by the Agreement and could not be treated as having triggered the contractual 'date of offer of possession'. - HELD THAT: - The Part Occupancy Certificate obtained by the respondent was not in the format or effect of the 'Occupancy Certificate' as defined under the relevant Development Control Regulations, which denotes full completion. The Agreement treated the date of offer of possession (Clause 1.14) as the date on which the Occupation Certificate is issued. The respondent could not skip the contractual date of offer of possession for fit outs by invoking the Part Occupancy Certificate, particularly when it had not in fact made available the key common areas and amenities as required under the Agreement. [Paras 11, 12]

The Part Occupancy Certificate did not satisfy the contractual requirement of an Occupation Certificate and did not cure the delay in offering possession for fit outs.

Construction and enforcement of written contract - court cannot rewrite or novate contract - NCDRC erred in substituting its own view of reasonableness and in refusing to give effect to the contractual right of termination; the forum could not rewrite the clear terms agreed by the parties. - HELD THAT: - Once parties have reduced their agreement to writing with express consequences for delay, those terms govern the rights and remedies of the parties. The NCDRC's conclusion that the delay was not 'unreasonable' and its direction that the respondent continue to offer possession (or allow forfeiture deductions) amounted to re-writing contractual consequences. Precedent establishes that courts must apply explicit contractual terms and not create a new contract or substitute their own commercial judgment. The NCDRC therefore overstepped its jurisdiction in denying the appellants the contractual remedy of termination and refund. [Paras 15, 16, 22]

The NCDRC's order was set aside to the extent it refused to give effect to the appellants' contractual termination rights.

Refund in instalments with contractual rate of interest - Relief to be granted: respondent directed to refund the amounts paid in twelve equal monthly instalments with simple interest at the contractual rate of 12% per annum from receipt until repayment, as stipulated in the Agreement. - HELD THAT: - The Agreement itself prescribed the mode of refund and the rate of interest (12% p.a.) in the event of termination within the contractual parameters. The Court declined to apply equitable variation of that stipulated rate (distinguishing prior decisions where contracts had expressly disavowed interest), and gave effect to the agreed contractual remedy. Consequently, the respondent was ordered to repay the deposited amount in twelve equal monthly instalments by post-dated cheques with simple interest at 12% p.a., the first installment falling due on 5 April 2024 and subsequent installments monthly thereafter. [Paras 21, 22]

Respondent directed to refund the deposited amount in 12 equal monthly instalments with simple interest @12% p.a., in accordance with the Agreement.

Final Conclusion: The appeal is allowed. The NCDRC's order is set aside insofar as it failed to give effect to the appellants' contractual right to terminate for delay; the appellants validly terminated the Agreement after expiry of the fit-outs possession date (including the grace period). The respondent is directed to refund the deposited amount in twelve equal monthly instalments with simple interest at 12% per annum from receipt until repayment; parties shall bear their own costs.

Refund of excess price collected in e-auction - interest on decretal/refund amounts - enforcement of contempt and compliance with court directions - effect of pendency of other proceedings on finality between parties - personal liability of officers for non compliance

Refund of excess price collected in e-auction - enforcement of contempt and compliance with court directions - Refund of excess amount for the period 1st January, 2007 to March, 2008 was payable to the appellant and the High Court was not justified in dismissing the contempt petition without ensuring such payment. - HELD THAT: - The Supreme Court held that the appellant's claim for refund for the third period (1st January, 2007 to March, 2008) stood concluded by earlier proceedings and the rejection of SLP(Civil) No. 21019 of 2010. The Single Judge erred in relying on the pendency of a separate SLP arising from a Calcutta High Court order to deny relief, because the inter se issue between the parties had already been finally dealt with by this Court. Consequently, non payment for the said period could not be excused and the respondents were obliged to make the refund as directed. [Paras 26, 27, 28]

Appellant entitled to refund for 1st January, 2007 to March, 2008; dismissal of contempt petition without ensuring payment was unjustified.

Interest on decretal/refund amounts - refund of excess price collected in e-auction - Appellant entitled to interest at 12% per annum on the refund amount for the period 1st January, 2005 to 11th December, 2005; the respondents' payment at bank rate was inadequate. - HELD THAT: - The Court observed that its earlier decision in Ashoka Smokeless Coal Industries(P) Ltd. had directed refund with interest at 12% per annum. The High Court overlooked that binding direction and treated the appellant's demand as exaggerated; the respondents admitted applying bank rate (3.5%) instead. The Supreme Court held that respondents failed to comply faithfully with the High Court's and this Court's orders and thus the appellant must receive interest at 12% per annum for the stated period, with the amount already paid at the bank rate to be deducted from the differential. [Paras 12, 16, 29, 30]

Interest at 12% per annum to be paid on refund for 1st January, 2005 to 11th December, 2005; amount already paid at bank rate to be deducted from differential.

Personal liability of officers for non compliance - enforcement of contempt and compliance with court directions - Respondents directed to pay the refund and interest within two months; failing which officers concerned to be made personally liable to pay interest. - HELD THAT: - Having found non compliance with court directions and having quantified the relief (refund and interest at 12% for identified periods, less amounts already paid at bank rate), the Court imposed a timeline for payment and provided for personal liability of officers in default to secure enforcement. This direction follows from the Court's conclusion that contempt proceedings were not to be closed without ensuring compliance. [Paras 30]

Payment to be made within two months; officers to be made personally liable for interest in case of default.

Final Conclusion: The appeal is allowed to the extent that the appellant shall receive refund for the period 1st January, 2007 to March, 2008 and interest at 12% per annum on the refund for 1st January, 2005 to 11th December, 2005 (with bank rate payments deducted); the amounts are to be paid within two months, failing which officers shall be personally liable; appeal disposed of with no costs.

Access to justice through electronic hearings - video conferencing hearings - hybrid hearings - non-discrimination and prohibition of arbitrary eligibility criteria for virtual hearings - obligation on State and judicial fora to provide requisite infrastructure and funding for electronic hearings - model standard operating procedure for virtual/hybrid hearings - provision of free Wi Fi and adequate bandwidth within court precincts - training of Bar and Bench in use of judicial technology - coordination between Union ministries and tribunals for infrastructural enablement

Access to justice through electronic hearings - video conferencing hearings - hybrid hearings - non-discrimination and prohibition of arbitrary eligibility criteria for virtual hearings - High Courts and Tribunals must not deny access to video conferencing or hybrid hearings and must not impose arbitrary eligibility criteria for virtual participation. - HELD THAT: - The Court found that technology is essential to securing access to courtrooms and that restrictions such as age limits or prior application requirements unjustifiably impede access. Accordingly, after two weeks from the date of the order no High Court shall deny access to video conferencing or hybrid hearings to any member of the Bar or litigant who wishes to avail such facility. Links for accessing virtual hearings must be published in daily cause-lists and prior-application requirements or age-based and other arbitrary criteria for availing virtual/hybrid hearings are impermissible. The reasoning emphasises that fetters on hybrid hearings discourage use of technology and adversely affect access to justice. [Paras 9, 10, 14, 16]

Access to video conferencing and hybrid hearings shall not be denied and arbitrary criteria for virtual participation are prohibited.

Obligation on State and judicial fora to provide requisite infrastructure and funding for electronic hearings - coordination between Union ministries and tribunals for infrastructural enablement - State Governments, the Union and judicial fora are required to ensure availability of funds and infrastructure to facilitate hybrid/video conferencing hearings across High Courts and Tribunals. - HELD THAT: - The Court recorded variations in technological adoption across High Courts and deficiencies in tribunal infrastructure (notably NCLAT). It directed State Governments to provide necessary funds to High Courts within the prescribed timeframe. The Union was directed to ensure that all tribunals are provided requisite infrastructure for hybrid hearings by 15 November 2023, and specific meetings were ordered between Union secretaries and tribunal leadership (NCLAT/NCLT) to resolve outstanding infrastructural and funding issues so hybrid hearings can commence within fixed periods. [Paras 6, 7, 14, 19]

State Governments and the Union shall ensure funding and infrastructural enablement so High Courts and Tribunals can conduct hybrid/video hearings within the prescribed timelines.

Model standard operating procedure for virtual/hybrid hearings - A uniform SOP for accessing hybrid/video conference hearings shall be prepared and circulated for adoption by all High Courts. - HELD THAT: - Noting absence of uniform SOPs and consequent arbitrariness, the Court directed preparation of a model SOP by Justice Rajiv Shakdher in conjunction with the amici curiae, based on the e-Committee's SOP. The model SOP is to be placed on record and circulated in advance so that a uniform SOP is adopted across all High Courts within the specified period. [Paras 10, 13, 14]

A model SOP shall be prepared and circulated to secure a uniform procedure for virtual/hybrid hearings across High Courts.

Provision of free Wi Fi and adequate bandwidth within court precincts - coordination between Union ministries and tribunals for infrastructural enablement - High Courts must ensure free Wi Fi and adequate internet bandwidth within court precincts; the Union Ministry of Electronics & Information Technology shall coordinate with the Department of Justice to ensure bandwidth/connectivity in specified regions. - HELD THAT: - The Court observed lack of internet connectivity and absence of Wi Fi in many High Courts, which impedes access. It directed High Courts to make adequate internet facilities, including free Wi Fi with sufficient bandwidth, available to advocates and litigants within court precincts. Further, the Union Ministry of Electronics & Information Technology was directed to coordinate with the Department of Justice to provide adequate bandwidth and connectivity to courts in the North East, Uttarakhand, Himachal Pradesh and Jammu & Kashmir to facilitate online hearings. [Paras 11, 14]

High Courts shall provide free Wi Fi and adequate bandwidth; the Union Ministry of Electronics & Information Technology shall coordinate to ensure connectivity in designated regions.

Training of Bar and Bench in use of judicial technology - High Courts must provide training facilities to members of the Bar and Bench to enable proficiency in the use of technology for hearings. - HELD THAT: - Recognising that effective use of technology requires training, the Court directed all High Courts to set up adequate training facilities for practising advocates and judges so they become conversant with the use of technology. These training facilities are to be established under intimation to the Court within two weeks from the date of the order. [Paras 14, 17]

All High Courts shall establish training facilities for the Bar and Bench within the stipulated period.

Judicial administration reporting and data collection - model standard operating procedure for virtual/hybrid hearings - High Courts must place on record specified data regarding licences, nature of hybrid infrastructure, and court wise counts of virtual/hybrid hearings since 1 April 2023, and steps taken to ensure internet/Wi Fi availability. - HELD THAT: - To assess implementation and enable further orders, the Court mandated that each High Court file details of video conferencing licences and hybrid infrastructure, a court wise tabulation of virtual/hybrid hearings conducted since 1 April 2023, and steps taken to provide Wi Fi/internet facilities to advocates and litigants. The amici curiae were nominated to collate affidavit information into a tabulated chart and to assist with preparation and dissemination of the model SOP. [Paras 13, 14]

High Courts shall place the specified infrastructural and usage data on record and the amici curiae shall collate and tabulate the information.

Coordination between Union ministries and tribunals for infrastructural enablement - Specific directions were issued for immediate coordination and meetings to expedite hybrid facilities at certain tribunals (NCLAT, NCLT, APTEL). - HELD THAT: - The Court directed a joint meeting within one week between Secretaries of the Ministries of Finance and Corporate Affairs and the President of the NCLAT to resolve funding and infrastructural issues, and a meeting with the Chairperson of the NCLT within two weeks. It further issued a specific direction for the Additional Solicitor General to contact the Chairperson of APTEL to ensure video conferencing/hybrid facilities at APTEL within one month. These are administrative steps intended to secure compliance with the broader infrastructural mandate. [Paras 6, 15]

Meetings and administrative coordination shall be undertaken immediately to enable hybrid facilities at NCLAT/NCLT and APTEL within the directed timelines.

Final Conclusion: The Court directed nationwide measures to ensure that video conferencing and hybrid hearings are accessible without arbitrary restrictions, mandated funding and infrastructure provisioning by State and Union authorities, required uniform SOPs, training and free internet facilities in court precincts, ordered specific administrative meetings for tribunal enablement, and set concrete timelines for compliance and reporting.

Power to direct interim compensation under Section 143A of the Negotiable Instruments Act - Discretionary power to fix interim compensation within 1% to 20% - Requirement to record reasons when awarding interim compensation - Presumption under Section 139 of the Negotiable Instruments Act - Inherent jurisdiction of the High Court under Section 482 Cr.P.C. - Bar on second revision under Section 397(3) Cr.P.C.

Power to direct interim compensation under Section 143A of the Negotiable Instruments Act - Discretionary power to fix interim compensation within 1% to 20% - Requirement to record reasons when awarding interim compensation - Presumption under Section 139 of the Negotiable Instruments Act - Validity of the Trial Court's order directing payment of 20% interim compensation under Section 143A in favour of the complainant. - HELD THAT: - The Court held that Section 143A is directory and vests discretion in the trial court to direct interim compensation not exceeding 20%. The Trial Court recorded reasons: the accused had admitted signatures and issuance of the cheque giving rise to presumptions under Section 139, and the order sheets demonstrated repeated adjournments and exemption applications indicative of dilatory tactics, including an adjournment cost imposed earlier. Having examined the order sheets and the Trial Court's reasoning, the High Court found that the learned Magistrate applied his mind to both the statutory ceiling and the accused's conduct and therefore lawfully exercised the discretion to award the maximum permissible interim compensation. The Revisional Court rightly declined to interfere with that exercise of discretion absent any patent error or lack of jurisdiction. [Paras 16, 17, 18]

Order directing payment of 20% interim compensation was lawful and warrants no interference.

Inherent jurisdiction of the High Court under Section 482 Cr.P.C. - Bar on second revision under Section 397(3) Cr.P.C. - Whether the High Court should exercise its inherent jurisdiction under Section 482 Cr.P.C. to reopen concurrent findings and grant relief akin to a second revision. - HELD THAT: - The Court reiterated that Section 482 jurisdiction must be exercised sparingly and cannot be used as a substitute for a second revision barred by Section 397(3). High Court may intervene only in cases of serious miscarriage of justice, abuse of process, violation of mandatory provisions or a well founded jurisdictional error. Where the Trial Court and Revisional Court have concurrently and reasonably dealt with the matter and applied discretion on facts (including findings on admissions and conduct), the High Court should not substitute its conclusions. Applying these principles to the present case, the Court found no exceptional circumstances or patent illegality to justify exercise of inherent jurisdiction. [Paras 10, 19, 20]

Petition under Section 482 Cr.P.C. dismissed; incumbent bar on second revision and absence of miscarriage of justice preclude interference.

Final Conclusion: The petition challenging the orders awarding 20% interim compensation and upholding that order in revision is dismissed; no exercise of inherent jurisdiction under Section 482 Cr.P.C. is warranted on the facts and concurrent findings of the Trial and Revisional Courts.

Prima facie case - cheating under Section 420 IPC - forgery under Sections 468 and 471 IPC - offence under Section 12(b) of the Passports Act, 1967 - supplementary chargesheet under Section 173(8) CrPC - reliability of private forensic report - State FSL report inconclusive - quashing of FIR and proceedings - marital dispute context and misuse of criminal process

Prima facie case - cheating under Section 420 IPC - marital dispute context and misuse of criminal process - The allegations do not prima facie amount to the offence of cheating under Section 420 IPC. - HELD THAT: - The Court analysed the ingredients of cheating - deception, dishonest inducement to deliver property or valuable security, and mens rea at the time of inducement - and found them missing on the material on record. Even if the alleged signatures were forged, the act did not result in Respondent No. 2 parting with any property or suffering demonstrable damage; the passport was a statutory right of the minor and its issuance did not confer benefit upon the appellants at Respondent No. 2's expense. The facts demonstrate a matrimonial dispute background and absence of dishonest intention to induce transfer of property, so the necessary elements of Section 420 IPC are not made out even prima facie. [Paras 16, 17, 18, 19, 34]

No prima facie case of cheating under Section 420 IPC; the charge thereunder cannot be sustained.

Forgery under Sections 468 and 471 IPC - reliability of private forensic report - State FSL report inconclusive - There is no prima facie case of forgery under Sections 468 and 471 IPC warranting trial. - HELD THAT: - Forgery requires fabrication of a document with intent that it be used for cheating. Having found no dishonest intention necessary for cheating, the Court confined its enquiry to whether a false document was prepared. The Court observed that the State FSL report was inconclusive and that the supplementary chargesheet relied on a paid private laboratory report already available earlier. No fresh material emerged from the further investigation and the private lab report, uncorroborated, is an unsafe basis to form a prima facie opinion of forgery. In these circumstances and given that proceedings against the implicated Passport Officer were quashed, the element of forgery could not be prima facie established. [Paras 21, 22, 23, 24, 30]

No prima facie case of forgery under Sections 468 and 471 IPC; charges cannot stand.

Supplementary chargesheet under Section 173(8) CrPC - reliability of private forensic report - The supplementary chargesheet filed under Section 173(8) CrPC was not supported by fresh evidence as required and therefore was insufficient to sustain cognizance for the added offences. - HELD THAT: - Section 173(8) CrPC contemplates obtaining further oral or documentary evidence before forwarding a supplementary report. The Court found that the so called further investigation produced no new material; it merely relied on a private lab report already in existence at the time of the original chargesheet. A mechanical compliance with the Trial Magistrate's direction, without procuring fresh corroborative evidence, renders the supplementary report deficient. A judicial magistrate is not obliged to take cognizance of a supplementary report lacking investigative rigour. [Paras 25, 26, 27]

Supplementary chargesheet under Section 173(8) CrPC was unsupported by fresh evidence and inadequate to proceed.

Offence under Section 12(b) of the Passports Act, 1967 - State FSL report inconclusive - There is no proper basis to invoke Section 12(b) of the Passports Act against the appellants on the material before the Court. - HELD THAT: - Section 12(b) requires proof that false information was knowingly furnished or material information suppressed to obtain a passport. The State FSL report was inconclusive as to forgery; moreover, cognizance under Section 12(b) can be taken only at the instance of the Prescribed Authority and no such complaint by that authority was placed on record. Absent conclusive forensic evidence or initiation by the prescribed authority, invoking Section 12(b) on conjecture would be inappropriate. [Paras 35, 36]

No sustainable case under Section 12(b) of the Passports Act, 1967 on the materials produced.

Quashing of FIR and proceedings - marital dispute context and misuse of criminal process - Proceedings arising from FIR No. 141/2010 are an abuse of process and are to be quashed. - HELD THAT: - Having found that the essential ingredients of cheating and forgery were not prima facie established, that the supplementary investigation did not produce fresh evidence, and that the controversy arose from matrimonial discord and a counterblast, the Court concluded continuation of criminal proceedings would amount to misuse of process. In exercise of its powers to prevent oppressive or vexatious litigation, the Court set aside the orders of the Trial Magistrate and the High Court and quashed the FIR and all consequential proceedings. [Paras 31, 32, 33, 34, 39]

FIR No. 141/2010 and all proceedings therefrom are quashed as an abuse of criminal process.

Final Conclusion: The appeal is allowed. The High Court and Trial Magistrate orders are set aside; FIR No. 141/2010 and all proceedings arising therefrom are quashed. Respondent No. 2 is directed to pay costs to Appellant No. 1, to be recovered as ordered.