TaxTMI Updates e-Newsletter
Feb 27,2021

Interim protection from arrest - coercive action stayed - arrest under Section 69 of the Central Goods and Services Tax Act, 2017 - investigation and cooperation with authorities

Interim protection from arrest - coercive action stayed - arrest under Section 69 of the Central Goods and Services Tax Act, 2017 - investigation and cooperation with authorities - Interim protection was granted to petitioner Nos. 2 to 8 against arrest by respondents pending further orders, subject to specified conditions of appearance and cooperation. - HELD THAT: - The petitioners' primary grievance related to apprehension of arrest under Section 69 of the Central Goods and Services Tax Act, 2017, arising from allegations of availing ineligible input tax credit through fake invoices. The Court recorded that petitioner No.1 had deposited more than fifty per cent of the alleged dues and that petitioner Nos.2 to 8 had co operated and would continue to co operate with the investigation. In view of these facts and the petitions, the Court directed that no coercive action shall be taken against petitioner Nos.2 to 8 until the next date, while imposing specific appearance obligations: petitioner Nos.2, 7 and 8 were ordered to appear before the investigating authority on the specified date and thereafter as and when summoned; the remaining petitioners were directed to appear as and when summoned and to cooperate with the investigation. The order is interlocutory and limited to protection from arrest until the next listing, while preserving the respondents' ability to proceed thereafter subject to compliance with the stated conditions. [Paras 5, 6, 7]

No coercive action shall be taken against petitioner Nos.2 to 8 till the next date, subject to the directed appearances and continued cooperation with the investigation.

Final Conclusion: Interim protection from arrest granted to petitioner Nos.2-8 pending further consideration, conditional on specified appearances and cooperation; matter listed for further orders.

Intelligence-based enforcement and cross-empowerment of Central and State tax authorities - jurisdiction of State tax authority to adjudicate determination of tax and penalty despite initiation of inquiry by Central tax officers - show cause notice under Chapter XV for determination of tax and penalty - inquiry under Chapter XIV as a judicial proceeding attracting penal consequences for furnishing false evidence and obstruction - right to reasonable opportunity of hearing and availability of first appeal

Intelligence-based enforcement and cross-empowerment of Central and State tax authorities - jurisdiction of State tax authority to adjudicate determination of tax and penalty despite initiation of inquiry by Central tax officers - show cause notice under Chapter XV for determination of tax and penalty - Whether respondent no.2 (State tax authority) had jurisdiction to pass the order under Chapter XV for determination of tax and penalty where initial inquiry/summons had been issued by Central tax officers. - HELD THAT: - The Court referred to the CBEC circular recording the GST Council recommendation that both Central and State tax administrations are empowered to take intelligence based enforcement action across the entire taxpayer base and may complete the entire process of investigation, issuance of SCN, adjudication and recovery. On the facts, the summons relied on had been issued in connection with an inquiry under Chapter XIV, whereas the determination and levy of tax and penalty proceeded under Chapter XV. Having regard to the circular and the separate character of the inquiry and the assessment proceedings, the Court found no merit in the challenge to the jurisdiction of the State tax authority to pass the assessment order under Chapter XV even though the inquiry had earlier been initiated by Central tax officers.

Challenge to the jurisdiction of respondent no.2 to pass the order under Chapter XV is rejected.

Inquiry under Chapter XIV as a judicial proceeding attracting penal consequences for furnishing false evidence and obstruction - right to reasonable opportunity of hearing and availability of first appeal - Whether the impugned order was passed without affording reasonable opportunity of hearing and whether the writ petition should be allowed on that ground. - HELD THAT: - The Court observed that the summons dated 30.10.2018 pertained to an inquiry under Chapter XIV which is a judicial proceeding for purposes of penal provisions, and that the order under Chapter XV recorded non appearance in response to the show cause notice. The Court noted the petitioner's factual assertions concerning illness and service, but treated the question of service of notice and adequacy of opportunity as matters requiring factual determination. The petitioner's remedy under the statute - the first appeal provided under Chapter XVIII - was held to be available. The Court directed that all issues raised, including non service and denial of opportunity, are to be adjudicated by the appellate authority afresh and without being influenced by observations in the order under review.

Allegation of non affording of reasonable opportunity is not sustained in the writ; petitioner is directed to pursue statutory first appeal which shall adjudicate the factual contentions afresh.

Final Conclusion: Writ petition dismissed. The State tax authority's order under Chapter XV is not quashed on jurisdictional grounds, and the petitioner may pursue the statutory first appeal in which all factual and procedural grievances, including service of notice and opportunity of hearing, shall be considered by the appellate authority independently.

Stay of recovery - interim stay on recovery subject to payment in installments - challenge to validity of Section 171 of the Central Goods and Services Tax Act, 2017 and Chapter XV of the CGST Rules - service and acceptance of notice - filing of counter affidavit within a stipulated time

Stay of recovery - interim stay on recovery subject to payment in installments - Stay of the respondents' recovery proceedings was granted on interim terms. - HELD THAT: - The Court ordered an interim stay of recovery on the condition that the petitioner pay the entire demanded amount, less the GST amount already deposited, in six equal monthly instalments beginning February 2021. The stay is expressly made subject to compliance with this payment schedule; no adjudication on the validity of the challenged statutory provisions or earlier administrative orders was undertaken in this order.

Interim stay of recovery granted subject to payment in six equal monthly instalments as directed.

Challenge to validity of Section 171 of the Central Goods and Services Tax Act, 2017 and Chapter XV of the CGST Rules - The substantive challenge to the statutory provisions and rules was not decided on merits in this order. - HELD THAT: - The petition challenges Section 171 CGST Act and Rules in Chapter XV of the CGST Rules; those legal challenges are noted but left for substantive consideration in other pending petitions listed for hearing on 4 March 2021. This order does not adjudicate the constitutional or legal validity of the provisions; it confines itself to interim relief and procedural directions.

Substantive challenge reserved for the listed hearing; not finally decided in this order.

Service and acceptance of notice - filing of counter affidavit within a stipulated time - Procedural directions regarding notice and filing of counter affidavit were issued and accepted. - HELD THAT: - The Court issued notice which has been accepted by counsel for the respondents. The respondents were directed to file a counter affidavit on factual aspects within six weeks; failure to do so would result in the matter being listed along with connected petitions on 4 March 2021.

Notice accepted; counter affidavit to be filed within six weeks or matter to be listed with connected petitions.

Final Conclusion: An interim stay of recovery was granted on condition of payment in six equal monthly instalments (less previously deposited GST); the substantive challenges to Section 171 CGST Act and Chapter XV CGST Rules were reserved for hearing on 4 March 2021, and respondents were directed to file a counter affidavit within six weeks.

Provisional attachment under Section 83 of the Central Goods and Services Tax Act, 2017 - notice under Sections 73 and 74 of the CGST Act - time-bound issuance of statutory notice - refund of amounts deposited to avoid business disruption - interim relief against provisional attachment

Provisional attachment under Section 83 of the Central Goods and Services Tax Act, 2017 - notice under Sections 73 and 74 of the CGST Act - time-bound issuance of statutory notice - refund of amounts deposited to avoid business disruption - Respondents must either issue the statutory notices under Sections 73 and/or 74 within a time-bound period or, in the absence of such issuance, refund the amounts deposited by the petitioner which were made to prevent business disruption following provisional attachment. - HELD THAT: - The Court recorded that the respondents had not issued the notices required under Sections 73 and/or 74 of the CGST Act, 2017, despite having provisionally attached the petitioner's bank monies under Section 83. Having regard to the petitioner's deposition of substantial funds to prevent its business from stopping, the Court took a prima facie view that the respondents should not retain those amounts indefinitely while failing to comply with the statutory notice requirement. Accordingly, the Court directed that the respondents must issue the requisite notices within a time-bound period; if they do not, the deposited amounts are to be refunded to the petitioner, with the petitioner remaining free to avail further remedies if notices are issued. The Court's direction was framed as interim relief, leaving substantive adjudication open on issuance of notices and further proceedings thereafter. [Paras 5, 6]

Direction issued that respondents shall issue the statutory notices within a time-bound period and, failing that, shall refund the amounts deposited by the petitioner; interim relief granted.

Final Conclusion: Interim relief granted: respondents directed to issue notices under Sections 73 and/or 74 within a time-bound period or refund the amounts deposited by the petitioner pending further proceedings; matter listed on 5th March, 2021.

Stay of recovery - interim measures pending constitution of tribunal - deposit condition for maintenance of appeal before tribunal - proceedings under Section 74 of the Goods and Services Tax Act, 2017

Stay of recovery - deposit condition for maintenance of appeal before tribunal - Interim stay of recovery of the disputed tax subject to deposit of 20% of the disputed amount - HELD THAT: - The Court granted an interim stay of the balance recovery of the disputed tax liability on condition that the petitioner deposits 20% of the amount of tax in dispute. The petitioner had earlier deposited 10% in terms of Section 107(6) of the Act and expressed willingness to deposit the additional 20% so that the appeal before the Tribunal, when constituted, would be maintainable. In view of the petition being filed against the appellate authority's order arising from proceedings under Section 74 of the Act and the absence of a constituted Tribunal, the Court imposed the deposit condition as a precondition for continuing the stay of recovery pending further adjudication. [Paras 4, 7]

Balance recovery stayed meanwhile, subject to deposit by the petitioner of 20% of the amount of tax in dispute.

Interim measures pending constitution of tribunal - proceedings under Section 74 of the Goods and Services Tax Act, 2017 - Petition entertained at interim stage due to non constitution of the Tribunal - HELD THAT: - The Court proceeded to entertain the petition challenging the appellate authority's order because no Tribunal under the Act had yet been constituted. Having assumed jurisdiction for interim relief in that context, the Court directed the parties to file affidavits and fixed a timetable for counter and rejoinder, while preserving the requirement of deposit for the continuance of the stay. The direction to entertain the petition and to regulate interim proceedings was motivated by the procedural gap created by the absence of the Tribunal. [Paras 1, 5]

Court entertained the petition at this stage and granted four weeks to respondents to file counter affidavit and two weeks to the petitioner for rejoinder.

Final Conclusion: The petition was entertained despite the absence of a constituted GST Tribunal; interim relief was granted in the form of a stay of balance recovery subject to the petitioner depositing 20% of the disputed tax, and the parties were given timelines for filing counter and rejoinder affidavits.

Summary order. Application for exemption allowed and disposed of; writ petition challenging provisional attachment of bank accounts under Section 83 of the CGST Act and the rejection of objections under Rule 159(5) was admitted by issuance of notice to respondents, who were directed to file a short affidavit/status report within one day; matter listed for hearing on 24th February, 2021.

Summary order. Respondents directed to obtain specific instructions and state their stand on recovery of interest on net cash tax liability for the period 01.07.2017 to 31.08.2020; matter listed on 14.01.2021.

Validity of reassessment notice issued under section 148 during pendency of proceedings under section 143(2) - finality of return filed under section 139 and bar to reopening under section 147 - reopening of assessment where notice under section 143(2) could still be issued - applicability of Explanation 2(b) to section 147 in relation to pendency of return

Validity of reassessment notice issued under section 148 during pendency of proceedings under section 143(2) - finality of return filed under section 139 and bar to reopening under section 147 - applicability of Explanation 2(b) to section 147 in relation to pendency of return - Notice dated 23.09.2016 issued under section 148 and consequent reassessment framed on 30.12.2017 are valid or void where the notice was issued before expiry of time for issuance of notice under section 143(2). - HELD THAT: - The Tribunal examined admitted facts that the assessee filed a valid return within time for AY 2015-16 and that the return was pending/processed under section 143(1) while the Assessing Officer issued the notice under section 148 on 23.09.2016, i.e., prior to the last date available for issuance of a section 143(2) notice. Applying the binding precedents relied upon in the judgment, the Tribunal held that where return proceedings are not finally disposed of and time for issuing a section 143(2) notice is still available, the Assessing Officer cannot initiate reassessment proceedings under section 147 by issuing a section 148 notice. The Tribunal relied on the ruling in Trustees of H.E.H. The Nizam's Supplemental Family Trust v. CIT (Supreme Court) and the decisions of the Hon'ble Madras High Court in CIT v. M/s. Qatalys Software Technologies Ltd. and CIT v. K.M. Pachayappan, which establish that no reassessment can be initiated so long as the return filed is pending and not finally disposed of; if assessment under section 143(2)/143(3) can still be initiated, resort to reopening under section 147 is impermissible. The Tribunal further considered the argument that Explanation 2(b) to section 147 alters this position, but concluded that Explanation 2(b) addresses deemed escapement cases of a different character and does not validate issuance of a section 148 notice while the return remains pending and the period for issuing a section 143(2) notice has not expired. Applying these principles to the facts, the Tribunal held the reassessment notice and consequent order to be invalid. [Paras 11, 12, 13, 14]

Notice dated 23.09.2016 issued under section 148 and the reassessment order dated 30.12.2017 are invalid and the reassessment is quashed.

Final Conclusion: The appeal is allowed: the reassessment initiated by issuance of notice under section 148 on 23.09.2016 (before expiry of the period for issuing notice under section 143(2)) and the consequent assessment order dated 30.12.2017 under section 143(3) r.w.s.147 are held void and quashed; other grounds raised by the assessee become academic and are dismissed as infructuous.

Admission under section 245R(2) of the Act - Objection of design to avoid tax prima facie - Obligation to deduct tax at source under Section 192 - Double Taxation Avoidance Agreement relief and foreign tax credit - Residential status - non-resident and resident and ordinarily resident

Objection of design to avoid tax prima facie - Revenue's objection that the transaction was prima facie designed for avoidance of income tax was rejected. - HELD THAT: - The Authority considered the Revenue's contention under clause (iii) of section 245R(2) that the transactions were prima facie designed for tax avoidance. The Authority held that to invoke that bar there must be material facts pointing to a prima facie inference of a design to avoid tax by illegal or improper means, and no such facts were placed on record by the Revenue. The questions raised by the Applicant concerned its obligation to deduct TDS under Section 192 and did not, by themselves, demonstrate a tax avoidance design. In absence of supporting material from the Revenue, the objection based on alleged tax avoidance design was not tenable and had to be rejected. [Paras 5]

Objection that the transaction was designed for avoidance of tax is rejected.

Residential status - non-resident and resident and ordinarily resident - Lack of clarity of residential status of seconded employees did not preclude admission of the application. - HELD THAT: - The Authority observed that residential status could be ascertained from the period of stay outside India as disclosed in Annexure I to the application. The first question related expressly to A.Y. 2020 21 when the employees were non resident; the second question pertained to the year of return when they would likely be resident and ordinarily resident. The Revenue's objection that residential status was unclear goes to the merits of the questions rather than to admissibility, and therefore does not preclude admission. [Paras 6]

Objection based on alleged lack of clarity of residential status is not sustained for admission purposes.

Admission under section 245R(2) of the Act - The Application was admitted under section 245R(2) for hearing. - HELD THAT: - Having found no prima facie material to invoke the bar under section 245R(2)(iii) and having held that objections about residential status and other contentions were matters of merit for adjudication, the Authority concluded that the application qualifies for admission and directed that the matter proceed to regular hearing. The Authority also noted that certain factual/contentious issues raised by the Revenue (such as the Applicant bearing foreign tax) were not raised in the application and could be examined on merits by the Revenue during the hearing. [Paras 7]

Application admitted under section 245R(2); matter posted for hearing.

Obligation to deduct tax at source under Section 192 - Double Taxation Avoidance Agreement relief and foreign tax credit - Questions on the Applicant's obligation to deduct TDS under Section 192 in respect of salary paid in India to seconded employees (including applicability of DTAA relief for A.Y. 2020 21) and on taking credit for taxes paid in the host country were admitted for determination on merits at the hearing. - HELD THAT: - The Authority did not decide the substantive questions on whether salary paid in India to the seconded employees is taxable in India for A.Y. 2020 21 under the relevant DTAAs, nor whether the Applicant as tax deductor may take credit for taxes paid by the employees in the host country when the employees return to India. Instead, these questions were treated as issues of merit which require detailed consideration and are therefore to be adjudicated in the regular hearing. The Authority recorded that the Revenue's contention that only the employees (and not the tax deductor) could claim foreign tax credit is a matter to be examined on merits. [Paras 2, 6]

Substantive questions on TDS obligation under Section 192 and DTAA/foreign tax credit are admitted for decision at the merit hearing.

Final Conclusion: The Revenue's objection that the transactions were prima facie designed for tax avoidance is rejected and the application is admitted under section 245R(2) for regular hearing; the Authority will decide on the Applicant's TDS obligations under Section 192 and the questions of DTAA relief/foreign tax credit on merits at the hearing (date to be intimated).

Revision under Section 263 - Erroneous order prejudicial to the interests of the revenue - Application of Section 40(a)(ia) to year-end provisions - Requirement of factual adjudication before exercise of revisional power - Remand for fresh consideration

Revision under Section 263 - Erroneous order prejudicial to the interests of the revenue - Scope and limits of exercise of revisional jurisdiction under Section 263 - HELD THAT: - The Court restated the settled legal test for exercise of power under Section 263: two concomitant conditions must be satisfied - the assessment order must be erroneous and such error must be prejudicial to the interests of the revenue. Where two reasonable views are possible and the Assessing Officer has adopted one view, such order ordinarily cannot be treated as erroneous and prejudicial. The Court relied upon established precedents to underscore that not every loss of revenue following an assessment order amounts to a revisable error under Section 263, and that the power is circumscribed by the twin requirements identified above. The Court articulated this legal principle before disposing of the appeal and directing further action. [Paras 6, 7, 8]

Legal principle governing exercise of revisional jurisdiction under Section 263 affirmed; revisional power is exercisable only when the order is shown to be erroneous and prejudicial to revenue, and not where two views are reasonably possible.

Application of Section 40(a)(ia) to year-end provisions - Requirement of factual adjudication before exercise of revisional power - Remand for fresh consideration - Whether the Tribunal and the Commissioner properly assumed jurisdiction under Section 263 without adjudicating the factual contention that the sum in question was a reversed year end provision not claimed in AY 2008-09 - HELD THAT: - The Court found that the Tribunal did not advert to the specific factual contention of the assessee that the amount of Rs. 2,36,07,661/- was not a substantive claimed payment for AY 2008-09 but merely a provision that had been directly reversed, and that the assessee had not claimed the benefit in the assessment year in question. Given that the question whether the disallowance under Section 40(a)(ia) was exigible turns on these factual matrix and the material before the Assessing Officer, the Court held that the matter required factual adjudication. Because the Tribunal failed to consider this aspect, the Court quashed the impugned order and remitted the matter to the Tribunal for fresh decision in accordance with the observations made, permitting both parties to raise all admissible contentions. [Paras 10, 11, 12]

Impugned order quashed and matter remitted to the Tribunal for fresh adjudication of the factual issues concerning the nature of the year end provision and applicability of Section 40(a)(ia).

Final Conclusion: The Court affirmed the legal test for exercise of revisional power under Section 263 but, finding that material factual questions (including whether the impugned amount was a reversed year end provision and whether it was claimed in AY 2008 09) were not examined, quashed the impugned order and remitted the matter to the Tribunal for fresh consideration permitting both parties to urge all admissible contentions.

Effacement of earlier assessment order by subsequent assessment order - re-opening of assessment under section 147 - validity of reassessment proceedings initiated under section 148 - applicability of section 153C

Effacement of earlier assessment order by subsequent assessment order - The effect of a subsequent assessment order on a prior assessment order in respect of the same assessment year. - HELD THAT: - The Court held that where a subsequent assessment order is passed in respect of the same assessment year, the earlier order stands effaced. Applying this settled principle to the facts, the Court found that the assessment order dated 22.03.2016 superseded and effaced the earlier assessment order dated 17.02.2014. The Court noted reliance upon the established legal position and disposed the appeal accordingly in respect of this question. [Paras 6]

The earlier assessment order dated 17.02.2014 is effaced by the subsequent order dated 22.03.2016; this question is decided in favour of the assessee.

Re-opening of assessment under section 147 - validity of reassessment proceedings initiated under section 148 - applicability of section 153C - Remaining substantial questions regarding the propriety of reopening under section 147, validity of proceedings under section 148, and applicability of section 153C were not decided by this Court. - HELD THAT: - The Court observed that an appeal against the subsequent assessment order is pending before the Commissioner of Income Tax (Appeals) and therefore it was not necessary to answer the other substantial questions framed at the admission stage. The Court accordingly did not adjudicate the merits of the re-opening, the validity of the section 148 notice or the contention on section 153C, leaving those issues to be raised and adjudicated in the pending appeal before the Commissioner (Appeals).

These questions are left open for consideration in the appeal pending before the Commissioner of Income Tax (Appeals); parties are at liberty to raise all admissible legal contentions therein.

Final Conclusion: The appeal is allowed to the extent that the Court holds that the assessment order dated 17.02.2014 was effaced by the subsequent order dated 22.03.2016; the remaining substantial questions were not decided and are left to be agitated and adjudicated in the appeal pending before the Commissioner of Income Tax (Appeals).

Determination of Arm's Length Price - limited scrutiny under Computer Aided Scrutiny Selection (CASS) - reference to the Transfer Pricing Officer under Section 92CA - validity of reference in light of CBDT instructions - reconciliation between Form 3CEB and return of income - maintainability of writ proceedings pending Dispute Resolution Panel under Section 144C

Limited scrutiny under Computer Aided Scrutiny Selection (CASS) - reference to the Transfer Pricing Officer under Section 92CA - validity of reference in light of CBDT instructions - reconciliation between Form 3CEB and return of income - Validity of the Assessing Officer's reference to the TPO for determination of ALP when the case was selected by CASS for scrutiny - HELD THAT: - The Court examined the CASS reason-matrix and the Assessing Officer's letter seeking prior approval for reference to the TPO and concluded that the selection reason - large aggregate employee cost relative to international transactions and associated TP risk parameters - did not restrict the assessment to a mere numerical reconciliation of Form 3CEB with the return. Given that the Assessing Officer is not competent to determine ALP, a reference to the TPO under Section 92CA was permissible where the issue implicated determination of arm's length price. The Court rejected the appellant's narrow construction that the scrutiny was limited to reconciliation and found no breach of the applicable CBDT instructions, noting that the Assessing Officer's request for reference complied with the requirement to state the issue for which reference was necessary. The Single Bench's conclusion that the reference was within jurisdiction and not vitiated by non-compliance with instructions was endorsed. [Paras 18, 19, 20, 21]

Reference to the TPO for determination of the Arm's Length Price was valid and not beyond the scope of the scrutiny or in contravention of CBDT instructions.

Maintainability of writ proceedings pending Dispute Resolution Panel under Section 144C - determination of Arm's Length Price - Whether the writ petitions were maintainable or required abstention because objections were pending before the Dispute Resolution Panel and the assessee had participated in assessment proceedings - HELD THAT: - The Court noted that after initial interim relief lapsed, the assessee actively participated in the assessment process, furnished detailed submissions on ALP, and filed objections before the DRP which remain pending. The affidavit in support of the writ petitions did not disclose these subsequent participatory steps. Having regard to the assessee's cooperation, participation in assessment proceedings and pending remedy before the DRP, the Single Bench was correct in concluding that the writ petitions did not merit the exceptional relief sought. Although the assessee argued that certain issues could not be agitated before the DRP, the Court found no substantive basis to overturn the Single Bench's exercise of discretion in dismissing the petitions. [Paras 22]

Writ petitions were not entitled to the relief sought in view of the assessee's participation in assessment proceedings and pending objections before the DRP; dismissal was justified.

Final Conclusion: The appeals are dismissed; the High Court upheld the Assessing Officer's reference to the TPO as valid and found no ground to grant relief in the writ petitions in view of the assessee's participation in the assessment and pending DRP objections.

Addition u/s 68 - Onus on assessee to prove identity, creditworthiness and genuineness of share capital- Assessing Officer's satisfaction as to explanation offered under Section 68 - insufficiency of statutory company return/form alone to discharge burden of proof - relevance of proof of receipt through banking channel and PAN/confirmation for establishing genuineness

HELD THAT: - The Court applied the tests in Section 68 and authoritative precedent holding that the primary onus rests on the assessee to establish by cogent and credible evidence the identity of the investors, their financial capacity and the genuineness of the transactions. The remand report was adverse: no confirmations, no bank account evidence of receipt, absence of PANs and inability to verify alleged subscribers. Because the assessee did not discharge this legal obligation, the Assessing Officer was entitled to treat the sums as not satisfactorily explained and to make additions. The Court relied on the Supreme Court precedent to conclude that, on these facts, the primary onus remained unfulfilled and the revenue's case succeeds. [Paras 8, 11, 12]

Primary onus not discharged by the assessee; additions under Section 68 justified and decision must be in favour of Revenue.

Insufficiency of statutory company return/form alone to discharge burden of proof - relevance of proof of receipt through banking channel and PAN/confirmation for establishing genuineness - HELD THAT: - The Court observed that statutory forms under the Companies Act (Form No.2) do not reveal PANs or necessarily establish the financial capacity or genuineness of investors. Mere production of a list of alleged allottees, without documentary evidence such as bank credits, confirmation letters or identification and creditworthiness, is inadequate. The tribunal's acceptance of such limited material was therefore erroneous in law where the Assessing Officer's enquiries revealed significant lacunae. [Paras 9, 14, 15]

Production of company return/form and a bare list of applicants was insufficient to discharge the assessee's burden; the Tribunal erred in upholding relief on that basis.

Assessing Officer's satisfaction as to explanation offered under Section 68 - HELD THAT: - The Tribunal had held that absence of allegation that funds emanated from assessee and the presence of a list of applicants sufficed. The High Court found this approach incorrect: once the assessee fails to discharge the statutory primary onus, there is no occasion to require the Assessing Officer to undertake further proof to displace an otherwise unsatisfactory explanation. The Tribunal's reasoning that geographic origin of applicants (being from another State) could not be a basis for disallowance ignored the fact that the Assessing Officer's findings showed absence of requisite documentary proof from the assessee. [Paras 5, 7, 15]

Tribunal erred in shifting burden; appellate interference was warranted and is allowed in favour of Revenue.

Final Conclusion: Tax case appeal allowed; Tribunal order set aside. The High Court held that for AY 2006-07 the assessee failed to discharge the primary onus under Section 68 to prove identity, creditworthiness and genuineness of alleged share application monies, mere production of company forms and a list of applicants was insufficient, and the Tribunal erred in shifting the burden to the Assessing Officer; substantial questions of law decided for the Revenue.

Royalty - business profits - permanent establishment - use of trademark - guarantee money - non-resident sports association - withholding tax - section 194E - section 195 - DTAA not affecting TDS obligation - rate of withholding

Royalty - business profits - permanent establishment - use of trademark - Whether the payment made by LG India to IML under the Marketing and Advertising Agreement (MAA) is taxable in India in the hands of IML under the India-Mauritius DTAA. - HELD THAT: - The Authority examined the actual rights transferred under the MAA (advertising, promotion, tickets, signage, hospitality, publication, replay screens, event promotions, match partner rights etc.) and held these rights are predominantly for advertisement and publicity of the applicant's brand. The definition of 'royalty' in Article 12.3 of the India-Mauritius DTAA was analysed and the Authority found that the MAA payments do not constitute consideration for the use of, or the right to use, copyright, trademark, patent, design, industrial/commercial equipment or for information concerning industrial/commercial/scientific experience. The right to use ICC marks and other IPRs is contained in a separate agreement (GPA) and not in the MAA; incidental use of the ICC trademark in publicity under MAA does not convert the MAA consideration into royalty. Equipment relied upon by Revenue were held to be used only as media for advertising and were neither transferred nor placed under the exclusive control of the applicant. Reliance on earlier decisions (including Reebok, Sheraton and Sahara precedents as discussed) supported the conclusion that the MAA consideration is not 'royalty' but may constitute business profits; absent a permanent establishment of the payee in India such business profits are not taxable in India. Consequently, the payment under MAA is not taxable in India in the hands of IML under the DTAA. [Paras 28, 30, 32, 34, 36]

Payment under MAA is not taxable in India in the hands of IML under the India-Mauritius DTAA.

Withholding tax - section 194E - section 195 - guarantee money - non-resident sports association - Whether LG India was obligated to withhold tax on payments made to IML for grant of commercial rights under MAA. - HELD THAT: - The Authority distinguished the obligations under section 195 (deduction when payment is chargeable to tax) and section 194E (deduction in relation to amounts covered by section 115BBA). It found that IML, as part of the ICC group that manages commercial rights for ICC events, was effectively a commercial arm of the non-resident sports association and the payments were connected to matches played in India. The fee schedule in MAA fixed amounts for each tournament and therefore, insofar as amounts related to matches played in India, they constituted 'guarantee' type receipts in relation to games in India and thus fell within section 115BBA(1)(b). Once conditions of section 115BBA are met, the obligation to deduct tax under section 194E is absolute and not contingent on whether the income is ultimately chargeable to tax; DTAA notifications or exemptions available to the payee do not relieve the payer from the statutory TDS obligation. The Authority applied the ratio of the Supreme Court decision in PILCOM to hold that TDS under section 194E must be deducted for amounts attributable to games played in India. [Paras 41, 44, 45, 48]

LG India was obligated to withhold tax on payments to IML in respect of games played in India under section 194E read with section 115BBA.

Rate of withholding - section 194E rate - DTAA not affecting TDS obligation - At what rate LG India was required to deduct tax at source on payments to IML that were subject to withholding under section 194E. - HELD THAT: - Because the payments under MAA were held not to be 'royalty', the special rate under section 115A(1)(b)(AA) (applicable to royalty) was inapplicable. The obligation to deduct arose under section 194E for amounts attributable to games played in India, and the payer must withhold at the rate prescribed in section 194E (as applicable at the relevant time). The Authority reiterated that the TDS obligation under section 194E is independent of DTAA beneficial rates; while the recipient may claim treaty relief or refund, the payer cannot apply the DTAA or other beneficial domestic rates in lieu of the statutory TDS rate applicable under section 194E. [Paras 49, 50]

Tax was to be deducted at the rate(s) prescribed under section 194E of the Income Tax Act for amounts attributable to games played in India; treaty or section 115A beneficial rates could not be applied by the payer.

Final Conclusion: The Authority ruled that the payments by LG India to IML under the MAA are not 'royalty' under the India-Mauritius DTAA and thus are not taxable in IML's hands under the DTAA; however, amounts attributable to matches played in India constitute payments to a non resident sports association and oblige LG India to deduct tax at source under section 194E (read with section 115BBA) at the rates prescribed by that provision at the relevant time.

Admission of fresh evidence before appellate tribunal - remand to assessing officer - appellate tribunal's duty to call for remand report - genuineness of expenditure claimed - reconciliation of documentary evidence

Admission of fresh evidence before appellate tribunal - appellate tribunal's duty to call for remand report - remand to assessing officer - Whether the Tribunal erred in admitting documents produced for the first time before it and granting relief instead of remanding the matter to the Assessing Officer or calling for a remand report. - HELD THAT: - The Court held that the Tribunal, when testing the correctness of the CIT(A)'s order, should not have taken cognisance of documents produced for the first time before the Tribunal and thereupon granted relief. Where the assessee failed to reconcile discrepancies before the Assessing Officer and the CIT(A), the Tribunal had two appropriate options: call for a remand report from the Assessing Officer based on the new documents or remand the matter to the Assessing Officer for fresh consideration. The Tribunal did neither and thus proceeded incorrectly by deciding the matter on the basis of records placed first before it. The procedure adopted by the Tribunal was therefore impermissible and its order was set aside for fresh adjudication by the Assessing Officer. [Paras 9, 10, 11]

Tribunal's order allowing appeal on the basis of documents produced for the first time was set aside and the matter remanded to the Assessing Officer for fresh consideration; Tribunal ought to have called for remand report or remitted the matter.

Genuineness of expenditure claimed - reconciliation of documentary evidence - Whether the expenditure claimed in relation to the subcontract to M/s. Coastal Projects Pvt. Ltd. was proved genuine. - HELD THAT: - The Court explicitly refrained from deciding the merits of the genuineness of the expenditure. It noted that the assessee had admitted inflated expenditure during survey and had been unable to reconcile discrepancies between the work order received and the sub-contract before the Assessing Officer and the CIT(A). Given the procedural error by the Tribunal in admitting and acting upon documents produced for the first time, the Court remanded the issue to the Assessing Officer for fresh consideration, making clear that no finding on the merits was being rendered and that the assessee would be free to place all documents before the Assessing Officer. [Paras 6, 7, 9, 10, 11]

Issue of genuineness of the expenditure is not decided on merits and is remanded to the Assessing Officer for fresh consideration; assessee may produce documents before the Assessing Officer.

Final Conclusion: The Revenue's appeal is allowed; the Tribunal's order is set aside and the matter is remanded to the Assessing Officer for fresh consideration without any adjudication on the merits by this Court.

Substantial question of law - appreciation of evidence - concurrent findings of fact - condonation of delay - time-barred appeal - appeal under Section 260A of the Income Tax Act, 1961

Substantial question of law - concurrent findings of fact - appreciation of evidence - Whether the appeal under Section 260A raised a substantial question of law requiring interference by the High Court. - HELD THAT: - The Court examined the paper book and found that the matters complained of by the appellant rest on concurrent findings of fact recorded by the Assessing Officer, the Commissioner of Income Tax (Appeals)-I and the ITAT. The relief sought by the appellant amounted to a request for re-appreciation of evidence on issues where consistent factual conclusions had been reached at each stage. The contention that material evidence was ignored and therefore a substantial question of law arose was held to be essentially an appellate re-evaluation of evidence rather than a question of law. Therefore the Court concluded that no substantial question of law was made out which would justify interference under Section 260A.

No substantial question of law is raised; appeal does not warrant interference on merits.

Condonation of delay - time-barred appeal - Whether the delay of 1350 days in filing the appeal should be condoned. - HELD THAT: - The appeal was filed beyond the statutory period and accompanied by an application seeking condonation of delay of 1350 days. The Court found that the application did not set out sufficient reasons to justify such condonation. Independently, even on merits the appeal was found to be without a substantial question of law. Having considered both the lack of adequate explanation for delay and the absence of a substantial question of law, the Court declined to condone the delay and dismissed the appeal.

Application for condonation of delay refused; appeal is time-barred and dismissed.

Final Conclusion: The application for exemption is allowed as ordered; the application for condonation of delay is refused and, finding no substantial question of law and only concurrent factual findings requiring re-appreciation of evidence, the appeal under Section 260A is dismissed.

Inflation of expenses - undisclosed income - profit element estimation - on-money receipts treated as unexplained cash credit under Section 68 - application of Income Tax Settlement Commission determination in group cases

Inflation of expenses - undisclosed income - profit element estimation - application of Income Tax Settlement Commission determination in group cases - Whether addition on account of inflation of expenses should be made in the hands of the assessee and in what proportion for the assessment years under consideration - HELD THAT: - The Tribunal found that the assessee had resorted to inflation of expenses by cheque payments with cash being returned and that the cash so received was utilised for business expenses. Identical facts in the assessee's case and the assessee's group cases before the Settlement Commission were accepted, and the Settlement Commission in group matters treated 12% of such inflated expenditure as income. The Tribunal held that only the residual profit element (the portion left after business expenses paid out of the cash) is taxable and that, given identical facts and the Settlement Commission's determination at 12%, the Assessing Officer ought to follow the same ratio. The Tribunal therefore directed the AO to make the addition at 12% of the inflation of expenses for the relevant assessment year(s), setting aside the higher ad hoc disallowance made by the CIT(A). [Paras 5, 6]

Addition on account of inflation of expenses directed to be made at 12% in line with the Settlement Commission's acceptance in group cases; grounds relating to this issue partly allowed.

On-money receipts treated as unexplained cash credit under Section 68 - undisclosed income - profit element estimation - application of Income Tax Settlement Commission determination in group cases - Whether on-money receipts received on sale of flats should be taxed in full as unexplained cash credit or only to the extent of the profit element, and the applicable rate of estimation - HELD THAT: - The Tribunal recorded that the assessee had received on-money for sale of flats and had incurred unaccounted business expenses out of such receipts. The Assessing Officer treated the net on-money as unexplained cash credit under Section 68 and taxed it in full, whereas the CIT(A) accepted that only the profit element could be taxed and estimated it at 25%, restricting the addition accordingly. The assessee's group had offered 12% of on-money receipts as income before the Settlement Commission and that approach was available to the AO for a rational estimation. The Tribunal concluded that it would be just and fair to tax only the profit element on an estimated basis and, in view of identical group determinations, directed the AO to adopt 12% of on-money receipts as undisclosed income for the year under consideration. [Paras 7]

Addition on account of on-money receipts directed to be made at 12% of on-money receipts; grounds relating to this issue partly allowed.

Final Conclusion: Appeals partly allowed: additions on account of inflation of expenses and on-money receipts are to be computed at 12% of the respective amounts for the relevant assessment years in accordance with the Settlement Commission's accepted ratio in the assessee's group cases, and the Assessing Officer is directed to give effect to this determination.

Proviso to Rule 24 of the ITAT Rules - sufficient cause for non-appearance - reinstatement of appeal dismissed for want of prosecution - condonation of delay in filing miscellaneous application - ex parte disposal and entitlement to decision on merits

Proviso to Rule 24 of the ITAT Rules - sufficient cause for non-appearance - condonation of delay in filing miscellaneous application - reinstatement of appeal dismissed for want of prosecution - Whether the Miscellaneous Application to recall the Tribunal's ex parte order dated 20 02 2018 and to restore the appeal should be allowed. - HELD THAT: - The Tribunal examined the affidavit and supporting material filed by the assessee explaining non receipt of hearing notice, changed tax consultants, health problems, steps taken in consequence of recovery proceedings, and delay in filing the MA. It applied the proviso to Rule 24 which requires that if an appellant appears after an ex parte disposal and satisfies the Tribunal that there was sufficient cause for non appearance, the ex parte order is to be set aside and the appeal restored. The Tribunal considered the factual matrix, the documents produced and the decision of the jurisdictional High Court in Dolphin Metal (India) Ltd. v. ITO, and concluded that the assessee had demonstrated sufficient cause for non appearance and delay. In view of these findings and in the interest of justice the Tribunal exercised its power under Rule 24 to condone the delay and restore the appeal for hearing on merits; directions were issued to list the matter for hearing on a specified date. [Paras 2, 3]

Delay in filing the Miscellaneous Application is condoned; the MA is allowed, the ex parte order dated 20 02 2018 is set aside and the appeal is restored and directed to be listed for hearing on 30th March, 2021.

Final Conclusion: The Tribunal allowed the Miscellaneous Application under the proviso to Rule 24, condoned the delay, set aside the ex parte dismissal for non prosecution and restored the appeal for hearing on merits, directing listing on 30 03 2021.

Cessation of liability under section 41(1) - requirement of prior allowance or deduction for applicability of section 41(1) - unexplained cash credit under section 68 - taxability of credits limited to the year in which they are entered in the assessee's books - burden on assessee to prove identity, genuineness and creditworthiness of creditors

Cessation of liability under section 41(1) - requirement of prior allowance or deduction for applicability of section 41(1) - Whether sundry creditors brought forward from earlier years can be assessed as income under the principle of cessation of liability embodied in section 41(1). - HELD THAT: - The Tribunal held that section 41(1) can be invoked only where an allowance or deduction was claimed in an earlier year in respect of a loss, expenditure or trading liability and subsequently a benefit accrues by remission or cessation of that liability. On the facts, the credits in question were not trade liabilities for which any deduction or allowance had been claimed in earlier years but represented amounts brought forward from family partition, loans or advances. The assessee produced evidence that the entries originated in earlier financial years and that no prior deduction had been taken; consequently there was no prerequisite factual foundation for applying the legal fiction under section 41(1). Reliance was placed on binding and persuasive authorities confirming the necessity of a prior allowance or deduction as a sine qua non for attracting section 41(1). [Paras 8, 10]

Additions under section 41(1) in respect of the sundry creditors are not sustainable and are deleted.

Unexplained cash credit under section 68 - taxability of credits limited to the year in which they are entered in the assessee's books - burden on assessee to prove identity, genuineness and creditworthiness of creditors - Whether the same old credits can be brought to tax as unexplained cash credits under section 68 in the assessment year 2014-15. - HELD THAT: - The Tribunal found that section 68 applies to credits that are reflected as receipts in the books for the previous year under consideration and where the assessee fails to satisfactorily explain the nature and source of such credits. Here the contested credits were carried forward from earlier financial years (2005-06, 2006-07 and 2007-08) and were not fresh credits in the relevant year; moreover, the assessee produced explanations and supporting documents regarding source, nature and, in some cases, contra entries in the creditors' books. In these circumstances the prerequisite for invoking section 68 in the impugned year was absent and the authorities below were not justified in treating those carried-forward entries as unexplained cash credits. [Paras 9, 10]

Additions under section 68 in respect of the carried-forward sundry credits are not sustainable and are deleted.

Final Conclusion: The appeals are allowed: the additions made by the Assessing Officer under sections 41(1) and 68, and confirmed by the CIT(A), in respect of the sundry creditors carried forward from earlier years are reversed and the Assessing Officer is directed to delete those additions.

Approval under section 80G(5)(vi) - scope of inquiry under section 80G(5)(vi) - requirement of ownership of premises - reliability of accounts and auditing - registration under section 12AA

Approval under section 80G(5)(vi) - requirement of ownership of premises - reliability of accounts and auditing - scope of inquiry under section 80G(5)(vi) - registration under section 12AA - Whether the Commissioner was justified in denying approval under section 80G(5)(vi) on the grounds that (a) the trust did not own the premises from which it operated and (b) its accounts were not audited, thereby rendering its activities not genuine. - HELD THAT: - The Tribunal examined the denial of approval in light of the conditions prescribed by clause (vi) of section 80G(5) read with Rule 11AA. The Commissioner introduced an ownership requirement by refusing approval because the trust operated from premises not owned exclusively by it; however, the statutory scheme does not prescribe ownership of premises as a condition for grant of approval. Further, the Commissioner's conclusion that the trust's activities were not genuine because its accounts were not audited was unsupported: the trust continued to hold registration under section 12AA, and the scope of the inquiry under section 80G(5)(vi) does not extend to a full assessment of income or to imposing additional conditions not found in the statute. Reliance was placed on settled law that the enquiry for 80G approval is limited and cannot be converted into an assessment of the trust's income or activities beyond the statutory conditions. On these findings the Tribunal held that the Commissioner was not justified in imposing the two impugned reasons to deny approval and directed grant of approval under section 80G(5)(vi). [Paras 9]

The Commissioner's rejection of approval under section 80G(5)(vi) on the stated grounds was unsustainable; approval is directed to be granted.

Final Conclusion: The appeal is allowed: the denial of approval under section 80G(5)(vi) on account of non-ownership of premises and absence of audited accounts was set aside and the Commissioner of Income Tax (Exemption), Pune is directed to grant approval under section 80G(5)(vi).

Admission of additional evidence under Rule 29 ITAT Rules, 1963 - Application of Section 69 - unexplained investment - Reopening assessment under section 147 of the Income Tax Act, 1961 - Remand for fresh adjudication - Principles of natural justice

Admission of additional evidence under Rule 29 ITAT Rules, 1963 - Principles of natural justice - Additional evidence in the form of Khasra Girdawari copies and related documents was admitted. - HELD THAT: - The assessee filed an application under Rule 29 seeking admission of Girdavari documents and translated copies which the authorities below had not had the opportunity to consider. The Tribunal found that these documents go to the root of the controversy, were not available to the authorities below and their absence was explained. In view of these factors and in the interest of justice the Tribunal admitted the additional evidence. [Paras 11]

Additional evidence admitted.

Application of Section 69 - unexplained investment - Reopening assessment under section 147 of the Income Tax Act, 1961 - Remand for fresh adjudication - The addition made under Section 69 in respect of alleged cash consideration for purchase of agricultural land was not finally sustained by the Tribunal but was remitted to the Assessing Officer for fresh adjudication after considering the newly admitted evidence. - HELD THAT: - The Assessing Officer had reopened the assessment under section 147 and added an amount as unexplained investment on the ground that cash consideration had been paid as per the sale deed; the CIT(A) confirmed that addition. The Tribunal, however, admitted the Girdavari and related documents which were not before the authorities below and held that, in the interest of natural justice and proper adjudication, the question of the addition must be reconsidered afresh by the Assessing Officer. The matter is to be adjudicated in accordance with law after affording the assessee a due and reasonable opportunity of being heard and after considering the additional evidence. The Tribunal applied the same conclusion mutatis mutandis to the separate but identical appeal. [Paras 11, 12]

Addition under Section 69 set aside for fresh adjudication by the Assessing Officer after considering the admitted additional evidence; the same course is directed in the co-pending appeal.

Final Conclusion: Both appeals allowed for statistical purposes: the additional evidence is admitted and the issue of addition under Section 69 is remitted to the Assessing Officer for fresh adjudication in accordance with law after giving the assessee a reasonable opportunity to be heard; the same order applies to the related appeal.

Comparability in transfer pricing - exclusion of 'giant' companies as non-comparables - arm's length price (ALP) determination - international transaction including free-of-cost transfers - requirement of appropriate benchmarking methodology and comparables-based adoption - working capital adjustment in transfer pricing

Comparability in transfer pricing - exclusion of 'giant' companies as non-comparables - Whether M/s. Infosys Limited is a valid comparable for benchmarking the assessee's software development services for A.Y. 2015-16. - HELD THAT: - The Tribunal applied its coordinate-bench precedents in the assessee's own case and in other decisions, which held that large/giant software companies with turnovers and functional/scale disparities are not valid comparables for smaller captive software development entities. The factual matrix for the year under consideration did not differ materially from the earlier years where exclusion was directed. On that basis the Tribunal concluded that Infosys Ltd. is not a comparable and directed the Transfer Pricing Officer to exclude Infosys from the final comparable set and to redetermine the ALP accordingly. [Paras 3]

Infosys Ltd. excluded from comparables; TPO directed to redetermine ALP after excluding Infosys.

International transaction including free-of-cost transfers - requirement of appropriate benchmarking methodology and comparables-based adoption - Validity of the ALP adjustment made by the TPO as a mark-up on free-of-cost software/assets received from the AE. - HELD THAT: - The Tribunal accepted the Revenue's position in principle that free-of-cost receipt can constitute an international transaction under the statutory definition. However, on the merits the TPO's addition was unsustainable because the impugned adjustment was made without applying any recognized comparables-based or prescribed methods under the Income-tax Rules and without considering market/captive service provider conditions. In absence of any adopted method or comparability basis, the Tribunal found no reason to uphold the addition and deleted the adjustment. [Paras 3, 4]

Impugned ALP adjustment on free-of-cost assets deleted.

Working capital adjustment in transfer pricing - Whether the assessee was entitled to a working capital adjustment and the appropriate course for verification. - HELD THAT: - The Tribunal observed that, unlike a precedent where details were not furnished, the assessee in the present case had placed on record the relevant working capital details of comparable entities. In consequence the Tribunal accepted the assessee's entitlement to a working capital adjustment in principle but directed the TPO to verify the necessary facts and compute the adjustment in accordance with law and established principles. [Paras 4]

Working capital adjustment accepted in principle; matter remitted to TPO for factual verification and computation as per law.

Final Conclusion: The appeal is partly allowed: Infosys Ltd. is directed to be excluded from the comparable set and the ALP to be redetermined; the ALP addition computed as mark-up on free-of-cost assets is deleted; the assessee's claim for working capital adjustment is accepted in principle and remitted to the TPO for verification and computation. The stay application was dismissed as infructuous.

Restriction on import of second hand goods under FTP para 2.17 - second hand capital goods exception - photocopier machines as restricted irrespective of tariff heading - common parlance test for interpretation of tariff and policy expressions - classification dispute distinct from applicability of import restriction - judicial discipline and binding nature of coordinate bench decisions - valuation re-determination under Customs Valuation Rules and Chartered Engineer certification

Restriction on import of second hand goods under FTP para 2.17 - second hand capital goods exception - photocopier machines as restricted irrespective of tariff heading - common parlance test for interpretation of tariff and policy expressions - classification dispute distinct from applicability of import restriction - Whether the imported old/used digital multifunction (print and copying) machines are restricted items under para 2.17 of the Foreign Trade Policy and therefore require an import licence. - HELD THAT: - The Court upheld the Tribunal's conclusion that the imported digital multifunction machines are captured by the expression "photocopier machines" in para 2.17 and thus fall within the restricted category. The Tribunal's factual analysis showed substantial functional parity between analogue photocopiers and the imported digital machines (scanning to create an image, development on photoreceptor and copying to paper), the printing feature being ancillary or subservient to the photocopying function. The Court accepted the Tribunal's observation that photocopying machines are classified under multiple tariff headings and that the DGFT notification used the generic term "photocopier machines" without reference to any particular tariff item; hence the restriction was not confined to a specific tariff entry. The Court further held that the decision in Xerox India Ltd. was concerned with a pure classification contest and was not applicable to the present question of whether the policy restriction applied to the goods; accordingly the Tribunal correctly applied the common parlance/functional test and affirmed that the imports required a licence under para 2.17. [Paras 12, 18, 20, 22, 23]

The imported digital multifunction machines are restricted as "photocopier machines" under para 2.17 of the FTP and require an import licence; the Tribunal's finding in this regard is affirmed.

Judicial discipline and binding nature of coordinate bench decisions - classification dispute distinct from applicability of import restriction - Whether the Tribunal was bound to follow the decision of a co-ordinate Bench or ought to have referred the matter to a Larger Bench before taking a contrary view. - HELD THAT: - The Court found that the Tribunal gave reasoned grounds for not following the earlier co-ordinate Bench decision (Shivam International) and criticised that earlier bench's failure to follow judicial discipline by not referring the contrary view to a Larger Bench. The High Court held that where a tribunal or bench cogently distinguishes an earlier coordinate decision and records reasons, it is not obliged to follow it blindly and need not refer the matter to a Larger Bench unless the proper course is to do so; the Tribunal's refusal to follow the co-ordinate bench in the facts of this case was justified. [Paras 21, 22]

The Tribunal was justified in not following the earlier co-ordinate Bench decision after recording reasons; non-adherence by the co-ordinate Bench did not require the Tribunal to refer the matter to a Larger Bench in the circumstances.

Final Conclusion: The Tribunal's conclusion that the imported digital multifunction print-and-copy machines are restricted under para 2.17 of the FTP and require an import licence is affirmed; the Tribunal was justified in declining to follow the earlier co-ordinate Bench decision. The appeal is dismissed and the substantial questions of law answered against the appellant.

Merchandise Exports from India Scheme (MEIS) - entitlement despite inadvertent marking on EDI shipping bills - Declaration of intent on EDI and Non-EDI shipping bills - marking/ticking of 'Y'/'N' as declaration - Amendment of shipping bills under Section 149 of the Customs Act, 1962 - discretionary power and no prescribed time limit - Conversion of free shipping bills to MEIS shipping bills - Circular No.36/2010-Customs and DGFT public notices - Doctrine of purposive and progressive interpretation in export promotion schemes

Merchandise Exports from India Scheme (MEIS) - entitlement despite inadvertent marking on EDI shipping bills - Declaration of intent on EDI and Non-EDI shipping bills - marking/ticking of 'Y'/'N' as declaration - The petitioner is entitled to seek MEIS benefits for exports where EDI shipping bills were inadvertently marked 'N', notwithstanding the absence of an affirmative declaration at the time of export. - HELD THAT: - The Court found that the MEIS scheme and the DGFT Public Notices (including amendments simplifying declaration procedures) treat marking/ticking of 'Y'/'N' in EDI shipping bills as the operative declaration of intent. The relevant Public Notices and para 3.14 of the Handbook of Procedure were intended to simplify procedures and promote exports. Precedent authorities (including decisions referred to in the judgment) establish that where all other documentary materials are available to establish eligibility and the omission to make the declaration is inadvertent, the omission is not fatal. Applying those principles, the Court held that the petitioner's exports (substantiated by 73 shipping bills) fall within the scheme and that denying benefits solely because 'N' was ticked inadvertently would frustrate the object of MEIS. [Paras 7, 9, 13, 14]

The petitioner's claim to MEIS benefits is maintainable despite the inadvertent 'N' marking on EDI shipping bills, and the procedural omission does not defeat substantive entitlement.

Amendment of shipping bills under Section 149 of the Customs Act, 1962 - discretionary power and no prescribed time limit - Conversion of free shipping bills to MEIS shipping bills - Circular No.36/2010-Customs and DGFT public notices - Doctrine of purposive and progressive interpretation in export promotion schemes - The competent customs authority may permit amendment/conversion of shipping bills under Section 149 notwithstanding lapse of time, where documentary evidence existing at the time of export establishes entitlement and no other objection is raised; refusal solely on the ground of delay beyond the period in Circular No.36/2010 is not justified in such circumstances. - HELD THAT: - The Court observed that Section 149 confers discretion to amend documents presented in the Custom House and does not prescribe a statutory time limit. Circular No.36/2010 sets a three month administrative guideline for conversion but, where all relevant documentary evidence (shipping bills, invoices, etc.) exists and eligibility is not disputed, the omission to declare intent should not be fatal. The Court relied on analogous authorities and the objective of MEIS to promote exports, concluding that a progressive, purposive interpretation requires permitting conversion/amendment in the facts of the case. Consequently, refusal based solely on the expiry of the circularal time limit was held to be improper. [Paras 16, 27, 34, 37]

The respondents were not justified in denying conversion/amendment of the shipping bills merely on the ground that the request was made beyond the time contemplated by Circular No.36/2010; the customs authority must permit conversion subject to satisfaction on documentary evidence.

Final Conclusion: The writ petition is allowed: the impugned communication dated 10.06.2019 is quashed and set aside, and respondent No.2 is directed to issue a No Objection Certificate enabling the petitioner to convert the shipping bills and avail MEIS benefits, the exercise to be completed within eight weeks from receipt of the order.

Determination of country of origin - Provisional release conditions - Anti-dumping duty component - Furnishing of PD bond and bank guarantee - Levy of fine and penalty premature - Adjudication under the Customs Act, 1962 - Reference to Rules of Origin under Trade Agreements (CAROTAR, 2020) - Nodal Officer determination on place of origin

Determination of country of origin - Adjudication under the Customs Act, 1962 - Reference to Rules of Origin under Trade Agreements (CAROTAR, 2020) - Nodal Officer determination on place of origin - Proceedings in respect of origin to be undertaken by the authorities and adjudication to be completed after investigation and determination by the designated Nodal Officer. - HELD THAT: - The Court held that the question whether the consignment originated in Singapore or Malaysia-determinative of liability to anti-dumping duty-is a matter requiring examination of documents and material by the administrative authorities. The Court directed the respondents to commence investigation, issue a show cause notice, complete adjudication and pass an order-in-original within two months. It further directed that during adjudication the authorities shall make reference to CAROTAR, 2020 and obtain a determination from the designated Director (Nodal Officer) regarding place of origin. The matter is thus remitted to the authorities for fresh consideration and determination in accordance with applicable rules of origin and the statutory adjudicatory process.

Proceedings for investigation and adjudication remitted to the authorities with direction to obtain Nodal Officer determination under CAROTAR, 2020 and to complete order-in-original within two months.

Provisional release conditions - Anti-dumping duty component - Furnishing of PD bond and bank guarantee - Levy of fine and penalty premature - Condition for provisional release requiring PD bond and bank guarantee for the anti-dumping duty component upheld; requirement to furnish fine and penalty for provisional release dispensed with as premature. - HELD THAT: - Addressing the petitioner's challenge to the provisional-release conditions, the Court sustained the requirement that the petitioner furnish a PD bond and bank guarantee covering the component of anti-dumping duty so as to secure any duty found payable on final adjudication. Simultaneously, the Court found that imposing fine and penalty as a pre-condition to provisional release was premature at that stage and therefore removed that requirement. The decision draws a distinction between securing potential duty liability through financial guarantees and imposing punitive conditions before completion of the adjudicatory process.

PD bond and bank guarantee for the anti-dumping duty component to be furnished; condition of fine and penalty for provisional release dispensed with.

Final Conclusion: Writ petition disposed by directing the customs authorities to investigate and adjudicate the question of origin (with reference to CAROTAR, 2020 and the Nodal Officer) and to pass a reasoned order-in-original within two months; provisional release to remain subject to PD bond and bank guarantee for the anti-dumping duty component, but not to any fine or penalty at this stage.

Reduction of share capital - Adjustment of accumulated losses against capital - Compliance with Section 66(3) and Section 66(5) of the Companies Act, 2013 - Creditor notice and consent - Regional Director report and compliance of observations - Effect on secured creditors and NOC - FEMA non applicability to non repatriable investments

Reduction of share capital - Adjustment of accumulated losses against capital - Compliance with Section 66(3) and Section 66(5) of the Companies Act, 2013 - Approval of the company's reduction of paid up share capital and adjustment of accumulated losses as recommended by the board and approved by shareholders. - HELD THAT: - The Tribunal examined the board resolution dated 29.11.2019, the special resolution passed at the Extra Ordinary General Meeting on 13.12.2019, and the audited financial statements for FY 2018 19 which showed accumulated losses and a net deficit. The reduction proposed would lower the face value of equity shares and create reserves to be adjusted against accumulated losses. The Articles of Association empower reduction of capital. The statutory auditor's certificates regarding the accounting treatment and non acceptance of deposits were placed on record. Having considered the material, including that the reduction would not involve payment to shareholders or diminution of unpaid share capital and that net worth would remain positive, the Tribunal held that the reduction as resolved by the board and shareholders is permissible and approved the minutes as required under Section 66(5).

Reduction of share capital as resolved is allowed and the minutes as specified under Section 66(5) are approved.

Creditor notice and consent - Regional Director report and compliance of observations - Effect on secured creditors and NOC - FEMA non applicability to non repatriable investments - Satisfaction of procedural and regulatory compliances including service on creditors and authorities, resolution of Regional Director's observations, and position of secured creditor and Income Tax Department. - HELD THAT: - The applicant filed evidence of service of notices to creditors and authorities, publication affidavit, auditor's certificate listing secured and unsecured creditors, and a declaration of solvency. The sole secured creditor's in principle consent was on record. The Regional Director's report raised certain procedural observations (relevant e forms, NOC of unsecured creditors, auditor's entries and Board resolution supporting the NOC). The applicant filed compliance affidavits addressing those observations; during hearing the Regional Director stated its queries/objections stood satisfied. Notice was served on the Income Tax Department which furnished no objection. On the totality of filings and the RD's statement of satisfaction, the Tribunal found procedural and regulatory requirements met and no outstanding objections preventing sanction.

Procedural compliances and responses to the Regional Director's observations are accepted; no objection from Income Tax Department and the application may be allowed.

Final Conclusion: Application under Section 66 is allowed; the Tribunal sanctioned the reduction of the company's share capital as approved by the board and shareholders, approved the minutes required under Section 66(5), directed filing of the certified copy of the order with the Registrar and publication in specified newspapers, and disposed of the application.

Exclusive security - liquidation estate - assets of a subsidiary excluded from liquidation estate - Section 36(4)(d) of the Insolvency and Bankruptcy Code, 2016 - enforcement of security by a financial creditor during liquidation - authority of transferee bank under amalgamation scheme

Assets of a subsidiary excluded from liquidation estate - Section 36(4)(d) of the Insolvency and Bankruptcy Code, 2016 - exclusive security - Exclusive securities and charges created on assets of the respondent subsidiary companies do not form part of the liquidation estate of the corporate debtor. - HELD THAT: - The Tribunal found that Section 36(4)(d) expressly excludes assets of any Indian or foreign subsidiary of the corporate debtor from the liquidation estate. The records of the Committee of Creditors corroborate that claims in respect of corporate guarantees and charges on subsidiary assets were not to form part of the liquidation estate and that only the investment value of subsidiaries was to be considered in liquidation. In view of the statutory exclusion and consistent precedent of this Appellate Tribunal, the exclusive security mortgaged by the respondent companies was held to be outside the liquidation estate and not available for recovery in the liquidation of the corporate debtor. [Paras 10, 11, 12]

Exclusive securities created by the respondent subsidiary companies are outside the liquidation estate and therefore do not form part of assets available in the corporate debtor's liquidation.

Enforcement of security by a financial creditor during liquidation - exclusive security - The Adjudicating Authority's direction restraining the bank from taking coercive steps (including sale) in respect of the exclusive mortgaged properties pending completion of the corporate debtor's liquidation was set aside. - HELD THAT: - The Adjudicating Authority had restrained the bank from enforcing its securities on the basis that such action might diminish the value of the liquidation estate or affect sale as a going concern. The Tribunal, however, concluded that where the securities are exclusive to guarantor subsidiaries and are not part of the liquidation estate, there is no basis to restrain enforcement of those securities under the Code. Given the statutory exclusion of subsidiary assets from the liquidation estate, the restraint on the bank's SARFAESI proceedings in respect of those exclusive securities could not stand and the impugned order was set aside. [Paras 2, 6, 12]

The restraint imposed by the Adjudicating Authority on the bank's enforcement action against exclusive securities of the subsidiary guarantors is set aside.

Authority of transferee bank under amalgamation scheme - The Appellant bank had the authority to file the appeal post-amalgamation pursuant to the amalgamation scheme's continuity clause. - HELD THAT: - The Tribunal examined the amalgamation clause which preserves and transfers to the transferee bank all subsisting contracts and instruments of the transferor banks without requiring third party consent. On that basis, and having regard to the Scheme of Amalgamation reproduced in the record, the Appellant's locus to prosecute the appeal as successor to the transferor bank was upheld. [Paras 8]

The Appellant bank was properly authorised to file the appeal under the amalgamation scheme's continuity provisions.

Final Conclusion: The appeal is allowed: the impugned order restraining the bank from enforcing exclusive securities of the respondent subsidiary companies is set aside; the Tribunal held that such subsidiary assets fall outside the liquidation estate under Section 36(4)(d) of the Code, and the Appellant bank was held duly authorised post-amalgamation to pursue the appeal. Pending applications disposed of; no order as to costs.

Maintainability of proceedings instituted in the name of a proprietorship firm - inclusive definition of "person" under the Insolvency and Bankruptcy Code - curable defect in party description and power to allow amendment - operational creditor standing of a proprietorship concern - remand for amendment and fresh adjudication on merits

Maintainability of proceedings instituted in the name of a proprietorship firm - curable defect in party description and power to allow amendment - inclusive definition of "person" under the Insolvency and Bankruptcy Code - An application filed in the name of a proprietorship firm is a curable defect and the Adjudicating Authority erred in dismissing the Section 9 application as not maintainable solely because it was in the trade name of the proprietorship. - HELD THAT: - The Tribunal noted that the Adjudicating Authority treated a proprietorship trade name as not constituting a "person" and dismissed the petition as not maintainable. Relying on the statutory scheme (including the provision recognising proprietorship firms within the Code's ambit) and precedents permitting correction of such descriptions, the Tribunal held that the defect in Part 1 of the Form-naming the operational creditor by the proprietorship trade name-was curable. The Appellate Tribunal observed that the petitioner had filed the application through the sole proprietor and that the Adjudicating Authority should have allowed opportunity to amend the operational creditor's description (for example by showing the proprietor's name suffixed as sole proprietor of the trade name) instead of rejecting the application on that ground. The Tribunal therefore allowed the appeal, quashed the impugned order, and directed remand for rectification and fresh consideration. [Paras 11, 12]

Impugned order set aside; Appellate Tribunal directed the Adjudicating Authority to permit correction of the operational creditor's description and reconsider the application.

Operational creditor standing of a proprietorship concern - remand for amendment and fresh adjudication on merits - The merits of the Section 9 application were not decided by the Adjudicating Authority and are remitted for fresh adjudication after the defect in party description is cured. - HELD THAT: - The Tribunal expressly recorded that the Adjudicating Authority did not decide the substantive disputes raised by the respondent on the merits of the claim. Consequently, having quashed the dismissal based on maintainability, the Tribunal remitted the matter to the Adjudicating Authority to give the appellant an opportunity to amend the application and to decide the Section 9 application on merits after hearing both parties. [Paras 10, 12]

Matter remitted to the Adjudicating Authority to allow amendment and to adjudicate the Section 9 application on merits after hearing both sides.

Final Conclusion: Appeal allowed; impugned order dated 28.02.2020 quashed and set aside. The Adjudicating Authority is directed to permit correction of the operational creditor's description in the application and to reconsider the Section 9 claim on merits after affording opportunity to both parties; no order as to costs.

Operational debt - Operational Creditor - Corporate Debtor - Pre-existing dispute under Section 8(2)(a) and Section 5(6) of the Insolvency and Bankruptcy Code, 2016 - Admission under Section 9 and initiation of CIRP - Principal agent relationship and liability to pay - Mobilox principle on existence of dispute

Operational debt - Operational Creditor - Corporate Debtor - Principal agent relationship and liability to pay - Katalist View Paper Pvt. Ltd. is the Corporate Debtor and Inspired Traveller (proprietor Saurav Keshan) is the Operational Creditor for the services of designing advertisements and producing video films. - HELD THAT: - The Appellate Tribunal examined purchase orders, invoices, TDS records and the e mail trail and found that purchase orders were issued by Katalist and invoices were raised in the name of Katalist, some payments were made by Katalist against those invoices and Katalist did not raise objection at the time of raising or initial payments. No formal prior tripartite or principal-agent agreement was produced to establish that Katalist merely acted as an agent for Group M. The flowchart and post hoc emails relied upon by the appellant were held to be insufficient to manufacture a pre existing principal-agent relationship. In absence of any document to the contrary, the entity that placed the purchase orders and accepted invoices is liable as the Corporate Debtor under the IBC definitions, and informal or internal arrangements between other parties do not alter the Operational Creditor-Corporate Debtor relationship. [Paras 11, 13, 14, 15]

Katalist View Paper Pvt. Ltd. is the Corporate Debtor and Inspired Traveller is the Operational Creditor.

Pre-existing dispute under Section 8(2)(a) and Section 5(6) of the Insolvency and Bankruptcy Code, 2016 - Admission under Section 9 and initiation of CIRP - Mobilox principle on existence of dispute - There was no real or pre-existing dispute between Katalist and Inspired Traveller regarding the operational debt prior to the Operational Creditor filing the Section 9 application. - HELD THAT: - The Tribunal analysed the demand notice, the corporate debtor's reply, the invoices and the contemporaneous conduct of the parties. The alleged dispute was held to be an afterthought raised through internal emails to shift liability to Group M and not a bona fide dispute relating to quality of service, amount or breach by the Operational Creditor. The Mobilox test was applied in context: since the purported dispute did not pertain to the services or amount and was raised post factum to avoid payment, it did not qualify as a pre existing dispute under Section 8(2)(a)/Section 5(6) of the IBC. The absence of any prior documented tripartite arrangement or agreement further undermined the appellant's contention that liability lay elsewhere. [Paras 16, 17, 18, 19, 21]

No pre existing dispute existed; the defence was spurious and could not prevent admission of the Section 9 application and initiation of CIRP.

Final Conclusion: The appeal is dismissed. The impugned order admitting the Section 9 petition and initiating CIRP against Katalist View Paper Pvt. Ltd. is upheld; no interference is warranted.

Summary order. Petition entertained and notice issued; the court did not decide whether the second show cause notice relates to the 'same matter' for the same period under Section 129(1)(c) of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, directed the respondents to place authorities on record, and listed the matter on 15 March 2021.

Quantification of tax dues - written communication - eligibility under Sabka Vishwas (Legacy Dispute Resolution) Scheme - personal hearing - principles of natural justice - remand for fresh consideration

Quantification of tax dues - written communication - eligibility under Sabka Vishwas (Legacy Dispute Resolution) Scheme - Whether the petitioner's service tax dues were 'quantified' on or before 30.06.2019 for the purpose of eligibility under the Scheme. - HELD THAT: - The court followed earlier decisions of this Court holding that 'quantified' means a written communication of the amount of duty payable, which includes a letter intimating duty demand or duty liability admitted during inquiry, investigation or audit, and need not await adjudication. The designated authority's computation of service tax in the letter dated 15.06.2019 amounted to quantification. Receipt of the physical copy thereafter did not alter the date of quantification; the relevant act was the authority's quantification on 15.06.2019. The court rejected the respondents' contention that quantification was incomplete merely because further verification of some particulars remained outstanding, noting that where a demand has been communicated, that figure can constitute quantification for scheme eligibility. [Paras 16, 17, 18]

The petitioner's tax dues stood quantified on or before 30.06.2019 and the petitioner was eligible to file a declaration under the Scheme.

Personal hearing - principles of natural justice - remand for fresh consideration - Whether rejection of the petitioner's declaration without affording an opportunity of hearing was justified and what relief should follow. - HELD THAT: - The court held that summary rejection of a declaration without giving the declarant an opportunity to explain would violate principles of natural justice where adverse civil consequences follow. Although the petitioner had accepted the Designated Committee's estimate in Form SVLDRS No.2A (waiving the need for hearing as to the estimate), rejection of the declaration on eligibility or other grounds required that the declarant be afforded a hearing and that any adverse material relied upon by the authority be furnished to the declarant. In view of these considerations the court set aside the rejection order and directed reconsideration by the Designated Committee with an opportunity of hearing and a speaking order within a stipulated time. [Paras 19, 20, 21]

Rejection without hearing was not justified; matter is remanded to the Designated Committee to reconsider the declaration with an opportunity of hearing and to pass a speaking order within eight weeks.

Final Conclusion: The order rejecting the declaration dated 13.11.2019 is set aside; the matter is remitted to the Designated Committee to reconsider the petitioner's declaration under the Scheme (the petitioner having been held to have had its dues quantified before 30.06.2019), to afford the petitioner a hearing, and to pass a speaking order and grant consequential reliefs within eight weeks. No order as to costs.

Transfer of right to use - taxability under Tamil Nadu Value Added Tax Act, 2006 - supply of tangible goods on hire - effective control and possession - tests laid down in Bharath Sanchar Nigam Ltd. for transfer of right to use - goods available for delivery - consensus ad idem as to the identity of the goods

Transfer of right to use - supply of tangible goods on hire - effective control and possession - tests laid down in Bharath Sanchar Nigam Ltd. for transfer of right to use - Whether the agreement for supply of mobile cranes to BHEL amounted to a "transfer of right to use" taxable under the Tamil Nadu Value Added Tax Act, 2006. - HELD THAT: - The court found the primary facts undisputed: the petitioner supplied 10T mobile cranes on daily rental and provided drivers and crew; cranes were operated under the supervision of BHEL during stipulated hours but remained the petitioner's equipment and were not parked inside BHEL premises after hours. Contract clauses required the petitioner's crew to maintain trip registers, provided for replacement of cranes by the contractor, and contemplated continued ownership and control by the petitioner. Applying the tests articulated in Bharath Sanchar Nigam Ltd., the court examined whether there was (a) goods available for delivery, (b) consensus ad idem as to identity of goods, (c) transferee having legal right to use including necessary permissions, and (d) exclusion of the transferor's rights for the period and inability of the owner to transfer the same rights to others. On the facts, there was no transfer of effective control or possession to BHEL; the agreement evidenced retention of control by the petitioner and an arrangement of hire with operator and operational duties retained by the petitioner. Consequently, the factual and legal conditions required to constitute a "transfer of right to use" were not satisfied and the demand under the VAT Act could not be sustained. [Paras 13, 14, 16, 18]

The agreement did not effect a transfer of right to use the cranes; the demand confirmed in the appellate orders lacked merit and was quashed.

Final Conclusion: Impugned appellate orders confirming assessment demands for Assessment Years 2012-2013 and 2013-2014 were quashed; the writ petitions were allowed with consequential relief and no costs.

Taxability of manpower recruitment or supply agency (MRSA) service - classification as Information Technology Software Services (ITSS) and temporal operation from introduction of the new service - control and supervision test to distinguish MRSA from ITSS - extended period of limitation and requirement of willful suppression or positive act to invoke extended period - new service category not liable retrospectively where not carved out from existing category

Taxability of manpower recruitment or supply agency (MRSA) service - classification as Information Technology Software Services (ITSS) and temporal operation from introduction of the new service - control and supervision test to distinguish MRSA from ITSS - Whether the services rendered by the appellant for the period 16.6.2005 to 2007-08 are exigible to service tax as MRSA or are services of ITSS and thus not taxable as MRSA for the disputed period. - HELD THAT: - The Tribunal examined the contractual terms and the nature of the services for each client listed in the show cause notice and applied the established distinction: where the assessee retains responsibility for delivery of IT work and control over personnel the transaction is ITSS; where personnel are supplied to function under the client's control and the assessee has no role in delivering the IT project, the transaction is MRSA. The agreements (ABN AMRO, GE, HDFC, Scope, Citigroup, Acsys, ING Vysya, Societe Generale and others) demonstrate that appellant was engaged to perform software development, maintenance and related IT services and remained responsible for selection, training, discipline and performance of personnel, and retained control and supervision. The Tribunal followed the reasoning in Cognizant Tech Solutions and distinguished facts in Future Focus Infotech where staff merely supplied and supervised by clients constituted MRSA. Applying that control/supervision test to the contractual matrix before it, the Tribunal found no ingredients of MRSA and held the disputed transactions to be IT-related services rather than manpower supply. The Tribunal also applied the principle that introduction of ITSS on 16.5.2008 does not operate as a carve out from MRSA such that identical services could be taxed earlier as MRSA where their true character is ITSS; accordingly the Revenue could not reclassify the same transactions for the prior period when it had accepted ITSS classification after 16.5.2008. [Paras 20, 21, 22, 23, 25]

Issue No.4 decided for the appellant: the demands under MRSA for the period 16.6.2005 to 2007-08 are unsustainable on merits and are set aside.

Extended period of limitation and requirement of willful suppression or positive act to invoke extended period - new service category not liable retrospectively where not carved out from existing category - Whether the Revenue could invoke extended period of limitation for the disputed demand in absence of positive evidence of suppression with intent to evade tax. - HELD THAT: - The Tribunal analysed the material relied upon by Revenue and the documentary correspondence preceding the show cause notice. The record shows repeated requests by the department for information and comprehensive replies by the appellant with supporting documents. There is no evidence of a positive act of suppression or willful mis statement as required to invoke the extended period. The Tribunal applied the settled test from the cited authority that mis statement or suppression must be willful to justify extension. In addition, having accepted the appellant's classification under ITSS after 16.5.2008, Revenue cannot now seek to reclassify identical transactions for earlier periods absent estoppel or demonstrable suppression. On these grounds the invocation of the extended period was held untenable. [Paras 24, 26]

Extended period not invocable; issue decided for the appellant and the demand is barred on limitation; consequential relief to follow.

Final Conclusion: The appeal is allowed: the demand under MRSA for the period 16.6.2005 to 2007-08 is set aside on merits (services were IT-related with appellant's control and supervision) and the invocation of the extended period of limitation is rejected for lack of willful suppression.

Service tax liability for renting of immovable property service - Registration and ST-3 return obligations - Effect of termination of development agreement on tax liability and quantum - Remand for fresh adjudication

Service tax liability for renting of immovable property service - Effect of termination of development agreement on tax liability and quantum - Remand for fresh adjudication - Whether the matter should be remanded to the adjudicating authority for fresh adjudication in light of the termination of the Development Agreement for Sarai Rohilla Railway Station and related subsequent proceedings. - HELD THAT: - The appellant, RLDA, was held to be rendering taxable services relating to commercial development of vacant rail land and had not registered or filed ST-3 returns; a show cause notice and consequent OIO imposed service tax demand. The adjudicating authority's order was passed on 27.03.2015, whereas the Development Agreement for Sarai Rohilla Railway Station was terminated subsequently on 06.08.2015 and that termination, and ensuing arbitration and litigation, may affect the quantum of tax liability. The Department acknowledged that the termination would have an effect on the quantum. Given that the termination and its consequences were not before the adjudicating authority when the original OIO was passed, the Tribunal considered it appropriate to remit the matter so that the adjudicating authority may re-adjudicate the issue after taking into account the termination and subsequent proceedings. The Tribunal directed that the re-adjudication be completed within six months from receipt of the copy of the order. [Paras 5, 6]

The appeal is remanded to the adjudicating authority for fresh adjudication taking into account the termination of the Development Agreement and subsequent proceedings, with directions to finalise adjudication within six months from receipt of this order.

Final Conclusion: The Tribunal has allowed remand: the service-tax demand is to be reconsidered by the adjudicating authority in light of the termination of the Sarai Rohilla Development Agreement and related proceedings, and the adjudication is to be completed within six months of receipt of this order.

Quashing of show cause notice - interim stay - finality of appellate order - jurisdictional challenge to show cause notice - refund of Education Cess and Secondary & Higher Secondary Education Cess - effect of binding appellate orders

Interim stay - quashing of show cause notice - finality of appellate order - Interim relief by staying operation of the show cause notice and restraining the department from proceeding with adjudication or recovery until the returnable date; issuance of notice for final disposal. - HELD THAT: - The petition challenged the legality of the show cause notice dated 8.10.2020 which sought recovery of a refund earlier sanctioned pursuant to the Commissioner (Appeals) order dated 18.12.2018. The petitioner contended that the impugned notice was issued contrary to binding appellate orders which had attained finality. After hearing learned counsel and noting the grievance that no further challenge to the appellate orders existed, the Court directed issuance of notice returnable on 8.3.2021 and granted interim relief by staying the operation and implementation of the show cause notice and restraining the respondent from proceeding with adjudication or recovery until that date. Service of notice was waived for the Central Government. The order preserves the status quo pending adjudication on merits while recognising the contention regarding finality of earlier appellate decisions. [Paras 10]

Interim stay granted on the show cause notice and notice issued returnable on 8.3.2021; service waived for the Central Government.

Final Conclusion: Notice issued returnable on 8.3.2021; interim stay of the show cause notice granted until that date and the department restrained from further adjudication or recovery in the meantime.

Withdrawal of statutory appeal for being below prescribed monetary limit - Consent withdrawal of appeal - Refund under appellate rules on withdrawal

Withdrawal of statutory appeal for being below prescribed monetary limit - Consent withdrawal of appeal - Refund under appellate rules on withdrawal - Appeal under section 35G of the Central Excise Act, 1944 allowed to be withdrawn on the ground that the amount involved is below the prescribed monetary limit and with no objection from the respondent, with refund directed as per rules. - HELD THAT: - Learned counsel for the appellant informed the Court that he had instructions to withdraw the appeal because the monetary value in dispute falls below the prescribed limit for admission. The respondent's counsel stated she had no objection to the prayer for withdrawal. In these circumstances the Court permitted the appellant to withdraw the appeal notwithstanding that the appeal had not been admitted earlier. The Court also directed that any refund consequent to the withdrawal be made in accordance with the applicable rules. [Paras 5, 6, 7, 8, 9]

Prayer to withdraw the appeal allowed; appeal disposed of as withdrawn and refund to be made as per rules.

Final Conclusion: The appeal under section 35G is permitted to be withdrawn on the appellant's statement that the amount involved is below the prescribed monetary limit and without objection from the respondent; the appeal stands disposed of as withdrawn and refund is directed in accordance with the rules.

Tribunal exceeding jurisdiction by deciding issues not raised in the show cause notice - Tribunal cannot sustain Revenue on a ground not raised in the show cause notice or original adjudication order - Validity of debit notes as eligible documents for CENVAT credit under the CENVAT Credit Rules, 2004 - Remand to original authority for verification of documents - Examination of eligibility of input services under Section 37(2) of the Central Excise Act, 1944

Tribunal exceeding jurisdiction by deciding issues not raised in the show cause notice - Tribunal cannot sustain Revenue on a ground not raised in the show cause notice or original adjudication order - The Tribunal acted without jurisdiction in proceeding to decide and direct fresh proceedings on grounds that were not raised in the show cause notices or in the original adjudication order. - HELD THAT: - The Court held that the Tribunal, while remanding the matter on the narrow question whether debit notes contained requisite particulars, proceeded suo motu to consider and make conclusive observations on broader questions - including whether the impugned services were eligible input services and references to Section 37(2) and Section 11AB - which were not the subject matter of the show cause notices or of the departmental order. The appeals were filed by the assessee and the Revenue did not prefer any cross-objection; consequently the assessee could not be put to answer new grounds not canvassed by the Revenue. Reliance was placed on authoritative precedent that an appellate Tribunal cannot sustain the Revenue on a ground not raised in the show cause notice or the original order. For these reasons the Court found the Tribunal's direction to issue a fresh show cause notice on the eligibility of services to be beyond its jurisdiction and liable to be set aside. [Paras 11, 12]

Direction by the Tribunal to issue a fresh show cause notice on grounds not raised in the original show cause notice is without jurisdiction and is set aside.

Examination of eligibility of input services under Section 37(2) of the Central Excise Act, 1944 - Tribunal exceeding jurisdiction by deciding issues not raised in the show cause notice - The Tribunal was not entitled to direct adjudicating authority to examine entitlement to CENVAT credit under Section 37(2) when the Revenue had not raised that contention in the show cause notices. - HELD THAT: - The Court noted that the Tribunal, after accepting the limited contention of the assessee on debit notes, nonetheless directed the original authority to consider eligibility of credit in light of Section 37(2). That course effectively required the assessee to meet a fresh allegation which the Revenue had never made. The Court emphasised that the Department cannot be permitted to proceed beyond the cause of action stated in the show cause notice; the Tribunal's invocation of Section 37(2) and related statutory provisions in that context was therefore an exercise beyond its jurisdiction and was set aside. [Paras 9, 11, 12]

Tribunal's direction to examine eligibility under Section 37(2) where no such contention was raised by the Revenue is without jurisdiction and set aside.

Validity of debit notes as eligible documents for CENVAT credit under the CENVAT Credit Rules, 2004 - Remand to original authority for verification of documents - The Tribunal's remand to the original authority to verify whether the debit notes contained the necessary particulars under Rule 9(2) of the CENVAT Credit Rules, 2004, and to allow credit if so verified, was justified and is sustained. - HELD THAT: - On the core controversy squarely raised by the show cause notices - whether debit notes issued by service providers are eligible documents for claiming CENVAT credit - the Tribunal examined precedent and concluded that debit notes may contain the particulars required by Rule 9(2) of the CCR, 2004. Consequently the Tribunal remanded the matter to the adjudicating authority for verification of the debit notes' contents and for grant of credit if the requisite details are found. The High Court upheld that remand and the limited direction for document verification, distinguishing that limited exercise from the Tribunal's impermissible further directions on eligibility of services. [Paras 8, 13]

Remand to the original authority to examine the debit notes' conformity with Rule 9(2) of the CCR, 2004 and to grant credit on verification is sustained.

Final Conclusion: The appeals are allowed. The Tribunal's broader directions to issue a fresh show cause notice and to examine eligibility of services under Section 37(2) - grounds not raised by the Revenue - are set aside as beyond jurisdiction. The Tribunal's remand to the original authority to verify the debit notes for particulars required under the CENVAT Credit Rules, 2004 is sustained; the substantial questions of law are answered in favour of the assessee.

Right to personal hearing - virtual hearing adequacy during lockdown - right to cross-examination as facet of the principle of natural justice - entertainment of writ under Article 226 for breach of natural justice

Right to personal hearing - virtual hearing adequacy during lockdown - Request for personal (in-person) hearing declined and virtual hearing held to be adequate in the circumstances. - HELD THAT: - The Court recorded that virtual hearings have been conducted since the lockdown and that it is not inclined to entertain the petitioner's insistence on a personal hearing. The observation reflects the Court's acceptance that, in the pandemic context and given the ongoing use of virtual proceedings for contested matters, denial of a physical hearing alone does not necessitate intervention. The Court therefore refused to accede to the petitioner's demand for personal hearing and proceeded on the basis that virtual hearing mechanisms are adequate for adjudication. [Paras 7]

Petitioner's plea for a personal hearing declined; virtual hearing treated as adequate.

Right to cross-examination as facet of the principle of natural justice - entertainment of writ under Article 226 for breach of natural justice - Denial of opportunity to cross-examine was recorded as having been made without a separate order, and the Court was inclined to entertain the writ petition on that limited ground of breach of natural justice and issued notice. - HELD THAT: - The Court noticed that the adjudicating authority, in the Order-in-Original, denied the petitioner the right to cross-examine witnesses without passing any separate reasoned order on the request for cross-examination. Relying on the principle that breach of natural justice may justify writ relief (referencing the ratio in Mafatlal Industries Ltd. and the decision in Mahek Glazes Pvt. Ltd. as guiding authority), the Court held that the question of denial of cross-examination merited judicial consideration. For that limited purpose the Court was inclined to issue notice and proceeded to issue notice returnable on the specified date to consider the petitioner's grievance as to cross-examination and natural justice. [Paras 7, 8, 9]

Foundation for entertaining the writ petition established on the limited ground that cross-examination was denied without a separate order; notice issued.

Final Conclusion: The Court declined the petitioner's demand for a personal (physical) hearing, treated virtual hearing as adequate, and, noting the denial of cross-examination without a separate order, issued notice on the limited natural justice point and listed the matter for further consideration.

Priority of secured creditors under Section 26-E of the SARFAESI Act over statutory charges - First charge under Section 37 of the MVAT Act - Effect of non-obstante clauses and later statute prevailing - Duty of secured creditor/authorised officer to disclose encumbrances under the Security Interest (Enforcement) Rules, 2002 - Charge under Section 100 of the Transfer of Property Act - notice requirement - Sale on "as is where is" basis - liabilities and encumbrances

Priority of secured creditors under Section 26-E of the SARFAESI Act over statutory charges - First charge under Section 37 of the MVAT Act - Effect of non-obstante clauses and later statute prevailing - Priority between secured creditor's charge under Section 26-E of the SARFAESI Act and the statutory first charge under Section 37 of the MVAT Act. - HELD THAT: - The Court held that Section 26-E of the SARFAESI Act, having the broader non-obstante language ("notwithstanding anything contained in any other law for the time being in force") and being a Central enactment, creates priority in favour of secured creditors over all other debts including taxes. Section 37(1) of the MVAT Act, though containing a non-obstante clause, is expressly subject to any provision regarding creation of first charge in any Central Act. The later central enactment (including Section 26-E and cognate provisions such as Section 31-B of the RDB Act) therefore governs and gives secured creditors priority. The Court relied on the principle that where two special statutes contain non-obstante clauses the later enactment will prevail, and applied authorities recognising that secured creditors' claims rank prior to governmental dues since 01.09.2016 when Section 26-E took effect. The consequence is that the bank, as secured creditor, ranks first in the distribution of sale proceeds, subject to the insolvency regime when applicable.

Section 26-E of the SARFAESI Act prevails over Section 37(1) of the MVAT Act; secured creditors have priority over statutory tax claims for purposes of realisation by sale under SARFAESI.

Charge under Section 100 of the Transfer of Property Act - notice requirement - Sale on "as is where is" basis - liabilities and encumbrances - Duty of secured creditor/authorised officer to disclose encumbrances under the Security Interest (Enforcement) Rules, 2002 - Whether an auction purchaser (purchaser for value) can be fastened with a statutory charge/encumbrance in the absence of notice, and the obligations of the secured creditor/authorised officer in respect of disclosure of encumbrances. - HELD THAT: - The Court explained the distinction between a contractual/ordinary charge (as addressed by Section 100 of the Transfer of Property Act, which ordinarily requires notice to bind a transferee for value) and a statutory charge that is created by statute and runs with the property. A statutory charge under Section 37(1) MVAT, being a charge created by statute, follows the property and is presumed notice to all; consequently an auction purchaser takes the property subject to such statutory charges and must clear them to obtain an encumbrance-free title. Simultaneously, the Court reiterated the statutory obligations on the secured creditor and authorised officer under Section 13(6) and (7) SARFAESI and Rules 8(7)(a),(f), 9(7),(9),(10) of the Security Interest (Enforcement) Rules, 2002: reasonable enquiries must be made about encumbrances known to statutory authorities, such encumbrances should be disclosed in the sale notice or provided for in the reserve price, and the sale certificate must record whether the purchaser acquired the asset free from encumbrances known to the secured creditor. Failure to disclose encumbrances known to the secured creditor may give the purchaser remedies against the secured creditor, but does not negate the statutory charge's effect in favour of the revenue where the statute creates a charge that runs with the property.

An auction purchaser takes the property subject to statutory charges that run with the property and must discharge them to obtain clear title; the secured creditor/authorised officer must make reasonable enquiries and disclose known encumbrances in the auction process, with non-disclosure creating a cause of action against the secured creditor but not extinguishing the statutory charge.

Final Conclusion: The writ petition challenging refusal to transfer the property and seeking directions to compel issuance of NOC and an encumbrance-free sale certificate was dismissed. The Court held that secured creditors have priority under Section 26-E SARFAESI, statutory charges under the MVAT Act run with the property and bind an auction purchaser, and the secured creditor must nonetheless disclose known encumbrances in the auction process.

Premature attachment/recovery pending period for filing second appeal - interpretation of Section 49 of the Puducherry Value Added Tax Act, 2007 regarding payment during pendency of appeal - right to file second appeal within sixty days and attendant extension/condonation - requirement of twenty-five per cent deposit for entertaining a second appeal - discretion of the Appellate Tribunal to admit appeal on furnishing security or to waive/mitigate deposit

Premature attachment/recovery pending period for filing second appeal - interpretation of Section 49 of the Puducherry Value Added Tax Act, 2007 regarding payment during pendency of appeal - right to file second appeal within sixty days and attendant extension/condonation - requirement of twenty-five per cent deposit for entertaining a second appeal - discretion of the Appellate Tribunal to admit appeal on furnishing security or to waive/mitigate deposit - Whether the revenue could issue attachment/recovery immediately upon service of the first appellate order or whether recovery proceedings must await expiry of the period for filing a second appeal under Section 49. - HELD THAT: - The Court analysed the scheme of Section 49 which grants an aggrieved person sixty days (with the possibility of further condonation) to prefer a second appeal to the Appellate Tribunal and which stipulates that an appeal will be entertained only if accompanied by satisfactory proof of payment admitted or of instalments thereof and twenty-five per cent of the difference, subject to the Appellate Tribunal's discretion to admit the appeal on furnishing security or to waive/mitigate the payment for reasons to be recorded. The revenue's contention that the entire tax becomes payable immediately on service of the appellate order was held to be misconceived. The Court concluded that an assessee must be afforded the full period allowed for filing the second appeal before coercive recovery steps are initiated; the statutory provisions permitting deposit, security or discretionary waiver under Section 49 do not authorize immediate attachment in all cases upon service of the order. The Court relied on precedent directing that recovery steps be deferred until the time for filing a second appeal has expired, and applied that principle to direct lifting of the impugned attachment. [Paras 6, 7, 9]

Attachment held premature; direction issued to lift the impugned attachment and writ petition allowed.

Final Conclusion: The writ petition was allowed; the attachment issued to the bank was directed to be lifted because recovery proceedings were premature pending expiry of the statutory period for filing a second appeal under Section 49 of the Puducherry Value Added Tax Act, 2007.

Liability of legal representative to pay tax out of the estate of the deceased - special provision regarding liability to pay tax in certain cases - attachment of immovable property as estate of the deceased - Section 57 of the Gujarat Value Added Tax Act, 2003 (liability on death of dealer)

Liability of legal representative to pay tax out of the estate of the deceased - attachment of immovable property as estate of the deceased - Section 57 of the Gujarat Value Added Tax Act, 2003 (liability on death of dealer) - Whether the immovable property attached by the Department is the estate of the deceased assessee and thus liable to be made available to discharge the tax liability assessed for the assessment years 2012-13 and 2013-14. - HELD THAT: - The Court recorded that the Commissioner, exercising powers under the GVAT Act, took revision assessment orders for assessment years 2012-13 and 2013-14 fixing tax liability against the deceased dealer. The Department invoked the special provision relating to liability on death, contending that the immovable property in question is the estate of the deceased and was therefore attached to meet the assessed liability. The writ applicant contends that the property is his self-acquired property. The Court did not decide the disputed factual or legal question on merits. Instead, the Court issued notice to the respondents and directed the learned AGP to file a reply, prima facie pointing out that the materials on record indicate the property is the estate of the deceased. No adjudication was made on whether the property is part of the estate or liable under Section 57; the matter remains to be examined on the return of the writ petition. [Paras 4]

Notice issued to respondents returnable on 09.03.2021; respondents to file reply with prima facie reliance on record indicating the property is the estate of the deceased; no final determination on the liability or ownership of the property made.

Final Conclusion: Writ petition admitted for consideration; interim direction issued for service and filing of reply on the question whether the attached immovable property constitutes the estate of the deceased liable under Section 57 of the GVAT Act, with no final adjudication on ownership or liability at this stage.

Presumption under Section 139 of Negotiable Instruments Act - ingredients of offence under Section 138 of Negotiable Instruments Act - re-appreciation of evidence in revisional jurisdiction - modification of sentence and imposition of fine in interest of justice

Presumption under Section 139 of Negotiable Instruments Act - ingredients of offence under Section 138 of Negotiable Instruments Act - re-appreciation of evidence in revisional jurisdiction - Validity of conviction under Section 138 of the Negotiable Instruments Act in view of the evidence and defenses raised. - HELD THAT: - The High Court upheld the concurrent findings of the trial and appellate courts that the cheque dated 18.07.2009 was proved, its presentation and return for insufficiency were duly established by documentary and oral evidence, and the statutory timelines for notice and prosecution were complied with. The defence plea that the cheque was left at a third party's house and was misused was considered by the courts below but found unrebutted and insufficient to displace the statutory presumption under Section 139. In revisional jurisdiction the High Court declined to re-appreciate evidence or disturb findings absent perversity, and found none pointed out by the petitioner; consequently the conviction under Section 138 was held to be justified. [Paras 11, 12, 13, 15, 16]

Conviction under Section 138 of the Negotiable Instruments Act is upheld; no interference with findings of the courts below.

Modification of sentence and imposition of fine in interest of justice - Whether the sentence should be modified and, if so, the nature of modification. - HELD THAT: - Although the conviction was sustained, the High Court exercised its revisional power to modify sentence in the interests of justice. Having noted the parties' submissions (including the complainant's willingness to accept an enhanced compensation), the Court limited the custodial sentence to the period already undergone and imposed an additional fine of Rupees one lakh to be paid along with the previously ordered compensation within two months; failure to deposit will entail revival of the original sentence. The Court also provided for discharge of bailors and immediate disbursement to the complainant upon deposit and identification. [Paras 17, 18, 19]

Sentence modified: custody limited to time already undergone; fine of one lakh imposed in addition to previously ordered compensation with specified deposit condition; petition disposed accordingly.

Final Conclusion: The revisional petition is disposed by upholding the conviction under Section 138 of the Negotiable Instruments Act while modifying the sentence to time already served and imposing a one lakh fine in addition to the compensation, subject to the deposit and procedural conditions directed by the Court.

Anticipatory bail - custodial interrogation necessary for investigation - scope of Section 17A of the Prevention of Corruption Act - evidence from seized registers during investigation - prima facie implication and risk of tampering with investigation

Evidence from seized registers during investigation - Whether the register seized from an accused-munshi can be relied upon at the stage of investigation to ascertain culpability of the petitioners. - HELD THAT: - The Court held that at the present investigational stage it is not permissible to rule out the relevance of the register seized from the munshi. Although admissibility under the Evidence Act and proof that the books were regularly maintained are matters for trial, the State may rely on the seized register during investigation to ascertain the role of the petitioner in alleged evasion of tax. The contention that entries cannot prima facie implicate the petitioner for lack of certification or proof of regular maintenance is not sustainable as a basis to foreclose custodial interrogation or investigation at this stage. [Paras 8]

The register may be relied upon for investigational purposes and its admissibility/weight is a matter for later adjudication.

Scope of Section 17A of the Prevention of Corruption Act - Whether prior approval under Section 17A of the Prevention of Corruption Act was required before instituting the investigation in the present case. - HELD THAT: - The Court examined Section 17A and the object of the amendment, and applying the principle in Devender Kumar (and consistent High Court authorities), concluded that Section 17A protects public servants for acts relatable to recommendations or decisions taken in discharge of official functions. Where the alleged offence is not relatable to any recommendation or decision by the public servant, prior governmental approval is not required. In the present case there is no record of any recommendation or decision by a public servant in discharge of official duties that would attract the bar under Section 17A; accordingly the State was not obliged to obtain prior approval before initiating enquiry or investigation. [Paras 9, 10]

Section 17A prior approval was not necessary for the investigation in this case because the alleged offences are not relatable to any recommendation or decision taken by a public servant in discharge of official functions.

Anticipatory bail - custodial interrogation necessary for investigation - prima facie implication and risk of tampering with investigation - Whether anticipatory bail should be granted to the petitioners. - HELD THAT: - Considering the material gathered during investigation - including telephone surveillance, disclosure by co-accused and entries in the seized register - the Court found a prima facie case that the petitioners were implicated in large-scale tax evasion with monthly gratification to officials. The Court observed that custodial interrogation was necessary to unearth the nexus between petitioners and intermediaries and to determine the extent of evasion. Given the nascent stage of investigation, the seriousness of allegations, and the possibility that the petitioners (being persons of influence) could impede investigation, the Court departed from the general rule favoring bail and declined anticipatory bail. The Court clarified that its observations relate only to the bail application and do not constitute expression on merits. [Paras 11, 12]

Anticipatory bail is refused and both petitions are dismissed.

Final Conclusion: The High Court dismissed both anticipatory bail petitions, holding that (i) the seized register may be used for investigational purposes, (ii) prior approval under Section 17A was not required as the offences are not relatable to any recommendation or decision by a public servant, and (iii) custodial interrogation was warranted given the prima facie material and risk to the investigation.