TaxTMI Updates e-Newsletter
Mar 04,2024

Refund of IGST on export of goods - deemed application for refund by filing of shipping bill - procedure for transmission of export details under Rule 96 - interest on delayed refunds under Section 56 - automatic entitlement to statutory interest despite absence of express claim

Refund of IGST on export of goods - deemed application for refund by filing of shipping bill - procedure for transmission of export details under Rule 96 - Sanction of IGST refund for the tax periods indicated was granted by respondent; the procedural compliance for claiming refund was satisfied. - HELD THAT: - The petitioner exported goods on payment of IGST and furnished returns in FORM GSTR-3B and submitted refund applications by filing shipping bills and FORM GST RFD-01. Rule 96 contemplates that the shipping bill is to be treated as the application for refund and that details in FORM GSTR-1 are to be transmitted to the Customs system; acknowledgements in FORM GST RFD-02 were issued and refunds have been sanctioned by the respondent. The Court recorded that the procedural requirements for processing export refunds were met and that the refunds for the specified tax periods have been sanctioned (albeit without interest). [Paras 2, 4, 6, 7]

Refunds of IGST for the tax periods December 2022, February 2023, March 2023 and May 2023 stand sanctioned; procedural requirements under Rule 96 and related provisions were satisfied.

Interest on delayed refunds under Section 56 - automatic entitlement to statutory interest despite absence of express claim - Whether petitioner is entitled to interest under Section 56 on the delayed IGST refund despite not having claimed interest in FORM GST RFD-01. - HELD THAT: - Section 56 mandates payment of interest at the prescribed rate where a tax ordered to be refunded is not refunded within sixty days from receipt of the application; such interest is statutory and becomes payable automatically once the sixty-day period is exceeded. The CBEC Circular cited by the petitioner clarifies that interest is to be calculated from the date immediately after expiry of sixty days until the date the amount is credited to the applicant's bank account, and that refund is to be treated as effected only upon credit to the bank account. Payment of interest under Section 56 does not depend upon an express claim for interest in the refund application form; therefore absence of a claim for interest in FORM GST RFD-01 does not disentitle the petitioner. The respondent has shown no justification for non-payment within the statutory period. [Paras 9, 10, 11, 12]

Petitioner is entitled to statutory interest at the rate of 6% from the date immediately after expiry of sixty days from receipt of the refund applications until the date on which the refund was credited to the petitioner's bank account; respondent directed to process and credit the interest within four weeks.

Final Conclusion: The writ petition is allowed in part: IGST refunds for December 2022, February 2023, March 2023 and May 2023 having been sanctioned, the petitioner is additionally entitled to statutory interest at 6% for the period from the day after sixty days from receipt of the refund applications until the date of credit; the respondent is directed to process and credit the interest within four weeks. The petition is disposed of.

Cancellation of GST registration - requirement of reasoned order - personal hearing and opportunity to be heard - effectiveness of cancellation from date of application - compliance with Section 29 of the Central Goods and Services Tax Act, 2017 - preservation of recovery rights for tax, penalty or interest

Cancellation of GST registration - requirement of reasoned order - effectiveness of cancellation from date of application - compliance with Section 29 of the Central Goods and Services Tax Act, 2017 - Validity of the order dated 03.01.2024 rejecting the petitioner's application for cancellation of GST registration and the effective date of cancellation. - HELD THAT: - The impugned order rejected the petitioner's cancellation application on the stated ground that the taxpayer did not attend the personal hearing and did not submit the requisite reply. The Court found the order to be bereft of details or reasons and therefore not a proper reasoned order capable of sustaining rejection. Consequently, the order was set aside and the petitioner's application for cancellation was allowed. The Court directed that the GST registration be treated as cancelled with effect from 21.11.2023, the date when the petitioner applied for cancellation, while also directing the petitioner to comply with the requirements of Section 29 of the Central Goods and Services Tax Act, 2017 and to furnish the requisite details. [Paras 8, 9]

Order dated 03.01.2024 set aside; cancellation of GST registration allowed and to be treated as effective from 21.11.2023; petitioner to comply with Section 29 CGST Act, 2017.

Preservation of recovery rights for tax, penalty or interest - Whether the respondents are precluded from initiating recovery of tax, penalty or interest in respect of the firm. - HELD THAT: - The Court clarified that although the petitioner's cancellation application is allowed, the respondents are not precluded from taking lawful steps for recovery of any tax, penalty or interest that may be due in respect of the firm. This preserves the respondents' statutory rights to pursue recovery proceedings under law notwithstanding the cancellation order. [Paras 10]

Respondents permitted to take steps for recovery of any tax, penalty or interest due in accordance with law.

Final Conclusion: Impugned order rejecting cancellation was unsustainable for lack of reasons; registration cancelled effective 21.11.2023 subject to compliance with Section 29 CGST Act, 2017, with respondents' rights to recover any tax, penalty or interest preserved.

Confirmation of tax demand - adequacy of taxpayer's reply - duty to consider replies on merits - opportunity to furnish additional details before adjudication - remand for fresh adjudication

Confirmation of tax demand - adequacy of taxpayer's reply - duty to consider replies on merits - remand for fresh adjudication - Impugned order confirming demand under Section 73 of the CGST Act was unsustainable as the Proper Officer did not consider the taxpayer's detailed replies on merits and did not afford opportunity to furnish further particulars before confirming the demand. - HELD THAT: - The show cause notice contained specific allegations of under-declaration of output tax and incorrect/impermissible ITC, to which the petitioner filed detailed replies and disclosures on multiple dates. The impugned order merely recorded that the taxpayer's reply was 'not satisfactory' and 'incomplete' without dealing with the content of the replies, supporting documents or indicia of insufficiency; thus the Proper Officer failed to apply his mind to the explanations furnished. If the Proper Officer considered the replies incomplete, he ought to have sought further particulars or documents and afforded an opportunity to the petitioner to clarify before confirming the demand. For these reasons the order confirming the demand cannot stand and requires fresh adjudication after proper consideration of the replies and, if necessary, after calling for specified further details. [Paras 5, 6, 7, 8, 9]

Impugned order dated 30.12.2023 set aside; matter remitted to the Proper Officer for re-adjudication after intimating required details to petitioner within one week, allowing petitioner one week to respond, and completing re-adjudication within two weeks after personal hearing.

Final Conclusion: The order confirming the tax demand is quashed and the matter is remitted for fresh adjudication; the Court has not expressed any view on the merits and has left open the challenge to Notification No. 9 of 2023.

Cancellation of GST registration with retrospective effect - objective satisfaction required for retrospective cancellation - adequacy of show cause notice and requirement to disclose particulars and reasons - procedural fairness / opportunity to object to retrospective cancellation - consequences of retrospective cancellation on input tax credit - power to recover tax, penalty and interest notwithstanding modification of registration date

Cancellation of GST registration with retrospective effect - adequacy of show cause notice and requirement to disclose particulars and reasons - procedural fairness / opportunity to object to retrospective cancellation - Validity of the Show Cause Notice dated 11.07.2023 and the order dated 22.08.2023 cancelling GST registration retrospectively from 01.07.2017, and the appropriate effective date of cancellation. - HELD THAT: - The show cause notice did not specify the officer, place of appearance, or particulars; its digital signature was generic; and it failed to inform the petitioner that cancellation, if ordered, would operate retrospectively. The impugned order likewise contains no reasons and merely refers to the show cause notice while recording a retrospective effective date of cancellation. Section 29(2) permits cancellation from a retrospective date only where the proper officer, on objective grounds, deems retrospective effect to be warranted; retrospective cancellation cannot be applied mechanically and must be supported by objective satisfaction. Mere non-filing of returns for some periods does not automatically justify cancelling registration retrospectively for periods when returns were filed and the taxpayer was compliant. Given the defects in notice and order and the absence of objective reasoning for retrospective effect, the court held that the documents cannot be sustained as issued. Because the petitioner does not wish to continue the registration, the court modified the order so that cancellation shall operate from the date of the show cause notice, 11.07.2023, while expressly leaving open the respondents' right to pursue recovery of tax, penalty or interest and to consider retrospective cancellation in accordance with law. [Paras 8, 9, 12, 13, 16]

Show cause notice and impugned order are unsustainable to the extent they cancel registration retrospectively from 01.07.2017; registration is treated as cancelled with effect from 11.07.2023, subject to respondents' rights to recover dues and to take lawful steps including any lawful retrospective cancellation.

Final Conclusion: Writ petition disposed; cancellation is modified so registration stands cancelled with effect from 11.07.2023 (date of show cause notice); respondents remain entitled to recover any tax, penalty or interest and are not precluded from taking steps in accordance with law including consideration of retrospective cancellation.

Jurisdictional challenge to issuance of show cause notice after statutory outer time-limit - power to extend time limits in special circumstances / force majeure - validity of notification extending limitation for initiation of recovery proceedings - interim refusal to stay proceedings but restraint on passing final order without court's leave - need to balance fiscal policy considerations with protection of accrued rights

Interim refusal to stay proceedings but restraint on passing final order without court's leave - need to balance fiscal policy considerations with protection of accrued rights - Whether the impugned show cause notice dated 15th January 2024 should be stayed pending adjudication of the petitioner's challenge. - HELD THAT: - The Court found that a jurisdictional issue had been raised and that the petitioner had made out a prima facie case. However, having regard to the fiscal policy implications and the existence of an identical order by a coordinate Bench, the Court exercised its discretion to refrain from granting a stay of the impugned notice. Instead, the Court permitted the respondents to continue the proceedings but restrained them from passing any final order without the leave of the Court. The Court thereby struck a balance between permitting the administrative process to move forward and protecting the petitioner from potential final adjudication before judicial scrutiny. [Paras 9]

Proceedings under the show cause notice may continue, but no final order shall be passed without the leave of the Court.

Jurisdictional challenge to issuance of show cause notice after statutory outer time-limit - power to extend time limits in special circumstances / force majeure - validity of notification extending limitation for initiation of recovery proceedings - Whether the notification(s) relied upon to extend the statutory time limit for initiating proceedings under the GST Act are valid and whether initiation of proceedings by the impugned show cause notice is within jurisdiction. - HELD THAT: - The Court did not decide the substantive validity of the notifications or the correctness of initiating proceedings after the statutory time limit. Instead, it directed that the contested issue be adjudicated after exchange of affidavits between the parties. The respondents were ordered to file affidavits in opposition within four weeks and the petitioner may file a reply within two weeks thereafter. The Court thereby remitted determination of the merits - including the challenge to the extension of time and whether the initiation of proceedings was a colourable exercise of power - for consideration on the basis of the affidavits to be exchanged. [Paras 10, 11, 12, 13]

The jurisdictional and validity issues are to be decided after exchange of affidavits; timelines for filing affidavits and an extended time to reply to the show cause notice were directed.

Final Conclusion: Interim relief limited: the impugned show cause notice is not stayed and proceedings may continue, but no final order shall be passed without the leave of the Court; substantive questions regarding the validity of the notifications and the jurisdictional competence to initiate proceedings are reserved for decision after exchange of affidavits under the timetable directed.

Requirement to consider representation before creating demand - reasoned order requirement in quasi judicial adjudication - remand for fresh adjudication and opportunity of personal hearing - bona fide clerical error in claiming input tax credit - proceedings under Section 73 of the Central Goods and Services Tax Act, 2017

Requirement to consider representation before creating demand - reasoned order requirement in quasi judicial adjudication - Impugned order concluding proceedings under Section 73 and creating a demand was set aside for being bereft of reasoning and for failure to consider the petitioner's detailed reply. - HELD THAT: - The High Court found that the order merely recorded that no payment was made within 30 days and that no proper reply/explanation was received, without addressing or advert ing to the detailed reply filed by the petitioner. The court held that the proper officer was obliged to consider the petitioner's explanation on merits and form a reasoned opinion on sufficiency of the explanation before creating a demand. An order that shows no consideration of the representations and lacks reasoning is unsustainable. [Paras 6, 7, 8]

Impugned order set aside for want of reasoning and failure to consider the petitioner's reply.

Remand for fresh adjudication and opportunity of personal hearing - bona fide clerical error in claiming input tax credit - Proceedings remitted to the proper officer for re adjudication after affording personal hearing and permitting additional reply on the claimed clerical error. - HELD THAT: - The court remitted the matter to the proper officer to re adjudicate the Show Cause Notice, directing that the petitioner be given an opportunity of personal hearing. The High Court also permitted the petitioner to file an additional reply within one week. The direction contemplates fresh consideration of the explanation that the Integrated GST credit was claimed by bona fide clerical error and that the amount remains to the petitioner's credit. [Paras 9, 10]

Matter remitted for fresh adjudication after affording personal hearing; additional reply permitted within one week.

Final Conclusion: The petition is allowed: the demand order passed under Section 73 is set aside for lack of reasoning and failure to consider the petitioner's reply; the matter is remitted for fresh adjudication with a personal hearing and leave to file an additional reply; the challenge to the subject notifications is left open.

Imposition of penalty and interest under Section 73 - condonation of delay in filing appeal - appellate authority's power under Section 107 - appeal limited to penalty and interest - payment of tax pending appeal

Condonation of delay in filing appeal - appellate authority's power under Section 107 - Whether the appeal should be admitted despite the delay beyond the statutory period and the Appellate Authority's power under Section 107 to condone delay. - HELD THAT: - The petitioner received the assessment order on 16.08.2023 and the 90 day limit for filing an appeal expired on 16.12.2023. The petitioner could not file within time due to being diagnosed with septic shock and related medical difficulties. The court noted that Section 107 does not permit the Appellate Authority to condone delay beyond 120 days, observed that the further period of delay in the present case was 24 days, and recorded that the petitioner had paid the entire tax liability and limited the proposed appeal to penalty and interest. In these circumstances the court exercised its supervisory jurisdiction to direct that the appeal be received and decided on merits if filed within the specified short period. [Paras 2, 3]

The Appellate Authority is directed to receive the appeal and dispose of it on merits if the appeal is filed within ten days from receipt of this order.

Imposition of penalty and interest under Section 73 - appeal limited to penalty and interest - payment of tax pending appeal - Adjudication on the merits of the challenge to imposition of penalty and interest. - HELD THAT: - The court did not decide the substantive correctness of the penalty and interest imposed under Section 73(9) and Section 73(7). Instead, having noted that the appeal is limited to penalty and interest and that tax liability has been discharged, the court remitted the matter to the Appellate Authority for disposal on merits. The Appellate Authority is to examine and decide the challenge to penalty and interest in accordance with law when the appeal is presented within the directed period. [Paras 3]

The appeal is to be decided on merits by the Appellate Authority if filed within ten days; the substantive challenge to penalty and interest is remitted for fresh adjudication.

Final Conclusion: Writ petition disposed by directing the Appellate Authority to receive and decide the appeal on merits if presented within ten days of receipt of this order; no costs.

Taxable income deemed to accrue in India - income from supply of CAS and middleware products to Indian customers - whether fall under the 'royalty' as defined under Section 9(1)(vi) of the Income Tax Act, 1961 and Article 12(3) of the India-Swiss DTAA.

As decided by HC [2022 (9) TMI 1563 - DELHI HIGH COURT] questions of law as covered by the decision of Engineering Analysis Centre of Excellence Pvt. Ltd. [2021 (3) TMI 138 - SUPREME COURT] wherein held amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India.

HELD THAT:- There is a gross delay of 325 days in filing the Special Leave Petition. Moreover, the issues which arise in this case are covered by the judgment of this Court in Engineering Analysis Centre of Excellence Pvt. Ltd. v. Commissioner of Income Tax (supra)

In the circumstances, the Special Leave Petition is dismissed both on the ground of delay as well as on merits. Pending application(s) shall stand disposed of.

Rectification under Section 254(2) of the Income tax Act, 1961 - mistake apparent from the record - blanket remand by an appellate authority - duty of an appellate authority to decide issues ripe for consideration - remand to the Transfer Pricing Officer / assessing officer for fresh adjudication - prejudice caused by wholesale remand

Rectification under Section 254(2) of the Income tax Act, 1961 - mistake apparent from the record - blanket remand by an appellate authority - duty of an appellate authority to decide issues ripe for consideration - remand to the Transfer Pricing Officer / assessing officer for fresh adjudication - Whether the Tribunal committed a mistake apparent from the record by remitting the appeal by way of a blanket remand without adjudicating issues recorded during hearing and therefore whether the rectification application under Section 254(2) should have been allowed. - HELD THAT: - The Court examined the Tribunal's order which recorded the petitioner's submissions on discrete valuation issues (including exclusion of terminal value, comparison of projections with actuals, and availability of the CUP/back to back transaction) but did not decide them and instead issued a blanket remand to the TPO. Reliance was placed on earlier decisions of this Court (Coca Cola India (P.) Ltd. and Sony Pictures Networks India Pvt Ltd) which hold that where all material facts and expert opinions are on the record and an issue is ripe for decision, the appellate authority ought to decide it rather than remit, since wholesale remand causes prejudice and prolongs litigation. The Tribunal's reliance on the observation in Commissioner of Income Tax v. Ramesh Electrical Company Ltd. was held to be inapposite where the omission to deal with a recorded, determinative submission amounts to a mistake apparent from the record. Applying these principles, the Court found that non consideration of the basic submissions recorded in the Tribunal's order constituted an obvious error and that the rectification application should have been allowed; accordingly the Tribunal's order of remand in respect of the issues raised in the rectification application was set aside and the appeal restored for fresh disposal. [Paras 9, 10]

The rectification application should have been allowed; the Tribunal's order dated 25th November 2021 is set aside insofar as it remanded the issues raised in the rectification application, and the appeal is restored to the Tribunal for fresh disposal in accordance with law.

Final Conclusion: Petition allowed; the Tribunal's order dated 25th November 2021 is set aside in respect of the issues raised in the rectification application and the appeal is restored to the Tribunal for fresh disposal; no order as to costs.

Time limit for reopening reassessment - applicability of the first proviso to amended Section 149(1) - exclusion of period under the fifth proviso to Section 149(1) - show cause notice under Section 148A(b) and its temporal effect - validity of notice to be judged by law in force on date of issuance - relate-back / travel-back theory and scope of TOLA - vested right against reopening when limitation has expired

Time limit for reopening reassessment - applicability of the first proviso to amended Section 149(1) - validity of notice to be judged by law in force on date of issuance - Whether the notice dated 31st July 2022 under Section 148 of the Income Tax Act, 1961 for AY 2014-15 is barred by limitation - HELD THAT: - The Court applied the ratio in The New India Assurance Company Limited (reproduced in the judgment) that the validity of a notice under Section 148 must be judged by the law in force on the date the Section 148 notice is issued. The first proviso to amended Section 149(1) operates to prohibit issuance of a notice under Section 148 where, as on 1 April 2021, a notice could not have been issued because it was beyond the unamended time limit. For AY 2014-15 the limitation under the unamended provision expired on 31 March 2021; the Court rejected the Revenue's contention that TOLA or departmental instructions operate to 'travel back' notices issued after 1 April 2021 to an earlier date. The Court further held that the Supreme Court's directions in Ashish Agarwal merely re-characterised earlier notices as show-cause notices under Section 148A(b) and preserved all defences available under Section 149; they did not obliterate the first proviso's bar. Applying these principles, the Court concluded that the impugned Section 148 notice dated 31 July 2022 is issued after the cut-off imposed by the first proviso and is therefore time-barred. [Paras 21, 22, 23, 28, 35]

The Section 148 notice dated 31st July 2022 for AY 2014-15 is barred by limitation.

Exclusion of period under the fifth proviso to Section 149(1) - show cause notice under Section 148A(b) and its temporal effect - Extent to which time may be excluded under the fifth proviso to Section 149(1) by virtue of a show cause notice under Section 148A(b) - HELD THAT: - The Court examined the fifth proviso which excludes (i) the time or extended time allowed to the assessee to reply to a show-cause notice under Section 148A(b) and (ii) the period during which proceedings under Section 148A are stayed by a court. On the facts, the Section 148A(b) show cause notice was issued on 24 May 2022 with time to reply till 8 June 2022; a subsequent letter from the Assessing Officer (28 June 2022) offering further time could not be treated as time claimed by the assessee and therefore the only exclusion available under the first limb is from 24 May 2022 to 8 June 2022 (and, at most, the period from 28 June to 8 July if the assessee had sought that extension). No stay was obtained prior to the impugned notice, so the second limb did not operate. Even after excluding the allowed period under the proviso, the notice dated 31 July 2022 remained beyond the permissible limitation under the first proviso to Section 149(1). The Court therefore held that the fifth proviso could not save the impugned notice. [Paras 11, 12, 13, 15, 17]

Only the period legitimately granted to the assessee to reply to the Section 148A(b) notice can be excluded; that exclusion does not render the impugned Section 148 notice of 31st July 2022 within time.

Final Conclusion: The petition is allowed on the ground of limitation: the reassessment notice under Section 148 dated 31st July 2022 for AY 2014-15 is barred by limitation and is quashed. Other grounds of challenge were not decided.

Reopening of assessment - change of opinion - tangible material - reason to believe - reassessment jurisdiction under Section 147 - effect of queries raised during assessment - Assessing Officer forming an opinion during assessment - AO cannot remedy oversight by reopening

Reopening of assessment - change of opinion - effect of queries raised during assessment - Assessing Officer forming an opinion during assessment - Validity of notice under Section 148 to reopen assessment for Assessment Year 2016-17 where the matters forming the reasons for reopening were raised and answered during the original assessment proceedings - HELD THAT: - The Court found that all four issues relied upon in the reasons for reopening were raised during the original assessment proceedings by notices under Section 142(1) and that the assessee furnished detailed responses and documents. The assessment order, although not containing an express discussion of each query, accepted the material and disallowed or dealt with certain claims; therefore the Assessing Officer had applied his mind and formed an opinion during the assessment. Relying on precedents cited in the judgment, the Court held that reopening an assessment on the same issues already considered in the original proceedings amounts to a mere change of opinion by the Assessing Officer and does not constitute a valid "reason to believe" that income has escaped assessment. Consequently the notice under Section 148 was held to be invalid insofar as it rested on those matters. [Paras 6, 7, 8, 9, 10]

Notice dated 27 March 2021 under Section 148 insofar as it seeks to reopen issues already raised and considered in the assessment is invalid and cannot be sustained as a mere change of opinion.

Tangible material - reason to believe - reassessment jurisdiction under Section 147 - Requirement of tangible material and live link for formation of belief under Section 147 when reopening within four years - HELD THAT: - The Court reiterated that, although reopening within four years is permissible, it must be founded on a bona fide "reason to believe" and not on mere change of opinion. The power to reopen must be supported by tangible material which bears a live link to the formation of belief that income has escaped assessment. Where the matter has already been placed before the Assessing Officer and considered, absence of fresh tangible material precludes reopening on the basis of a changed view. [Paras 6, 7, 10]

Reopening under Section 147 requires tangible material and a live link to the belief of escapement; mere change of opinion is insufficient.

AO cannot remedy oversight by reopening - Whether the Assessing Officer may reopen assessment to remedy an alleged excess claim or oversight discovered after completion of assessment - HELD THAT: - Applying the principle in Gemini Leather Stores (as relied on in the judgment), the Court held that an Assessing Officer cannot use the reassessment process under Section 147/148 to remedy an error or oversight of his own in the original assessment when all primary facts were then available. The Revenue's contention that reopening was justified to recover an alleged excess claim was rejected on this ground. [Paras 11]

Reopening cannot be used to remedy the Assessing Officer's oversight; reopening on that basis is impermissible.

Final Conclusion: Petition allowed. The notice dated March 27, 2021 issued under Section 148 and the consequential orders disposing objections and show-cause notices (as set out in the petition) are quashed and set aside insofar as they seek to reopen assessment for Assessment Year 2016-17 on the grounds considered in the judgment.

Breach of principles of natural justice - failure to furnish quantification in show cause notice - right to personal hearing by video conferencing under clause (viii) of sub section 6 of Section 144B - treatment of a draft assessment order as a show cause notice - quashing of assessment order for denial of fair opportunity

Breach of principles of natural justice - failure to furnish quantification in show cause notice - Whether the issuance of a show cause notice without quantification, followed by a draft assessment order containing detailed quantification, violated principles of natural justice. - HELD THAT: - The show cause notice dated 12.09.2023 merely specified the discrepancy between the closing stock for assessment year 2019-20 and the opening stock for assessment year 2020-21 but did not specify any quantified addition. The draft assessment order, however, included detailed quantification and estimations (including unit value taken from the assessee's website and consequent additions and disallowances) which were not foreshadowed in the earlier notice. Because the quantification in the draft order introduced a new and specific basis for additions and disallowances, the assessee was deprived of a reasonable opportunity to respond to those specific proposals. The court treated this omission as a breach of natural justice requiring corrective action so that the assessee may be put on notice of the precise case it must meet. [Paras 7, 8, 10]

The absence of quantification in the show cause notice, followed by quantification in the draft order, amounted to a breach of principles of natural justice and required interference.

Right to personal hearing by video conferencing under clause (viii) of sub section 6 of Section 144B - Whether the petitioner was entitled to the requested personal hearing by video conferencing and whether denial of such hearing vitiated the proceedings. - HELD THAT: - The petitioner expressly requested a personal hearing through video conference in its communications replying to the show cause notice. Clause (viii) of sub section 6 of Section 144B mandates provision of hearing through video conferencing where such a request is made. The Court found that, in the circumstances, the petitioner was entitled to such a hearing and that failure to provide that mode of personal hearing contributed to the unfairness of the proceedings. [Paras 3, 9, 11]

The petitioner was entitled to a personal hearing by video conferencing; failure to afford that opportunity vitiated the impugned proceedings and required reconsideration.

Treatment of a draft assessment order as a show cause notice - quashing of assessment order for denial of fair opportunity - Remedial course: whether the draft assessment order should be treated as a show cause notice and the subsequent assessment order set aside to permit fresh consideration. - HELD THAT: - Given that the draft assessment order contained material quantifications and conclusions not disclosed in the preceding show cause notice, and that the petitioner had been denied the requested personal hearing, the Court directed that the draft assessment order be treated as a show cause notice. The Court further held that, in view of this interference with the draft order, the assessment order dated 23.11.2023 could not stand. The petitioner was permitted to file a reply within three weeks of receipt of the order, and the assessing officer was directed to provide a reasonable opportunity including video conference hearing before issuing a fresh draft assessment order. [Paras 10, 11]

The draft assessment order is to be treated as a show cause notice; the assessment order dated 23.11.2023 does not survive and the matter is remitted for fresh consideration with opportunity to the assessee.

Final Conclusion: The writ petition is allowed in part: the draft assessment order is to be treated as a show cause notice, the assessment order dated 23.11.2023 is set aside, the petitioner may file a reply within three weeks, and the assessing officer must grant a reasonable opportunity including a personal hearing via video conferencing before issuing a fresh draft assessment order.

Waiver of interest under Sections 234A, 234B and 234C - Interpretation and application of CBDT circular dated 23.05.1996 - Voluntary filing of return without detection by the Assessing Officer - Unavoidable circumstances as ground for waiver (old age and illiteracy)

Voluntary filing of return without detection by the Assessing Officer - Interpretation and application of CBDT circular dated 23.05.1996 - Whether the petitioners' returns were filed voluntarily without detection by the Assessing Officer and whether, on the facts, the CBDT circular of 23.05.1996 permitting waiver of interest applies. - HELD THAT: - The Court examined the temporal sequence and communications: information in Form 15-H came to the Assessing Officer's notice and letters were sent by the Assessing Officer on 30.01.2000; the assessee filed returns on 03.02.2000 and deposited the tax within four days. In the statutory context the Court treated 'detection' in light of provisions such as Sections 142 and 148 and held that the filing followed the Assessing Officer's communication and therefore could not be said to be voluntary without detection. Notwithstanding that finding, the Court construed the CBDT circular dated 23.05.1996 as permitting reduction or waiver of interest where returns could not be filed due to unavoidable circumstances and the return was thereafter filed and tax deposited; the circular was intended to cover cases of the type before the Court. The Court further considered the factual milieu (old age and illiteracy) as falling within 'unavoidable circumstances' contemplated by the circular and therefore relevant to application of the waiver policy. Applying that construction to the facts, the Court found the Chief Commissioner's rejection to be a misinterpretation of the circular and unjustified.

The Chief Commissioner's order rejecting waiver was quashed; the Court held that notwithstanding filing after communication from the authorities, the facts (including old age and illiteracy) brought the case within the CBDT circular and entitled the petitioners to waiver of interest.

Unavoidable circumstances as ground for waiver (old age and illiteracy) - Waiver of interest under Sections 234A, 234B and 234C - Whether the petitioners' factual circumstances (age and illiteracy of the predecessor-in-interest) constitute unavoidable circumstances warranting waiver of interest demanded under Sections 234A/234B/234C. - HELD THAT: - The Court accepted the earlier finding that the predecessor-in-interest was of advanced age and illiterate and had signed Form 15-H on the dotted lines at the bank. Those factual findings were held to be material and to vitiate an inference of deliberate evasion. The Court treated such personal circumstances as falling within the class of 'unavoidable circumstances' envisaged by the CBDT circular, particularly where the citizen promptly deposited the tax upon becoming aware of the liability. On that basis the Court concluded that interest demanded under the specified provisions could be waived in exercise of the policy set out in the circular.

The petitioners were entitled to waiver of the interest demanded and the order confirming interest was set aside; subsequent proceedings under Section 140 of the Act were also quashed.

Final Conclusion: Writ petition allowed; the Chief Commissioner's order confirming interest is quashed and set aside. In view of the petitioners' circumstances and the Court's construction of the CBDT circular dated 23.05.1996, the interest demanded under Sections 234A, 234B and 234C is waived and the subsequent proceedings under Section 140 of the Act stand quashed.

Business profits not taxable in India in absence of Permanent Establishment - fees for technical services under Section 9(1)(vii) not attracted by mere access to database - royalty under Article 12 of DTAA requires transfer of copyright or right to use copyright - 'make available' test for fees for included services under Article 12(4)(b) - precedent treating licence/access to software or database as non-royalty (Engineering Analysis Centre / Microsoft / Infrasoft line of authority)

Business profits not taxable in India in absence of Permanent Establishment - Receipts from subscription fees for access to the assessee's legal database constitute business profits and are not taxable in India in the absence of a Permanent Establishment attributable in India. - HELD THAT: - The Tribunal's conclusion that the subscription receipts are business profits and, therefore, not taxable in India without a PE is upheld. The Department did not contend that the assessee had a fixed place of business in India, and the assessee's case that the receipts arise as business income rather than as royalty or FTS was accepted. The Court found no basis to treat the subscription receipts as taxable business income attributable to a PE in India and therefore saw no reason to interfere with the Tribunal's view.

Subscription receipts treated as business profits not taxable in India in absence of PE; Tribunal's decision affirmed.

Fees for technical services under Section 9(1)(vii) not attracted by mere access to database - Section 9(1)(vii) (fees for technical services) does not apply to consideration received for mere access to the assessee's database because no managerial, technical or consultancy services were rendered to subscribers. - HELD THAT: - Explanation 2 to Section 9(1)(vii) contemplates consideration for rendering managerial, technical or consultancy services (including provision of personnel). The Court held that mere provision of access to a database does not amount to rendering such services; there was no material to show the assessee provided managerial, technical or consultancy assistance to subscribers. Consequently, the receipts cannot be characterized as FTS under Section 9(1)(vii).

FTS under Section 9(1)(vii) not attracted; Department's contention rejected.

Royalty under Article 12 of DTAA requires transfer of copyright or right to use copyright - 'make available' test for fees for included services under Article 12(4)(b) - The subscription receipts do not constitute 'royalty' under Article 12(3) of the DTAA nor do they qualify as 'fees for included services' under Article 12(4); the 'make available' test is not satisfied by mere access to the database. - HELD THAT: - To treat payments as royalty under Article 12(3) it must be shown they are consideration for the use of, or the right to use, copyright or similar rights. The Court reiterated the established distinction between transfer of copyright (or rights to use it) and mere grant of access to copyrighted material; here the assessee retained copyright and granted access only. Similarly, Article 12(4)(b) requires that technical knowledge, experience, skill, know how or processes be made available such that the recipient can apply them independently. Following the Tribunal and recent precedents, the Court found that the access granted did not transfer such capabilities or make available technology or know how; mere incidental advantage or recurring dependence on the provider does not satisfy the test. Reliance on the Supreme Court and this Court's authorities (Engineering Analysis Centre/Microsoft/Infrasoft line) supports that the payments are not royalty or fees for included services.

Neither Article 12(3) royalty nor Article 12(4) fees for included services apply; Department's characterization rejected.

Final Conclusion: The Tribunal's conclusion that the subscription receipts are business profits not taxable in India in the absence of a Permanent Establishment, and that neither Section 9(1)(vii) nor Article 12 of the DTAA apply, is affirmed; the appeal is dismissed.

Reopening of assessment - reason to believe - fresh material - failure to disclose fully and truly material facts - change of opinion - objective satisfaction and prior approval - assessment year 2014-2015 - assessment year 2015-2016

Reopening of assessment - fresh material - reason to believe - failure to disclose fully and truly material facts - objective satisfaction and prior approval - Validity of reopening assessment for Assessment Year 2014-2015 - HELD THAT: - The Court found no merit in the petition challenging the reopening for AY 2014-2015. The revenue relied on the Supreme Court order (dated 24.10.2013) directing service-tax refund of Rs.77.80 crores as fresh material showing that the refund had accrued in FY 2013-14 and ought to have been taxed in AY 2014-2015. The Court accepted the respondents' position that the amount was not offered to tax in the return for AY 2014-2015 and that the satisfaction recorded contains a clear mention of non-offering, constituting a reason to believe that income had escaped assessment. The contention of change of opinion was rejected on the ground that accessibility of the refund was not discussed in the original proceedings and therefore there was no prior opinion on that specific aspect to constitute a mere change of opinion. The petitioner's plea that the Supreme Court order had been placed on record during assessment was negatived on verification of records. The approval by the Principal Commissioner of Income Tax was held to satisfy the requirement of objective satisfaction and prior sanction. On these bases the Court dismissed the challenge to reopening for AY 2014-2015.

Reopening of assessment for AY 2014-2015 upheld; writ petition dismissed.

Reopening of assessment - reason to believe - failure to disclose fully and truly material facts - change of opinion - objective satisfaction and prior approval - Validity of reopening assessment for Assessment Year 2015-2016 - HELD THAT: - The Court upheld the reopening for AY 2015-2016. It accepted the respondents' reasoning that during search the assessee admitted additional income of Rs.200 crores which was not reflected in the certified accounts and that the assessment had made only a partial addition, leaving an escapement. The Court held that the omission to include the additional admitted income in the return amounted to failure to disclose material facts; further, because the reopening was within four years, recording of failure was not a sine qua non. The objection of change of opinion was rejected because the original assessment did not address the question whether the amount admitted during search was over and above the certified accounts, so there was no prior opinion on that distinct aspect. The satisfaction and prior approval by the range/head and PCIT were found to be objective and not mechanical. In view of these findings the challenge to reopening for AY 2015-2016 was dismissed.

Reopening of assessment for AY 2015-2016 upheld; writ petition dismissed.

Final Conclusion: All writ petitions are dismissed; the Court finds the reasons for reopening (including fresh material, failure to disclose and recorded reason to believe, with requisite approvals) sufficient to justify notices under Sections 147/148 and related proceedings for AY 2014-2015 and AY 2015-2016.

Unexplained cash credit - creditworthiness and genuineness of shareholders - valuation of share premium - applicability of Section 56(2)(viib)

Unexplained cash credit - creditworthiness and genuineness of shareholders - Addition of share capital/share premium as unexplained cash credit under Section 68 was justified - HELD THAT: - The Tribunal examined whether amounts credited as share capital/share premium could be treated as unexplained cash credits under Section 68. The assessee produced documents in respect of all five subscribers including ITRs, audited accounts, certificates of incorporation, Memorandum and Articles, annual returns filed with ROC, bank statements, replies to summons issued under section 131, source of source certificates and, where applicable, assessment orders. The Tribunal noted the chart showing the net worth of the subscribers which was many times higher than their investments in the assessee, and observed that the authorities below did not pinpoint any defect or deficiency in the evidence furnished. Having perused the material and applied the statutory tests of identity, genuineness and creditworthiness, the Tribunal held that the AO and the CIT(A) were not justified in treating the receipts as unexplained cash credit and that the addition could not be sustained. [Paras 8, 9]

Addition made by the AO and confirmed by the CIT(A) under Section 68 is deleted and the appeal is allowed on this ground.

Valuation of share premium - applicability of Section 56(2)(viib) - Whether higher issue price/premium attracted deeming provision under Section 56(2)(viib) - HELD THAT: - The Tribunal noted that the deeming provision in Section 56(2)(viib), which treats consideration received for shares in excess of fair market value as income of the recipient company, is effective from AY 2013-14 and therefore not applicable to the assessment year under consideration. Although the AO and CIT(A) referred to the disparity between book value per share and the issue price, the Tribunal recorded that the statutory provision relied upon by the Revenue post dates AY 2011-12 and thus cannot be invoked for the year under appeal. [Paras 8]

Section 56(2)(viib) is not applicable to AY 2011-12 and does not sustain the addition.

Final Conclusion: The Tribunal found that the assessee furnished sufficient evidence to establish the identity, genuineness and creditworthiness of the five shareholders and that the deeming provision of Section 56(2)(viib) did not apply to AY 2011-12; consequently the addition under Section 68 confirmed by the CIT(A) was deleted and the appeal was allowed.

Bogus/accommodation share trading/entry operator - retracted confession recorded during survey lacks evidentiary value without corroboration - addition cannot be sustained on mere suspicion or on DIT(Investigation) report alone - obligation on Assessing Officer to make independent inquiry and place corroborative evidence

Bogus/accommodation share trading/entry operator - retracted confession recorded during survey lacks evidentiary value without corroboration - addition cannot be sustained on mere suspicion or on DIT(Investigation) report alone - obligation on Assessing Officer to make independent inquiry and place corroborative evidence - Validity of addition disallowing loss from trading in shares on the ground that the assessee was an entry operator and the loss was bogus - HELD THAT: - The Tribunal found that the Assessing Officer primarily relied upon information received from DIT(Investigation) and on a statement allegedly recorded from the director during survey to treat the share trading loss as bogus. The Assessing Officer did not conduct independent inquiry into or test the evidences filed by the assessee and made the addition on the basis of suspicion and the DIT(Inv.) report. The alleged confession recorded during survey was subsequently retracted by the director by affidavit and, in the absence of any corroborative material brought on record by the Revenue, such a survey confession cannot sustain an addition. The Tribunal applied the settled principle that a confession in survey requires corroboration and that mere reliance on investigative agency reports or suspicion is insufficient to displace the assessee's claimed loss. The Tribunal noted that the authorities below failed to bring substantive corroborative facts and therefore could not uphold the disallowance. The decision was taken with reference to supportive High Court authorities including Kailashben Manharlal Chokshi Vs CIT , Shree Ganesh Trading Co.-Vs.- CIT and ITO-Vs.- Vijay Kumar Kesar , which the Tribunal treated as relevant on the need for corroboration of survey confessions and not sustaining additions on mere suspicion. [Paras 5, 6]

Addition disallowing the trading loss was set aside for lack of independent inquiry and corroborative evidence; the appeal is allowed and the Assessing Officer is directed to delete the addition.

Final Conclusion: The Tribunal allowed the appeal, set aside the disallowance of the trading loss for A.Y. 2014-15 on the ground that the addition rested on suspicion, DIT(Inv.) report and a retracted survey confession without corroboration, and directed the Assessing Officer to delete the addition.

Rectification under Section 154 - apparent mistake on record - prohibition of roving enquiries in rectification proceedings - fresh claim and revised return rule

Rectification under Section 154 - apparent mistake on record - prohibition of roving enquiries in rectification proceedings - fresh claim and revised return rule - Maintainability of the assessee's rectification petition filed under Section 154 for A.Y. 2013-2014 - HELD THAT: - The Tribunal held that the rectification sought could not be treated as an instance of an apparent mistake on record under Section 154 because the claim involved subjective reassessment of business income by reference to comparables and required detailed enquiry rather than correction of an obvious error. Reliance was placed on the principle in TS Balram, ITO vs. Volkart Bros. that Section 154 is confined to correcting apparent mistakes and is not a forum for detailed re examination or roving enquiries. The NFAC's order did not reverse the Assessing Officer's categorical finding that the claim was not maintainable as a rectification; accordingly the NFAC's acceptance of the rectification was set aside. The Tribunal noted the Revenue's citation of the Goetze (India) Ltd. line (that fresh claims ordinarily require a revised return) but observed that Goetze does not address Section 154 rectification and in any event the determinative factor here is that the relief sought was not an apparent mistake amendable under Section 154. [Paras 5]

Rectification application under Section 154 was not maintainable as it involved roving enquiry and was not an apparent mistake; Revenue's appeal allowed.

Final Conclusion: The Tribunal allowed the Revenue's appeal, holding that the assessee's rectification under Section 154 for A.Y. 2013-2014 was not maintainable because it sought reassessment by reference to comparables and involved inquiries beyond correction of an apparent mistake; the NFAC's acceptance of rectification was set aside.

Acceptance of a possible and plausible view by the Assessing Officer - revisional jurisdiction under Section 263 of the Income-tax Act, 1961 - treatment of unexplained cash credits / accommodation entries - prohibition on substitution of opinion by the revisional authority - exclusion of COVID-19 period for limitation

Acceptance of a possible and plausible view by the Assessing Officer - revisional jurisdiction under Section 263 of the Income-tax Act, 1961 - prohibition on substitution of opinion by the revisional authority - treatment of unexplained cash credits / accommodation entries - Validity of exercise of revisional jurisdiction under Section 263 in setting aside an assessment where the Assessing Officer assessed income at 1.5% of total bank credits after examining bank statements and forming a plausible view that the assessee acted as an accommodation-entry provider. - HELD THAT: - The Tribunal held that the Assessing Officer examined the bank statement, recorded that substantial credits were immediately transferred out and took a possible and plausible view by assessing commission income at 1.50% of gross credits. The revisional order under Section 263 was quashed because the Principal Commissioner could not substitute his opinion merely because he disagreed with the AO's view. The Tribunal found that the AO's conclusion was based on material on record and was not incorrect as a matter of law; reliance was placed on precedents recognizing that where the AO forms a tenable view on the facts, revision under Section 263 is not warranted. Consequently, the exercise of revisional jurisdiction was held to be invalid insofar as it set aside the assessment to direct de novo assessment on the same factual matrix. [Paras 7, 9]

Revision under Section 263 setting aside the assessment was quashed and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, quashed the revisional order passed under Section 263 insofar as it set aside the assessment framed by the AO (who had taken a plausible view of assessing income at 1.5% of gross bank credits), and treated the assessment as valid. The appeal was allowed.

Exemption under section 10(23C)(iiiad) - allowance of belated claim during assessment and appellate proceedings - Form 10B audit report requirement for claiming application of income - eligibility by registration under section 12AA

Exemption under section 10(23C)(iiiad) - Form 10B audit report requirement for claiming application of income - allowance of belated claim during assessment and appellate proceedings - eligibility by registration under section 12AA - Whether the assessee is entitled to exemption under section 10(23C)(iiiad) for AY 2018-19 despite belated filing of the audit report in Form 10B and absence of the claim in the original return - HELD THAT: - The assessee, a society registered under section 12AA and operating a school, filed return for AY 2018-19 declaring nil income but did not accompany a timely audit report in Form 10B. The CPC processed the return without granting exemption under sections 11/12 and assessed income. The Tribunal noted that the assessee's gross receipts were below Rs. 1 crore for the year and that, on admitted facts, the amounts expended on revenue and capital account met the statutory application tests for charitable purposes. The audit report was digitally signed and uploaded belatedly after the return filing and due date. The Tribunal held that, irrespective of the belated filing of Form 10B and the fact that the exemption under section 10(23C)(iiiad) was not claimed in the original return, the assessee was nevertheless entitled to exemption under section 10(23C)(iiiad). The Tribunal relied on the settled proposition that a belated claim may be allowed during assessment or appellate proceedings and therefore the denial of exemption by the lower authorities on the ground that it was not claimed in the return was incorrect. [Paras 5, 6]

The assessee is entitled to exemption under section 10(23C)(iiiad) for AY 2018-19; the denial of the claim for want of a timely Form 10B or absence of the claim in the return was set aside.

Final Conclusion: The Tribunal allowed the appeal for AY 2018-19, granting exemption under section 10(23C)(iiiad) to the assessee; other grounds were left undecided as unnecessary in view of the grant of relief.

Unexplained cash credit u/s 68 - identity, genuineness and creditworthiness of creditor - deemed dividend under section 2(22)(e)

Unexplained cash credit u/s 68 - identity, genuineness and creditworthiness of creditor - Whether the addition of Rs. 80 lakhs made as unexplained cash credit under section 68 should be sustained. - HELD THAT: - The assessee produced confirmations, bank statements of the assessee and of the lender, income-tax returns of the lender for relevant years, audited financial statements of a company in which the lender held 98.4% shareholding and other supporting material before the AO and the CIT(A). The AO and CIT(A) treated the loan as unexplained since the creditor was not produced and questioned the creditor's creditworthiness. Having considered the documentary evidence including bank transactions through banking channels and the financials of the company establishing substantial profits and a sufficient source of funds to the director-lender, the Tribunal held that the assessee discharged the onus of proving the identity, genuineness and creditworthiness of the creditor. The Tribunal found the AO's reliance on non-production of the creditor to be unjustified in light of the contemporaneous documentary proof and therefore concluded that the loan could not be treated as unexplained cash credit under section 68. [Paras 9]

Addition of Rs. 80 lakhs under section 68 deleted and the AO directed to give effect accordingly.

Deemed dividend under section 2(22)(e) - Whether the loan of Rs. 8,75,000 received from a company in which the assessee was a director/shareholder is to be treated as deemed dividend under section 2(22)(e), and if so to what extent. - HELD THAT: - The AO treated the loan from M/s KAJ Infrastructure Pvt. Ltd., where the assessee held more than 10% voting rights, as deemed dividend under section 2(22)(e) and restricted the addition to the amount of accumulated profits available as on the relevant date. The assessee contended the loan was for business purpose (purchase of agricultural land) and advanced in the course of business, but failed to produce substantive evidence to substantiate that contention before the Tribunal. In absence of adequate proof to rebut the deeming fiction and given that the company had accumulated profits only to the extent determined by the AO, the Tribunal found no infirmity in the CIT(A)'s confirmation of the addition. [Paras 12]

Addition of Rs. 85,304 under section 2(22)(e) sustained.

Final Conclusion: Appeal partly allowed: addition of Rs. 80 lakhs under section 68 deleted; addition of Rs. 85,304 under section 2(22)(e) sustained.

Weighted deduction under section 35(2AB) - Deduction for in house research and development under section 35(1) and section 35(1)(iv) read with section 35(2)(ia) - Certification by the Department of Science & Industrial Research (Form 3CM / Form 3CL) - Reassessment notice under section 148/section 147 and change of opinion

Weighted deduction under section 35(2AB) - Deduction for in house research and development under section 35(1) and section 35(1)(iv) read with section 35(2)(ia) - Certification by the Department of Science & Industrial Research (Form 3CM / Form 3CL) - Allowability of R&D expenditure for AY 2005-06 where expenditure certified by DSIR in Form 3CL but claimed as weighted deduction under section 35(2AB). - HELD THAT: - The Tribunal found as an admitted fact that the assessee incurred expenditure on research activities which had been approved and certified by the Ministry of Science and Technology (DSIR) and that Form 3CM/Form 3CL corresponding to the claim were on record. The assessee had claimed the amount under section 35(1) in the revised return and relied on the certification. Given that the certified amount in Form 3CL corresponded with the claim and revenue did not dispute the actual expenditure, the Tribunal directed the AO to allow the actual expenditure for the in house R&D facility instead of disallowing the claim for want of location particulars in the forms; accordingly the grounds disallowing the weighted deduction were allowed and the AO was directed to permit the certified expenditure. [Paras 5, 6, 7]

Certified R&D expenditure shown in Form 3CL for AY 2005 06 is to be allowed by the AO (allowing the grounds and directing allowance of the actual expenditure).

Weighted deduction under section 35(2AB) - Deduction for in house research and development under section 35(1) and section 35(1)(iv) read with section 35(2)(ia) - Certification by the Department of Science & Industrial Research (Form 3CM / Form 3CL) - Allowability of R&D expenditure for AY 2007-08 where part of the expenditure was incurred at a location not reflected in the Form 3CL/Form 3CM issued by DSIR. - HELD THAT: - The Tribunal applied the same reasoning as in the lead appeal (AY 2005 06). As the grounds regarding disallowance of weighted deduction under section 35(2AB) were identical and the assessee's certified expenditure was on record, the Tribunal held that its earlier decision applies mutatis mutandis. Consequently, the grounds disallowing the weighted deduction were allowed and the AO was directed to allow the certified actual expenditure for the in house R&D facility for AY 2007 08. [Paras 11, 13, 14]

Certified R&D expenditure shown in Form 3CL/Form 3CM for AY 2007 08 is to be allowed by the AO (grounds allowed; decision in the lead appeal applied mutatis mutandis).

Final Conclusion: Both appeals for AY 2005 06 and AY 2007 08 are allowed: the Tribunal directed the assessing officer to allow the actual R&D expenditure certified by DSIR (Form 3CL/Form 3CM) in place of the disallowance of the weighted deduction under section 35(2AB), and applied the lead decision for AY 2005 06 to AY 2007 08.

Scope of Toys (Quality Control) Order, 2020 - compulsory BIS registration for toys - classification under CTH 9503 - exclusion of holiday/ornamental decorations from IS 9873 - confiscation and re-export option under Section 111/125 of the Customs Act - redemption fine - penalty under Section 112(a) of the Customs Act

Scope of Toys (Quality Control) Order, 2020 - compulsory BIS registration for toys - exclusion of holiday/ornamental decorations from IS 9873 - classification under CTH 9503 - Whether the imported balloons fell within the scope of the Toys (Quality Control) Order, 2020 and thereby required compulsory BIS registration - HELD THAT: - The Tribunal accepted the appellant's consistent case that the imported items were balloons intended for party decoration and ornamental use rather than toys for play by children. It noted that IS 9873 (Part 1) expressly excludes from its scope "holiday decorations that are primarily intended for ornamental purposes" and that the exclusion does not distinguish based on the material of the balloon. The Tribunal observed that the departmental Analytics Report and classification under CTH 9503 did not displace the statutory/standards exclusion and that the department had not produced testing or other material to establish that the goods were intended as toys. Reliance was placed on prior decisions and administrative clarification showing that party/ornamental inflatable items fall outside the TQC Order. On these grounds the Tribunal concluded that the TQC Order's compulsory BIS registration requirement did not apply to the imported balloons. [Paras 7, 8]

The imported balloons are not covered by the Toys (Quality Control) Order, 2020 and did not require compulsory BIS registration.

Confiscation and re-export option under Section 111/125 of the Customs Act - redemption fine - penalty under Section 112(a) of the Customs Act - Whether the confiscation, the condition of re-export with redemption fine, and ancillary penalties imposed in the impugned order were sustainable - HELD THAT: - Having held that the goods did not attract the TQC Order, the Tribunal found that the foundational premise for the Original Authority's confiscation and the condition of re-export (with redemption fine) failed. Applying that conclusion, the Tribunal set aside the impugned order insofar as it confiscated the goods and imposed the re-export/redemption condition and redemption fine. The Tribunal directed release of the goods to the appellant on payment of applicable duty, if any, and expressly set aside the redemption fine. The impugned order being quashed on its principal legal premise, the consequences flowing from that order were undone. The Tribunal did not sustain the department's contention that the declaration as "toy balloons" alone justified confiscation in the absence of material proving the items were intended as toys. [Paras 8]

The confiscation, re-export condition and redemption fine imposed in the impugned order are set aside; goods to be released on payment of applicable duty, if any.

Final Conclusion: The appeal is allowed: the Tribunal held that the imported balloons are ornamental/party decorations outside the scope of the Toys (Quality Control) Order, 2020; the Original Authority's order of confiscation and re-export with redemption fine is set aside, the redemption fine is quashed, and the goods are to be released to the appellant on payment of applicable duty, if any.

Leviability of Social Welfare Surcharge (SWS) when Basic Customs Duty (BCD) is exempted - Meaning of "levied and collected" in tax law (physical realisation of tax) - Debit to duty credit scrips (MEIS/SEIS) - mode of payment versus exemption - Retrospective application of a beneficial Board circular - Parity of jurisprudence between Education Cess/SHEC and Social Welfare Surcharge

Leviability of Social Welfare Surcharge (SWS) when Basic Customs Duty (BCD) is exempted - Meaning of "levied and collected" in tax law (physical realisation of tax) - Debit to duty credit scrips (MEIS/SEIS) - mode of payment versus exemption - Retrospective application of a beneficial Board circular - Parity of jurisprudence between Education Cess/SHEC and Social Welfare Surcharge - Whether SWS is leviable where BCD is exempted under Notification Nos. 24/2015 & 25/2015 and duties are debited to MEIS/SEIS scrips - HELD THAT: - The Tribunal found that Section 110(3) of the Finance Act, 2018 directs SWS to be computed at 10% on the aggregate of duties which are "levied and collected" under Section 12 of the Customs Act. On the facts, BCD was exempted under notifications issued under section 25 and there was no actual collection of BCD in cash to the exchequer. Applying the principle that "collection" means physical realisation of tax (Somaiya Organics), the Tribunal held that where the aggregate of duties actually collected is nil, SWS computed thereon must also be nil. The Revenue's contention that debit to MEIS/SEIS scrips constitutes equivalent payment (and hence not an exemption) was rejected: the notifications operate to exempt BCD subject to procedural conditions (including debit to scrip), and the debit is, in the context of those notifications, a notional accounting entry rather than physical collection to the exchequer. The Tribunal relied on consistent High Court and Tribunal precedents concerning Education Cess/SHEC under similar exemption/scrip schemes and held the pari materia character of the provisions supports the same outcome for SWS. The Board TRU Circular dated 01.02.2022, being beneficial in nature, was held applicable retrospectively to confirm that SWS is nil where the base aggregate of customs duties is zero; earlier circulars taking a contrary view were not treated as prevailing. The Apex Court decision in Unicorn Industries was distinguished on facts as not addressing non leviability where the underlying duty is not collected. Applying these legal principles to the admitted fact that BCD was not actually collected for the impugned Bills of Entry, the Tribunal concluded SWS could not be levied. [Paras 45, 46, 47, 48, 49]

SWS is not leviable where BCD is exempted under the cited notifications and the aggregate duties collected are nil; appeals allowed and impugned orders set aside with entitlement to refund of SWS with interest.

Final Conclusion: All appeals allowed: where Basic Customs Duty was exempted under Notification Nos. 24/2015 & 25/2015 and no BCD was actually collected, Social Welfare Surcharge calculated on the aggregate of duties is nil; impugned orders set aside and appellant entitled to refund of SWS with interest as per law.

Used goods versus new and unused goods - Change of opinion by a Government approved valuer - Cross examination of expert witness - Delay and dilatory tactics in adjudication - Admissibility and reliance on expert certificate - Entitlement to incentive benefit under SHIS - Natural justice and personal hearing - Remand for fresh adjudication

Delay and dilatory tactics in adjudication - Cross examination of expert witness - Admissibility and reliance on expert certificate - Whether the noticee was supplied requisite documents and whether the request for cross examination was a dilatory tactic warranting rejection. - HELD THAT: - The Tribunal examined the impugned order's recital (notably para 3.2) and the correspondence showing repeated supply of documents (including relied upon and non relied upon items) and instances where documents sought by the noticee were already in its possession. The adjudicating authority had afforded opportunities for cross examination of the Chartered Engineer, which the noticee did not avail, instead persisting in seeking documents that were either supplied or necessarily in its custody. The Tribunal accepted the finding that the noticee's conduct amounted to delay aimed at stalling adjudication and that the revenue had made sufficient efforts to furnish documents necessary for effective cross examination. The Tribunal therefore upheld the finding that the process had not been vitiated by non supply of documents and that the department had been justified in relying upon the revised report of the Government approved valuer subject to appropriate procedural safeguards. [Paras 3, 7]

The Tribunal found that documents had been provided and that the noticee's conduct amounted to dilatory tactics; the department's reliance on the revised expert report was not invalidated by non supply of documents.

Used goods versus new and unused goods - Change of opinion by a Government approved valuer - Cross examination of expert witness - Remand for fresh adjudication - Natural justice and personal hearing - Entitlement to incentive benefit under SHIS - Whether the matters of classification (used/new), valuation, confiscation, demand of duty and penalty, and entitlement to SHIS benefit should be finally adjudicated in the light of the valuer's changed reports or remitted for further proceedings. - HELD THAT: - The Tribunal recognised that the determinative controversy turns on the Government approved valuer Shri N. J. Lalwani having changed his findings from an initial certificate to subsequent reports stating the goods were new and unused. Given the centrality of the valuer's changed stance, the Tribunal held that cross examination of the valuer was relevant and material to ascertain reasons for the change and the factual basis underlying the revised report. In the interest of justice and to ensure adherence to principles of natural justice, the Tribunal set aside the impugned adjudication and remanded the matter to the Commissioner for fresh adjudication. The Commissioner was directed to provide two dates for cross examination of Shri N. J. Lalwani, allow the noticee to avail one of those dates, and to grant personal hearing while reconsidering valuation, confiscation, demand, penalty and the claim under the SHIS scheme. The remand contemplates that the Commissioner will reassess the reliance on the valuer's report after the cross examination and thereafter decide all consequential issues. [Paras 8, 9, 10]

The Tribunal set aside the impugned order and remitted the matter to the Commissioner for fresh adjudication, directing specific opportunities for cross examination of the valuer and personal hearing; valuation, confiscation, duty, penalty and SHIS entitlement to be reconsidered afresh.

Final Conclusion: The appeal is allowed in part by setting aside the impugned adjudication and remanding the matter to the Commissioner for fresh adjudication. The Commissioner shall grant two dates for cross examination of the Government approved valuer, permit the appellant to avail one date, follow principles of natural justice including personal hearing, and thereafter redecide valuation, confiscation, demand of duty, penalties and entitlement under the SHIS scheme.

Amendment of documents under section 149 - Amendment of Bill of Entry - Bonafide mistake - Documentary evidence in existence at the time of clearance - Discretion of the proper officer - Effect of payment of differential duty, interest and penalty on amendment

Amendment of documents under section 149 - Amendment of Bill of Entry - Documentary evidence in existence at the time of clearance - Bonafide mistake - Effect of payment of differential duty, interest and penalty on amendment - Application under Section 149 to amend Bills of Entry to correct Customs Tariff Heading was allowable in the facts of the case. - HELD THAT: - The Tribunal held that Section 149 permits amendment of a Bill of Entry even after goods are cleared for home consumption provided the amendment is based on documentary evidence which existed at the time of clearance. Reliance on the decisions of the Bombay High Court (affirmed by the Apex Court) and decisions of the Delhi High Court was held to be apposite. The Deputy Commissioner had rejected the amendment request solely because the mis-declaration was not revealed suo motu by the appellant; the Tribunal found no valid reason for such rejection where the mis-classification was asserted to be a bona fide clerical error, differential duty, interest and penalty were paid promptly after detection, and the amendment sought was a paper correction of tariff heading. Allowing the amendment in these circumstances was consistent with Section 149 read with the Customs Manual provision permitting rectification of bona fide mistakes and did not prejudice revenue since dues (including interest and penalty) had been discharged. [Paras 9, 11, 12]

The impugned order rejecting the request for amendment is set aside; the Department is directed to amend the Bills of Entry under Section 149 and pass consequential orders after payment of the requisite fee.

Final Conclusion: Appeal allowed: amendment of the Bills of Entry under Section 149 directed to be permitted on the facts (bona fide mistake, documentary basis and payment of differential duty, interest and penalty), and consequential orders to be passed by the Department.

Cancellation of bail - cognizable and non-bailable offence - breach of bail conditions - custodial interrogation necessity - exercise of judicial discretion in granting bail - co-operation with investigation

Cancellation of bail - breach of bail conditions - co-operation with investigation - custodial interrogation necessity - exercise of judicial discretion in granting bail - Whether the prosecution's application for cancellation of bail granted to the accused should be allowed - HELD THAT: - The Court examined the grounds urged by the prosecution that the magistrate erred in granting bail in a cognizable and non-bailable case, that the accused had not cooperated with investigation and might influence witnesses, and that custodial interrogation was necessary. The Court found that the learned Magistrate had on merits granted bail after noting the nature of the allegation (mis-declaration concerning documents filed with the RTO) and the accused's stated willingness to cooperate. The prosecution's specific complaint that the accused failed to furnish documents was addressed in the proceedings and the accused subsequently submitted the documents. There is no material on record showing breach of any bail condition or that continued custody was necessary for further interrogation. In these circumstances the Court held there was no justification to cancel bail or to order custodial remand, and that the magistrate's exercise of judicial discretion in granting bail did not call for interference.

Application for cancellation of bail rejected and dismissed.

Final Conclusion: The prosecution's misc. application to cancel the bail granted on 21.11.2023 is rejected; bail stands and no custodial interrogation or cancellation is warranted in the absence of breach or necessity.

Eligibility of an ex-promoter to submit a resolution plan under Section 29A read with Section 240A of the IBC - MSME registration obtained after initiation of CIRP but before submission of the resolution plan - power of the Resolution Professional to apply for statutory registrations during CIRP and disclosure to the Committee of Creditors - Adjudicating Authority's limited jurisdiction and the scope of judicial review of the Committee of Creditors' commercial wisdom under Section 30(2) - inadmissibility of unilateral revocation or re-calculation of MSME registration by the Adjudicating Authority

Eligibility of an ex-promoter to submit a resolution plan under Section 29A read with Section 240A of the IBC - MSME registration obtained after initiation of CIRP but before submission of the resolution plan - SRA's eligibility to submit a resolution plan claiming MSME status where MSME registration was obtained after CIRP commencement but prior to submission of the resolution plan. - HELD THAT: - The Tribunal applied the law declared by the Hon'ble Supreme Court in Hari Babu Thota and held that lack of MSME status at the commencement of CIRP does not disqualify a prospective resolution applicant if MSME status is attained before the date of submission of the resolution plan. The Corporate Debtor obtained MSME registration on 23.10.2020 and the resolution plan was submitted on 30.10.2020; accordingly the SRA was entitled to claim MSME benefits under Section 240A and was not ineligible under Section 29A. The Adjudicating Authority's contrary finding, which treated commencement of CIRP as the cut off, was held to be inconsistent with the binding Supreme Court authority and therefore unsustainable. [Paras 16]

SRA held eligible to submit the resolution plan as an MSME; Adjudicating Authority's finding to the contrary set aside.

Power of the Resolution Professional to apply for statutory registrations during CIRP and disclosure to the Committee of Creditors - Adjudicating Authority's limited jurisdiction and the scope of judicial review of the Committee of Creditors' commercial wisdom under Section 30(2) - inadmissibility of unilateral revocation or re-calculation of MSME registration by the Adjudicating Authority - Whether the Adjudicating Authority could re-open, re-calculate or treat as invalid an MSME registration granted by the competent authority, and whether the RP acted improperly in obtaining MSME registration without prior CoC approval. - HELD THAT: - The Tribunal held that MSME registration is granted by the competent authority under the MSME Act on the basis of prescribed procedure and that the IBC and the MSME scheme provide grievance and cancellation mechanisms within that statutory framework. The Adjudicating Authority does not have supervisory power to revise, revoke or substitute its own calculations for those performed by the competent authority when exercising summary jurisdiction under the IBC. Further, the RP was entitled to make applications for registrations in the course of running the corporate debtor's business during CIRP and the record of CoC meetings showed that the CoC had been informed and had taken note of the MSME registration on multiple occasions; no contemporaneous objection was raised by the CoC. Separately, the Tribunal reiterated the primacy of the CoC's commercial wisdom: a resolution plan approved by the requisite voting share (66% threshold) is entitled to deference and the Adjudicating Authority cannot substitute its view of commercial merits except on limited statutory grounds under Section 30(2). In consequence, the Adjudicating Authority erred in rejecting the resolution plan on the basis that it could independently nullify the MSME certificate or re-evaluate the computations underlying that certificate. [Paras 24, 27, 28, 29, 33]

Adjudicating Authority lacked jurisdiction to unilaterally invalidate the MSME registration or re-open the valuation computations; RP's conduct in obtaining registration and keeping CoC informed was permissible; the CoC's approval with requisite majority must be given effect to.

Final Conclusion: Both impugned orders of the Adjudicating Authority are set aside; the SRA is held eligible to submit the resolution plan as an MSME and the matter remitted to the Adjudicating Authority to pass a fresh order on I.A. No. 2895/2021 (seeking approval of the resolution plan) in accordance with law, endeavouring to do so within three months from production of this order.

Related party financial creditor - First proviso to Section 21(2) - Assignee akin to related party - Bad faith assignment / circumvention of exclusion - Eligibility of assignees to participate in CoC - Insolvency Law Committee Report 2020 - Phoenix ARC v Spade (principle against circumvention) - Resolution Professional reliance on subsequent material

Related party financial creditor - First proviso to Section 21(2) - Assignee akin to related party - Bad faith assignment / circumvention of exclusion - Eligibility of assignees to participate in CoC - Insolvency Law Committee Report 2020 - Phoenix ARC v Spade (principle against circumvention) - Whether the assignee, Rare ARC, must be treated akin to a related party and excluded from representation, participation and voting in the Committee of Creditors. - HELD THAT: - The Tribunal examined the assignment dated 09.09.2020 (effective from cut off 12.08.2020), the timing of the claim filed on the same date, the allocation of security receipts (85% held by SEFL; 15% by the assignee) and contemporaneous and historical corporate records demonstrating common control and links with the Kanoria Foundation. Having regard to the ILC Report 2020 and the Supreme Court's ratio in Phoenix ARC v Spade, the Tribunal applied the principle that an assignee of a related party may be treated as akin to a related party where the assignment is shown to be in bad faith or is made to circumvent the exclusion under the first proviso to Section 21(2). The facts-assignment made during the earlier CIRP, immediate filing of claim, retention by SEFL of substantial beneficial interest, and pleaded round tripping/funding concerns in the avoidance pleadings-created a justifiable doubt as to the bona fides of the assignment. While the Tribunal refrained from deciding pending avoidance proceedings, it held that the circumstances supported the Resolution Professional's conclusion that the assignment was a mechanism to secure backdoor entry into the CoC and therefore Rare ARC ought to be treated akin to a related party and excluded from CoC rights. [Paras 12, 24, 27, 29, 30]

Rare ARC is to be treated akin to a related party and excluded from representation, participation and voting in the CoC; no interference with the Adjudicating Authority's order rejecting IA No. 822 of 2022.

Resolution Professional reliance on subsequent material - Mohinder Singh Gill distinction - Whether the Resolution Professional was precluded from placing reliance on material and affidavits filed after the e mail dated 30.04.2022 when defending his decision before the Adjudicating Authority. - HELD THAT: - The Tribunal distinguished the decision support context from cases where an administrative order is supported by after the fact reasons (as in Mohinder Singh Gill). It held that the Resolution Professional does not exercise final adjudicatory power on disputed issues and that once the adjudicatory process before the Adjudicating Authority commenced (by virtue of IA No. 822 of 2022), the RP was not precluded from relying upon or placing before the Adjudicating Authority subsequent material relevant to the decision to exclude the assignee. Consequently, the RP's filing of affidavits and reliance on avoidance pleadings and transaction audit material was permissible for the purposes of adjudication by the Adjudicating Authority. [Paras 15, 16]

The Resolution Professional could rely upon and place subsequent material before the Adjudicating Authority in support of his decision; Mohinder Singh Gill is not applicable to preclude such reliance in this context.

Final Conclusion: On the facts and materials before the Tribunal, including timing and manner of the assignment, retention of beneficial interest by the assignor, and pleaded indications of round tripping and suspicious funding, the assignee (Rare ARC) was rightly treated akin to a related party and excluded from CoC rights; the Adjudicating Authority's order dismissing IA No. 822 of 2022 is upheld and the appeal is dismissed.

Commencement of limitation under Section 61(2) IBC - pronouncement of order versus uploading of order - application for certified copy and exclusion under Section 12 of the Limitation Act - limited condonation under the proviso to Section 61(2) IBC

Commencement of limitation under Section 61(2) IBC - pronouncement of order versus uploading of order - Limitation for filing an appeal under Section 61(2) IBC commenced from the date the order was pronounced in open court and not from the date the order was uploaded. - HELD THAT: - The Tribunal found on the material before it, including the report from the NCLT Court Officer, that the impugned order was dictated in open court in the presence of counsel for the appellant on 09.11.2023. When an order is pronounced in the presence of counsel, constructive knowledge of the order arises and the statutory limitation under Section 61(2) IBC begins to run from the day after pronouncement. Reliance on authorities where no substantive order had been pronounced before the upload (notably where counsel agreed no order was passed) was held distinguishable. Consequently, the appellant's contention that limitation should begin from the uploading date (22.11.2023) was rejected as inconsistent with the facts of this case and the statutory scheme. [Paras 13, 19]

Limitation commenced from 10.11.2023 (day after pronouncement on 09.11.2023) and not from the upload date.

Application for certified copy and exclusion under Section 12 of the Limitation Act - Time taken to obtain a certified copy can be excluded under Section 12 of the Limitation Act, but the appellant did not establish entitlement to exclusion sufficient to render the appeal within time. - HELD THAT: - The Tribunal noted that Section 12 permits exclusion of time required for obtaining a certified copy if an application for the copy is made diligently after pronouncement. Here the appellant acknowledged applying for a certified copy only on 22.11.2023 and did not annex the certified copy to the appeal; at best, exclusion of two days might have been claimed. The Tribunal held that the mere fact of later uploading does not supplant the obligation to apply for a certified copy promptly once the order was pronounced, and failure to do so does not justify treating the upload date as the commencement of limitation. [Paras 13]

Exclusion under Section 12 was not available to the appellant in any measure sufficient to cure the delay claimed.

Limited condonation under the proviso to Section 61(2) IBC - The appeal was filed beyond the thirty-day period and also beyond the fifteen-day condonable extension under the proviso to Section 61(2) IBC; the condonation application was therefore rejected and the appeal dismissed. - HELD THAT: - Applying the date of commencement as 10.11.2023, the thirty-day limitation expired on 09.12.2023 and the maximum fifteen-day condonable period expired on 24.12.2023. The appeal was e-filed on 27.12.2023, after the condonable period. The Tribunal observed that its power to condone delay is confined to the statutory proviso and cannot extend beyond that period. On this basis it concluded that the delay could not be condoned. [Paras 19, 20]

Delay condonation application dismissed and the memo of appeal rejected as barred by limitation.

Final Conclusion: The Tribunal held that the order was pronounced on 09.11.2023 in open court, limitation under Section 61(2) IBC commenced from 10.11.2023, the appellant failed to establish exclusion of time for obtaining a certified copy sufficient to cure the delay, and the appeal, e-filed on 27.12.2023, was beyond the statutory thirty days and the fifteen-day condonable period; accordingly the condonation application was dismissed and the appeal rejected.

Commercial wisdom of the Committee of Creditors (CoC) - Limited judicial review of approval of resolution plan - non-compliance with Section 30(2) of the Code - Maintainability of challenge by an unsuccessful resolution applicant - Approval of resolution plan by Adjudicating Authority on CoC recommendation

Maintainability of challenge by an unsuccessful resolution applicant - Commercial wisdom of the Committee of Creditors (CoC) - Limited judicial review of approval of resolution plan - non-compliance with Section 30(2) of the Code - Whether the unsuccessful resolution applicant could maintain the present appeal challenging approval of the resolution plan and whether interference with the Adjudicating Authority's approval was warranted. - HELD THAT: - The Tribunal held that the appellant was one of the resolution applicants whose plan was considered by the CoC but was not approved; the CoC approved the resolution plan of Respondent No. 3 with 100% vote share and the Adjudicating Authority thereafter sanctioned that plan. The appellate challenge by an unsuccessful resolution applicant to the commercial decision of the CoC was held not maintainable insofar as it sought to impugn the commercial wisdom of the CoC. Interference by the Adjudicating Authority (and on appeal) is limited and permissible only where the resolution plan is in non compliance with the requirements of Section 30(2) of the Code. The appellant did not allege or establish any such non compliance; consequently there was no ground to disturb the approval. The Tribunal relied on the principle laid down by the Supreme Court in Arcelor Mittal India Pvt. Ltd. Vs. Satish Kumar Gupta that courts should not substitute their view for the commercial decision of the CoC except on limited statutory grounds. [Paras 7, 8]

Appeal dismissed for lack of merit; no interference with the Adjudicating Authority's approval of the resolution plan.

Final Conclusion: The appeal by the unsuccessful resolution applicant challenging approval of the resolution plan is dismissed; the CoC's commercial decision and the Adjudicating Authority's approval are left undisturbed as there is no established non compliance with the statutory test under Section 30(2) of the Code.

Specific performance of allotment agreements - moratorium on transferring corporate assets during CIRP - role and managerial discretion of the Resolution Professional in CIRP - protection and preservation of allottees' rights during insolvency - treatment and interim custody of rents/receipts during CIRP

Specific performance of allotment agreements - role and managerial discretion of the Resolution Professional in CIRP - moratorium on transferring corporate assets during CIRP - Whether the Adjudicating Authority erred in refusing to direct the Resolution Professional to execute the Conveyance Deed in favour of the allottee. - HELD THAT: - The Tribunal held that allottees cannot claim as of right an order for specific performance or direct execution of conveyance during CIRP. The moratorium under Section 14(1)(b) bars transferring or alienating corporate assets, and the Resolution Professional, vested with management under Sections 17, 18 and 25, is the appropriate authority to determine which parts of the corporate debtor's business may be carried on. An order directing conveyance requires reasons akin to ordering specific performance and depends on factual matrix; the earlier decision relied upon by the appellant (Alok Sharma) was fact-specific and inapplicable here. Since the present application did not originally pray for conveyance and the RP's managerial role and discretion remain determinative, the Adjudicating Authority did not commit error in rejecting the prayer for execution of the Conveyance Deed. [Paras 12, 13, 14]

Prayer for direction to execute the Conveyance Deed refused; Adjudicating Authority did not err in declining to order conveyance during CIRP.

Treatment and interim custody of rents/receipts during CIRP - protection and preservation of allottees' rights during insolvency - role and managerial discretion of the Resolution Professional in CIRP - Whether the Appellant is entitled to immediate payment of the assured rent under the MoU during the pendency of CIRP. - HELD THAT: - The Tribunal noted the RP's recorded statement that amounts received from the units have been placed in a Fixed Deposit and would be dealt with in accordance with law. The Adjudicating Authority's observation that the FD would be managed and disbursed at the appropriate stage protects allottees' interests during CIRP. Questions as to entitlement to amounts received during CIRP depend on the ultimate adjudication in the CIRP; absent error in the Adjudicating Authority's interim treatment, there was no basis to direct immediate payment of the entire amounts claimed by the Appellant. [Paras 15, 16]

No entitlement to immediate disbursement ordered; amounts held in FD to be dealt with in accordance with the CIRP process and final decision.

Final Conclusion: Appeal dismissed; no interference with the Adjudicating Authority's order refusing to direct execution of the Conveyance Deed and leaving amounts received during CIRP in the custody of the Resolution Professional to be dealt with according to law.

Twin conditions for grant of bail under Section 45 of the PMLA - assistance in money laundering as distinct from generation of proceeds of crime / beneficiary status - precedential effect of co accused's bail order on grant of bail to a lesser involved accused

Twin conditions for grant of bail under Section 45 of the PMLA - assistance in money laundering as distinct from generation of proceeds of crime / beneficiary status - precedential effect of co accused's bail order on grant of bail to a lesser involved accused - Whether the applicant, accused No.2, is entitled to bail in ECIR/MBZO I/57/2022 under the PMLA. - HELD THAT: - The Special Court observed that the applicant's role was not of generating proceeds of crime nor of laundering them, and that he was not a beneficiary or recipient of the proceeds; his role was limited to 'knowingly assisting' the process (paragraph 45 as noted by the High Court). The Supreme Court had earlier enlarged the prime accused (co accused No.1) on bail under Section 45(1)(ii) of the PMLA by reason of the fair stand of the ASG and without detailed reasons. Applying these concurrent findings, and recognising that Section 45 requires satisfaction of its twin conditions for bail, the High Court concluded that where the prime accused has been enlarged on bail and the present accused's role is materially lesser (assistance rather than generation/benefit), the applicant could be enlarged on bail. The Court therefore exercised its discretion to grant bail subject to conditions designed to secure attendance and preserve the integrity of the trial (furnishing PR bond/surety, deposit/undertakings, passport deposit, non tampering and cooperation obligations, and attendance at trial). [Paras 11, 12, 13]

Bail allowed on conditions (PR bond/surety, cash security until surety furnished, passport deposit/leave restriction, non interference and cooperation undertakings, and attendance at trial).

Final Conclusion: The application for bail under Section 439 CrPC read with Section 45 of the PMLA is allowed; the applicant Jayram Vinayak Deshpande is released on bail on the conditions set out by the Court.

Scope of Section 482 Cr.P.C. - Interpretation and scope of Section 66(2) of the Prevention of Money Laundering Act, 2002 - Interference with ongoing investigation and quashing of FIR at preliminary stage - Role of Enforcement Directorate in sharing information for necessary action - Predicate offence and initiation of ECIR under PMLA

Scope of Section 482 Cr.P.C. - Whether this Court under Section 482 Cr.P.C. can be invoked to enforce or protect orders of a superior forum (Hon'ble Supreme Court / NGT) in the manner sought by the petitioner. - HELD THAT: - The Court held that the powers under Section 482 Cr.P.C. do not extend to a repository for enforcing or protecting orders of a forum superior to this Court. The petitioner's first prayer, which seeks directions to protect the 'spirit and sanctity' of proceedings pending before the Supreme Court and arising from the NGT order, falls outside the ambit of Section 482 and does not make out a prima facie case for issuance of notice. The petition was therefore not the appropriate mode to obtain the relief sought in respect of orders of the Supreme Court/NGT, and the petitioner was granted liberty to approach the appropriate Court. [Paras 14]

First prayer dismissed with liberty to approach the appropriate Court.

Interpretation and scope of Section 66(2) of the Prevention of Money Laundering Act, 2002 - Role of Enforcement Directorate in sharing information for necessary action - Predicate offence and initiation of ECIR under PMLA - Whether the communication sent by the Joint Director, ED under Section 66(2) PMLA to the Superintendent of Police amounted to an impermissible direction to the police and thereby exceeded the statutory limits of Section 66(2). - HELD THAT: - The Court examined the text and purpose of Section 66(2) PMLA and the communication annexed to the petition. It found that the primary offences relied upon (notably Sections 120-B and 420 IPC) are cognizable offences and that the ED, after conducting searches and seizures under PMLA, shared information in terms of Section 66(2). The communication was construed as information furnished to the concerned agency for necessary action and not as a directive to register FIRs; the power to register criminal cases rests with the police investigator/SHO who must be satisfied about a cognizable offence. On these facts the petitioner failed to demonstrate a breach of Section 66(2) or that the ED had arrogated to itself the power to direct police action in contravention of the statute. [Paras 15, 16, 23]

Petitioner's challenge to the ED communication under Section 66(2) PMLA is rejected; the communication is held to be information within the scope of Section 66(2) and not an impermissible direction.

Interference with ongoing investigation and quashing of FIR at preliminary stage - Whether the FIR(s) and consequential proceedings ought to be quashed at the pre-investigation stage on the petitioner's contentions of illegality, rubber stamp registration and lack of preliminary inquiry. - HELD THAT: - The Court emphasised the limited scope for judicial intervention at the stage when investigation is ongoing. It noted that disrupting investigations at an initial stage, absent clear demonstration of malice or illegality that strikes at the root, would impede the statutory duty to investigate and bring offenders to justice. The petitioner's submissions that the FIR was a 'rubber stamp' of the ED and therefore a stillborn foundation for PMLA proceedings were not found to constitute sufficient grounds for interference. The Court observed that remedies such as discharge or challenge at later stages remain available to the accused and that the present material did not justify quashing the FIR or staying investigation at this stage. The Court further recorded that future information sharing must remain within the parameters of Section 66 PMLA. [Paras 12, 24, 25]

Prayer to quash the FIR and stay investigation dismissed; court declines to interfere at the preliminary investigation stage and permits investigation to proceed in accordance with law.

Final Conclusion: The petition is dismissed. The High Court declined to exercise Section 482 Cr.P.C. jurisdiction to enforce the orders of a superior forum, rejected the challenge to the ED's communication under Section 66(2) PMLA as exceeding statutory limits, and refused to quash the FIR or stay the ongoing investigation at this preliminary stage; liberty was granted to approach the appropriate Court in respect of the first prayer and investigations are to proceed in accordance with law.

Cenvat credit - input service - used directly or indirectly in or in relation to the manufacture of final products - setting up of factory as an input service - interpretation of Rule 2(l) of the Cenvat Credit Rules, 2004

Cenvat credit - input service - used directly or indirectly in or in relation to the manufacture of final products - interpretation of Rule 2(l) of the Cenvat Credit Rules, 2004 - Validity of Tribunal's allowance of Cenvat credit on various services consumed by the assessee in the course of its manufacturing activity - HELD THAT: - The High Court upheld the Tribunal's reasoning that services availed by the assessee in the course of its business of manufacturing fall within the definition of 'input service' under Rule 2(l) of the 2004 Rules if they are used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products. The court relied on appellate precedents which adopted an expansive construction of Rule 2(l), including acceptance that services which contribute to setting up and operating manufacturing premises may qualify as input services. On that basis the Tribunal's grant of Cenvat credit in respect of Air Travel Agent Service, Catering Service, CHA Service (Export), Courier Service, Event Management Service, Group Term Insurance Service, Hotel Service, Rent a Cab/Car Service, Repair and Maintenance Service (Car), Tour and Travel Service and Construction Service was sustained.

Tribunal's allowance of Cenvat credit on the listed services is upheld; the appeal is dismissed on this point.

Setting up of factory as an input service - input service - interpretation of Rule 2(l) of the Cenvat Credit Rules, 2004 - Whether construction/industrial construction service used for setting up factory qualifies as an input service - HELD THAT: - The court agreed with the view in Bellsonica and allied decisions that civil/industrial construction services and services for setting up a factory are covered by Rule 2(l). The factory and the land taken for it were held to be used by the manufacturer, at least indirectly, in or in relation to manufacture and clearance of final products; thus payment for services rendered for setting up the factory falls within the 'means' and the 'includes' parts of the definition. The court also noted that the 2011 amendment to Rule 2(l) was not retrospective and did not affect the applicability of the pre-amendment rule to the periods in question.

Construction services for setting up factory premises qualify as input services under the pre-2011 Rule 2(l); Tribunal's allowance on this ground is sustained.

Cenvat credit - used directly or indirectly in or in relation to the manufacture of final products - Limited remand to adjudicating authority to determine recoveries from employees in respect of catering service and rent-a-cab service - HELD THAT: - The Tribunal had excepted catering service and rent-a-cab service from automatic allowance and remanded the matter to the adjudicating authority to ascertain whether amounts towards these services had been recovered from employees. The High Court noted this limited factual enquiry and did not disturb the approach; the admissibility of credit in respect of these services depends on the adjudicating authority's finding whether the cost was borne by the assessee or recovered from employees.

Matter remanded to adjudicating authority only to verify whether amounts for catering and rent-a-cab services were recovered from employees; admissibility of credit to be determined accordingly.

Final Conclusion: The appeal is dismissed. The Tribunal's allowance of Cenvat credit on the challenged services is upheld as falling within the pre-2011 definition of 'input service' under Rule 2(l), subject only to a limited remand to determine whether costs of catering and rent-a-cab services were recovered from employees.

Liability of builder/developer for service tax on construction services prior to introduction of Explanation to Section 65(105)(ZZZH) - classification as Works Contract Service versus Commercial or Industrial Construction Service - prospective effect of Explanation to Section 65(105)(ZZZH) from 01.07.2010 - application of precedent in M/s. Larsen & Toubro Ltd. (Apex Court) to builder/developer cases

Liability of builder/developer for service tax on construction services prior to introduction of Explanation to Section 65(105)(ZZZH) - classification as Works Contract Service versus Commercial or Industrial Construction Service - prospective effect of Explanation to Section 65(105)(ZZZH) from 01.07.2010 - Demand of service tax on the appellant for the period October 2008 to June 2010 is unsustainable. - HELD THAT: - The Tribunal found that the appellant, as a builder/developer, provided works contract services and the agreements recorded that standard materials were to be used by the developer, establishing the nature of service as works contract. The period in dispute is prior to 01.07.2010, i.e., before the Explanation to Section 65(105)(ZZZH) was introduced by the Finance Act, 2010. Applying the reasoning in the principal Bench decision in Krishna Homes and following the Apex Court's decision in M/s. Larsen & Toubro Ltd., together with the CBEC clarification, the Tribunal held that service tax could not be levied on such developer/builder activities for the period before 01.07.2010. The Tribunal therefore concluded that the demand confirmed by the Adjudicating Authority lacks merit. [Paras 8, 9, 10, 11, 12]

Impugned order set aside; appeal allowed with consequential benefit if any.

Final Conclusion: For the period October 2008 to June 2010 the demand of service tax against the appellant, a builder/developer, is quashed as service tax could not be levied prior to 01.07.2010 under the Explanation to Section 65(105)(ZZZH); the impugned order is set aside and the appeal is allowed with consequential relief.

Business auxiliary services - Export of services / receipt of convertible foreign exchange by set-off - Renting of immovable property versus cold storage facility - Management, Maintenance & Repair Service (MMRS) - exemption for repair of government vessels - Composite contract (service and material) not leviable as pure MMRS - Extended period of limitation - Penalty under Section 78/77

Business auxiliary services - Export of services / receipt of convertible foreign exchange by set-off - Whether amounts credited to the appellant as post sale discounts/dealer margins and receipts adjusted in the running account with the foreign principal are exigible to service tax under Business Auxiliary Services or qualify as export/receipt of convertible foreign exchange. - HELD THAT: - Both the SCN and OIO admitted that the appellant received amounts by way of adjustment in the running account and by credit/adjustment notes from the foreign principal but declined export treatment on the ground that requisite permissions/procedure under RBI were not followed. The Tribunal held that it is not the competence of the service tax authorities to adjudicate RBI procedural lapses and that set off/adjustment against payables to the same foreign party constitutes receipt in convertible foreign exchange. Reliance was placed on the settled principle that such account adjustments satisfy the condition of receipt in convertible foreign exchange. Applying that principle and noting that services rendered outside the taxable territory are not leviable under Section 66B for the post July 2012 period, the demand under the BAS category does not survive. [Paras 25]

Demand under Business Auxiliary Services on dealer margins/post sale discounts set aside; receipts by set off treated as receipt in convertible foreign exchange and export treatment accepted.

Renting of immovable property versus cold storage facility - Whether the transaction characterised by the department as 'renting of immovable property' in respect of cold storage amounts to taxable renting or is a provision of cold storage facility not leviable as renting. - HELD THAT: - On examination of the agreement and contemporaneous documents, the Tribunal found the arrangement to be in the nature of providing and maintaining a cold storage facility (including temperature control and security) rather than mere leasing/renting of immovable property. The impugned order's classification as renting was therefore incorrect. [Paras 26]

Demand under the 'renting of immovable property' category does not sustain and is set aside.

Management, Maintenance & Repair Service (MMRS) - exemption for repair of government vessels - Composite contract (service and material) not leviable as pure MMRS - Whether turnover attributed to repair and maintenance services to Navy/Coast Guard and warranty repair claims are taxable under MMRS, or exempt/otherwise not exigible as pure MMRS. - HELD THAT: - The Tribunal noted that a substantial part of the repair work was performed for Navy/Coast Guard and that relevant work orders and invoices evidenced provision of exempt services (repairs of government vessels) during the period under consideration. The Tribunal also accepted the appellant's contention that warranty claims involved composite supplies (service plus material) and, where warranty work was performed on behalf of the foreign principal, could be classifiable as business auxiliary services or be outside pure MMRS levy. Finding force in both contentions, the Tribunal set aside demands made under the MMRS head. [Paras 27, 28]

Demands under MMRS for repairs to Navy/Coast Guard and for warranty claims set aside.

Extended period of limitation - Penalty under Section 78/77 - Whether the department can invoke the extended period of limitation and impose penalties for the demands raised in the impugned order. - HELD THAT: - The Tribunal observed that the department was aware of the relevant facts from earlier proceedings and SCNs, the issues were subject to varied interpretation, and the appellant had maintained proper books and disclosed amounts in returns (from 2012 13 onwards). There was no misrepresentation, suppression or fraud. Given these circumstances and the periodical nature of notices, the extended period of limitation was not invocable. For the same reasons, imposition of penalties under the cited provisions was not warranted. [Paras 29]

Extended period of limitation not invocable; all penalties set aside.

Final Conclusion: The appeal is allowed. The impugned order is set aside in respect of demands under Business Auxiliary Services (dealer margins/post sale discounts), renting of immovable property (cold storage), MMRS (repairs to government vessels and warranty claims), and the extended limitation and penalties; consequential benefits to the appellant shall follow in accordance with law.

Manufacture of excisable goods - mining service - ownership of plant and machinery not determinative of liability - mutual exclusivity of central excise and service tax where manufacture is established

Manufacture of excisable goods - mutual exclusivity of central excise and service tax where manufacture is established - Activity of operating HPMACs to produce and supply compressed air is manufacture of an excisable good and not a taxable service. - HELD THAT: - The Tribunal accepted that the appellant, under contracts, operated HPMACs to produce and supply compressed air which is an identifiable excisable commodity classified under Tariff Heading No. 28530030. Having held that the process results in manufacture of excisable goods (as per the finding recorded in respect of three HPMACs and consistent facts in the remaining contracts), the Tribunal applied the principle that where manufacture is established the levy under the Finance Act, 1994 for service tax cannot be levied concurrently. The end result and scope of the contracts in both sets were identical (production and supply of compressed air) and therefore the activity must be characterised uniformly as manufacture rather than service.

Demand of service tax on the activity set aside as the activity amounts to manufacture of compressed air, not a taxable service.

Ownership of plant and machinery not determinative of liability - manufacture of excisable goods - Ownership of the HPMACs by ONGC does not convert the manufacture into a taxable service or defeat characterization as manufacture by the operator. - HELD THAT: - The Tribunal observed that the only difference between the two sets of contracts was ownership of the HPMACs. All other terms, including responsibility to operate and maintain the compressors and to produce and supply compressed air, were the same. Ownership of the plant or machinery is not a criterion for charging central excise; the liability arises from who produces the excisable goods and the nature of the process. Therefore the fact that the compressors were owned by ONGC in some contracts did not render the activity a 'mining service' liable to service tax.

Ownership of the compressors by ONGC does not make the activity a service; it remains manufacture of excisable goods.

Mining service - Activities performed by the appellant do not fall within the definition of 'mining service' under Section 65(105)(zzzy) and the confirmed demand of service tax and penalties under that head is unsustainable. - HELD THAT: - On review of the scope of work, the Tribunal found the appellant was engaged only in operation and maintenance of compressors to produce compressed air and was not entrusted with oil exploration nor paid on the basis of oil produced. The work did not constitute services in relation to mining of mineral oil or gas as defined under the Finance Act. Consequently, the demand of service tax confirmed by lower authorities under 'mining service' and the attendant interest and penalties were held to be not sustainable.

Demand of service tax, interest and penalties under 'mining service' set aside as the activity does not constitute mining service.

Final Conclusion: The appeal is allowed; the Tribunal set aside the impugned order and held that the appellant's operation of HPMACs to produce and supply compressed air is manufacture of an excisable good (nil-rated) and not a taxable 'mining service', and therefore the demand of service tax, interest and penalties is unsustainable.

Prospective application of administrative circulars - liability of a sub-contractor for service tax on taxable services - extended period of limitation for recovery of service tax - penalty for suppression requiring proof of intention to evade tax

Liability of a sub-contractor for service tax on taxable services - prospective application of administrative circulars - Whether the appellant, as a sub-contractor, was liable to pay service tax for dredging services for the period 2005-06 to 2006-07 - HELD THAT: - The Tribunal noted that earlier departmental instructions created confusion about whether sub-contractors were separately liable when the main contractor discharged service tax on the gross amount. The Board clarified the position by Circular No. 96/7/2007-ST dated 23.08.2007 that sub-contractors are liable to pay service tax even if the main contractor pays on the gross value. However, applying the principle that an administrative circular which is onerous to a class of persons must operate prospectively, and following the Supreme Court's decision in Suchitra Components Ltd., the Tribunal held that Circular No. 96/7/2007-ST has effect only from 23.08.2007. Consequently, demands for periods antecedent to that date (2005-06 and 2006-07) on the basis of that Circular are not sustainable. [Paras 7]

Demand of service tax for dredging services as sub-contractor for 2005-06 to 2006-07 is not sustainable.

Extended period of limitation for recovery of service tax - Whether the demand of service tax for dredging services for the period 2008-09 to 2011-12 could be sustained by invoking the extended period of limitation - HELD THAT: - The Tribunal examined the show cause notice issued on 18.10.2013 and the filing of ST-3 returns by the appellant, noting that amounts received for dredging were reflected in statutory records and that there was no material to show suppression. The appellant filed ST-3 for April 2011 to September 2011 in October 2011; the impugned demand covered up to September 2011 and was issued beyond the normal one-year limitation period. In absence of evidence of suppression or concealment to justify invocation of the extended period, the demand raised by invoking the extended period was held to be unsustainable. [Paras 8]

Demand of service tax for dredging services for 2008-09 to 2011-12 set aside as barred by limitation.

Penalty for suppression requiring proof of intention to evade tax - Whether penalties under Section 78 (equal amount) were sustainable - HELD THAT: - The Tribunal found no evidence on record to establish suppression of facts with intent to evade payment of service tax. In absence of such a finding, penalties equivalent to the tax under Section 78 could not be sustained and were set aside. [Paras 9, 10]

Penalties under Section 78 are set aside for want of proof of suppression with intent to evade tax.

Service tax liability for construction and goods transport agency services - Disposition of the uncontested demands in respect of Construction Service and Goods Transport Agency Service - HELD THAT: - The appellant did not contest demands relating to Construction Service and Goods Transport Agency Service. Having noted the absence of challenge, the Tribunal upheld these demands along with interest as confirmed by the authorities below. [Paras 7, 10]

Demand in respect of Construction Service and Goods Transport Agency Service is upheld along with interest.

Final Conclusion: The appeals are partly allowed: demands for dredging services as a sub-contractor for 2005-06 to 2006-07 and for 2008-09 to 2011-12 (on limitation ground) are set aside; penalties under Section 78 are vacated for want of proven suppression; demands for Construction Service and Goods Transport Agency Service are upheld with interest.

Goods Transport Agency (GTA) services - definition of "goods" as movable property - marketability not a precondition for levy of service tax on transportation of goods - recipient liability for payment of service tax under Rule 2(1)(v)(a) of the Service Tax Rules, 2004 - no exemption for government units from levy of service tax merely by reason of being under Central Government - waiver of penal liability in exercise of discretion

Goods Transport Agency (GTA) services - definition of "goods" as movable property - marketability not a precondition for levy of service tax on transportation of goods - recipient liability for payment of service tax under Rule 2(1)(v)(a) of the Service Tax Rules, 2004 - Liability of the appellant to pay service tax and interest on transportation of components engaged through GTA for the stated periods. - HELD THAT: - The Tribunal upheld the conclusion that the components manufactured and transported by the appellant fall within the definition of "goods" as movable property and are therefore subject to levy of service tax when transported by a GTA. The Court rejected the contention that lack of ordinary sale or marketability places the items outside the tax net, holding that sale is not a mandatory requirement for the term "goods" for the purpose of service tax on transportation. The Tribunal accepted the Department's position that the appellant, even as a government unit under the Ministry of Railways, is within the class of "other persons" liable as the recipient of GTA services under Rule 2(1)(v)(a) (also referred to in the impugned orders and earlier coordinate decisions), and that the exemption relied upon by the appellant was inapplicable to GTA services. Consequently, the tax demand and interest as confirmed below were held payable by the appellant for the periods in dispute. [Paras 2, 4]

Tax demand and interest for the periods 1st February 2008 to 30th September 2008 and 1st October 2008 to 30th March 2009 are upheld and payable by the appellant.

No exemption for government units from levy of service tax merely by reason of being under Central Government - waiver of penal liability in exercise of discretion - Whether the penal liabilities imposed under Sections 76 and 77 should be sustained. - HELD THAT: - Although the appellant was held liable for the tax and interest, the Tribunal accepted the factual position that the appellant is a unit under the Ministry of Railways discharging sovereign functions and considered the circumstances sufficiently mitigating. Exercising discretion, the Tribunal set aside the penalties imposed by the authorities while leaving the tax and interest intact. The Tribunal noted prior coordinate decisions and the factual posture in reaching the conclusion that penal liability should be waived. [Paras 4, 5]

Penal liabilities imposed under the impugned orders are set aside; tax and interest remain payable.

Final Conclusion: The appeals are disposed of by upholding the service tax demands and interest for the specified periods while setting aside the penalties imposed; the appellant remains liable to pay the tax and interest but is relieved of the penal liability.

Service tax not leviable on activities amounting to manufacture of excisable goods - manufacture resulting in a new and identifiable product having distinct name, character and use - excisable goods - nil rate of duty does not make goods non-excisable - limitation - extended period of limitation under Section 73 invoked where suppression of facts alleged - classification of same activity under multiple service heads and requirement of application of mind by adjudicating authority

Manufacture resulting in a new and identifiable product having distinct name, character and use - excisable goods - service tax not leviable on activities amounting to manufacture of excisable goods - nil rate of duty does not make goods non-excisable - Whether the appellant's operation of the Heavy Water plant and production of Heavy Water amounts to manufacture of excisable goods so as to exclude the levy of service tax on those activities. - HELD THAT: - The Tribunal found that the appellant operated the Heavy Water plant to extract deuterium from feed synthesis gas and to process it into a distinct product, "Heavy Water", which has a different name, character and use. Applying the inclusive definition of "manufacture" under the Central Excise Act, 1944, the process of converting deuterium into Heavy Water was held to be manufacture. The Tribunal further held that Heavy Water is specified in the Central Excise Tariff (CETH 28.45) and, although it attracts a nil rate of duty, that alone does not render it non-excisable. Reliance was placed on Supreme Court authority that exemption or nil rate does not alter excisability. Consequently, activities that are in substance manufacturing cannot be subjected to service tax. [Paras 4]

Operation and production of Heavy Water by the appellant is manufacturing of excisable goods and therefore service tax cannot be levied on those activities.

Limitation - extended period of limitation under Section 73 invoked where suppression of facts alleged - service tax not leviable on activities amounting to manufacture of excisable goods - Whether the second show cause notice dated 01.05.2009 (covering April 2004 to November 2006) invoking the extended time proviso is barred by limitation. - HELD THAT: - The Tribunal observed that the department had earlier issued a show cause notice on 16.06.2005 covering July 2003 to March 2004 on the same set of facts and was therefore aware of the activities in question. No fresh reason was recorded to justify invocation of the extended period of limitation for the subsequent notice dated 01.05.2009. Applying settled principles on limitation, the Tribunal held that the second show cause notice was time-barred and set it aside, relying on precedent that extension cannot be invoked when the department already had notice of the same facts. [Paras 4]

The second show cause notice dated 01.05.2009 is barred by limitation and is set aside.

Classification of same activity under multiple service heads and requirement of application of mind by adjudicating authority - service tax not leviable on activities amounting to manufacture of excisable goods - Whether the adjudicating authority properly and consistently classified the appellant's activity under different service categories and applied judicious reasoning in confirming demands. - HELD THAT: - The Tribunal noted that the adjudicating authority confirmed demands in two separate orders for the same activity under different service categories (Maintenance or Repair Service; Business Auxiliary Service; Manpower Recruitment or Supply Agency Service) and did so on the same date without cogent reasons. This demonstrated lack of application of mind and a perfunctory approach to classification. Given the Tribunal's primary finding that the core activity was manufacturing of excisable goods (not taxable services), the inconsistent classification and absence of reasoned analysis further invalidated the impugned orders. [Paras 4]

The confirmations of service tax demands under differing service classifications without reasoned application of mind are unsustainable.

Final Conclusion: The impugned orders-in-original confirming service tax demands were set aside: the appellant's operation of the Heavy Water plant constitutes manufacture of excisable goods (Heavy Water) and is not amenable to service tax; the second show cause notice was time-barred; and the adjudicating authority's inconsistent classification without application of mind rendered the demands unsustainable. The appeals are allowed.

Consideration received in money as taxable value under Service Tax - Notional interest on interest-free security deposit not includible in taxable value for renting of immovable property - Nexus requirement between security deposit and reduction in rent for addition to taxable value - Absence of statutory provision to deem notional interest as consideration

Notional interest on interest-free security deposit not includible in taxable value for renting of immovable property - Consideration received in money as taxable value under Service Tax - Nexus requirement between security deposit and reduction in rent for addition to taxable value - Absence of statutory provision to deem notional interest as consideration - Whether notional interest on interest-free security deposits collected from lessees is liable to service tax in the context of renting of immovable property services. - HELD THAT: - The Tribunal applied the principle that service tax is leviable only on the consideration received in money for the service rendered and that the consideration for leasing immovable property is the rent agreed between the parties. The security deposit serves a separate purpose (security against default or damage) and is not consideration for the lease. Following the decision in Murali Realtors (as followed in M/s Singhal Premises Pvt. Ltd.), the Bench held that, in the absence of a statutory provision deeming notional interest on security deposits to be consideration, notional interest cannot be added to the taxable value. The department must demonstrate a nexus showing that the interest-free deposit influenced the rent charged before any notional addition could be sustained; no such nexus was established in the present case. Applying these principles to the facts, the Tribunal concluded that service tax could not be levied on the notional interest calculated by the department on the security deposits. [Paras 7, 8, 10]

Notional interest on the interest-free security deposits is not liable to service tax and the demands based on such notional interest are unsustainable.

Final Conclusion: The appeals are allowed; the impugned orders confirming service tax on notional interest on security deposits are set aside as such notional interest is not includible in the taxable value of renting of immovable property services.

Job-worker - CENVAT credit scheme - reversal of credit on transfer to contracted manufacturer under rule 4(5)(a) of CENVAT Credit Rules, 2004 - non-receipt of inputs at assessee's premises as bar to availment of credit - devolution of central excise liability - relevancy of statements under section 9D of the Central Excise Act, 1944 - threshold entitlement under rule 3 and retention eligibility under rules 4 and 6 of CENVAT Credit Rules, 2004

Job-worker - reversal of credit on transfer to contracted manufacturer under rule 4(5)(a) of CENVAT Credit Rules, 2004 - threshold entitlement under rule 3 and retention eligibility under rules 4 and 6 of CENVAT Credit Rules, 2004 - Whether CENVAT credit availed on inputs supplied to contracted entities could be retained by the appellant without reversal under rule 4(5)(a) when finished goods were cleared by the contracted entities and not returned to the appellant - HELD THAT: - The Tribunal held that the adjudicating authority did not adequately determine whether the contracted entities were to be treated as 'job-workers' for the limited fiscal purpose of excise liability devolution, a determination integral to retention or reversal of credit. The decision-maker failed to apply the statutory principle that the concept of 'job-worker' in the excise scheme is tied to devolution of duty liability and the identity of the entity liable for excise, and instead treated commercial labels such as 'vendor' without requisite findings on who bore excise liability. The adjudicating authority further disregarded prior permissions for clearance from the contracted premises and failed to examine alternative bases for retention under rules 4 and 6. Because the record lacks findings on devolution of liability and on the factual basis for treating the entities as not being job-workers, the Tribunal concluded that the question of continued retention versus reversal of the credit requires fresh adjudication. [Paras 11, 12, 13, 14]

Set aside and remanded for fresh determination of whether reversal under rule 4(5)(a) was required, directing reconsideration of job-worker status and retention eligibility.

Non-receipt of inputs at assessee's premises as bar to availment of credit - relevancy of statements under section 9D of the Central Excise Act, 1944 - CENVAT credit scheme - Whether CENVAT credit availed in respect of materials allegedly not received in the appellant's premises was rightly denied by the adjudicating authority - HELD THAT: - The Tribunal found that the adjudicating authority rejected the appellant's entitlement on the ground of non-receipt without properly addressing the statutory implication that the 'premises of the manufacturer' may extend to the premises of a job-worker where duty liability devolves, and without testing prosecutorial statements for relevancy under section 9D. The impugned order does not contain sufficient elaboration of the finished products or findings showing why the non-receipt conclusion was justified. In view of these procedural and substantive deficiencies, the Tribunal held that the matter could not be finally decided on the record and required fresh consideration of whether the inputs qualified as eligible 'inputs' under rule 2 and rule 3 and whether non-receipt at the appellant's premises was a bar to credit. [Paras 12, 13, 14]

Set aside and remanded for fresh adjudication on the entitlement to credit in respect of alleged non-receipt, with direction to test statements for relevancy and to examine the scope of the manufacturer's premises.

Final Conclusion: The impugned order is set aside and the matters remanded to the adjudicating authority for fresh disposal in light of the Tribunal's observations on job-worker status, devolution of excise liability, and admissibility of statements; disposal to be completed within 90 days of this order.

Entitlement to Cenvat credit on capital goods where goods remain in factory of manufacture - physical removal requirement under Rule 3(5A)(a) of the Cenvat Credit Rules, 2004 - reversal of Cenvat credit versus levy of duty on transaction value where capital goods are removed - burden of proof on department to establish physical removal - use of Chartered Engineer's certificate and factory verification as evidence of possession

Entitlement to Cenvat credit on capital goods where goods remain in factory of manufacture - physical removal requirement under Rule 3(5A)(a) of the Cenvat Credit Rules, 2004 - burden of proof on department to establish physical removal - Whether Cenvat credit availed on tools and moulds which were shown as sold on VAT invoices but continued to be used in the manufacturer's factory is liable for reversal under Rule 3(5A)(a) on account of alleged removal to the buyer. - HELD THAT: - The Tribunal examined Rule 3(5A)(a) and held that the statutory trigger for reversal is physical removal of the capital goods after use. The material on record did not establish physical removal; the tools and moulds continued to be in use in the appellant's factory for manufacture of excisable goods. The department produced no evidence of physical removal and relied only on commercial/VAT invoices, which do not by themselves prove movement from factory premises. The Tribunal followed earlier decisions holding that invoices alone are insufficient and that possession/installation evidence (for example, Chartered Engineer's certificate or factory verification) rebuts a presumption of removal. Applying this principle, and on the balance of probabilities, the Tribunal found that Rule 3(5A)(a) was not attracted and the demand, interest and penalties based on assumed removal were unsustainable. The Tribunal therefore set aside the adjudicating authority's order confirming duty and penalties. [Paras 6, 8]

Cenvat credit need not be reversed and duty need not be demanded under Rule 3(5A)(a) where capital goods remain in the manufacturer's factory and the department fails to prove physical removal; impugned order set aside and appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that Rule 3(5A)(a) for reversal of Cenvat credit is attracted only upon physical removal of capital goods; as the tools and moulds were shown to be in use at the appellant's factory and no evidence of removal was produced by the department, the demand and penalties in the impugned order were set aside.

Protection against double jeopardy - issuance of multiple show-cause notices for the same clearance/period - issuance of a subsequent show-cause notice without new material is without jurisdiction and an abuse of process - time-bar and abuse of process in revenue adjudication - valuation under Rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - Section 4(1)(b) of the Central Excise Act, 1944 vis-a -vis Section 4A (MRP assessment)

Issuance of multiple show-cause notices for the same clearance/period - protection against double jeopardy - issuance of a subsequent show-cause notice without new material is without jurisdiction and an abuse of process - time-bar and abuse of process in revenue adjudication - Validity and jurisdictional competence of the subsequent show-cause notice and consequential adjudication pursued after an earlier show-cause notice for the same period had been finally held not sustainable. - HELD THAT: - The Tribunal found on the record that two show-cause notices were issued for the same clearances for the period April, 2001 to July, 2005: one dated 04.01.2006 (seeking MRP based assessment under Section 4A) and another dated 04.05.2006 (seeking value determination under Section 4(1)(b) read with Rule 7). The first matter was adjudicated and ultimately the demand under that show-cause notice was dropped by the CESTAT on 11.01.2018. Thereafter the Department pursued the second show-cause notice and obtained an adjudication which was challenged before the Tribunal. Applying established precedent (including the principle in Osaka Alloys and related decisions) that issuance of another show-cause notice for the same act, without fresh material, is without jurisdiction and constitutes an abuse of process (and may be time-barred), the Tribunal held that the subsequent adjudication based on the later show-cause notice was without jurisdiction. The Tribunal consequently set aside the order passed by the Commissioner (Appeals) which had affirmed the subsequent adjudication, granting consequential relief to the appellant. [Paras 5, 6]

The order based on the subsequent show-cause notice is without jurisdiction and is set aside; the appeal is allowed with consequential relief.

Final Conclusion: The appeal is allowed: the adjudication and appellate order founded on the subsequent show-cause notice (issued after an earlier notice for the same period had been held not sustainable) were held to be without jurisdiction and have been set aside, with consequential relief to the appellant.

Limitation for reopening assessment - deemed assessment and first assessment under Section 22(4) TNVAT Act, 2006 - procedure where return incomplete or not filed - power to provisionally determine tax under Section 25 TNVAT Act, 2006 - non-binding nature of departmental circulars - attachment of bank accounts upon confirmed demand

Deemed assessment and first assessment under Section 22(4) TNVAT Act, 2006 - limitation for reopening assessment - procedure where return incomplete or not filed - Whether the impugned assessments dated 23.12.2019 for AYs 2009-10 to 2014-15 were time barred under the limitation provisions of the TNVAT Act given the absence of earlier assessment or deemed assessment. - HELD THAT: - The Court observed that deemed or actual assessment under section 22(1) and (2) could arise only if returns filed by the dealer were complete in terms of Rule 7; there were no records to show timely or complete returns for the years in question. In the absence of any earlier assessment order, the assessments passed on 23.12.2019 had to be treated as the first assessments under Section 22(4), which applies where no return or incomplete/incorrect return is filed and the assessing officer assesses to the best of his judgment after completion of the year. The limitation for reopening or assessing afresh under Section 27 runs from such first assessment, and the court therefore rejected the contention that the impugned orders were time barred. The Court accordingly found no merit in the limitation challenge to the impugned assessment orders. [Paras 15, 21, 22, 24, 25]

Impugned assessments of 23.12.2019 are first assessments under Section 22(4) and not time barred; challenge on limitation fails.

Non-binding nature of departmental circulars - procedure where return incomplete or not filed - Whether non implementation of the Audit/Inspection proposal within three months as per Circular Q3/3259/2010 invalidates the subsequent assessment proceedings. - HELD THAT: - The Court noted that paragraph 7 of the circular envisages informing higher authorities where implementation is delayed, but treated the circular as advisory and not binding on the assessee or the Court. Relying on the legal position that departmental circulars are not binding as held by higher courts, the petitioner's plea that failure to issue a notice within three months pursuant to the inspection vitiates the assessment could not be countenanced. The circular did not oust the statutory powers to make assessment where returns were not filed or were incomplete. [Paras 11, 12, 13, 14]

Circular Q3/3259/2010 is not binding so as to invalidate the impugned assessments for failure to implement Audit/Inspection proposals within three months.

Attachment of bank accounts upon confirmed demand - Whether the attachments of the petitioner's bank accounts made before passing of the assessment orders warranted interference. - HELD THAT: - The Court recorded that the petitioner's accounts had been frozen and attached and that the demand has now been confirmed by the impugned assessment orders. Given the confirmation of demand by the assessment, the Court found no basis to interfere with the attachments of the bank accounts maintained with various banks. [Paras 3, 9, 25]

No interference with the bank account attachments in view of the confirmed demand.

Procedural requirement for separate proceedings and court fee - Whether the petitioner complied with procedural requirement to file separate writ petitions or pay separate court fees when challenging multiple notices/orders. - HELD THAT: - The Court observed that the petitioner had paid a single court fee for multiple petitions and should have filed separate writ petitions or obtained leave. The petitioner was directed to pay the necessary court fees separately for each notice and impugned order and the Registry was directed not to admit any appeal unless the requisite court fees are paid. [Paras 26, 27]

Petitioner must pay separate court fees for each challenged notice and order; Registry directed accordingly.

Final Conclusion: Writ petition dismissed. The assessments dated 23.12.2019 for AYs 2009-2010 to 2014-2015 are the first assessments under Section 22(4) TNVAT Act, 2006 and are not time barred; the departmental circular relied upon is not binding so as to invalidate the assessments; attachments of bank accounts stand in view of confirmed demand; petitioner directed to pay requisite court fees for separate challenges.

Automatic vacation of interim orders - exercise of Article 142 jurisdiction - principles of natural justice / right to be heard - Article 226(3) automatic vacatur mechanism - High Court power to vacate or modify interim relief - time bound directions versus judicial legislation

Automatic vacation of interim orders - principles of natural justice / right to be heard - Automatic vacation of interim stay merely by lapse of a prescribed period is impermissible where the beneficiary of the stay has not been heard and is not at fault. - HELD THAT: - The Court held that interim orders lawfully passed after hearing cannot be set aside automatically solely because a court could not hear the main matter within a fixed period. Elementary principles of natural justice require that vacatur or modification of interim relief be by a judicial order after hearing the affected parties; application of mind is essential. Automatic vacatur applied irrespective of the merits of individual cases would be unfair and contrary to the maxim actus curiae neminem gravabit. The judgment further observed that statutory attempts at automatic vacatur (e.g., the proviso to Section 254(2A) of the IT Act struck down in Pepsi Foods) illustrate that automatic vacation may be manifestly arbitrary and vulnerable to Article 14 challenge. [Paras 12, 16, 17, 18, 36]

There cannot be automatic vacation of stays granted by High Courts merely upon lapse of time; vacatur normally requires hearing and a speaking judicial order.

Exercise of Article 142 jurisdiction - time bound directions versus judicial legislation - This Court cannot, in exercise of Article 142, issue blanket directions that High Courts must decide all matters with interim stays on a day to day basis within a fixed period or cause automatic vacatur of all such stays. - HELD THAT: - The Court explained that Article 142 is a remedial power to do complete justice between parties before it and cannot be used to nullify substantive rights of non parties or to effect broad legislative change. Directing disposal of categories of cases within fixed outer time limits or mandating automatic lapse of interim orders across the board would amount to judicial legislation and is impermissible. Article 142 may be used to issue procedural directions to streamline processes, but not to affect substantive rights of litigants who are not parties to the reference or to defeat natural justice. [Paras 19, 21, 22, 28, 36]

The directions in Asian Resurfacing requiring day to day hearings and automatic lapse of stays after six months are not sustainable under Article 142.

High Court power to vacate or modify interim relief - principles of natural justice / right to be heard - High Courts retain the power to vacate or modify interim relief, but such power must be exercised after application of mind and, where appropriate, after hearing affected parties; ad interim orders should be of limited duration. - HELD THAT: - The Court identified illustrative grounds for vacatur or modification: deliberate prolongation by the beneficiary, suppression/misrepresentation of material facts, or material change in circumstances. Ad interim orders (passed without hearing) are inherently time limited and should be promptly placed for hearing. Even where an interim order was passed after hearing, the opposite party may apply for vacatur, and High Courts must give priority to such applications rather than defer them indefinitely or merely await the main hearing. [Paras 14, 15, 34, 35]

High Courts may vacate or modify interim stays on appropriate grounds but must do so with application of mind and opportunity to be heard; ad interim stays should be limited and promptly adjudicated.

Article 226(3) automatic vacatur mechanism - automatic vacation of interim orders - Clause (3) of Article 226 is confined to ex parte ad interim orders made without service and hearing, and envisages automatic vacatur only upon an application for vacation that is not decided within the statutory period; it does not support blanket automatic vacatur without an application. - HELD THAT: - On its plain reading clause (3) applies where an interim order was made without furnishing the petition and documents and without hearing the opposite party. Even if clause (3) were treated as not merely directory, it contemplates that an aggrieved party must make an application for vacating the interim order and that the order stands vacated only if that application is not disposed within the prescribed short period. Clause (3) does not apply to interim orders granted after service and hearing. [Paras 26]

Article 226(3) does not justify automatic vacatur of interim orders generally; its scope is limited to ex parte ad interim orders and requires an application for vacatur.

Time bound directions versus judicial legislation - exercise of Article 142 jurisdiction - Constitutional Courts should ordinarily refrain from fixing time bound schedules for disposal of cases pending in other courts; such directions should be exceptional and sensitive to courtwise pendency and priorities. - HELD THAT: - The Court noted practical constraints: heavy docket loads, varied categories of priority cases, and differing local conditions. While speedy disposal is desirable, prescribing uniform outer time limits or mandating out of turn priority would unfairly advantage litigants who can access constitutional courts and impose unrealistic burdens on trial and High Courts. Thus, time bound disposal directions may be issued only in exceptional circumstances and should generally be left to the concerned Courts to prioritize. [Paras 29, 30, 31, 32, 33]

Fixing universal time bound mandates for other courts is inadvisable; priority and scheduling should ordinarily be left to the courts where cases are pending, and constitutional courts should limit such directions to exceptional situations.

Final Conclusion: The reference is answered by overruling the aspects of Asian Resurfacing that directed automatic vacatur of interim stays after a fixed period and compulsory day to day disposal within such period. Automatic vacation of stays merely by lapse of time is impermissible; Article 142 cannot be used to issue blanket time bound directives that nullify substantive rights or displace natural justice. High Courts retain the power to grant, extend, vacate or modify interim relief, but must do so with application of mind and observance of the right to be heard; procedural directions to streamline adjudication are permissible under Article 142, but fixing universal outer time limits is generally inappropriate and should be confined to exceptional circumstances.