TaxTMI Updates e-Newsletter
Feb 26,2025

Stay of proceedings - show cause notice - tagging of matters - consolidation for final hearing

Stay of proceedings - show cause notice - consolidation for final hearing - Further proceedings under the impugned show cause notices are to be stayed pending final disposal of the tagged main matter. - HELD THAT: - The writ petitions sought quashing of show cause notices alleging short-payment of goods and services tax for financial year 2017-2018. The Court recorded that these matters are tagged with the main matter in SLP (C) Nos.19366-19369/2023 and related matters, which is ripe for final hearing. Observing that some show cause notices might become time-barred imminently, the Court ordered that further proceedings in all impugned show cause notices shall remain stayed until the main matter and the tagged matters are finally disposed of. The stay was directed as an interim protective measure and the matters were listed for final disposal along with the main matter. [Paras 2, 3, 4]

Stay of all further proceedings under the impugned show cause notices until final disposal of the main matter and tagged matters.

Final Conclusion: Interim stay granted: all further proceedings on the impugned show cause notices are stayed pending final disposal of the main matter and tagged matters; matters listed for final disposal on 18-3-2025.

Violation of principle of natural justice - personal hearing was denied - difference in the amount of Input Tax Credit (ITC) for the tax period April, 2018 to March, 2019 - HELD THAT:- A bare look at the show cause notice issued under Section 73 of the Act (Annexure - 5) would reveal that date of filing of reply and date of personal hearing are the same i.e. 20.01.2024. This Court has repeatedly frowned on the action of the respondents in fixing identical date of reply and date of hearing, as the same apparently is an empty formality and essentially results in violation of principle of natural justice.

It would be seen that show cause notice was issued on 10 points and while on 7 points, the same was accepted, that also without indicating any reason, on 3 points only a cursory observation has been made that no evidence has been produced pertaining to deposit of tax through RCM and the accounts books have not been verified. Such a cursory disposal of the objection raised in reply to the show cause notice cannot be countenanced when plea raised is very specific.

In view of above fact situation, wherein besides non granting of opportunity of hearing, the order impugned i.e. 30.04.2024 passed, is wholly cursory, the same cannot be sustained.

So far as the challenge laid to order passed under Section 161 of the Act rejecting the rectification application is concerned, in view of the fact that the order dated 30.04.2024 itself has been found to be vitiated, rejection of the said application under Section 161 of the Act loses its significance.

The order impugned dated 30.04.2024 passed under Section 79(3) of the Act is quashed and set aside - Petition allowed.

Payment under protest - voluntary payment - rectification under Section 161 - penalty under Section 129(1)(a) - order under Section 129(3) - right to statutory appeal - exclusion of time for limitation

Payment under protest - voluntary payment - rectification under Section 161 - right to statutory appeal - Validity of the order rectifying the Section 129(3) demand by treating the deposit made through DRC-03 as a voluntary payment and thereby extinguishing the petitioners right to appeal. - HELD THAT: - The Court found that although the petitioner deposited the penalty amount through DRC-03, the deposit was accompanied by a clear endorsement that it was "paid under protest and without prejudice to our legal right of appeal." The respondents subsequent invocation of power under Section 161 to treat the earlier order under Section 129(3) as rectified and to record the demand as "NIL" had the practical effect of preventing the petitioner from prosecuting the statutory appeal against the demand which had been challenged and the amount paid under protest. The Court held that a payment made with a contemporaneous and express reservation of rights cannot be converted into a voluntary payment so as to oust the petitioners right to invoke appellate remedy; accordingly, the rectification order that produced that effect was unlawful and was quashed and set aside. [Paras 11, 12]

Order dated 08.10.2024 rectifying the order under Section 129(3) and treating the deposit as voluntary is quashed; petitioner retains the right to appeal against the order dated 06.10.2024.

Exclusion of time for limitation - right to statutory appeal - Whether the period during which the petitioner was unable to file the appeal by reason of the rectification order should be excluded for computation of limitation. - HELD THAT: - The Court observed that the effect of the impugned rectification order was to deprive the petitioner of the ability to file the statutory appeal against the Section 129(3) order. In view of the quashing of the rectification order and to obviate prejudice caused by that order, the Court directed that the period from 08.10.2024 (date of impugned rectification) until the date of the present order be excluded for computing limitation for filing the appeal against the order dated 06.10.2024. [Paras 12]

Period from 08.10.2024 until passing of this order is excluded for computation of limitation for filing the appeal against the Section 129(3) order dated 06.10.2024.

Final Conclusion: Writ petition allowed; order dated 08.10.2024 passed under Section 161 is quashed and set aside, the petitioners payment will continue to be treated as made under protest preserving the right to appeal, and the period from 08.10.2024 to the date of this order is excluded for computation of limitation for filing the appeal against the Section 129(3) order dated 06.10.2024.

Rate of GST on works contracts - Government entity or not - recovery of differential tax - HELD THAT:- There is no doubt that the petitioner is liable to pay GST @ 18% on the taxable turnover arising out of the contract with the 1st respondent. However, the 1st respondent had only reimbursed @12% instead of 18%.

The contention of the petitioner that the contract between the petitioner and the 1st respondent required the 1st respondent to reimburse the entire amount of GST paid by the petitioner, has not been contradicted. In such circumstances, it must be held that the 1st respondent was liable to reimburse the petitioner to the extent of the GST paid out by the petitioner and accordingly, the 1st respondent is liable to reimburse the petitioner the differential amount of GST @ 6%, for the period for which the petitioner ended up paying GST @ 18%. Needless to say, if interest is recovered from the petitioner for late payment, by the GST authorities, the same shall be reimbursed by the 1st respondent.

This Writ Petition is disposed of directing the 1st respondent to reimburse the petitioner to the extent of the differential amount of GST paid by the petitioner over and above the GST which has been reimbursed by the 1st respondent on account of the works executed by the petitioner under the contract with the 1st respondent.

Violation of principles of natural justice - no proper and prior SCN prescribed under sub-section [1] of Section 73 of the Assam Goods and Services Tax Act, 2017 and the petitioner was only served with a Summary of SCN in Form GST DRC-01 - HELD THAT:- Non-issuance of a proper and prior Show Cause Notice, as contemplated under sub-section [1] of Section 73 of AGST Act, 2017 and issuance of only Summary of Show Cause Notice and Attachment to Determination of Tax cannot be said to be in compliance with sub-section [1] of Section 73 and sub-rule [1] of Rule 142 of the AGST Rules, 2017. A Summary of Show Cause Notice is held to be not a substitute of a Show Cause Notice, contemplated by the provisions of sub-section [1] of Section 73 to set the proceeding in motion.

From the provisions of Section 73, it emerges that the Show Cause Notice is required to be issued by the Proper Officer, the statement under Section 73 [3] is to be issued by the Proper Officer as well as the Order under Section 73[9] is required to be issued by the Proper Officer. Compliance of the provisions contained in sub-section [1] to sub-section [8] and sub-section [10] to sub-section [11] of Section 73 and sub-rule [1] of Rule 142 are conditions precedent to term an Order passed under sub-section [9] of Section 73 as a valid one.

Having regard to the fact that a proper and prior Show Cause Notice under sub-section [1] of Section 73 of the AGST Act, 2017 was not issued along with the Summary of Show Cause Notice in Form GST DRC-01 [Annexure-B to the writ petition] and the Attachment to Determination of Tax [Annexure-B to the writ petition], and in terms of the observations made in the common Judgment and Order [2024 (10) TMI 279 - GAUHATI HIGH COURT], the impugned Order dated 21.08.2024 [Annexure-C to the writ petition] is found not sustainable in law and the same deserve to be set aside and quashed.

Conclusion - i) The Summary of the Show Cause Notice in GST DRC-01 is not a substitute to the Show Cause Notice to be issued in terms with Section 73(1) of the Central Act as well as the State Act. ii) The issuance of proper Show Cause Notices is mandatory for initiating proceedings under Section 73, and that compliance with natural justice principles is essential.

Petition disposed off.

Violation of principles of natural justice - no proper and prior SCN prescribed under sub-section [1] of Section 73 of the Assam Goods and Services Tax Act, 2017 and the petitioner was only served with a Summary of SCN in Form GST DRC-01 - HELD THAT:- Non-issuance of a proper and prior Show Cause Notice, as contemplated under sub-section [1] of Section 73 of AGST Act, 2017 and issuance of only Summary of Show Cause Notice and Attachment to Determination of Tax cannot be said to be in compliance with sub-section [1] of Section 73 and sub-rule [1] of Rule 142 of the AGST Rules, 2017. A Summary of Show Cause Notice is held to be not a substitute of a Show Cause Notice, contemplated by the provisions of sub-section [1] of Section 73 to set the proceeding in motion.

From the provisions of Section 73, it emerges that the Show Cause Notice is required to be issued by the Proper Officer, the statement under Section 73 [3] is to be issued by the Proper Officer as well as the Order under Section 73[9] is required to be issued by the Proper Officer. Compliance of the provisions contained in sub-section [1] to sub-section [8] and sub-section [10] to sub-section [11] of Section 73 and sub-rule [1] of Rule 142 are conditions precedent to term an Order passed under sub-section [9] of Section 73 as a valid one.

Having regard to the fact that a proper and prior Show Cause Notice under sub-section [1] of Section 73 of the AGST Act, 2017 was not issued along with the Summary of Show Cause Notice in Form GST DRC-01 [Annexure-B to the writ petition] and the Attachment to Determination of Tax [Annexure-B to the writ petition], and in terms of the observations made in the common Judgment and Order [2024 (10) TMI 279 - GAUHATI HIGH COURT], the impugned Order dated 21.08.2024 [Annexure-C to the writ petition] is found not sustainable in law and the same deserve to be set aside and quashed.

Conclusion - i) The Summary of the Show Cause Notice in GST DRC-01 is not a substitute to the Show Cause Notice to be issued in terms with Section 73(1) of the Central Act as well as the State Act. ii) The issuance of proper Show Cause Notices is mandatory for initiating proceedings under Section 73, and that compliance with natural justice principles is essential.

Petition disposed off.

Opportunity to file reply - opportunity of personal hearing - principles of natural justice - remand for fresh consideration - conditioning relief on interim payment - Section 75(4) of the GST Act, 2017

Opportunity to file reply - Whether the respondent provided sufficient opportunity to the petitioner to file a reply to the show cause notice prior to passing the impugned order - HELD THAT: - The Court observed that the petitioner had engaged a consultant who merely uploaded Form GSTR-9 and Form GSTR-9C instead of filing an effective reply. The record shows that adequate opportunity was afforded for filing a reply, but the consultant failed to furnish a substantive response. On this basis the Court found no fault with the respondent in regard to opportunity for filing a reply and concluded that the impugned order was not invalid on that ground. [Paras 8]

Sufficient opportunity to file a reply was provided; no relief on this ground.

Opportunity of personal hearing - principles of natural justice - Section 75(4) of the GST Act, 2017 - Whether the respondent afforded the petitioner a personal hearing after receipt of the reply and before passing the adverse order - HELD THAT: - The Court found that no personal hearing was granted subsequent to the filing of the reply and prior to passing the impugned assessment order. Relying on the mandate of Section 75(4) of the GST Act, 2017 and the requirements of natural justice, the Court held that passing an adverse order without providing the mandatory opportunity of personal hearing was contrary to law and vitiated the impugned order. [Paras 9]

Absence of personal hearing amounted to violation of Section 75(4) and principles of natural justice; impugned order is unsustainable on this ground.

Remand for fresh consideration - conditioning relief on interim payment - Remedial course to be adopted in view of the violation of personal hearing - HELD THAT: - The Court set aside the impugned order and remanded the matter to the 1st respondent for fresh consideration. The remand was conditional: the petitioner was directed to pay 10% of the disputed tax amount within two weeks, failing which the setting aside would not take effect. The petitioner was granted liberty to file a proper reply/objection within three weeks of receipt of the order, and the respondent was directed to issue a 14-day notice fixing a date for personal hearing and thereafter decide the matter on merits expeditiously and in accordance with law. [Paras 10]

Impugned order set aside and matter remanded for fresh consideration on the stated conditions and timelines.

Final Conclusion: The writ petition is allowed in part: the impugned order dated 23.04.2024 is set aside and the matter is remanded to the 1st respondent for fresh consideration; the setting aside is subject to the petitioner making the specified interim payment and complying with the timelines for filing reply, after which the respondent must accord a personal hearing and decide the matter in accordance with law.

Constitutional validity of Section 16(2)(c) of the Central Goods and Services Tax Act, 2017 - ultra vires of Articles 14, 19(1)(g) and 20 of the Constitution of India - availment of fraudulent Input Tax Credit (ITC) on the invoices issued by respondent No.3 - HELD THAT:- As per the contents of the show-cause notice, a specific intelligence was gathered by the officers of the CGST and Central Excise, Indore Commissionerate that as many as 12 noticees are indulged in issuance of fake invoices to various manufacturers without actual supply of goods. The investigation further revealed that the noticees had shown supply of various commodities to their recipients despite the fact that their supply pertains to FMCG goods. A detailed show-cause notice which runs into 82 pages has been issued to the petitioner and 11 other purchasers as well as respondent No. 3/supplier. Therefore, only on the instance of the petitioner the entire show-cause notice cannot be quashed.

Petitioner is required to establish its defence by producing documents before the competent authority, who shall examine the invoices and bills generated by all the noticees during the enquiry. It appears that in order to avoid the participation in the enquiry, petitioner is challenging the constitutional validity by placing reliance on the judgment passed by the Delhi High Court in case of On Quest Merchandising India Pvt. [2017 (10) TMI 1020 - DELHI HIGH COURT] in respect of Delhi Value Added Tax Act, 2004 in which the pari materia provision was 'read down'.

Conclusion - The non-obstante clause in the negative sentence in Section 16(2) restricts the eligibility under Section 16(1) for entitlement to claim ITC.

There are no good ground for entertaining this petition - petition dismissed.

Treatment of payments made in FORM GST DRC-03 against demand raised in FORM GST DRC-07 - mechanism under rule 142(2B) for crediting payments to Electronic Liability Register in FORM GST PMT-01 - application in FORM GST DRC-03A to rectify payment mode - refund remedy under Section 54 of the Central/State Goods and Services Tax Act

Treatment of payments made in FORM GST DRC-03 against demand raised in FORM GST DRC-07 - mechanism under rule 142(2B) for crediting payments to Electronic Liability Register in FORM GST PMT-01 - application in FORM GST DRC-03A to rectify payment mode - Payment made by the petitioners in FORM GST DRC-03, though the demand was in FORM GST DRC-07, can be regularised by filing FORM GST DRC-03A so that the amount is credited to the Electronic Liability Register in FORM GST PMT-01 against the debit entry created for the demand. - HELD THAT: - The court noted that rule 142(2) prescribes payment by FORM GST DRC-03 where payment is made before service of notice or statement, while recovery after a demand in FORM GST DRC-07 must be credited in FORM GST PMT-01 against the debit entry. Subrule (2B), inserted by notification No.12/24 dated 10th July, 2024, specifically addresses payments made through FORM GST DRC-03 instead of crediting the electronic liability register for amounts payable under the identified sections. It permits the person to file FORM GST DRC-03A electronically so that the amount already paid and intimated through FORM GST DRC-03 shall be credited in the Electronic Liability Register in FORM GST PMT-01 against the debit entry for the demand, with effect from the date of such intimation. Applying this provision to the admitted fact that the petitioners paid via DRC-03, the court permitted the petitioners to file FORM GST DRC-03A and directed the respondents to credit the paid amount in the electronic liability register against the debit entry for the demand if the application is made within the specified time. [Paras 5, 6]

Petitioners permitted to file FORM GST DRC-03A electronically; if filed within two weeks, respondents to credit the amount paid in FORM GST DRC-03 to the Electronic Liability Register in FORM GST PMT-01 against the debit entry for the demand.

Refund remedy under Section 54 of the Central/State Goods and Services Tax Act - Amount recovered from the petitioners' electronic liability register pursuant to the demand shall be refunded to their electronic cash/credit ledger upon processing of an application under Section 54. - HELD THAT: - The court, having regard to the submission of the State's counsel, directed that if the petitioners make an application under Section 54 of the Act, that application shall be duly processed and the amount already recovered from the petitioners' electronic liability register shall be refunded to the petitioners' electronic cash/credit ledger. The court prescribed a timeline of two weeks from the date of such application for effecting the refund. [Paras 7]

On the petitioners' application under Section 54, respondents to process the refund and refund the amount recovered to the petitioners' electronic cash/credit ledger within two weeks of such application.

Final Conclusion: Writ petition disposed of with directions permitting the petitioners to file FORM GST DRC-03A to regularise the payment made in FORM GST DRC-03 and directing respondents to credit that amount against the demand in FORM GST PMT-01 if application is filed within two weeks, and to process and refund amounts recovered to the petitioners' electronic cash/credit ledger upon an application under Section 54 within two weeks.

Non-service of SCN - notices issued under Section 73 of the Act, were uploaded on 'Additional Notices and Orders' Tab of the G.S.T. Portal - petitioner being unaware of issuance of the notices as well as passing of the order, could neither appear before the authority nor question the validity of the impugned order within the period of limitation - HELD THAT:- In the case of Ola Fleet Technologies Pvt. Ltd [2024 (7) TMI 1543 - ALLAHABAD HIGH COURT] a coordinate Bench of this Court inter alia observed and held that 'At present, it does appear that the petitioner is entitled to a benefit of doubt. No material exist to reject the contention being advanced that the impugned order was not reflecting under the tab "view notices and orders". On merits, as noted in the earlier orders an other dispute exists whether all replies and annexures to the replies as filed by the assessee were displayed to the assessing officer and whether those have been considered. We find, no useful purpose may be served for keeping this petition pending or calling for a counter affidavit or even relegating the petitioner to the available statutory remedy.'

The order impugned dated 05.04.2024 passed by the Assistant Commissioner, State Tax, Sector 8, Varanasi (Annexure-1 to the writ petition) is quashed and set aside - petition allowed.

Rejection of appeal for delay - Condonation of delay - Pre-deposit under Section 107(6) of the GST Act, 2017 - Attachment in recovery proceedings under Section 79 - Consideration of appeal on merits - Remand for fresh consideration

Rejection of appeal for delay - Condonation of delay - Pre-deposit under Section 107(6) of the GST Act, 2017 - Consideration of appeal on merits - Remand for fresh consideration - Whether the order rejecting the appeal as beyond the condonable period should be set aside and the appeal considered on merits - HELD THAT: - The High Court examined the petitioner's inability to respond to a notice allegedly uploaded in the 'additional notices' column of the common portal, the consequent delay of 35 days in filing the appeal, and the steps taken by the petitioner after learning of the impugned order, including a pre-deposit under Section 107(6) and additional payments toward the disputed tax. While observing that the second respondent applied the statutory time limit strictly in rejecting the appeal, the Court considered the surrounding circumstances and the petitioner's partial compliance with statutory payment requirements. In the interests of justice the Court held that the procedural delay, although significant, was not an absolute bar to adjudication on merits and that the matter merited fresh consideration by the appellate authority rather than being finally dismissed on the procedural ground of delay. The Court therefore set aside the impugned order and remanded the appeal for reconsideration on merits, directing the second respondent to decide the appeal in accordance with law and the facts of the case within a specified period. [Paras 9, 11]

Order dated 03.01.2025 rejecting the appeal on the ground of delay is set aside and the matter remanded to the second respondent to consider the appeal on merits and in accordance with law within two months.

Final Conclusion: The High Court allowed the writ petition in part by setting aside the appellate order rejecting the appeal for delay and remanding the matter to the appellate authority for fresh consideration on merits, with a direction to dispose of the appeal within two months; no costs ordered.

Detention and penalty under Section 129 of the Central Goods and Services Tax Act, 2017 - intent to evade payment of tax - physical verification and conformity with invoices - HSN classification and product identity - quashing of administrative orders by writ jurisdiction

Physical verification and conformity with invoices - HSN classification and product identity - detention and penalty under Section 129 of the Central Goods and Services Tax Act, 2017 - Whether detention of the vehicle and goods and imposition of penalty under Section 129 was justified where the goods physically verified matched the invoices and shared identical HSN classification. - HELD THAT: - The court found that the department's physical verification established correct quantity/weight and that the gross description in the invoices did not disclose any change in the product carried. The inspecting authority recorded additional particulars (size of pipe, shutter, TMT bar) not mentioned in the invoices, but no discrepancy as to the nature of goods or HSN classification was demonstrated. Because the products' classification was identical and there was no pinpointed discrepancy, the facts did not support drawing the procedural consequences under Section 129. The court observed that a different conclusion might follow if adjudication had raised a classification dispute, which was not the case here. [Paras 3]

Detention of the goods and imposition of penalty under Section 129 were not justified on the facts and were quashed.

Intent to evade payment of tax - quashing of administrative orders by writ jurisdiction - Whether the appellant had the requisite intent to evade tax such as would sustain the orders of demand, summary and penalty affirmed by the Appellate Authority, and whether those orders warranted interference by the High Court in writ jurisdiction. - HELD THAT: - The court held that the authority failed to pinpoint any intention on the part of the appellant to evade tax. In the absence of evidence of suppression or a material difference between invoiced and actual goods, the Appellate Authority's affirmation of the original orders could not stand. Exercising writ jurisdiction, the court interfered with and set aside the orders impugned in the writ petition. The court further granted consequential reliefs including release of the vehicle and goods and liberty to seek refund of any predeposit made in the appeal process. [Paras 3, 4]

Appellate Authority's affirmation of demand, summary and penalty was set aside; impugned orders quashed and relief granted to release the vehicle and goods.

Final Conclusion: The intra-court appeal is allowed; the writ petition is allowed and the impugned show-cause notices, summary, demand and penalty orders are quashed. The authorities are directed to release the vehicle and goods within four days of receipt of the order, and the appellant may seek refund of any predeposit made.

Condonation of delay of nearly 20 days in filing appeal - Seeking to call for the records - HELD THAT:- The appeal was dismissed since it was filed with the delay. In the present case, the appeal was filed with the delay of nearly 20 days due to the reason that the petitioner was not able to file the appeal through online mode. The reason of the delay in filing appeal appears to be just and reasonable. Therefore, this Court is inclined to condone the delay and set aside the impugned rejection order passed by the Appellate Authority.

The delay is condoned and the rejection order dated 19.11.2024 made by the Appellate Authority is set aside. Accordingly, the matter is remanded back to the Appellate Authority.

Petition allowed by way of remand.

Late fee for delayed filing of return - non-filing of annual return - general penalty for contraventions where no specific penalty provided - show cause notice under provisions for determination of tax combined with late fee proceedings

Late fee for delayed filing of return - non-filing of annual return - show cause notice under provisions for determination of tax combined with late fee proceedings - Validity of show cause notice issued under provisions for determination of tax read with the provision for levy of late fee for non-filing of annual return - HELD THAT: - The Court held that where a registered person failed to furnish the annual return under the Act, the respondent was entitled to proceed to call for payment of late fee under the specific provision dealing with belated filing of returns. Section 47(2) prescribes liability for late fee where the return required under the relevant provision is not furnished by the due date. The initiation of proceedings in the present case under Section 47 read with the provision for determination of tax did not vitiate the proceedings, and the show cause notice issued for non-filing of the annual return was held to be permissible. The late fee liability imposed on the petitioner in respect of delayed filing is therefore sustained. [Paras 6, 7]

Show cause notice issued in respect of non-filing of the annual return and levy of late fee is valid; the late fee is confirmed.

General penalty for contraventions where no specific penalty provided - late fee for delayed filing of return - Whether the general penalty under the Act could be imposed in addition to the late fee for delayed filing of return - HELD THAT: - The Court examined the applicability of the general penalty which applies where no separate penalty is provided by the Act. Since the contravention in the present case attracted a specific consequence in the form of late fee under the special provision for belated filing, the general penalty could not be validly imposed in addition. The imposition of the general penalty was therefore held to be impermissible and set aside, while the special remedy of late fee imposed under the specific provision was left intact. [Paras 7]

General penalty imposed in addition to the late fee is set aside; the late fee alone is sustained.

Final Conclusion: Writ petition partly allowed: the show cause notice and levy of late fee for non-filing of the annual return are upheld; the general penalty imposed in addition is set aside.

Voluntary cancellation of GST registration - right to claim input tax credit subject to statutory conditions - retrospective cancellation of supplier's registration not ipso facto vitiating recipient's claim - verification of supplier's registration and tax payment - obligation to furnish prescribed basic details for registration processes - duty to comply with demands and provide supporting documents before processing cancellation

Obligation to furnish prescribed basic details for registration processes - Requirement to furnish the corrected address and basic particulars as a precondition for processing the voluntary cancellation application. - HELD THAT: - The court found no ground to relieve the petitioner from the requirement to provide the basic details (corrected address for future correspondence) and the particulars referenced in paragraph 2 of the impugned order. The respondents are entitled to insist upon the completion of those prescribed particulars before proceeding with the petitioner's application for voluntary cancellation.

Petitioner must provide the required basic details; no relief granted on that ground.

Retrospective cancellation of supplier's registration not ipso facto vitiating recipient's claim - right to claim input tax credit subject to statutory conditions - verification of supplier's registration and tax payment - Whether retrospective cancellation of a supplier's registration automatically prevents the recipient from obtaining voluntary cancellation where the recipient claims ITC on invoices issued by such suppliers. - HELD THAT: - The court held that the mere fact that suppliers' registrations were cancelled retrospectively does not, by itself, justify rejection of the petitioner's voluntary cancellation application. If the petitioner can satisfy the authority that the supplies were received from suppliers who were validly registered at the relevant time and that the corresponding tax liabilities were discharged by those suppliers, retrospective cancellation alone is not a ground to deny processing of the voluntary cancellation request. This legal proposition is subject to due verification by the respondents of the petitioner's documentary and factual submissions establishing the suppliers' registration status and payment of tax.

Retrospective cancellation of suppliers' registration is not automatically fatal to the petitioner's claim; the respondents must verify the petitioner's supporting evidence.

Duty to comply with demands and provide supporting documents before processing cancellation - Requirement to answer and comply with demands raised in the impugned order (requests for supporting invoices, ledgers, bank statements, payment/deposit of disputed tax and interest, and compliance with Rule 86B-related demand) before consideration of voluntary cancellation. - HELD THAT: - The court directed that the petitioner must respond to and comply with the demands made in the impugned order, subject to any legal or factual contentions the petitioner may raise. The expression of this obligation contemplates verification and consideration by the competent authority once the petitioner furnishes the requisite responses and documents. The court afforded the petitioner three weeks to furnish the response, after which the respondents may take up the cancellation application for consideration.

Petitioner must furnish the specified responses and supporting documents within three weeks; the authority shall thereafter consider the voluntary cancellation application.

Final Conclusion: The writ petition is disposed of by directing the petitioner to furnish the required basic particulars and to respond to the demands (with supporting documents) within three weeks; retrospective cancellation of suppliers does not, without more, bar processing of the voluntary cancellation application, which the respondents must consider after verifying the petitioner's submissions.

Prosecution Proceedings initiated u/s 276C - Bogus LTCG - guilty mind i.e., mens rea - willful evasion of tax on claims made under the head LTCG/Short Term Capital Loss - allegation of crime invoking Section 200 of the CrPC for offence punishable under Section 276C - HC held [2024 (1) TMI 1007 - KARNATAKA HIGH COURT] stocks vary from JMD Telefilm Industries, Splash Media, Essar India and Alpha. Trading is both by the individuals and by the companies. But, the moment it is brought to the notice of all these petitioners, retracing of steps immediately happen by filing of revised returns. Therefore, it is not a case where ipso facto evasion of tax can be laid against these petitioners - mens rea is an element that is to be present in a proceeding u/s 271 of the Act. The mere fact of not accurate tax, not exact tax or erroneous tax would not lead to the proceedings u/s 276

An offence is made out so as to take Cognisance more so on account of the fact that it is on taking Cognisance that the criminal law is set in motion insofar as accused is concerned and there may be several cases and instances where if the Court taking Cognisance were to apply its mind, the Complaint may not even be considered by the said Court taking Cognisance let alone taking Cognisance and issuance of Summons. Thus the order taking Cognisance is not in compliance with applicable law and therefore is set aside.

HELD THAT:- The delay of 271 days in filing the present petition(s) is adequately explained and is condoned. Accordingly, I.A. is allowed.

Heard learned counsel for the petitioner.

Since the similar special leave petitions have already been dismissed by this Court, we dismiss the present petition(s) as well leaving the question of law open to be decided in some other appropriate case.

Revision u/s 263 - bogus LTCG - Validity of reopening of assessment u/s 147 - PCIT, Sambalpur exercised the suo motu revisional power u/s 263(1) and an order was passed directing the AO to add an entire amount u/s 68 r.w.s. 115BBE.

HC held [2023 (3) TMI 268 - ORISSA HIGH COURT] if the original re-assessment order itself was not validly passed, the subsequent revisional order by the PCIT was required to be held invalid.

No substantial question of law arises from the impugned order of the ITAT. Court is therefore not inclined to frame the questions of law as urged by the Revenue in the present appeals.

HELD THAT:- After having heard learned counsel appearing for petitioner and after perusing the finding of facts recorded by the Tribunal in paragraph 14 and 15 of its judgment which has been confirmed by the High Court, we find no case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India. The Special Leave Petitions are, accordingly, dismissed.

Fixed Place Permanent Establishment (PE) in India - taxability, the existence of a PE and attribution of income - whether NIPL would constitute a PE of Nokia OY? - whether the Liaison Office could be treated as a PE? - HELD THAT:- In Progress Rail [2024 (5) TMI 1417 - DELHI HIGH COURT] on occasion to examine what would constitute ‘preparatory’ and ‘auxiliary’ activities, expressions found in Para 4 (f) of Article 5, and which stipulates that as long as the activities undertaken could be said to be preparatory or auxiliary, the establishment would not be liable to be construed as constituting a PE. Clause (f) of Para 4 thus provides that a maintenance of a fixed place of business, even if it be for the undertaking of any of the activities stipulated in the preceding clauses, would still not qualify as a PE if the overall character of such activities were found to be of a preparatory or auxiliary character.

Tribunal has committed no error in answering the questions posited in favour of Nokia OY. Undisputedly, the issue of the Liaison Office constituting a PE had come to be settled in the first round of the litigation which ensued before the Tribunal and came to be ultimately affirmed by the 2012 judgment of this Court. The broad questions on which this Court remanded the matter to the Tribunal stood confined to NIPL and its interrelationship with Nokia OY.

Whether NIPL constituted a PE appears to have been principally answered in light of it being the wholly owned subsidiary of Nokia OY? - Article 5(8) bids us to bear in mind that the mere control of an entity by a parent or a holding company would not be determinative of whether a PE exists. A subsidiary or an entity which is substantially controlled by another would still have to meet the test prescribed by Paras (1), (2), (3), (5) and (6) of Article 5 before it can be said to constitute a PE.

We are also of the firm opinion that the question of PE is not liable to be answered on the basis of a “perception” of virtual projection. The DTAA does not leave this seminal issue to be decided on the basis of individual estimations or impressions. It lays in place certain empirical standards which must be borne in mind when answering the question whether a PE exists. Issues of “virtual projection” and “functional integration” are liable to be answered on an appreciation of facts as may be found to exist. It is here that the precepts propounded by learned scholars such as the use and maintenance of a place of business, the place being at the disposal of an enterprise or being liable to be viewed as an operating asset of the enterprise itself assume significance. What, however, needs to be emphasized is that these are aspects which cannot possibly be left to depend upon the tenuous thread of fluctuating perceptions, impressions and mutable beliefs. Article 5 thus bids us to answer the question of PE based on measurable evidence and the objective benchmarks incorporated therein. The exercise to ascertain whether a PE exists is thus founded on evidence-based standards rather than a theory or mere surmise. We consequently find ourselves unable to countenance the perception test which was propounded by the Tribunal in the earlier round of litigation.

When tested on the standards consistently recognized by courts, it becomes apparent that the appellants had woefully failed to establish that NIPL or its premises could be recognised to be a PE when tested on the mandated criterion of either a Fixed Place or a Dependent Agent PE. Having gone through the copious material which was examined and evaluated by the Tribunal, we have no hesitation in affirming its view insofar as Fixed Place PE is concerned.

We also find ourselves unconvinced of the arguments advanced by the appellants before us in their attempt to question the correctness of its conclusions insofar as DAPE is concerned. The reasons underlying our conclusion are set out hereinafter.

Examining the minority opinion - It becomes pertinent to note that the learned Member has, in our opinion, correctly noted that there is no general presumption in law that a subsidiary can never be acknowledged to be a PE. This since Article 5(8) itself merely states that the said factor alone shall not be determinative of the PE question. The covenant thus clearly obliges us to evaluate the facts based on the other provisions comprised in Article 5 of the DTAA.

We also concur with the minority opinion when it held that the appellants had failed to establish the existence of a DAPE. It has, however, in this respect observed that while the view expressed in the previous round, stricto sensu, may not have been wholly accurate or tenable, the question of PE would still be liable to be answered basis the essence of the arrangement between Nokia OY and NIPL as was discerned by the AO and the CIT(A).

The second aspect which appears to have weighed upon the minority was the commitment towards technical support as held out by Nokia OY as well as its assurance against dilution of its interest in NIPL. All this, according to the minority, amounted to a virtual performance guarantee and ultimately concerned with “furtherance of the business interests of the assessee company in India, as much, if not more, for its own economic and business interests.” It is this underlying theme and line of reasoning which then breathes through the entire opinion.

The minority then proceeds to notice and apply the principle of alter ego companies as being pertinent to the issue of PE. However, the alter ego test was subjected to the caveat of it being found that the resident company had no significant independent activity of its own. The minority then also culled out a distinction between an associated PE (and which it chose to describe as a direct PE) and an unassociated PE (“indirect PE” as per the minority).

In our opinion, the reasoning so adopted clearly seeks to blur the distinction which the law seeks to draw between associated enterprises and which may legitimately enter into transactions inter se and which would satisfy the arm’s length test.

The agency PE which is contemplated in Article 5 (5) is concerned with a person who acts on behalf of an enterprise and undertakes activities specified in clauses (a), (b) and (c) thereof. Such an agent must and in light of the textual construct of Article 5 (5) be one who acts “on behalf of”, “in the name of” and “for the enterprise itself”. The minority thus in its attempt to conflate a Fixed Place PE with DAPE has merely confounded two distinct issues. It has thus chosen to ignore the primordial conditions of “virtual projection” and premises at the disposal of an enterprise being found to exist so as to constitute a PE.

We may only observe that a parent or a holding company would invariably be expected to have an interest and concern in the working of an overseas subsidiary. This essentially represents its right of oversight, supervision and protection of shareholder interest. However, the exercise of those powers does not denude the subsidiary of its independent economic existence.

Ultimately, it would have been imperative for the appellants to have established that NIPL was an enterprise through which Nokia OY was operating and carrying on its own business and that the former was no more than an adjunct of Nokia OY itself. The mere fact that Nokia OY held out an assurance in respect of a fledgling venture in its formative years fails to convince us to hold that the former constituted its PE. The assurances were clearly not liable to be viewed as being evidence of Nokia OY using NIPL as a vehicle for its own enterprise.

Insofar as the issue of software is concerned, it was fairly conceded that the same would be liable to be answered against the appellants in light of the judgment of the Supreme Court in Engineering Analysis Centre of Intelligence Private Limited [2021 (3) TMI 138 - SUPREME COURT]

Answer the questions as posited in the negative and against the appellants.

Income Tax Department to conduct an inquiry and investigate the alleged illegal cash transactions - HELD THAT:- Petitioner is unable to indicate as to what fundamental or statutory rights of the petitioner have been infracted or violated. From the submissions as also after perusing the pleadings of the petitioner, it appears that the present petition is predicated upon a matrimonial feud between the petitioner and respondent no. 3.

That apart, record also reveals that the disputes are hotly contested and involve highly complex and disputed questions of facts which will not be within the purview of the Income Tax department to adjudicate. Similarly, such disputed questions of facts also cannot be adjudicated under Article 226 of the Constitution of India.

As also been unable to indicate the provision under which such a complaint has been submitted to the Income Tax department. Clearly, the complaint was not under a statutory scheme or a regulatory mechanism available under the Income Tax Act, 1961, thus the question of non-response to such complaint constituting violation of fundamental right or even a civil or statutory right of the petitioner, is non-existent. The said submission is unmerited.

Attachment of bank account - disposal of the appeal filed under Section 251 - HELD THAT:- According to the petitioner, since the aforesaid assessment is a high pitched assessment, the petitioner had prayed for stay of the entire demand raised by the respondent authorities u/s 156. Record would reveal that not only the Deputy Commissioner of Income Tax but the PCIT had in the year 2019 itself rejected the petitioner’s application for staying the entirety of the demand and the petitioner was called on to make immediate payment of 20% of the demand already raised.

It is true that in case where a high pitched assessment is made ordinarily when an appeal is preferred within the stipulated period of limitation, the demand may not to be enforced till disposal of the appeal. The Hon'ble Division Bench of this Court in the case of Jankalyan Vinimay[2023 (8) TMI 723 - CALCUTTA HIGH COURT] has taken the above view.

In the present case, however, taking note of the fact that there is no explanation for the delay, for the petitioner approaching this Court after four and half years from the date of rejection his application for stay of the entirety of the demand and the order attaching his bank account, petitioner is not entitled to the stay of the order of attachment at this stage.

Appellate authority should expeditiously hear out and dispose of the appeal not later than six weeks from the date of communication of this order upon giving reasonable opportunity of hearing to the petitioner. It is made clear that in the interregnum, if any amount is credited to the petitioner’s bank account which is the subject matter of attachment, the same shall be retained with the bank to the credit of the appeal.

Benefit u/s 10 (26) - direction to the NF Railway to pay the tax which was deducted at source to the decree holder/Respondent No.1 herein on the ground that in terms with Section 10 (26) there is an exemption of Income Tax on Scheduled Tribes - whether the said decree holder is a recognized Scheduled Tribe within the State of Assam? - HELD THAT:- As in the instant case, the consignment was booked from Jharkhand to North Lakhimpur. The entitlement of the interest on the compensation has to be taken as an income accrued at North Lakhimpur. The said area i.e. North Lakhimpur do not fall within the ambit of the Sixth Schedule insofar as the State of Assam is concerned.

Considering the above, as the benefit u/s 10 (26) of the Act of 1961 can only be permissible to a Schedule Tribe when the income had to accrue in the areas as specified in Section 10 (26), this Court is of the opinion that the learned Railway Tribunal erred in law and committed an error in exercising its jurisdiction while passing the orders dated 06.01.2017 as well as 09.06.2017 which have been impugned in the instant proceedings only on the ground that the claimant was a tribal of Arunachal Pradesh. The said being an error in exercise of jurisdiction, this Court interferes with the said orders dated 06.01.2017 as well as 09.06.2017.

Revision u/s 263 - provision for bad debts was made in the profit and loss account, the same is not seen obliterated - HELD THAT:- AO did not show any application of mind and mechanically accepted the statement of the assessee. When the assessee is found to have claimed deduction towards the “provision for doubtful assets” for the purpose of computation of book profit under Section 115-JB, AO did not state any reason as to why he decided, if at all, to accept the explanation of the assessee despite the fact that the said amount was not debited for the provision for doubtful account and consequently, the provision of doubtful debts account has not been obliterated. Thus, it is only for disclosure purposes that the amount was shown as a reduction from the trade receivables in the balance sheet. The assessee has not included the said amount as written off debts, but was hopeful of getting it back at some point of time.

Viewed in the above perspective, we cannot find fault with the Principal Commissioner of Income Tax for having exercised his jurisdiction under Section 263 of the Income Tax Act, 1961. Consequently, the order passed by him after hearing the appellant and directing the assessing officer to re-examine the said issue is perfectly justifiable and legal.

Tribunal, on the other hand, had analysed the position of law as stated by us above and concluded rightly that the order passed by the Commissioner of Income Tax did not suffer from any illegality or perversity. Therefore, we are of the considered view that the order impugned in the appeal does not suffer from any jurisdictional infirmity. Decided against the assessee.

Validity of reassessment proceedings beyond period of limitation -proviso to Section 149(1)(b) and its effect on retrospective operation - reopening barred where six-year period has expired

HELD THAT:- In the present case, the period of six years for the relevant AY 2016-17, thus, expired on 31.03.2022. The impugned notice has been issued thereafter, and the same is, thus, barred by limitation. Assessee appeal allowed.

Assessment u/s 153A when no incriminating material was found during the search - AO has only made the addition by invoking the provisions of Section 68 on account of unexplained cash credits, receipts from the sale of house u/s 57 and trading addition on additional sales - HELD THAT:- Revenue is unable to controvert the argument of the assessee that there is no incriminating document referred to in the assessment order by the AO nor any such document was produced either before the ld. CIT(A) or before the Tribunal.

Therefore, by respectfully following the judgement of Abhisar Buildwell [2023 (4) TMI 1056 - SUPREME COURT] we are of the opinion that no addition could be made in the hands of the assessee in the order passed u/s 153A in absence of any incriminating material. Accordingly, we direct to delete the additions made without referring to any incriminating material.

Liberty is granted to the AO to initiate reassessment proceedings u/s.147/148 of the Act as per law in case of completed/unabated assessment, if no incriminating material found during the course of search. Accordingly, the ground of appeal no. 1 of the assessee is allowed.

Correct head of income - characterization of income - gain on sale of part of property/shops - ‘Capital Gains’ or ‘Profits from business and Profession’ - HELD THAT:- Assessee has pointed that the assessee had sold some shops during the period relevant to AY 2017-18 and had offered gain on sale of said shops as Long Term Capital Gain in the return of income.

AO while making assessment u/s. 143(3) examined the issue in detail and accepted the gain on sale of shops as Long Term Capital Gain. Once, the Revenue has accepted the property as investment and sale of part of such property as Long Term Capital Gain the principle of consistency demands that when there is no change in the nature of holding of the property in impugned assessment year, the gain on sale of part of such property cannot be re-characterized as ‘Business Income’. Decided against revenue.

Addition under section 68 - bogus share capital and share premium - window dressing of balance sheet - consistency in acceptance of admissions and affidavits - deletion of addition on admitted bogus entries

Addition under section 68 - bogus share capital and share premium - window dressing of balance sheet - consistency in acceptance of admissions and affidavits - deletion of addition on admitted bogus entries - Deletion of addition of Rs. 3.30 crores made under section 68 on account of alleged share capital and share premium - HELD THAT: - The AO had made an addition under section 68 after inquiries showed that notices to alleged subscribers were unserved and bank confirmations and account details were not genuine. Before the CIT(A) the assessee's Chartered Accountant filed an affidavit admitting that the balance sheet was window dressed by increasing both liabilities (share capital and share premium) and assets (plant and machinery) by the same amount to obtain higher bank credit. The CIT(A) accepted the assessee's admission in part by deleting the depreciation claim but confirmed the addition under section 68. The Tribunal held that where the authorities accept the statement/admission that entries on the asset side are bogus, the corresponding admitted entries on the liability side cannot be sustained; acceptance of the affidavit must be consistent and either accepted wholly or rejected wholly. Applying that principle, and having regard to the admitted window dressing, the addition of Rs. 3.30 crores on account of bogus share capital and share premium was deleted. [Paras 5]

Addition of Rs. 3.30 crores under section 68 deleted.

Procedural dismissal for non-prosecution of grounds - Grounds 3 to 7 of the appeal dismissed for want of prosecution as no submissions were advanced - HELD THAT: - Counsel for the assessee pressed only grounds 1 and 2 before the Tribunal and made no submissions in respect of grounds 3 to 7. The Tribunal accordingly dismissed those grounds for lack of prosecution and absence of any argument or supporting material presented on them. [Paras 6]

Grounds 3 to 7 dismissed.

Final Conclusion: Appeal partly allowed: addition of Rs. 3.30 crores under section 68 on account of alleged share capital and share premium deleted; remaining grounds (3-7) dismissed for want of prosecution.

Powers provided u/s. 12AB for cancelling the registration granted to the assessee u/s. 12A - PCIT (Central) jurisdiction to cancel the registrations u/s 12A/12AA/12AB - ‘specified violation'

HELD THAT:- As going through the above decisions of Maa Jagat Janani Seva Trust [2024 (7) TMI 1020 - ITAT CUTTACK] wherein catena of judgments have been referred and also the ratio laid down in the case of Industrial Infrastructure Development Corporation (Gwalior) M.P. Ltd. [2018 (2) TMI 1220 - SUPREME COURT] has been followed, we find that the same is squarely applicable on the facts of the instant case and therefore we are inclined to hold that since there is no express power provided u/s. 12AB(4) of the Act for cancelling the registration granted u/s. 12A, PCIT (Central) grossly erred in issuing show cause notice u/s. 12AB(1) of the Act on 21.07.2023. The said show cause notice is held to be invalid and void ab-initio and therefore finding of ld. PCIT (Central) is reversed and we hold that registration granted u/s. 12A of the Act cannot be cancelled during the proceedings carried out u/s. 12AB(4) of the Act.

Assessee challenging the powers available in section 12AB that the show cause notice issued u/s. 12AA on 20.03.2024 is also invalid - Assessee stated that section 12AA(5) of the Act provides that nothing contained in section 12AA of the Act shall apply on or after 01.04.2021 - As in the instant case the proceedings for cancellation of registration have been initiated on 21.07.2023 and therefore even the registration u/s. 12A cannot be cancelled u/s.12AA of the Act in the instant case because the proceedings have been initiated u/s. 12AB which have been brought into Act w.e.f. 01.04.2021. Therefore, the show cause notice u/s. 12AA of the Act issued on 20.03.2024 for cancelling the registration u/s. 12AA(3) and 12AA(4) of the Act for the period 01.04.2019 to 31.03.2021 is invalid and ab-initio as the PCIT (Central) has issued the show cause notice dated 20.03.2024 in a section already stood discontinued from 01.04.2021 onwards. Thus, the assessee succeeds on this second limb of its legal ground.

In the show cause notice PCIT has referred to ‘specified violation’ committed by the assessee by virtue of which the assessee trust has not applied its income wholly and exclusively for the purpose for which it is established but using it directly or indirectly for the benefits of its trustees and other members of the trust - As sub-section (3) and (4) of section 12AA, there is no mention to any ’specified violation’ but only refers to the genuineness of the activity carried out by a trust or institution, however, PCIT has only referred to some ‘specified violations during F.Yrs. 2019-20 to 2021-22 which was going on under scrutiny by AO. There were only few statements which were recorded during the course of search which are the basis of the alleged allegation and that too have been retracted and apart from that no other evidence and no accounted assets, unaccounted income were found during search at assessee’s premises and therefore they are merely allegations and there is no concrete finding disproving the genuineness of activities of trust. Therefore, even sub-section (3) and sub-section (4) of section 12AA could not have been invoked in absence of any specified violation for the years under consideration.

To conclude we allow the legal ground raised by the assessee and hold that since the show cause notices issued to the assessee on 21.07.2023 and 20.03.2024 are invalid and void ab-initio for want of express powers for cancellation of registration u/s.12A of the Act and also proceedings wrongly started u/s. 12AA of the Act in view of the amendment brought in from 01.04.2021 and lastly the ‘specified violation word being inserted from 01.04.2022 cannot be applied for the alleged violation made from F.Yrs. 2019-20 to 2021-22 and therefore hold that ld. PCIT (Central) grossly erred in cancelling the registration granted to assessee u/s. 12A on 16.02.2001 and also erred in cancelling the registration granted u/s. 12A r.w.s.12AB of the Act granted on 28.05.2021. Thus registration u/s. 12A and 12AB of the Act granted to the assessee trust are restored.

Observation of PCIT based on the seized document, and other loose sheets found during the course of search along with the Pendrive found at the residential premises of Chief Accountant of the assessee trust and proceeding to cancel the registration -As remains uncontroverted that assessee trust is carrying out genuine activities as per its objects forming part of registration certificate granted u/s. 12A/12AB of the Act and running a Medical College, Hospital and Research Centre. Even ld. PCIT has not referred to any other discrepancy in the regular day to day activity of the assessee trust except to the loose documents found during the course of search and that to only pertaining to F.Yrs. 2019-20 to F.Y. 2021-22. Total focus of the ld. PCIT has been around these documents referred in the impugned order but other than these documents nothing wrong has been found in the regular day to day activity of the assessee trust. We also notice that the alleged documents are only confined to the staff salary, doctor salary and capitation fee but the assessee trust is carrying out many more activities and the expenses are of much more magnitude which involves the amount spent towards building construction, medicine, machines, college building and other expenses which are appearing in the audited books of account.

If it is established that the assessee trust/societies is carrying out genuine activities as per the objects for which they have been established, then the issue arising out of any loose paper/documents/ incriminating material alleging that the funds of the society have been misappropriated or there is ambiguity in the claim of expenses, the same can be taken care of at the time of assessing the income and the additions involving such issues can be made but for the remaining income of the society, benefit of exemption u/s. 11 of the Act cannot be denied.

We are inclined to follow the decision of Shri Jairam Education Society [2021 (10) TMI 911 - ITAT INDORE] and the same being squarely applicable on the facts of the instant case hold that PCIT erred in cancelling the registration granted to the assessee u/ss. 12A and 12AB of the Act solely on the ground of alleged documents even when the activities of the assessee trust are found to be genuinely carried out are charitable in nature and are in accordance with the objects of the trust and addition if any emanating out of the seized record can be taken care by the Assessing Officer in the assessment proceeding.

Conclusion:-

PCIT erred in cancelling the registration granted to the assessee u/s. 12A on 16.02.2001 and also erred in cancelling the registration granted u/s. 12A r.w.s.12AB of the Act for period 01.04.2021 onwards. Accordingly registration granted u/s. 12A of the Act and u/s. 12A r.w.s.12AB of the Act stands restored.

Allow the Grounds raised by the assessee observing that since the assessee is carrying out genuine charitable activities as per the objects of the trust the ld. PCIT erred in cancelling the registration u/s. 12A/12AB of the Act based on some statements recorded during the course of search but subsequently retracted and other seized material which were the subject matter of assessment proceedings undergoing at that point of time and therefore even if any addition is made by the AO, the benefits of registration u/s. 12A/12AB of the Act shall continue to be enjoyed by the assessee for the remaining amount of income earned by it.

Assessee succeeds on Ground further because the ‘specified violation’ allegedly made by the assessee trust cannot be said to be justified because the word ‘specified violation’ has been brought into the Act from 01.04.2022 and the alleged violation are based on the documents and details for the F.Yrs. 2019-20 to 2021-22 which are prior to 01.04.2022.

Reopening of assessment u/s 147 - Notice after the expiry of 4 (four) years - requirements under section 151(ii)(a) - notice was issued under the old provisions of the Act - scope of new provision/scheme introduced by the Finance Act 2021 - HELD THAT:- AO has completed the reassessment proceedings under old provisions of the Act. Since Section 149 of the Act 1961 requires notice to be issued by Income Tax Authority, therefore, in terms of sub Section (1) of Section 282A it has to be signed by that authority and to be issued in paper form or communicated in electronic form by that authority in accordance with procedure prescribed.

Thus, considering the provisions of Section 282 and 282A of the Act, 1961 and the provisions of Section 13 of the Act, 2000 and meaning of the word "issue" NFAC concluded that firstly notice shall be signed by the assessing authority and then it has to be issued either in paper form or be communicated in electronic form by delivering or transmitting the copy thereof to the person therein named by modes provided in section 282 which includes transmitting in the form of electronic record. Section 13(1) of the Act, 2000 provides that unless otherwise agreed, the dispatch of an electronic record occurs when it enters into computer resources outside the control of the originator.

Thus, the point of time when a digitally signed notice in the form of electronic record is entered in computer resources outside the control of the originator i.e. the assessing authority that shall be the date and time of issuance of notice under section 148 read with Section 149 of the Act, 1961.

In this case, it was observed from the copy of Notice u/s 148 filed by the assessee, that the Notice bears the date 31/03/2021 and the Digital Signature of AO shows the date 'Thursday April 1, 2021 2.27 PM' On the foot note of the said notice, following has been written: "If digitally signed, the date of digital signature may be taken as date of document". In view of the above discussion, NFAC concluded that the impugned notice u/s 148 of the Act shall be treated to have been issued on 01.04.2021 as the same has been digitally signed by the AO on 01-04-2021 and in no case, issue of notice can take place before signing of the same either electronically or otherwise.

Thus, in this case, the reassessment notice was held to be issued on 01.04.2021 and accordingly, new provisions of making reassessment, Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (hereinafter referred to as "TOLA"), ratio of Supreme Court Judgement and consequent CBDT Instruction No. 1/2022 dated 11.05.2022 are made applicable by the NFAC.

DR has failed to establish that the order of NFAC is in any way beyond the principles laid down by the Hon’ble Supreme Court in the aforesaid referred in Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] and Ashish Aggarwal [2022 (5) TMI 240 - SUPREME COURT] The question to be examined is not just about the competence of sanction giving authority u/s 151 of the Act, but the larger issue has been examined by the NFAC and rightly decided against the AO.

Addition on account of alleged payment of on-money by assessee for purchase of residential unit - AO while alleging payment of on money by the assessee to the builder has taken the difference of actual payment made by the assessee to the builder and the registered value of the property - HELD THAT:- Holding such difference as on money is bizarre. The assessee has made payment for purchase of property from declared and proved sources. All the payments to the builders have been made either from loan account or through banking channel from foreign remittances. The assessee in order to substantiate source of payment has placed on record bank statement and loan disbursement details. Hence, to make addition of difference between actual payment and registered value as on money is unwarranted and without any basis, when the entire amount is paid from declared sources through banking channels. The Revenue has not substantiated assessee’s any undisclosed source of income in India for payment of alleged on money. Decided in favour of assessee.

Addition on the basis of directions of the DRP - HELD THAT:- As per Sub-section (13), once the DRP issues directions, the AO shall in conformity with the directions, complete the assessment without providing any further opportunity of being heard to the assessee within one month from the end of the month in which such directions are received.

The scheme of section 144C does not provide option to the DRP to issue directions to the AO to make further enquiries or verification after DRP directions. Section 144C(7) empowers the DRP to conduct enquiries and verifications on the documents furnished by the assessee during DRP proceedings.

DRP cannot cause the AO to verify documents placed before the DRP before passing the Final Assessment Order. DRP has gone beyond its jurisdiction in giving such directions to the AO, hence, addition made by the AO in Final Assessment Order is without jurisdiction. Ergo, addition is directed to be deleted - Decided in favour of assessee.

Penalty u/s 271(1)(c) - allegation of defective notice - non specification of clear charge - HELD THAT:- AO initiated the penalty proceedings by issuing the notice u/s 274/271(1)(c) of the Act without specifying whether the assessee has concealed ''particulars of income" or assessee has furnished "inaccurate particulars of income", so as to provide adequate opportunity to the assessee to explain the show cause notice. Rather notices in this case have been issued in a stereotyped manner without applying any mind which is bad in law, hence is not a valid notice sufficient to impose penalty u/s 271(1)(c).'

AO has issued notices under section 274 r.w.s. 271(1)(c) of the Act without striking off the irrelevant words the penalty proceedings shows the non-application of mind by the Assessing Officer and is, thus, unsustainable. Appeal of the assessee is allowed.

Condonation of delay in filing the second appeal - misdeclaration and undervaluation of imported Brass Ceramic Cartridges - HELD THAT:- Admittedly, the Appellant had preferred the appeal before the Commissioner (Appeals) and had engaged the said counsel. The notice for personal hearing was served upon the Appellant as also the Counsel, as is evident from the notice dated 08th January, 2020. The Counsel had also attended the hearing. There was no other alternative address, which the Appellant provided, to the Commissioner (Appeals) for service of the order dated 1st June 2020.

Under such circumstances, the Commissioner (Appeals) cannot be blamed for having sent the order to the earlier address of the Appellant. There has been clear lack of alacrity on behalf of the Appellant, who has not bothered to verify as to whether any order was passed by the Commissioner (Appeals) in the appeal preferred at its instance. This Court is of the opinion, that the duty existed, also, upon the Appellant to check if any order was passed in the appeal.

In the overall facts and circumstances, the Department did not have any other option and has exercised its due diligence in accordance with the procedure. As the Appellant did not provide an alternate address and the Counsel failed to inform the Appellant, the Department cannot be held responsible.

Conclusion - The Department had fulfilled its obligations, and the appellant's lack of diligence contributed to the dismissal of the appeal.

The order of CESTAT does not warrant any interference - Appela dismissed.

Benefit of concessional rate of Counter Veiling Duty (CVD) on the imports - import of cement bags of 50 kgs retail packing instead of in bulk, not declaring the purpose of import - importers have failed to fulfill the conditions stipulated in the Notification No.4/2006-CE as amended - HELD THAT:- In the instant case, it is an admitted fact by the importer that he did not purchase the cement from the manufacturer directly. It was an high sea purchase from third party. No doubt, the Bill of Entry contain details of the manufacturer, but that is not sufficient to claim concession rate of duty. The concessional rule not only mandates that the purchase must be from the manufacturer directly but also specifies the mode of manufacturing and the capacity of the manufacturer. If the reasoning given by the CESTAT to be accepted, then the condition in Clause IB in the notification which imposes condition about the mode of manufacturing and capacity of the manufacturer will become redundant.

To avail concession rate of duty, it should be purchased directly from the manufacturer who had satisfied the conditions mentioned in the notification. In case of High Sea Sales (HSS), it is not the manufacturer who sell the goods contrarily, it is the Middleman or a Trader for commission who sell the goods. Likewise, clearance of goods by the Examiner of Customs Department will not be a ground to set aside the order of withdrawal of duty concession on the ground of mis-declaration if evasion is found subsequently.

The end use of the cement imported is one of the condition for granting concession rate of duty as per Clause IC. In fact the importer has to file a end use declaration at the time of clearance and any violation of the declaration will come to knowledge of the Revenue obviously only after the misuse of the goods imported for a purpose other than for which it was allowed to be imported at concession rate. In this case, the records reveals that, by way of show cause notice, the department had sought for explanation about the Post- Importation actual user confirmation. The importer has admitted that the cement imported was used for manufacturing Ash brick and sold in the local market. Therefore, it is evident that the cement was not used for institutional/industrial purposes.

Conclusion - The CESTAT erred in allowing the benefit of concessional rate of counter veiling Duty (CVD) to the respondent M/s V.V.Minerals despite gross violation of the concession condition.

The Order in Original is upheld - appeal allowed.

Absolute confiscation of the seized gold - Seeking issuance of an appropriate writ to amend or review the impugned Compounding Order - HELD THAT:- In view of the fact that the delay was only due to financial difficulties and also considering the value of the gold seized i.e., about 1688.22 grams and 1664.18 grams, the Petitioner is permitted to deposit the amount in terms of the order dated 08th May, 2023.

Petition disposed off.

Vicarious liability - penalty under Section 117 of the Customs Act - cancellation of licence - exoneration of employees

Vicarious liability - penalty under Section 117 of the Customs Act - exoneration of employees - Whether the penalty sustained by the tribunal under Section 117 of the Customs Act against the appellant is sustainable in view of the finding that the appellant was not vicariously liable and the employees were exonerated. - HELD THAT: - The tribunal found no evidence that the appellant had forged the customs seal and held that the appellant was not vicariously liable, yet it nevertheless sustained the penalty under Section 117 without assigning any reasons. The employees against whom forgery was alleged had their appeals allowed and the penalty against them set aside (Annexure-C), and the Investigating Officer's report in the criminal proceedings recorded that the appellant was exonerated (Annexure-D). Given these findings and the absence of any rationale by the tribunal to penalise the appellant despite exoneration of the employees, there is no basis to sustain the penalty imposed on the appellant under Section 117. [Paras 3, 5, 6, 7]

The tribunal's decision sustaining the penalty under Section 117 is set aside and the appeal is allowed.

Cancellation of licence - penalty under Section 117 of the Customs Act - Whether the tribunal's interference with the order of cancellation of the appellant's licence is consistent with its simultaneous sustention of the penalty. - HELD THAT: - The tribunal interfered with and set aside the order cancelling the appellant's licence on the basis that the allegations in the show cause notice were unsustainable. Despite that interference, the tribunal did not explain why the penalty under Section 117 should nonetheless be sustained. The High Court noted this inconsistency and found no justification for upholding a penalty when the foundational allegations were not sustained and the employees were exonerated. [Paras 3, 6]

The tribunal's sustaining of the penalty is unsupportable where the order cancelling the licence was set aside and the underlying allegations were not upheld; the penalty is quashed.

Final Conclusion: The appeal is allowed: the Customs Tribunal's order of 22.2.2019 insofar as it sustains the penalty under Section 117 of the Customs Act is set aside; no order as to costs.

Classification of imported goods - Aluminium Foil 50 MIC +- 10% - to be classified under CTH 7607 19 91 of Customs Tariff or not - whether the goods imported by the appellant under AAs are permitted for duty free import under Advance Authorization Scheme? - HELD THAT:- It is not disputed that the importer was issued Advance Authorizations for import of raw material viz. Aluminium Foil to Mic +/-10% for export of Alu/Alu Foil (PVC 60 MIC/OPA 25), the final goods have been exported by the appellant and the competent authority i.e. DGFT has also issued the EODCs in this regard. It has to be appreciated that the DGFT functioning under the aegis of the Ministry of Commerce and Industry is responsible for formulating and implementing the Foreign Trade Policy for promoting India’s exports. The Advance Authorization Scheme is one such scheme under which the appellant has imported the raw material subsequent by exported the final products.

The Hon’ble Supreme Court in Titan Medical Systems Private Limited vs. Collector of Customs, New Delhi [2002 (11) TMI 108 - SUPREME COURT] held that 'As regards the contention that the appellants were not entitled to the benefit of the exemption notification as they had misrepresented to the licensing authority, it was fairly admitted that there was no requirement for issuance of a licence that an applicant set out the quantity or value of the indigenous components which would be used in the manufacture. Undoubtedly, while applying for a licence, the appellants set out the components they would use and their value. However, the value was only an estimate.'

In the instant case also, the licensing authority viz. DGFT has accepted the fulfilment of export obligation and issued 7 Export Obligation Discharge Certificates to the appellant. The 8th was pending at the time of hearing. These EODCs discharge the appellants from any further export obligation. That being the position, the Customs authorities cannot deny the benefit of Customs duty exemption under the notifications governing the Advance Licensing Scheme. The customs authorities, if had been of the opinion that the appellant had violated any of the terms and conditions of the licences, the matter should have been referred to the licensing authority for appropriate action rather than demanding duty in the inputs/raw materials.

Conclusion - The appellant correctly availed the benefits under Notification No. 18/2015-Cus, and the customs authorities could not demand duty based on a reclassification of the imported goods.

Appeal allowed.

Violation of Section 197 (3), 197 (9) of Companies Act and Rule 7 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 - effect of amendment to Section 197 (15) of the Companies Act, 2013, which substituted the expression "punishable with fine" with "penalty," - retrospective effect to offenses allegedly committed before the amendment came into force or not - HELD THAT:- The provisions contained in Section 197 (15) was amended vide Companies (Amendment) Act, 2019 by Central Act No. 22/2019. A bare perusal of the amendment Act is sufficient to come to the conclusion that Section 197 (15) has been substituted by the amended provisions. In this context, in the absence of anything to the contrary in the amendment the substitution of Section 197 (15) vide amendment w.e.f. 02.11.2018 would relate back to the date of original provision of the year 2013 and in the light of the undisputed fact that the alleged offences are said to have been committed in the year 2016, it is opined that the amended provision of Section 197 (15) would not apply even in relation to the offences said to have been committed in the year 2016.

Under these circumstances, having regard to the amendment to Section 197 (15) vide amended Act, 2019, Central Act No. 22/2019 w.e.f 02.11.2018, the impugned proceedings as against the petitioner clearly are not maintainable and same deserves to be quashed.

Conclusion - The amendment to Section 197 (15) of the Companies Act, 2013, applies retrospectively, thereby affecting the maintainability of proceedings initiated under the pre-amendment provisions.

The complaint and order of cognizance against the petitioner on the file of the Special Court for Economic Offences, Bengaluru are hereby quashed - Petition allowed.

Approval of Resolution Plan - viability and feasibility of the plan - principle argument of the Promoter is that the plan is not implementable within 9 months and neither it is viable and feasible - HELD THAT:- Plan is not implementable within 9 months is not an issue which can be decided at the time of approval of the plan. The question that the plan cannot be implemented within 9 months is the question which can be raised after expiry of the period as contemplated in the plan.

In so far as viability and feasibility, it is the commercial wisdom of the CoC to take a decision on viability and feasibility of the plan. The CoC having approved the plan with 100% voting, the CoC deemed to have adverted to the viability and feasibility of the Resolution Plan. The scope of interference in an order approving Resolution Plan is too limited for the Adjudicating Authority and this Appellate Tribunal which is well settled proposition - there are no good ground to interfere in the order approving the Resolution Plan at the instance of the Promoter.

Appellant who is one of the homebuyers has to go with the majority decision of the homebuyers and cannot be allowed to question the approval of the plan which is law settled by the Hon’ble Supreme Court in Jaypee Kensington Boulevard Apartments Welfare Association and Ors. Vs. NBCC (India) Limited & Ors., [2021 (3) TMI 1143 - SUPREME COURT]. The Supreme Court having already held that single homebuyer cannot be allowed to question the approval of the Resolution Plan. He has to sail or sink with the majority decision and in the present case, plan has approved with 100% voting share. Thus on behalf of one lone homebuyer challenge to the Resolution Plan cannot be maintained.

Conclusion - The individual homebuyers cannot challenge the approval of a Resolution Plan when the CoC has endorsed it with a majority vote.

Appeal dismissed.

Condonation of 18 days delay in filing of the Appeal - Sufficient cause for delay or not.

Whether, when the condonable period of 15 days, as prescribed under Section 61(2) of the proviso, is falling on a day, on which the Appellate Tribunal is closed, whether the condonable period shall stand extended upto the date when Court re-opens? - HELD THAT:- This Tribunal referring to the judgment of the Hon’ble Supreme Court in Assam Urban Water Supply and Sewerage Board vs. Subhash Projects and Marketing Ltd. [2012 (1) TMI 412 - SUPREME COURT] clearly held that the period of one month under which the delay in filing the application should be condoned is not the period of limitation.

It is held that 15 days condonable period, even if it is coming to an end on a day, when the Tribunal is closed, the benefit of Rule 3 or Section 4 of the Limitation Act cannot be extended.

Whether for computing the 30 days period for filing the Appeal under Section 61, the limitation of 30 days period expiring on a day on which Tribunal is closed for, the period shall be excluded upto the period on which Tribunal re-opens, for computation of 30 days period for filing of the Appeal? - HELD THAT:- Rule 3 of the NCLAT Rules specifically provides that in computing the time, the day from which the said period is to be reckoned shall be excluded, and if the last day expires on a day when the office of the Appellate Tribunal is closed, that day and any succeeding day on which the Appellate Tribunal remains closed shall also be excluded. On reading Rule 3 of the NCLAT Rules, it clearly provides that when the last date expires on a day when the office of the Appellate Tribunal is closed, that day and any succeeding day on which the Appellate Tribunal remains closed shall also be excluded.

In the facts of the present case, the order was passed on 31.07.2024 and by giving benefit of two days for certified copy, 30th day when limitation was expiring shall be 01.09.2024. 31st August, 2024 and 1st September, 2024 being Saturday and Sunday, the Appeal could have been filed on 02.09.2024, which was the day when the Appellate Tribunal was to re-open.

Rule 3 of the NCLAT rules, which provides for exclusion of the period, which falls on day when the office of the Appellate Tribunal is closed. Hence, exclusion of the period is specifically provided in the Rules. The judgment of the Delhi High Court, which had only considered Section 4 of the Limitation Act had no occasion to consider the rule 3 of the NCLAT Rules, 2016. Hence, by virtue of Rule 3 the said judgment of the High Court cannot be held to be applicable in the facts of the present case - by virtue of Rule 3 of the NCLAT Rules, 2015, when last date for period of computation of limitation is falling on a day when office of the Tribunal is closed, the said period shall be excluded. Thus, in the present case, 30.08.2024, which was the 30th day for filing the Appeal and by giving two days for certified copy, 30th day will be 01.09.2024 and 31st August 2024 and 1st September, 2024 being Saturday and Sunday both the days have to be excluded for computing the period of 30 days of limitation. Hence, the last day for filing of the Appeal shall be 01.09.2024.

For computing 30 days period for filing the Appeal under Section 61, if the office of the Tribunal is closed on the 30th day, the period shall extend upto the date on which the Tribunal re-opens.

Whether the delay is within condonable period and sufficient cause has been made out to condone the delay? - HELD THAT:- The 30 days period when expiring on a day when the Court is closed, the said period also be excluded while computing the period of limitation. Reasons have been given by the Appellant in the application for explaining the delay of 15 days in filing the Appeal. The Appellant is an organization, which require approval at the organization level for filing an Appeal, which grounds have been pleaded in the application - there is sufficient ground given in the application, explaining the delay in filing the Appeal.

The delay condonation application filed within condonable period and there being sufficient cause being shown for condonation of the delay, the delay condonation application deserves to be allowed and the Applicant has made out sufficient cause for condonation of the delay. The delay in filing the Appeal is accordingly condoned.

Whether the delay in filing is within condonable period and sufficient cause has been made out to condone the delay? - HELD THAT:- Impugned order was passed on 31.07.2024 and the Appeal was e-filed on 17.09.2024. There is no material on record to indicate that certified copy was applied by the Appellant. The Appellant is, thus, not entitled for any exclusion on the ground of certified copy, which exclusion was available for the Applicant in Company Appeal (AT) (Ins.) No.1862 of 2024. The 30 days period shall come to an end on 30.08.2024, the Appeal filed on 17.09.2024 was beyond condonable period. 30th August, 2024 was not a holiday, the Appeal having been filed on 17.09.2024, i.e. beyond 15 days condonable period, IA No.6950 of 2024 deserves to be rejected. In result IA No.6950 of 2024 is dismissed.

Conclusion - The 15-day condonable period under Section 61(2) of the IBC cannot be extended by Rule 3 of the NCLAT Rules or Section 4 of the Limitation Act if it ends on a day when the Tribunal is closed.

The application for condonation of delay is allowed.

Maintainability of Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) - no interest had ever been paid by the CD to the OC nor the interest component was ever recorded in the books of accounts - HELD THAT:- There is no dispute to the fact that out of total amount of Rs. 6,13,48,161.98/- Rs. 4,97,22,461.16 was towards the principal amount and Rs. 1,16,25,700.82/- was the interest. It is also not in dispute that Respondent No. 2 has claimed the interest only on the basis of invoice in which it has been mentioned that “in case of delay payment, interest will be charged @ 12% or as per the agreed terms” whereas no other document has been placed on record, much less, any purchase order or the agreement between the parties which can reflect the terms and conditions of the interest - The ledger account of the CD also reflects that principal amount claimed by the OC has been shown as nil which means that the principal amount has already been paid and has been accepted as such by the OC as the principal amount has been received without any murmur, therefore, the Tribunal is not correct to hold that the amount paid by the CD to the OC of Rs. 4,97,22,461.16 was adjusted towards interest at the first instance by making reference to the decisions in the case of Asset Reconstruction Company India Limited [2022 (8) TMI 70 - SUPREME COURT] and BHEL [2012 (10) TMI 1016 - SUPREME COURT].

Whether the amount of Rs. 1,16,25,700.82/- can be claimed even as an interest by the OC only on the basis of the boilerplate provision in the invoice in the absence of any agreement between the parties towards for the payment of interest or anything which may reflect it by way of email or purchase order etc.? - HELD THAT:- In the case of Prashat Agarwal (Supra) it was a condition in the invoice that “interest will be charged @ 18% plus GST P.A after due date of the bill” and the dispute was regarding the maintainability of the application filed under Section 9 in which the amount in question was less than Rs. 1 Cr. which is the minimum threshold prescribed under Section 4.

In the present case, condition prescribed in the invoice is that in case of delay in payment, interest will be charged at the rate of 12 @ as per the agreed terms. This clause in the invoice is totally vague because it does not specify the period within which the amount was to be paid unlike the case of Prashat Agarwal [2022 (7) TMI 835 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH] in which it was prescribed that interest will be charged after due date of bill. Secondly, it is mentioned in this clause that interest will be charged as per the agreed terms whereas no agreed terms have seen the light of the day to enable the OC to claim interest as a part of debt. In this regard, the observation has been made, in the case of Comet Performance [2025 (1) TMI 793 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB] by a three members bench of this Court, relying upon Rishabh Infra Through Hari Mohan Gupta Vs. Sadbhav Engineering Ltd., [2024 (11) TMI 1411 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] in which it has been held that “invoices with interest clauses which were not part of the formal agreement are unenforceable”.

Conclusion - i) Interest claims based solely on invoice provisions without a formal agreement or acknowledgment are not enforceable under the IBC. ii) The IBC is intended for the resolution of debts, not for the recovery of interest claims that lack a contractual basis.

The impugned order is set aside - the present appeal is allowed.

Condonation of delay of 19 days in filing the present appeal - sufficient cause for delay or not - HELD THAT:- As per Section 61 of the Code the period prescribed for filing the appeal before the Appellate Tribunal is 30 days. However, in terms of the proviso to Section 61(2) the Appellate Authority has the jurisdiction to allow the appeal to be filed even after the expiry of prescribed period of 30 days if it is satisfied that there was sufficient reason for not filing the appeal within prescribed period but such period cannot be extended more than 15 days.

As per the decision of the Hon’ble Supreme Court in the case of National Spot Exchange Limited Vs. Anil Kohli [2021 (9) TMI 1156 - SUPREME COURT], the Appellate Authority does not have the jurisdiction to condone the delay beyond the period of 15 days in any case.

In the present case, the impugned order was passed on 14.06.2024. The Appeal was required to be filed by the appellant within the prescribed period of 30 days which has to be computed from 15.06.2024 in terms of the Section 12(1) of the Limitation Act, 1963. The period of 30 days counted from 15.06.2024 expired on 14.07.2024 - The period of 15 days provided in the proviso to Section 61(2) counted from 14.07.2024 expired on 29.07.2024. The appeal has been e-filed on 02.08.2024 i.e after the period of 4 days of expiry even of the period of 15 days on 29.07.2024.

Counsel for the Appellant has submitted that the Court should exclude the period of two days spent by the Appellant in obtaining certified copy of the impugned order which was applied on 01.07.2024 and was received on 02.07.2024 - Even if the aforesaid period of two days are excluded in view of Section 12 of the Act, the appeal would still be barred by two days.

Similarly, the holidays on 17.06.2024, 29.06.2024 and 13.07.2024 which fell before 14.07.2024 (during the prescribed period) is no help to the Appellant because it is not the case where the Appellant has filed the appeal just on the reopening of the Court when the prescribed period of limitation was to expire rather the appellant has filed the appeal after the expiry of 45 days i.e. 15 days prescribed as the extended period in proviso to Section 61(2) for which the Appellant has to show sufficient cause for condonation of delay and is not part of the prescribed period of limitation.

Conclusion - There is hardly any merit in the present application which calls for any interference as the appeal has been clearly filed after the expiry of period of 45 days and therefore, this Court does not have the jurisdiction to condone the delay.

Application dismissed.

Seeking release of petitioner - illegality in the arrest of the petitioner or not - whether petitioner was not produced before the learned Special Court within 24 hours of his arrest as mandated in law? - HELD THAT:- There are no ground to interfere with the impugned order passed by the High Court. However, it is made clear that the impugned judgment will not stand in the way of the petitioner raising all the contentions while seeking an appropriate remedy in the manner known to law.

The regular bail application of the petitioner is pending before the High Court. The petitioner is at liberty to proceed with the bail application, notwithstanding the impugned order passed. The High Court is requested to expedite the hearing in the pending bail application.

SLP dismissed.

Seeking grant of Regular bail - Money Laundering - extortion of a huge amount of cash - Section 483 of the Bhartiya Nagrik Suraksha Sanhita, 2023 - HELD THAT:- It is pertinent to mention here that the applicant has nowhere stated in the bail petition regarding source of amount i.e. Rs. 6,44,38,000/- cash seized by the Income Tax, gold jewellery worth Rs. 3,24,61,655/- as also Rs. 52,35,000/- which was recovered from applicant’s and his wife locker which clearly shows that the ACB/EOW has collected certain material against the applicant. The prosecution has collected the material against the applicant that he has purchased properties in the name of his family members and relatives but not disclosed the source from where it has been purchased. Thus, from perusal of FIR and the material available in the case diary, involvement of the applicant in commission of offence under Sections 7, 7A & 12 of the PC Act, which is economic offence, is prima facie reflected.

Hon’ble the Supreme Court while considering the gravity of economic offence in case of P. Chidambaram Vs. Directorate of Enforcement, [2019 (9) TMI 286 - SUPREME COURT] has held that 'Grant of anticipatory bail at the stage of investigation may frustrate the investigating agency in interrogating the accused and in collecting the useful information and also the materials which might have been concealed. Success in such interrogation would elude if the accused knows that he is protected by the order of the court. Grant of anticipatory bail, particularly in economic offences would definitely hamper the effective investigation. Having regard to the materials said to have been collected by the respondent-Enforcement Directorate and considering the stage of the investigation, we are of the view that it is not a fit case to grant anticipatory bail.'

Considering the FIR and other material placed on record, it prima facie shows involvement of the applicant in crime in question. As such, this is not a fit case where the applicant should be granted regular bail.

Conclusion - i) The economic offences, due to their deliberate nature and impact on national interests, require careful consideration in bail applications. ii) This is not a fit case where the applicant should be granted regular bail.

The instant bail application filed under Section 483 of the Bhartiya Nagrik Suraksha Sanhita, 2023 is liable to be and is hereby rejected.

Denial of claim of exemption by Notification No. 24/04-ST dated 10.9.04 - Voluntary training and coaching services - it was held by High Court that the training provided by the assessee in this case amounted to “vocational training” within the meaning of the term under Notification No. 9/2003-S.T. - HELD THAT:- There are concurrent findings of fact recorded which do not call for interference as the said findings cannot be said to be either perverse or illegal. The findings are rendered in facts which are peculiar to the respondent.

Appeal dismissed.

Levy of service tax or VAT - deemed sale - activity of renting out cinematographic equipment by the appellant - transfer of "right to use" the equipment - HELD THAT:- Under Section 66 of the Finance Act, 1994, there shall be levied a tax at the rate of 12% of the value of the taxable services referred to in subclause (zzzzj) of clause (105) of Section 65 of the Finance Act, 1994. The “taxable service” means any service provided or to be provided to any person, by any other person in relation to supply of tangible goods including machinery, equipment and appliances for use, without transferring right of possession and effective control of such machinery, equipments and appliances. Therefore, where right of possession and effective control is transferred, then it will not be a taxable service. Consequently, if it is not a taxable service, then certainly service tax is not leviable under Section 66 of the Finance Act, 1994.

There is not only a transfer of right of possession, but also effective control. The order-in-original has proceeded on an erroneous interpretation of the provisions of this agreement that possession and effective control has not been transferred to the hirer. This conclusion of the adjudicating authority not gareed upon. It is clear from the agreement that the equipments have been supplied for hire and possession and effective control has been transferred to the hirer.

The possession and effective control has been transferred. If it is not so, why will the owner reserve a right to inspect the equipments as and when required. If the possession and effective control is still with the owner, he would not need the hirers' permission to inspect. If effective possession and control has not been transferred, why the hirer has to make it known to the owner regarding loss or destruction or damage, after such loss or damage occurs - If possession and effective control is still with the owner or has not been transferred to the hirer, why would the hirer make a statement that he has taken inspection of the goods and he is satisfied with the condition thereof and the owner shall not be liable for any defects.

Conclusion - There shall be a deemed sale where there is transfer of the right to use any goods for any purpose – whether or not for a specified period, for cash, deferred payment or other valuable consideration. From the documents and particularly from the clauses reproduced above, it is quite clear that there has been a transfer of the right to use equipments for valuable consideration. Even in clause 29A of Article 366 of the Constitution of India, the only requirement is there should be transfer of the rights to use the goods for valuable consideration. Factually, there has been.

The order-in-original cannot be sustained, as it was without jurisdiction. The same is quashed and set-aside - Appeal disposed off.

Recovery of service tax with penalties - order issued without examining the relevant charging section of the Finance Act, 1994, particularly Section 66B - violation of principles of natural justice - HELD THAT:- In the present case, the adjudicating authority has held that the petitioner contravened the provisions of the Act and the Rules made thereunder with an intent to evade payment of service tax. So far as the case of Amadeus India Pvt. Ltd.[2019 (5) TMI 669 - DELHI HIGH COURT]is concerned, in the said case, the Hon’ble Delhi High Court was dealing with a case in which the SCN issued on 4th September, 2018 to the petitioner-company was challenged. The fact of the matter was that on 3rd October, 2018, the petitioner drew attention of respondent to the master circular dated 10th March, 2017 read with an instruction dated 21st December, 2015 issued by the CBEC in terms of which a pre-show-cause notice consultation was mandatory in cases involving demand of duty above Rs. 50 lakhs.

A reminder was again sent by the petitioner on 13th November 2018. When no response was received, the writ petition was filed in the High Court of Delhi on 13th December, 2018. It appears that Hon’ble Delhi High Court not only entertained the writ application but also rejected the contention of the respondent that since the SCN was preceded by a search that was conducted in the business premises of the petitioner and the petitioner also rendered itself liable for penal action ‘for suppression of facts and contravention of various statutory provisions with intent to evade payment of due service tax’ and other incidental levies, the SCN partakes of the character of an ‘offence related’ SCN and therefore falls within the exceptions carved out under para 5.0 of the master circular.

In the case of Cosmic Dye Chemical [1994 (9) TMI 86 - SUPREME COURT], the matter reached to the Hon’ble Supreme Court only after final adjudication by the Tribunal failed. The Tribunal in the said case had taken a view that regardless of intent, a mere suppression of facts or misstatement in the information statutorily required to be supplied to the Excise authorities attract the larger period of limitation.

Conclusion - All the issues which have been raised by learned counsel for the petitioner in the present writ application would essentially involve appreciation of facts emerging from the records which may be duly gone into by the appellate authority. It is not the case of the petitioner that he has no equally efficacious remedy, we would, therefore, refrain from exercising our extra-ordinary writ jurisdiction at this stage.

Application disposed off.

Liability of sub-contrator to pay service tax, when main contractor has paid the service tax - Invocation of extended period of limitation - suppression of facts or not.

Whether in case the main contractor has paid the service tax, the appellants are required to pay service tax on the services rendered by the appellants being sub-contractor, or not? - HELD THAT:- Admittedly, the appellant is a service provider and they are required to pay service tax on the services rendered by them as clarified by CBEC Circular No.96/7/2007-ST dated 23.08.2007, wherein it has been clarified that for the services rendered by the sub-contractor, the sub-contractor is required to pay service tax - the appellant is liable to pay service tax as demanded.

Whether the extended period of limitation in the facts and circumstances is applicable or not? - HELD THAT:- Admittedly, without investigation, it could have been revealed that whether the appellants are providing man power services to the main contractor or not nor after investigation, it came to the notice to the Department that the appellant is providing man power services and entitled in not to pay service tax. It is a fact on record that the appellants did not take service tax registration also. In that circumstances, unless and until, there is a bonafide act on the part of the appellants, the extended period of limitation has rightly invoked.

Conclusion - The appellants are liable to pay service tax as demanded and that the extended period of limitation was rightly invoked.

There are no merit in the appeals filed by the appellants - appeal dismissed.

Exemption from service tax - advisory services provided by the appellant to JCB UK - export of service under Rule 6A of the Service Tax Rules, 1994 or not - place of provision of service - HELD THAT:- In the instant case, it is not disputed that JCB (UK) is a company incorporated under the laws of United Kingdom and is located in United Kingdom. Therefore, the UK office of JCB would qualify as its business establishment where decisions pertaining to the company are taken. Consequently, the services rendered by the Appellant would be considered as received at the 'business establishment of JCB UK' in terms of Rule 2(i)(b)(i) of the POPS Rules. Accordingly, the ‘location of the recipient of service' for purposes of Rule 3 would be United Kingdom, which is outside the taxable territory of India.

The taxability of such transactions, where rendition of service resulting in business growth in India, stands decided in favour of the appellant by the Larger Bench of the Tribunal in the case of M/S. ARCELOR MITTAL STAINLESS (I) P. LTD (NOW KNOWN AS M/S. ARCELOR MITTAL DISTRIBUTION SOLUTIONS INDIA PRIVATE LIMITED) VERSUS COMMISSIONER SERVICE TAX MUMBAI-II [2023 (8) TMI 107 - CESTAT MUMBAI-LB] wherein the Tribunal held 'It is, therefore, clear that the recipient of service is the person at whose desire the activity is done in exchange for a consideration, i.e., the person who is obliged to make payment for the service. The recipient of service would, therefore, be a person at whose instance and expense the service is provided, whether or not he is the beneficiary of the service.'

From the above, in the context of the present case, it is noted that the recipient of the service is JCB, UK who is also the person at whose desire the activity is done in exchange of monetary consideration.

Conclusion - The services rendered by the appellant were exports, thus not subject to service tax.

The impugned order is set aside - appeal allowed.

Taxable service - retained portion of the freight collected from the oil companies - It is common ground that the freight charged for such activity was either exempted from tax or excluded for taxability in the respective tax regimes before and after 1st July 2012 - HELD THAT:- The essence of ‘business auxiliary service’ which is the intended target of tax, is the presence of a provider of service between a service/product belonging to one and required by another. The retained amount has been sought to be taxed by the fitment of carriage of cargo belonging to oil companies by vessel belonging to others as acting on behalf of oil companies, from contract, and causing receipt of service from vessel owners to oil companies. From a perusal of the impugned order, it would appear that the adjudicating authority has examined the contract, at least of a particular customer with the appellant herein and corresponding contract of appellant herein with owner of a vessel under on flag of Liberia.

The appellant as well as the oil companies are located in the territory of India with consequential location of the ‘provider of service’, which, in this case, is the appellant would render the tax liability to arise within the taxable territory of India; this aspect was never in dispute. However, ‘address commission’ is amount contractually withheld by the appellant and, while that may arithmetically be the difference between that received as ‘charter charges’ and paid as ‘charter charges’, is also the amount payable by the ‘vessel owner’ to the appellant as ‘commission’ for recourse to those vessels. It would, therefore, amount to consideration paid by the overseas entity to the appellant and either recompense for provision of service which was not considered by the adjudicating authority or unaccounted payment. In the haste to fall back on Place of Provision of Service Rules, 2012 for fastening liability, this aspect appear to have been overlooked.

Conclusion - In view of the inadequacy in the impugned order and such inadequacy precluding us from determining the tax liability to be legal and proper a fresh finding within the framework of the show cause notice and the contention of the noticee along with appreciation of legal authority for charging of tax under section 66 of Finance Act, 1994 and section 66B of Finance Act, 1994 in the respective periods is warranted.

Matter remanded back to the original authority for a fresh decision.

Imposition of duty on plant and machinery imported from abroad - invocation of exended period of limitation - revenue neutrality - HELD THAT:- In the instant case the duty was paid of its own by the party in 2013 with interest. This conduct itself justifies that there was no intent to evade duty on the part of the appellant as has indicated by the learned advocate. Even on their discharge of the duty there were entitled to credit of the same and were allowed the department therefore they would have not benefitted in avoiding the taxes. He also pointed out that the taxes paid in 2013 were given credit of by the department of its own, as per law indicating that action resulting in S.C.N. was not an enforcement action. Revenue neutrality existed in the present case and delay in payment has been compensated by paying interest.

The extended period has been incorrectly invoked in the facts and circumstances of the matter. Therefore, on limitation the matter does not stand. The party become entitled to relief on limitation both for extended period as also for penalty. This court is not committing on merit of the case.

Appeal allowed.

Maintainability of petition when efficacious statutory alternative remedy of appeal under section 35F of the Central Excise Act, 1944 is available to the petitioner - principles of natural justice - HELD THAT:- The Apex court in the case of Hindustan Coca Cola Beverage Private Limited Vs. Union of India and others, [2014 (9) TMI 585 - SUPREME COURT] has held that when a statute provides for statutory appeal, the said remedy is to be availed by the litigating parties.

In the case of Hameed Kunju vs. Nazim, [2017 (7) TMI 1414 - SUPREME COURT], the Apex Court has held that any petition under Article 227 of the Constitution of India should be dismissed in limine where there is statutory provision of appeal.

The Apex court in the case of Ansal Housing and Construction Ltd. Vs. State of Uttar Pradesh and others, [2016 (3) TMI 1435 - SUPREME COURT], has held that when statutory appeal is provided then the said remedy has to be availed.

In the present case, it is evident that sufficient opportunity of hearing through virtual mode was provided to the petitioner on 4.7.2022, 15.7.2022 and 10.8.2022 but neither the petitioner nor his authorised representative attended the personal hearings on the above dates. Thus, the contention of the petitioner with regard to non-grant of opportunity of personal hearing is contrary to the record and is hereby rejected.

Petition disposed off.

Recovery of CENVAT credit under the CENVAT Credit Rules, 2004 - appellant is a recipient of distributed credit from an Input Service Distributor (ISD) - rule 7 of CENVAT Credit Rules, 2004 - HELD THAT:- By a special provision, viz., rule 7 of CENVAT Credit Rules, 2004 distribution of credit of service tax paid on input services by ‘input service distributor’, neither a manufacturer of excisable goods nor a provider of output service, is permitted and, therefore, from not being in a position to utilize the credit so taken. From this, it is apparent that the mechanism provided in rule 7 of CENVAT Credit Rules, 2004, governing the distribution of such credit, deems the credit so distributed to be eligible credit for the purpose of utilization. A harmonious reading of rule 3 and rule 4 of CENVAT Credit Rules, 2004 and the conditions prescribed in rule 7 alone would determine the extent of validity of the credit so distributed within the scheme of CENVAT Credit Rules, 2004. The whole of it operates on presumption that the objective of the scheme, viz., restricting the tax liability at each stage in the chain only to the taxable event as set out in section 3 of Central Excise Act, 1944 and section 66/66B of Finance Act, 1994, will be adequately achieved by such distribution.

The decision of the Tribunal, in re Clariant Chemicals India Ltd [2015 (10) TMI 2754 - CESTAT MUMBAI], was rendered on the limited issue of applicability of rule 6 in relation to ‘exempted services’ and owing to which, the Tribunal, finding absence of mechanism for recovery, fell back upon a singularity of the undertakings operated by that particular legal entity. The issue therein was not about the eligibility to take the credit under rule 3 of CENVAT Credit Rules, 2004 but the propriety of retention of the credit in terms of rule 6 of CENVAT Credit Rules, 2004.

The impugned order has confirmed the recovery of credit taken, and distributed under rule 7 of CNEVAT Credit Rules, 2004, by the ‘input service distributor (ISD)’ by subjecting it to scrutiny for eligibility thereof by reference to the activities undertaken by the appellant herein. The appellant herein has merely utilized the credit and, to the extent that rule 3(4) of CENVAT Credit Rules, 2004 has not been shown to have been breached, is not concerned with the source of the credit. The obligation under rule 3(1) of CENVAT Credit Rules, 2004 cannot be transferred to the recipient of credit under rule 7 of CENVAT Credit Rules, 2004.

Conclusion - i) The responsibility for verifying the eligibility of CENVAT credit lies with the ISD, not the recipient of the distributed credit. ii) The recovery proceedings against the appellant were without legal authority.

Appeal allowed.

Classification of Printed Thermal Paper ATM rolls - classifiable under CETH 49019900 or under CETH 48119099 of Central Excise Tariff Act, 1985 or not - HELD THAT:- The process of printing on the Thermal rolls brings into the existence of the product ATM Rolls. Where an article is printed with materials, the primary purpose of the printing is to convey the message contained in the article and so would be more appropriately classifiable under the heading 49.01.

The CESTAT, Mumbai in the case of Alpha Carbonless Paper Manufacturing Co. Pvt. Ltd. vs. The Commissioner of Central Excise, Belapur [2014 (2) TMI 589 - CESTAT MUMBAI] had the occasion to examine a similar issue and classified ATM Rolls, Printed lottery ticket rolls and printed bus ticket rolls as products of the printing industry. The case also took into consideration the Amendment made to the Finance Act, 2012 by the insertion of note 14 under Chapter 48 and held that the same cannot have retrospective operation.

In Sai Security Printers Ltd. Vs. Commissioner of C. Ex., Faridabad [2006 (2) TMI 23 - APPELLATE TRIBUNAL, NEW DELHI] the Tribunal held that the Thermal papers that were imported printed, cut and slit to size were products of the printing industry. In Kayen Print Process (P) Ltd. Vs Commissioner of C. Ex., Bangalore [2006 (7) TMI 87 - CESTAT, BANGALORE], the Tribunal held that printing on paper sheet and paper board would come within the category of the printing industry.

In the present case, in addition to the black bar code, details of transactions, the sheet also contains instructions on keeping the ATM premises clean, instructions on use of ATM cards safely etc. This further strengthens the point that the product is not merely of incidental use but it is of primary use. The thermal paper cut rolls, printing of paper with logos / marks of customers are not merely incidental but essential to primary use, i.e. providing information of bank statements and receipts. The pre-printed matter and the matter to be printed by ATM are inter connected and constituted a single matter. Further, the existence of blank portions in printed forms do not take them out of “other printed products and articles”.

Conclusion - The printed thermal paper rolls were correctly classifiable under Chapter 49.

Appeal allowed.

Interest on the refund deposited during investigation - rate of interest - relevant dates for calculation of interest - HELD THAT:- In view of the various decisions of the High Court and various Benches of the Tribunal, wherein, it has been consistently held that interest on refund of deposit made during investigation is required to be computed @ 12% per annum. It is found that the jurisdictional High Court of this Tribunal has already held that rate of interest applicable in such cases is 12% per annum as held in the cases of CCE, Panchkula Vs. Riba Textiles Limited [2022 (5) TMI 1531 - PUNJAB AND HARYANA HIGH COURT] Punjab and Haryana High Court and Sunrise Immigration Consultants Private Limited Vs. Union of India [2023 (6) TMI 411 - PUNJAB AND HARYANA HIGH COURT].

Reference also made to the decision of the Tribunal in the case of Indore Treasure Market City Pvt Ltd [2024 (5) TMI 367 - MADHYA PRADESH HIGH COURT] wherein the Tribunal after considering the various decisions of the Courts, has held that the assessee is entitled for interest on the amount of refund sanctioned @12% to be calculated from the date of payment till the date of disbursement.

Also, in the case of Raghuveer Metal Industries Ltd [2023 (12) TMI 371 - CESTAT NEW DELHI], the Tribunal has held that the appellant is entitled to receive interest at the rate of 12% from the date of deposit of the amount till the date of refund thereof.

Conclusion - The appellant is entitled to the rate of interest @ 12 % per annum on the amount deposited during investigation.

Appeal allowed.

Process amounting to manufacture or not - alteration of MRP on the imported goods - entitlement to claim CENVAT Credit on the duty paid at the time of importation of goods - Seizure and Confiscation of the Goods - Extended Period of Limitation - interest - penalty.

‘Manufacture’ in terms of Section 2(f)(iii) of the Act - HELD THAT:- The process of affixing MRP by the appellant on the goods in question i.e. various electrical home appliances, which are covered under Third Schedule, there is no manner of doubt that the activity carried out by the appellant amounts to manufacture. Apart from that, in the statement recorded under Section 14 of the Act, Shri A.K Jindal, the General Manager of the company had categorically admitted that he understands that their products were covered under the Third Schedule of the Act and that the processes carried out by them in their company amounts to ‘manufacture’ in terms of Section 2(f)(iii) and they were liable to pay excise duty which they actually paid. In view of their own admission accepting that the activity amounts to manufacture and is leviable to excise duty, the issue stands concluded against them and in favour of the Revenue.

Eligibility to CENVAT Credit - HELD THAT:- Reliance placed on the decision of Delhi High Court in Global Ceramics Pvt. Ltd. versus Commissioner Central Excise, Nagpur [2019 (5) TMI 1432 - DELHI HIGH COURT], where it has been held that the amendment to Rule 4(1) of CCR prescribing a time limit for claiming CENVAT Credit will not apply to the consignments, where the import took place prior to the date of the amendment and the deemed manufacture took place when the MRP was altered, which also happened prior to the amendment. The facts of the present case are quite identical with the facts of the case before the Delhi High Court and, therefore, there are merit in the submission of the learned Counsel that the appellant having paid appropriate duty at the time of import has to be considered as an ‘input’ for the purpose of CENVAT Credit Rules. Here the Bill of Entries considered were for the period 2011–12 to 2015–16 and, therefore, on the analogy drawn by the Delhi High Court, the amendment w. e. f. 01.09.2014 prescribing the time limit for making the CENVAT Credit claim shall not apply to imports covered prior to the said date. Moreover, once the activity has been held to be manufacture, exigible to excise duty, the Credit on CVD paid by the appellant on the goods imported is available.

Seizure and Confiscation of the Goods - HELD THAT:- The action of seizure of the goods lying in the premises is unjustified, more so when the daily stock status as on 5.10.2016 was made available by the appellant to the Central Excise Officers and the goods were duly recorded - It is also relevant to refer the decision of the Mumbai Bench in Nakoda Enterprises versus Commissioner Central Excise, Mumbai–V [2016 (12) TMI 1679 - CESTAT MUMBAI], where all the goods were covered under the SSI exemption, except few and therefore, they were under bonafide belief that since the unit is eligible for SSI exemption, they were not required to obtain any registration. It was held that just because the exemption notification is not applicable on one of the products, the goods lying within the factory should not be confiscated and it cannot be equated with the case of attempt to clear the goods clandestinely. Therefore, in the present case, the seizure and confiscation is unsustainable.

Extended Period of Limitation - HELD THAT:- From the statements recorded under Section 14 during the course of investigation, it is apparent that the appellant was unaware of the fact that the activity of affixing MRP on the imported goods amounts to manufacture and the consequent duty liability. The appellant bonafide believed that they were into the trading activity and were, therefore, registered with the VAT Department and were paying the VAT regularly. Had they known that the activity amounts to manufacture under the excise law, they would have registered themselves with the Excise Department and availed the benefit of CENVAT Credit - There is no reason to doubt the statement made by Shri A. K. Jindal or by Shri Rajesh Mohan and on the other hand, Revenue has not produced any further evidence to show that non-registration and non-payment of excise duty was deliberate and wilful to evade payment of duty. In view of the fact that all the records/books of accounts were properly maintained and duly reflected in the balance sheet, it cannot be said that there was any misstatement or suppression of facts with intent to evade payment of duty. Therefore, the demand of excise duty is justified only qua the normal period i.e., 01.03.2015 to 05.10.2016.

Interest and Penalty - HELD THAT:- As the activity has been held to ‘manufacture’ and, therefore, leviable to excise duty, the appellant is liable to pay interest on the delayed payment of duty. The liability to interest is mandatory and automatic which the appellant cannot escape - The levy of penalty under Rule 25 read with Section 11 AC is not sustainable as we have already held that extended period of limitation is not invokable in the absence of any mis-statement or willful suppression of facts. The penalty under Section 11 AC is mandatory only when duty is confirmed by invoking the extended period of limitation.

Personal penalty imposed on Director of the appellant company under Rule 26 of the Rules - HELD THAT:- The personal penalty imposed on Shri Rajesh Mohan under Rule 26 of the Rules is also not sustainable as the penalty under Rule 26 can be imposed for actions related to goods which were rendered liable for confiscation. In this case, the confiscation of goods is set aside. Hence, there is no reason to impose penalty when the goods itself were not to be confiscated. The second situation in which penalty under Rule 26 can be imposed is where invoices are issued without supplying goods so as to enable the recipient to avail ineligible CENVAT Credit, which is also not the case here.

Conclusion - i) The activity of affixing MRP on the imported goods, which are covered under Third Schedule amounts to manufacture in terms of Section 2(f)(iii) of the Act and are exigible to excise duty along with interest. ii) Since the activity amounts to manufacture, the appellant is entitled to CENVAT Credit. iii) Seizure and confiscation of the goods is unsustainable. iv) Extended period of limitation is not invocable in the facts of the present case. v) Penalty under Rule 25 cannot be imposed on the appellant.Penalty under Rule 26 cannot be imposed on Director of the appellant company.

Matter remanded to the Adjudicating Authority for limited purpose of computation of the duty liability along with interest and entitlement of CENVAT Credit - The appeals are, partly allowed in above terms, by way of remand.

Refund of utilization Cenvat Credit on account of clearance to 100% EOU without any payment of duty - rejection of refund on the ground that the same were filed after expiry of one year, i.e. time limit prescribed under Section 11B of Central Excise Act, 1944 - HELD THAT:- Reliance placed on the decision of M/s Kumaraswamy Mineral Exports vs CCE & ST – Belgaum [2019 (2) TMI 1378 - CESTAT BANGALORE] in which the decision of Hon’ble Madras High Court in GTN Engineering Industries [2011 (8) TMI 960 - MADRAS HIGH COURT] was also considered and same was distinguished in view of specific relevant date having been given in the Notification itself which aspect, the Hon’ble Bench considered was not taken into consideration by Hon’ble Madras High Court.

In view of the stated position and the case of GTN Engineering, having been distinguished the party becomes entitled to the refund on the basis of cited decisions of Tribunal. Same is therefore, allowed, as per law.

Appeals are allowed.

Refund of accumulated CENVAT Credit - denial of refund on the ground that Rule 5 ibid deals with the situation of grant of refund in case of non-utilization of CENVAT Credit on the inputs, which were used for manufacture of the final products exported by the assessee - HELD THAT:- The issue arising out of the present dispute is no more res integra, in view of the order of this Bench of the Tribunal passed in the case of M/S. ATV PROJECTS INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX, RAIGAD [2023 (9) TMI 802 - CESTAT MUMBAI] where it was held that 'In the case in hand, though the factory of the appellant was nonoperational for quite a long time, but it had continued to file the statutory returns before the authorities and finally surrendered the registration certificate. Immediately thereafter, since the accumulated cenvat balance lying in the books was claimed as refund, in my considered view, it cannot be said that such claim is barred by limitation of time. In other words, availment of cenvat credit is an indefeasible right of an assessee and such right conferred under the statue cannot be taken away on the ground of limitation.'

By placing the reliance on the order passed in the case of M/s ATV Projects India Ltd., co-ordinate Bench of the Tribunal in the case of M/s Kinol Lubes Pvt. Ltd. Vs. Commissioner of Central GST & Central Excise, West Delhi [2024 (10) TMI 1254 - CESTAT NEW DELHI], has allowed the refund benefit in respect of unutilized CENVAT Credit available in the books of account on closure of the manufacturing unit.

Conclusion - The denial of the refund application based on the understanding of Rule 5 of the CENVAT Credit Rules was not justified, and the appellants were entitled to the refund of the accumulated CENVAT Credit balance despite the suspension of production activities.

There are no merits in the impugned order, insofar as it has upheld confirmation of the adjudged demands on the appellant. Therefore, the impugned order is set aside and the appeal is allowed in favour of the appellants.

Challenge to search and seizure proceedings conducted in the appellants’ Firm by the Taxation Authorities, in exercise of powers conferred under Sections 74 (3) and 74(4) of the Assam Value Added Tax Act, 2003 - main contention raised by the appellants before the Writ Court was that the respondent authorities had conducted the aforesaid search and seizure proceedings without following the due process of law - HELD THAT:- The learned Single Judge, while taking into consideration the provisions of the Code of Criminal Procedure, 1973 in Sections 46, 47, 51 and 100, has come to the conclusion that while conducting the search and seizure proceedings, the respondent authorities ought to have followed the procedure laid down under Sections 47 and 100 of the Code of Criminal Procedure, because detail procedure for search and seizure has not been provided in the Assam Value Added Tax Act, 2003. At the same time, the learned Single Judge has not interfered with the search and seizure proceedings effected way back on 03.09.2014, while observing that since much time had already elapsed after conducting the search and seizure proceedings, it may not be necessary to make any further observation except to hold that if any cause of action still survives, the appellants will be at liberty to approach the appropriate forum. It is to be noticed that while passing the impugned order on 05.11.2019, no one appeared on behalf of the appellants before the learned Single Judge.

Since in the order dated 05.11.2019 passed in WP(C) No. 6363/2014 and WP(C) No. 6364/2014 and orders dated 25.01.2021 passed in I.A. (Civil) No. 956/2020 and I.A. (Civil) No. 1262/2020 the learned Single Judge has kept it open for the appellants to challenge the validity of the assessment order and the notice of demand issued during the pendency of the writ petitions, or after disposal of the writ petitions, no further order is required to be passed in these writ appeals.

Appeal dismissed.

Valuation - Invocation of revisional jurisdiction of this court u/s. 8F of the Karnataka Entertainment Tax Act, 1958 - inclusion of service tax component in the ‘amount received or receivable’ while levying entertainment tax, in terms of Sec. 4G of the Act

Whether the service tax collected by the Petitioner from the subscribers under the provisions of the Finance Act, 1994 against the DTH broadcasting services shall from part of consideration for the levy of Entertainment Tax under Section 4G of the 1958 Act? - HELD THAT:- The entertainment tax is levied and collected ‘on the amounts received or receivable’ by a Multi System Operator or Direct To Home service provider [DTH]. These amounts are nothing but the consideration which the customers would pay towards providing television signals under the DTH scheme. The transaction would obviously include both entertainment and service. Since both are discernible independent of each other, they are taxable separately; the entertainment is taxed under the provisions of 1958 Act whereas, the service is taxed under the provisions of Finance Act, 1994. The text, content & intent of section 4G leaves no manner of doubt that for the purpose of levy of entertainment tax, the ‘amount received or receivable’ cannot include service tax component. Had the legislature intended inclusion, the text of this provision would have been a bit different. Therefore, the first question of law is answered in the negative and in favour of the Assessee.

The above view gains support from the decision of Apex Court in M/s Anand Swarup Mahesh Kumar vs. Commissioner Of Sales Tax [1980 (9) TMI 238 - SUPREME COURT] wherein, Assessee therein had argued that the market fee payable under the UP Krishi Utpadan Mandi Adhiniyam, 1964 being a sum which could be collected from the purchaser under the provisions of the said statute by the commission agent for being remitted to the market committee, could not be considered as forming part of the consideration payable by the purchaser of the goods to the commission agent and therefore, it could not be included in the ‘turnover of purchases’ for the purpose of levy of tax under section 3-D of the UP Sales Tax Act, 1948.

Whether in the absence of definition of ‘invoice’ in the 1958 Act, the bills/statement of accounts containing the itemized details/segregation of the basic value of DTH broadcasting services, service tax, license fee etc. will be considered as ‘invoice’? - HELD THAT:- Abundant evidentiary material is produced even in the paper book of the petition. The Assessee had placed before the authorities the Statement of Account showing itemized billing and separate collection of service tax amount which aspect has been discussed by a Coordinate Bench of this Court in Assessee’s earlier STRP No. 436/2017 disposed off on 10.12.2021 [2022 (1) TMI 443 - KARNATAKA HIGH COURT]. True it is that the word ‘invoice’ is not defined in the 1958 Act nor in the Mysore General Clauses Act, 1899. However, Black’s law dictionary, 5th edition, gives the meaning of this word. “A written account or itemized statement of merchandise shipped or sent to a purchaser, consignee, factor, etc., with the quantity, value or prices and charges annexed. Document showing details of a sale or purchase transaction…The new International Webster’s comprehensive dictionary, 2004 edition, defines ‘invoice’ to mean a list sent to a purchaser, etc., containing the items and charges of merchandise.” Both the authorities at their level and the Tribunal in its domain would have treated this aspect of the matter in a satisfactory way. This having not happened, it is required to upset the finding in this regard so that even this aspect of the matter would be considered afresh.

Conclusion - i) The 'amount received or receivable' for entertainment tax does not include the service tax component. ii) The absence of a statutory provision authorizing the passing on of tax to consumers affects the consideration for tax levy.

The impugned order of the Tribunal is set at naught; matter is remitted to the domain of the Tribunal for consideration afresh in the light of the observations hereinabove made and in accordance with law - Petition allowed by way of remand.

Challenge to judgment of conviction and order on sentence passed against accused Nos. 1 and 2 - Acceptance of illegal gratification by the accused - Income Tax Officers - appreciation of acceptance of illegal gratification by the accused.

Whether the findings of the Trial Court in respect of the demand and acceptance of illegal gratification by the accused is justified? - HELD THAT:- The evidence of P.W.8 who is the shadow witness to the incident would indicate that there was no demand of illegal gratification by accused No. 3. However, P.W.1 was handing over the amount of Rs. 2,50,000/- to accused No. 3, at that time, the accused No. 3 was apprehended by the respondent-CBI. On conjoint reading of the evidence of P.W.1, 2 and 8, it can be inferred that the prosecution has failed to establish the demand and acceptance of illegal gratification by accused Nos. 1 and 2. The Trial Court ought to have appreciated the evidence in such a manner before arriving at a conclusion that the accused are found guilty of offence punishable under Section 7 of the P.C. Act.

Whether the Trial Court is justified in appreciating the electronic evidence? - HELD THAT:- Though P.W.8 supported the case of the prosecution in respect of the said mahazar, the evidence of PWs.1 and 8 would clearly indicate that both these witnesses have not seen the removal of the memory card from the said M.O.6. Further, it would indicate that they have not heard the conversations said to have been transferred to the Compact Discs (CD). In the absence of collecting the certificate as required under Section 65-B of the Indian Evidence Act to prove the electronic evidence in respect of the memory card, it is unsafe to rely on the evidence of the said electronic device. Though the prosecution has tried to impress the Court that the conversations that had taken place between the parties were transferred to CDs, which are identified as M.O.s 1, 7 and 9, as the primary evidence itself proved to be unacceptable, the remaining portions ought not to have been considered by the Trial Court. However, the Trial Court grossly committed an error in considering the said evidence. Therefore, the findings of the Trial Court in respect of the electronic evidence, is opposed to the settled principle of law.

Whether the findings of the Trial Court in recording the conviction is justified? - HELD THAT:- The lack of credible evidence of demand and acceptance, coupled with inadmissible electronic evidence, undermined the Trial Court's conviction. The conviction was unjustified and should be set aside.

Conclusion - i) The demand and acceptance of illegal gratification were not proven beyond a reasonable doubt, as required under Section 7 of the P.C. Act. ii) The electronic evidence was inadmissible due to the lack of a Section 65-B certificate, and the Trial Court erred in considering it. iii) The conviction based on insufficient evidence and misappreciation of the law was unjustified.

The judgment of conviction and order on sentence by the III Additional District and Sessions Judge and Special Judge, Dharwad is set aside - appeal allowed.