TaxTMI Updates e-Newsletter
Mar 05,2025

Summary order. Delay condoned; Special Leave Petition dismissed; impugned High Court judgment and order not interfered with; pending applications, if any, disposed of.

Seeking to withdraw the writ petition - Challenge to demand raised in order passed u/s 73 of the WBGST/CGST Act, 2017 issued in Form GST DRC-07 - HELD THAT:- Without going into the issue as the whether the entire tax has been paid by the petitioner, the writ petition stands dismissed as withdrawn for the petitioner to take the benefit of waiver of interest and penalty in terms of Section 128(A) of the said Act.

The interim order passed by this Court on 15th July, 2024, accordingly stands vacated.

Vires of extension of time limits specified under the CGST Act - Chellenge to N/N. 9/2023-Central Tax dated 31st March, 2023, N/N. 56/2023 – Central Tax dated 28th December, 2023, N/N. 9/2023-State Tax dated 24th May, 2023 and N/N. 56/2023 dated 16th January, 2024 - HELD THAT:- In a similar matter, in the case of [2024 (7) TMI 1601 - BOMBAY HIGH COURT], the Nagpur Bench of this Court has directed the Respondents in the said matter not to take any coercive action against the Petitioner. Here also, since the issue is whether the Notifications are valid and whether the impugned order could have been passed (especially, if Notifications dated 28th December, 2023 and 16th January, 2024 are set aside), a strong prima facie case is made out for granting interim relief to the Petitioner.

Liberty granted to the parties to apply in the event the matter before the Hon’ble Supreme Court is disposed of one way or the other.

Vires of extension of time limits specified under the CGST Act - Chellenge to N/N. 9/2023-Central Tax dated 31st March, 2023, N/N. 56/2023 – Central Tax dated 28th December, 2023, N/N. 9/2023-State Tax dated 24th May, 2023 and N/N. 56/2023 dated 16th January, 2024 - HELD THAT:- In a similar matter, in the case of [2024 (7) TMI 1601 - BOMBAY HIGH COURT], the Nagpur Bench of this Court has directed the Respondents in the said matter not to take any coercive action against the Petitioner. Here also, since the issue is whether the Notifications are valid and whether the impugned order could have been passed (especially, if Notifications dated 28th December, 2023 and 16th January, 2024 are set aside), a strong prima facie case is made out for granting interim relief to the Petitioner.

Liberty granted to the parties to apply in the event the matter before the Hon’ble Supreme Court is disposed of one way or the other.

Vires of extension of time limits specified under the CGST Act - Chellenge to N/N. 9/2023-Central Tax dated 31st March, 2023, N/N. 56/2023 – Central Tax dated 28th December, 2023, N/N. 9/2023-State Tax dated 24th May, 2023 and N/N. 56/2023 dated 16th January, 2024 - HELD THAT:- In a similar matter, in the case of [2024 (7) TMI 1601 - BOMBAY HIGH COURT], the Nagpur Bench of this Court has directed the Respondents in the said matter not to take any coercive action against the Petitioner. Here also, since the issue is whether the Notifications are valid and whether the impugned order could have been passed (especially, if Notifications dated 28th December, 2023 and 16th January, 2024 are set aside), a strong prima facie case is made out for granting interim relief to the Petitioner.

Liberty granted to the parties to apply in the event the matter before the Hon’ble Supreme Court is disposed of one way or the other.

Challenge to Notifications extending time limits for issuing show cause notice u/s 73/74- Extension of time limits specified under the CGST Act by Notification issued under Section 168A of CGST Act - HELD THAT:- It is found that in a similar matter in the case of Aspect Integrated IT Pvt. Ltd Vs. Union of India [2024 (7) TMI 1601 - BOMBAY HIGH COURT], the Nagpur Bench of this Court has directed the Respondents in the said matter not to take any coercive action against the Petitioner. Here also, since the issue is whether the Notifications are valid and whether the impugned order could have been passed (especially, if Notifications dated 28th December, 2023 and 16th January, 2024 are set aside),we find that a strong prima facie case is made out for granting interim relief to the Petitioner.

Liberty granted to the parties to apply in the event the matter before the Hon’ble Supreme Court is disposed of one way or the other - This order will be digitally signed by the Private Secretary/ Personal Assistant of this Court.

Mandatorial pre-deposit under Section 107(6)(b) of the CGST Act, 2017 - compliance by transfer to GST Electronic Cash Ledger as valid pre-deposit - condonation of delay in filing appeal under Section 107(4) of the CGST Act, 2017 - requirement of electronic filing linked to upload of impugned order on GST portal - remand for fresh decision on merits after acceptance of procedural compliance

Mandatorial pre-deposit under Section 107(6)(b) of the CGST Act, 2017 - requirement of electronic filing linked to upload of impugned order on GST portal - Whether the appellate authority rightly dismissed the appeal for non-payment of the mandatory pre-deposit and for delay in filing - HELD THAT: - The Court found that the petitioner had deposited the requisite amount in his GST Electronic Cash Ledger within the limitation period and that electronic filing of the appeal via the GST portal was not possible until the adjudicating authority uploaded the impugned order. The appellate authority's view that pre-deposit had not been made because it was not paid through the GST APL-01 at the time of filing was rejected, since the petitioner had no practical means to use the electronic mode prior to upload of the order. The Court held that filing the appeal by speed post and depositing the sum in the electronic cash ledger constituted compliance with the pre-deposit requirement, and that the appeal was wrongly dismissed on these procedural grounds. [Paras 10, 11]

Appeal was improperly dismissed for non-payment and delay; the petitioner had complied with the pre-deposit requirement by transferring funds to the GST Electronic Cash Ledger and by filing the appeal when electronic filing was not yet available.

Condonation of delay in filing appeal under Section 107(4) of the CGST Act, 2017 - Whether the delay in preferring the online appeal (filed after upload of the order) should be condoned - HELD THAT: - The Court accepted that the delay in filing the online appeal arose because the impugned order had not been uploaded on the GST portal, which prevented electronic filing. Given the petitioner had deposited the pre-deposit amount in the Electronic Cash Ledger within the limitation period and had initiated a contemporaneous manual appeal by speed post, the Court held that the delay was condonable under Section 107(4). The appellate authority's refusal to condone the delay was therefore unsustainable. [Paras 10, 11, 12]

Delay in preferring the appeal is condoned.

Remand for fresh decision on merits after acceptance of procedural compliance - Whether the matter should be remitted to the appellate authority for fresh adjudication on merits - HELD THAT: - Having quashed the impugned order of dismissal and having held that the petitioner complied with mandatory pre-deposit requirements and that delay is condonable, the Court directed that the appeal not be decided on procedural grounds but on merits. The Court remitted the matter to the Joint Commissioner (Appeals) for fresh consideration after providing adequate opportunity to the petitioner. [Paras 12]

Matter remitted to the appellate authority for fresh decision on merits after giving opportunity to the petitioner.

Final Conclusion: The writ petition is allowed: the appellate order dismissing the appeal is quashed and set aside, the delay is condoned, the petitioner's pre-deposit by transfer to the GST Electronic Cash Ledger is held to satisfy Section 107(6)(b), and the matter is remitted to the appellate authority for fresh disposal on merits.

Challenge to issuance of the SCN dated 29th November, 2024 under Section 73 of the WBGST/CGST Act, 2017 - HELD THAT:- Having considered the materials on record and noting that the challenge in the present writ petition is directed against the assumption of jurisdiction of the proper officer to issue a show-cause on 29th November, 2024, which the petitioner says to be barred by limitation, the writ petition which raises a jurisdictional issue in relation to exercise of authority to issue the aforesaid show-cause on 29th December, 2021 for the tax period April 2020 to March 2021, should be heard. At the same time, noting that the time to pass the order under Section 73(9) of the said Act would lapse on 28th February, 2025, the petitioners are directed to participate in the proceedings so that the proceeding can reach a logical conclusion.

Considering the pendency of the writ petition and the nature of challenge, if any final order is passed, the same shall not be enforced by the proper officer without obtaining leave of this Court - List this matter in the Monthly List of April, 2025 under the heading ‘Motion’.

Challenge to impugned order - "proceedings" Versus "inquiry" - Separate proceedings by the state and central authorities - On the audit concluded (by the state GST), petitioner accepted relevant paragraphs in the report, to meet the short payment of tax. - HELD THAT:- State revenue had probed by initiating audit. In G.K. Trading Company [2021 (1) TMI 130 - ALLAHABAD HIGH COURT] view taken includes audit to be a proceeding. Undisputed fact is, the show cause notice issued by Central revenue was after commencement of audit. A summons issued under section 70 means the process of collection of evidence or gathering of material, as by interpretation of word ‘investigation’ given by the Supreme Court in Liberty Oil Mills v. Union of India [1984 (5) TMI 236 - SUPREME COURT] with reference to investigation mentioned in provisions of Import and Export Control Act and Imports (Control) Order, 1955. There is also no dispute that subject matter of both proceeding are same.

Impugned order is quashed - petition allowed.

Reversal of ITC claim - time limitation - HELD THAT:- The issue involved in the present Writ Petition, has been squarely covered by the common order of this Court in SRI GANAPATHI PANDI INDUSTRIES, REP. BY ITS PROPRIETOR VERSUS THE ASSISTANT COMMISSIONER (STATE TAX) (FAC) TONDIARPET ASSESSMENT CIRCLE, CHENNAI [2024 (10) TMI 1631 - MADRAS HIGH COURT] wherein, this Court has categorically held 'this Court considering the fact that the issue involved in all these Writ Petitions is only with regard to the availment of ITC, which is barred by limitation in terms of Section 16 (4) of the CGST Act, and in the light of the subsequent developments took place, whereby, Section 16 of the CGST Act was amended and sub-section (5) was inserted to Section 16, which came into force with retrospective effect from 01.07.2017, the petitioners are entitled to avail ITC in respect of GSTR-3B filed in respect of FYs 2017-18, 2018-19, 2019-20 and 2020-21 as the case may be, on or before 30.11.2021, is inclined to quash the impugned orders.'

The impugned order dated 28.04.2024 is quashed insofar as it relates to the claim made by the petitioner for ITC which is barred by limitation in terms of Section 16 (4) of the CGST Act, 2017 but, within the period prescribed in terms of Section 16 (5) of the said Act - the respondent-Department is restrained from initiating any proceedings against the petitioners by virtue of the impugned order based on the issue of limitation.

Petition allowed.

Cancellation of GST registration - restoration of GST registration - show cause notice and opportunity to reply - inspection of declared place of business - payment of tax and filing of statutory returns - prohibition on utilization of Input Tax Credit pending scrutiny

Cancellation of GST registration - inspection of declared place of business - payment of tax and filing of statutory returns - Validity of the order cancelling the petitioner's GST registration on the ground that business was not carried on at the declared place when the petitioner had been regularly filing returns and paying tax and had explained temporary closure. - HELD THAT: - The Court found that the respondent cancelled the petitioner's GST registration after observing that the premises was closed at the time of inspection, without adequately ascertaining whether the petitioner was carrying on business. The petitioner had regularly paid tax and filed returns and had furnished a specific explanation that the proprietor was abroad and the business was closed temporarily during the Deepavali holidays. The Court held that the explanation appeared genuine and that the respondent erred in concluding that the petitioner was not carrying on business at the declared place without proper verification of the explanation and other relevant material. For these reasons the cancellation was set aside and the registration restored. [Paras 7, 8]

Impugned cancellation dated 27.01.2025 set aside and GST registration of the petitioner restored.

Restoration of GST registration - show cause notice and opportunity to reply - prohibition on utilization of Input Tax Credit pending scrutiny - Consequential directions on restoration including filing returns, payment of tax/interest/fee, and restriction on utilisation of Input Tax Credit until departmental scrutiny and approval. - HELD THAT: - As a condition of restoration, the Court directed the respondents to enable the petitioner to file returns and pay dues by making necessary changes on the GST portal. The petitioner was ordered to file all outstanding returns and pay tax, interest and fees within specified timelines. The Court expressly prohibited adjustment or payment from any unutilised or unclaimed Input Tax Credit until such ITC is scrutinized and approved by a competent officer; only approved ITC may thereafter be utilized for future tax liabilities. The Court made compliance with these conditions mandatory and provided that failure to comply would automatically terminate the benefits granted under the order. [Paras 9]

Restoration subject to directions: portal facilitation, filing of returns and payment of dues within stipulated time, and prohibition on utilising unapproved ITC until departmental scrutiny and approval; non-compliance to revoke the benefit.

Final Conclusion: The High Court set aside the cancellation order dated 27.01.2025 and restored the petitioner's GST registration, subject to directions enabling filing of returns and payment of outstanding tax/interest/fee within specified periods and prohibiting utilisation of unapproved Input Tax Credit until departmental scrutiny and approval; non-compliance will terminate the relief granted.

Reimbursement of excess GST - applicable GST rate change - maintainability of writ petition despite arbitration clause - liability of government entity to bear increased tax - interest on delayed payment

Maintainability of writ petition despite arbitration clause - The writ petition is maintainable and the petitioner is not required to be relegated to the contractual Dispute Resolution Forum where no disputed question of fact exists. - HELD THAT: - The Court found that the controversy did not involve any disputed questions of fact which would necessitate reference to the arbitration or dispute resolution mechanism provided in the agreement. In such circumstances, the existence of an alternative contractual forum is not a bar to the exercise of jurisdiction under Article 226 and the petitioner may seek relief directly from the High Court. The Court therefore rejected the respondents' objection to maintainability based on the Arbitration Act and related contractual dispute-resolution provision. [Paras 4]

Objection based on arbitration/relegation to dispute forum overruled; petition held maintainable.

Reimbursement of excess GST - applicable GST rate change - liability of government entity to bear increased tax - interest on delayed payment - Respondent No.2 (the Government entity) is directed to reimburse the petitioner the difference in GST paid, being the excess 6% for the period 01.01.2022 to 24.01.2022, and to pay interest @ 6% per annum in case of failure to pay within the stipulated time. - HELD THAT: - On the admitted factual matrix the petitioner paid GST at a higher rate and, for the specified period, the applicable rate was lower by 6%. The Court recorded that there was no dispute on material facts and that the State GST Department's position was that the enhanced rate was payable by the government entity. Having found that the petitioner had paid excess GST for the period 01.01.2022 to 24.01.2022, the Court directed respondent No.2 to pay the difference to the petitioner within three months of receipt of the certified copy of the order. The Court further provided a consequential remedy: in case of default the petitioner would be entitled to interest at the rate of 6% per annum from the date of entitlement. [Paras 2, 5, 6]

Respondent No.2 to reimburse the excess GST of 6% for 01.01.2022 to 24.01.2022 within three months; interest @ 6% p.a. payable on default.

Final Conclusion: Writ petition allowed: petitioner entitled to reimbursement of excess GST paid at 6% for the period 01.01.2022 to 24.01.2022 from respondent No.2 within three months; petition maintainable notwithstanding arbitration clause; interest at 6% per annum payable in case of default.

Benefit related to industrial promotion policies of the State Government - petitioner has submitted that although the reply has been filed by the respondents but there is no reference of the order passed by the appellate authority which is binding on the respondents also as they have also not challenged the aforesaid order - HELD THAT:- On perusal of the reply, it is found that the respondents have already complied with the order passed by the appellate authority vide their order dated 05/01/2022 accepting the petitioner's investment towards the construction, however, its benefit has not been given to the petitioner as per Clause 9(a) and 9(b) of their policy dated 22/06/2018 citing that the benefit of 2014 policy cannot be availed by the petitioner. However, it is also found that subsequent to the policy of 2014 after introduction of GST regime on 01/07/2017, the respondents/State has already come out with a fresh circular dated 22/06/2018 modifying the aforesaid policy on which, the petitioner is relying upon. Thus, apparently, the respondents have not extended the aforesaid benefit to the petitioner. In such circumstances, this Court is inclined to allow the present petition and it is directed to the respondents to extend the benefit of the order passed by the respondents on 05/01/2022 (Annx.R/3) to the petitioner within a period of 3 months from today.

Petition allowed.

Rejection of petitioner's claim for concessional rate of 12% on works contract services of original works executed pursuant to a contract entered with Tvl. Rail Vikas Nigam Limited - tax at 18% levied - whether the petitioner's contract with M/s. RVNL is entitled to the concession granted in terms of Sl. No. 3 (v) (a) of the notification, in other words liable to tax at 12%?

Relevance of definition under Indian Railway Act, 1989 - HELD THAT:- It may be relevant to note that “Railways”, has not been defined under the GST Act. Thus, the expression “railway” employed in the above notification, ought to be understood applying the common parlance test. It is also relevant to keep in view that a definition contained in a particular enactment cannot be incorporated into another enactment unless the enactments are pari materia. The definition in one statute may not afford a guide to construction of the same words or expressions in another statute unless the same are pari materia legislations or specifically provided or incorporated in the other statute - The impugned order insofar as it looks to the definition of Railways as defined under the Indian Railways Act, to construe the scope and width of the notification is wholly misdirected.

Applying the definition of Railways under Indian Railways Act, 1989 - HELD THAT:- On applying the definition of Railway as defined under IRA it appears that the contract between the petitioner and RVNL for doubling of track between Vanchi Maniyachchi to Nagercoil, construction of roadbed, minor bridges, platforms, buildings, water and effluent treatment facilities, wagon / coaching maintenance infrastructure, supply of ballast, installation of tracks and other electrical, signalling and telecommunication infrastructure in Madurai and Thiruvananthapuram Divisions of Southern Railway, would constitute 'Railway' even under the definition of Indian Railways Act, more particularly covered under clauses (b), (c) and (d) to Section 2(31) of the Indian Railways Act.

Expression “Railway” under the Notification – Not confined to Indian Railway - HELD THAT:- If the expression railway employed in the notification were to be construed to be confined to Indian Railway in its operation it may produce results which are incongruous inasmuch as the relevant entry under the notification covers original works pertaining not only to railways but also Mono Rail and Metro Rail which is undisputedly not part of the Indian Railway. The reference to Mono Rail and Metro Rail is only to show that the object does not appear to be to grant concession under the relevant entry to the subject notification of the qua an entity instead the object / intent appears to be to extend the benefit / concession to industry / utility mentioned therein viz., Railway, Metro Rail and Mono Rail.

Relevance of the expression “pertaining to” - HELD THAT:- The use of the expression “pertaining to” would show that the legislation intented to give an expansive meaning to the expression “Railway”. If we bear this in mind the contract in question for doubling of track between Vanchi Maniyachchi to Nagercoil, construction of roadbed, minor bridges, platforms, buildings, water and effluent treatment facilities, wagon / coaching maintenance infrastructure, supply of ballast, installation of tracks and other electrical, signalling and telecommunication infrastructure in Madurai and Thiruvananthapuram Divisions of Southern Railway, between the petitioner and RVNL, would constitute original work pertaining to railway for the purpose of the subject notification.

Exemption not to be curtailed by importing conditions - HELD THAT:- The definition of Railway under the Indian Railway Act, 1989, may not be relevant in construing the subject notification. In any view, even applying the definition of Railway as defined under the Indian Railway Act, 1989, to the contract between the petitioner and M/s. RVNL which is for doubling of track between Vanchi Maniyachchi to Nagercoil, construction of roadbed, minor bridges, platforms, buildings, water and effluent treatment facilities, wagon / coaching maintenance infrastructure, supply of ballast, installation of tracks and other electrical, signalling and telecommunication infrastructure in Madurai and Thiruvananthapuram Divisions of Southern Railway, it appears to me from the discussion supra that it would still constitute original work pertaining to Railway for the purpose of the subject notification and thus covered under Sl.No. 3 (v) (a) of the said notification.

Construction that leads to Consistency - HELD THAT:- It is trite law that consistency in law is as important as correctness, if not greater as held in Paper Products LTO vs. Commissioner of Central Excise [1999 (8) TMI 70 - SUPREME COURT] - Thus the impugned order being contrary to Appellate Advance Ruling and Advance Ruling Authorities referred above would lead to uncertainity and inconsistency which ought to be avoided.

Conclusion - The contract for doubling of track between Vanchi Maniyachchi to Nagercoil, construction of roadbed, minor bridges, platforms, buildings, water and effluent treatment facilities, wagon / coaching maintenance infrastructure, supply of ballast, installation of tracks and other electrical, signalling and telecommunication infrastructure in Madurai and Thiruvananthapuram Divisions of Southern Railway, between the petitioner and RVNL would be covered by Notification 11 of 2017 CGST (RATE) dated 28.06.2017 as amended vide Notification No. 20/2017 dated 22.08.2017, Notification No. 8 of 2017 Integrated Tax (Rate) dated 28.06.2017 and G.O. Ms. No. 94 dated 22.8.2017 CT & RE and liable to tax at 12%.

The impugned orders are set aside - Petition allowed.

Entitlement to exemption under GST - No estoppel against statute - Non-justiciability of non-statutory representations - Availability of statutory appellate remedy under Section 107

Entitlement to exemption under GST - No estoppel against statute - Claim that petitioner is exempt from GST by virtue of prior VAT and service tax exemptions was unsustainable. - HELD THAT: - The Court held that the GST Act does not provide any exemption or a zero-rated classification for the petitioner's products. Consequently, any exemption under earlier statutes (VAT or service tax) cannot be carried forward into the GST regime. The Court further observed that there can be no estoppel against the operation of a statute and, since the taxing provisions of the GST Act are applicable to the petitioner, reliance on prior statutory exemptions had no legal basis.

Claim of exemption based on earlier statutes rejected; GST liability under the GST Act upheld.

Non-justiciability of non-statutory representations - Whether the Court should direct consideration of the petitioner's representations (Ext.P3 and Ext.P4 series) to tax authorities. - HELD THAT: - The Court examined the representations and found that they were not filed before any statutory authority competent to adjudicate claims for exemption under the GST Act and were not statutory in character. In those circumstances, the Court declined to issue a direction for their consideration, noting that the representations did not engage any statutory mechanism that the Court could mandate be entertained.

No direction issued for consideration of the non-statutory representations.

Availability of statutory appellate remedy under Section 107 - Appropriate remedy against the assessment order Ext.P5. - HELD THAT: - The Court observed that the impugned assessment order under the GST Act is appealable before the Appellate Authority as provided by Section 107 of the Central Goods and Services Tax Act, 2017. In view of the existence of this statutory remedy, the Court considered it appropriate to refrain from entertaining the writ petition on merits and to direct the petitioner to pursue the prescribed appellate procedure.

Petitioner relegated to pursue appeal under the statutory remedy; writ petition dismissed.

Final Conclusion: Writ petition dismissed; petitioner's contention of exemption under earlier statutes rejected, no direction issued for non-statutory representations, and petitioner relegated to avail remedy of appeal under Section 107 of the GST Act.

Expenses incurred are excessive u/s 40A(2)(b) - Applicability of provisions of section 44BBB - HC [2024 (2) TMI 1531 - DELHI HIGH COURT] held that material particulars had been duly placed before the DRP and the AO failed to justify the invocation of the said provision. ITAT has further found that the Department had failed to produce any material or establish from the record that the expenses claimed were inflated or unjustified. Also assessee was not executing a turnkey power project to attract applicability of provisions of section 44BBB

HELD THAT:- We do not find any good ground and reason to interfere with the impugned judgment and, hence, the present special leave petition is dismissed.

Proceedings u/s 153C - issuance of the notice was preceded by the drawl of a Satisfaction Note by the jurisdictional AO - importance of material recovered in the course of a search or a requisition made and a right to reassess u/s 153A and 153C - scope of Incriminating material.

As decided by HC [2024 (4) TMI 461 - DELHI HIGH COURT] abatement of the six AYs’ or the “relevant assessment year” would follow the formation of that opinion and satisfaction in that respect being reached - Jurisdictional AO would have to firstly be satisfied that the material received is likely to have a bearing on or impact the total income of years or years which may form part of the block of six or ten AYs’ and thereafter proceed to place the assessee on notice u/s 153C. The power to undertake such an assessment would stand confined to those years to which the material may relate or is likely to influence. Absent any material that may either cast a doubt on the estimation of total income for a particular year or years, the AO would not be justified in invoking its powers conferred by Section 153C.

HELD THAT:- There is a delay of 185, 155, 97, 190, 186 and 171 days in filing the Special Leave Petitions respectively which have not been satisfactorily explained. Even otherwise, we have gone through the Special Leave Petition and do not find any merit in the same.

Special Leave Petitions are therefore, dismissed on the ground of delay as well as on merits.

Benefit of exemption u/s 11 & 12 - Section 13(1)(b) applicability - delay of 306 days in preferring this petition before SC - HELD THAT:- The High Court seems to have taken the view that the assessee is a religious society working for the benefit of a particular community and therefore is entitled to the benefit of exemption under Sections 11 & 12 of the Act, 1961 respectively. However, prima facie it appears that the High Court overlooked the fact that the society has been registered under Section 12A of the Act, 1961 as a charitable institution/organisation.

Issue notice on the application for delay as well as on the main matter.

Bogus Long Term Capital Gain - sale of shares of Global Capital Markets Ltd., a penny stock - period of holding of shares - AO that the price movement of the company were not supporting by financial fundamentals of the company - ITAT deleted addition - HC [2023 (12) TMI 1422 - GUJARAT HIGH COURT] held Assessee has sold shares after seven years and therefore, the proximity of time between the buy and sale of shares cannot be considered as an accommodation entry in penny stock company within a short period of about one year to book bogus of Long Terms Capital Gain or loss to defraud the Revenue.

AO and CIT(A) have ignored such facts which were considered by the Tribunal to arrive at a finding of fact that the assessee has to be treated as an investor and cannot be treated to have engaged in fraudulent activity or manipulation activity.

HELD THAT:- No reason to interfere with the impugned order passed by the High Court.

The Special Leave Petition is, accordingly, dismissed.

Entitlement to interest for delayed payment of refund under the Direct Tax Vivad Se Vishwas Act, 2020 - HELD THAT:- It is true that the petitioner is not entitled to interest under Section 244A of the Income Tax Act, 1961, however, when the petitioner has opted for direct tax for Vivad se Visvas Scheme 2020 and filed the application which was approved by the designated authority and refund order is also passed as per the said scheme on 12/05/2022 by the Jurisdictional Assessing Officer, the petitioner was entitled to the interest on the amount of refund till the same was paid to the petitioner. The respondents are therefore liable to pay the interest on the amount of refund.

Without considering whether it is a fault on part of the petitioner to validate the bank account or whether any negligence on part of the respondents for not releasing the amount of refund, we direct the respondents to pay the amount of interest at the rate of 6% per annum as per the calculation provided to us amounting to Rs.22,04,104/- for twenty months from 01/06/2022 to 31/01/2024 considering the entire month on amount of Rs. 2,20,41,042/- within a period of three months from the date of receipt of copy of this order.

Tribunal disposing of the Appeal by observing the fact that the petitioner did not disclose truly and fully all the particulars necessary for the assessment - reopening of the assessment on the ground that no unabsorbed investment allowance was available for Assessment Year

HELD THAT:- Tribunal has erroneously observed “the fact as to whether the depreciation has been claimed on the machinery installed for trial production has not been shown in the computation statement”.

It appears that the Tribunal has lost sight of the fact that in the computation statement, there is no requirement of showing that the depreciation has been claimed on machinery installed for trial production.

On perusal of the Assessment Orders passed u/s 143 (3) of the Act dated 30th March, 1994 as well as the Reassessment Order dated 29.10.1999, it appears that the Assessing Officer has considered the issue of depreciation in detail on the basis of the information provided by the petitioner as well as considering the fact that the petitioner has disclosed truly and fully all the facts necessary for the assessment.

The findings of the Tribunal while rejecting the Misc. Application of the petitioner appear to be perverse. Tribunal has failed to consider that there is no failure on the part of the assessee about disclosing truly and fully all material facts necessary for the assessment and therefore, the view taken by the Tribunal is erroneous on face of the record.

Tribunal order is hereby quashed and set aside and the Misc. Application filed by the petitioner is allowed and the matter is remanded back to the Tribunal to pass a fresh de-novo order.

Validity of order u/s 144C(1) - errors in the implementation of the Faceless Assessment Scheme - notices sent prior to framing assessment - Order did not meet the requirements of a DAO as it lacked the necessary stipulations for the assessee to respond - HELD THAT:- The officer has made reference to the statutory requirement under Section 144C(2) of the Act, which requires an assessee on receipt of a DAO, to either indicate acceptance or file objections to the DAO proposals with the DRP within 30 days. The officer then blames the assessee for neither filing its acceptance nor objections with the DRP within the time provided.

The fact of the matter was that such statutory option was never extended to the assessee. Hence, the assessee could not have complied with the statutory requirement as order of assessment dated 27.12.2010 does not extend such option as it ought to have. The corrigendum stating that order dated 27.12.2010 may be taken to be a DAO has itself been issued only on 21.02.2011, two months after order dated 27.12.2010. Hence, the period of 30 days provided in terms of Section 144C(2) has expired by then and the attempt of the Department to circumvent the issue and pin the blame for its error on the assessee is nothing short of a travesty of its statutory responsibilities under that provision.

Importantly, a demand accompanying an assessment order is a statutory demand in terms of Section 156 of the Act, which states that 'when any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under this Act, the assessing officer shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable'. The recovery of the demand under that notice is as per the modes of recovery under Section 226 of the Act.

There is hence, a sanctity attached to a demand under a notice under Section 156 of the Act that cannot be wished away merely by issuing a letter styled as a 'corrigendum'. If at all such demand is to be extinguished, the order under which such demand was raised ought to be reversed in a manner known to law.

Notices sent prior to framing assessment dated 27.12.2010, do not adhere to the statutory stipulations of Section 144C of the Act and such aberrations in law are not saved by virtue of Section 292BB.

Court has held that all irregular, erroneous or illegal orders cannot be held to be non est as there is a distinction between orders that are null and void on the one hand, and those that are irregular, wrong or illegal, on the other. We are of the view that the above judgement, rather than advancing the case of the Revenue, would support the case of the assessee.

We disagree with the Tribunal in its conclusion that the errors committed by the Department in this matter are insignificant and have assigned reasons in the paragraphs supra in support of our conclusion that the errors committed are fundamental to the assumption of jurisdiction and go to the root of the matter.

In light of the fact that we have upheld the validity of order as a regular assessment, we answer substantial questions 1 to 3 in favour of the assessee and adverse to the revenue.

Validity of ex-parte assessment order and subsequent demand notices issued - assessment order was passed on the basis of aforesaid FIR lodged by daughter of petitioner No.1 - HELD THAT:- The foundation of impugned assessment orders is FIR No.3 dated 01.01.2001 which stands quashed by this Court on the basis of compromise arrived at between the parties. The respondent-department concededly has neither conducted independent investigation nor brought on record evidence to the effect that petitioner actually earned aforesaid amount during the relevant assessment year. In the absence of any concrete evidence, demand cannot be created on assumptions and presumptions.

Thus, we are of the considered opinion that present petition deserves to be allowed and accordingly allowed.

Unexplained investments u/s 69 - Estimation of income at the rate of 8% on total deposit in bank account and cash deposit in the bank accounts of the assessee - HELD THAT:- We find that the assessee is running a cold storage and receiving rentals for renting out the space.

During the year, the assessee’s total receipt was ₹ 1,80,64,642/- and total expenses was ₹ 1,80,52,273/- and thus, the net profit was only ₹ 12,368/-. We note that the assessee has incurred huge expenses on the electricity and various other expenses which aggregated to ₹ 1,80,52,273/-. We have also observed from the perusal of the bank statements of the two banks that assessee at no point of time has any substantial money accumulating in these bank accounts.

Therefore, the theory invoked by the ld. AO that assessee has unexplained investments u/s 69 of the Act is wrong and against the facts on record. It is only for this reason the addition made by the ld. AO u/s 69 of the Act is ordered to be deleted by setting aside the order of ld. Commissioner of Income-tax (Appeals).

Second addition on estimation - We note that the ld. AO has applied 8% on other deposits in the bank accounts/ aggregate to ₹ 71,62,220/-. We observe from the profit and loss account, that the assessee has a very meagre profit of ₹ 12,368/- and therefore, such estimation which is devoid of any basis cannot be sustained. Accordingly, the addition made by the ld. AO is ordered to be deleted by setting aside the order of ld. CIT (A) and the appeal of the assessee is allowed.

Correct amount of the interest u/s 234A - HELD THAT:- As per clause (a) of sub-section 1 to section 234A, interest is to be charged for every month or part of a month comprised in the period commencing on the date immediately following the due date till the ending on the date of furnishing of the return.

Due date for filing of return of income in the case of assessee was 30th September 2011.

Undisputedly assessee had filed the return of income for the first time in response to notice u/s 148 on 10.5.2018 and no return was filed u/s 139 thus assessee is liable for interest u/s 234A as provided in section 234A(1)(a) of the Act.

Since the AO vide rectification order has corrected the period of default in filing the return by the assessee from one month to eighty months which is in accordance with the provisions of section 234(1)(a) thus, there is no error in such order. Decided against assessee.

Bogus Purchases - AO has primarily doubted the purchases only on basis of transportation of the goods being suspicious - HELD THAT:-Quite apparently the assessee has provided all the relevant and necessary evidences to the ld. AO to establish genuineness of the purchases. However, with out commenting anything on same and unable to point any deficiency in these documentary evidences the AO has relied oral statements. Further these observation of AO are based upon the statements recorded by AO behind the back of assessee and were not confronted to assessee during the course of assessment proceedings and thus, any observations based on such statements could have been relied upon.

CIT(A) has highlighted the observation of Ld. AO in his remand report that Sh. Mohan Lal Gupta in his statement has mentioned certain facts which are contradictory. Thus Ld. CIT(A) has casted a doubt over reliability and credibility of the statement of Sh. Mohan Lal Gupta and concluded that appellant has indeed undertaken some manipulation in terms of prices. However, this observation of Ld. CIT(A) is without establishing as to what was transaction under taken with Sh. Mohan Lal Gupta in the impugned year. We find that with very general observations the ld. Tax authorities have proceeded to doubt the purchases.

As far doubting the use of transport vehicle is concerned, it is not the case of ld. AO that the assessee was making payments to the transporters. Then the owners of the transport agencies duly appeared before Ld. AO and their statement was record which are on record wherein they have confirmed the fact that goods were transported by them to the assessee company and the payments for the same were made by the suppliers.

Thus for any discrepancy if any left in details of vehicles used cannot be basis to doubt the wholesome evidences of bills etc filed by the assessee. Thus, in view of the above we are of the considered view that the addition made by AO and sustained by Ld. CIT(A) is without any basis.

Addition on account of alleged suppressed profit embedded in purchases from bogus entity - When the genuineness of the purchases have also been accepted here above by us therefore addition of profit embedded in such purchases cannot be sustained.

Addition on the basis of seized tally data alleging the same to be data of sale made by assessee outside the books - The said document which shows that this document does not even bears the name of the appellant. Moreover, perusal of this document would show that the nomenclature of this documents is “Sales Register” whereas documents is named as “Hygienic Purchase A/c”. This ambiguity establishes that this document neither pertains to assessee nor shows any out of book sales of assessee. Thus no addition could have been made on the basis of document not found from control and possession of assessee.

Addition on the ground that stock found during the survey - We find that the copy of profit and loss a/c of assessee for the period 01.04.2013 to 31.01.2014 which shows that assessee has shown closing stock in the books as on 31.01.2014 at Rs. 4,15,79,778/- and thus the comparison drawn by Ld. AO on 28.02.2014 could not be taken into consideration. Even otherwise without any basis, evidence or material the valuation was arrived and same deserves to be deleted.

Unexplained sales - documents found and seized by search party RU-1 and marked as annexure A-39 shows the sales made by assessee of Rs. 24,26,94,374/- however, assessee failed to reconcile the same to the tune of Rs. 19,83,94,520/- - letter filed by Mr. Sanjeev Kumar before Ld. ADIT(inv.) making surrender in his hand and further submitting the working which is enclosed at PB 292-295 and same shows that assessee has surrendered 3% profit i.e. Rs. 78,99,000/- on total un-reconciled turnover of Rs. 26,33,00,000/- (PB 295) which includes un-reconciled turnover of Rs. 10,28,69,230 in the case of assessee in AY 2014-15 based on the said seized document in his personal capacity. PB 288A-290 is the copy of ITR and computation of Mr. Sanjeev Kumar for AY 2014-15 perusal of which would show that he has surrendered total income of Rs. 3,61,00,000/- which includes above mentioned surrender of Rs. 78,99,000/-. Thus no addition could have been made in the hands of assessee on the basis of the said seized documents and same has rightly been deleted by Ld. CIT(A).

Assessment u/s 153A - addition on account of alleged bogus purchases - as alleged no incriminating material found during the search

HELD THAT:- Without there being any incriminating material found during the search and merely relying on the statements recorded alone cannot be the basis of addition. Moreover, in the present case, the statements recorded prior and after the search were heavily relied to make the addition without there being any incriminating material or any mismatch of purchase or closing stock brought on record to be treated as incriminating material found during the search.

In our considered view, the assessee has submitted all the relevant quantitative details of raw material supported by tax audit report for the impugned assessment years under consideration and no discrepancies were brought on record except on the basis of statements recorded from Mohan Lal Gupta and Devender Kumar prior to search and also heavily relied on the 3 STRs forwarded by the Investigation Wing.

There is no incriminating or corroborative evidence with the Revenue in conformity with the statements given by Mohan Lal Gupta and Devender Kumar. They made the statements prior to search and the Revenue must have gathered supporting evidence in line with the statements recorded.

Merely relying on circumstantial evidences without there being any corroborative evidence cannot be treated as incriminating material. Therefore, the assessment order is quashed.

Liability for making TCS on compounding fees received from illegal miners, illegal transporters and for illegal storage of minerals on which royalty is payable - CIT(A) confirmed AO order - HELD THAT:- Authorized Representatives of both the parties in the backdrop of the order passed by the Tribunal in the case of District Mining Officer, Bemetara [2023 (8) TMI 31 - ITAT RAIPUR] as held that the assessee in the case before us had not only received royalty from the illegal miners/transporters of minerals as it would have in the normal course received in case of a regular lease or license, but in fact was in receipt of 10 times of royalty amount from them, therefore, the contention of the Ld. AR that the assessee was not exigible for collection of tax at source (TCS) on the amounts received from the illegal miners/transporters of minerals being devoid and bereft of any substance is liable to be rejected.

We, thus, in terms of our aforesaid observations, finding no infirmity in the view taken by the lower authorities that the assessee who was liable to collect tax at source (TCS) on the amounts received from illegal miners/transporters, having failed to do so, was to be treated as 'assessee-in-default' u/s. 206C(6) of the Act, uphold the same.

As the CIT(Appeals) had followed the view taken by the Tribunal qua the identical issues, therefore, finding no infirmity in the same, we uphold his order. Decided against assessee.

Revision u/s 263 - capital gain on sale of residential house -determination of cost of acquisition in respect of residential property sold by the assessee -valuation of the fair market value (FMV) of the property as on April 1, 2001 - HELD THAT:- In the instant case, where the assessee’s father acquired the property prior to the 01/04/1981 and thereafter the property has been gifted to the assessee which has been sold in the year under consideration while computing capital gain the term “first year in which the asset was held by the assessee” as so interpreted by the Courts to means the year in which asset was first held by the previous owner and not the year in which the assessee became the owner of the asset in terms of the gift deed.

We therefore find that even on this account, where the assessee has computed the Index cost of acquisition by taking into consideration cost of inflation index for the year beginning first day of April 2001, the same is in consonance with the stated provision in the statute and where the AO has verified and allowed the same, the order so passed by the AO cannot be held to be erroneous in so far as prejudicial to the interest of the Revenue.

Valuation report of a registered valuer so submitted by the assessee during the course of assessment proceedings and the findings of the Ld. PCIT - We find force in the contention so advanced by the Ld AR as what is relevant for determining the fair market value is the comparative sale instance not just in terms of land area, built up structure, proximity of location but also the ownership rights and inherent risks associated with such ownership and therefore, where the assessee has sold a property having 100% ownership rights, the comparative sale instance where the seller holds 25% undivided share has to be suitably grossed up rather than discounted as currently done by the Valuer and where the adjusted value is considered, there is no prejudice which is caused to be Revenue as the same is on a higher side as compared to what has been considered by the assessee.

AO, after calling for required information/documentation and after duly considering the explanations and documentation submitted before him, reached a rightful conclusion in terms of determining the indexed cost of acquisition while working out the capital gains in the hands of the assessee.

Such a view is clearly a plausible view which a reasonable and prudent officer could have taken and the view so taken and order so passed by the Assessing officer cannot be held to be erroneous in so far as prejudicial to the interest of the Revenue and the exercise of revisional jurisdiction by the Ld. PCIT u/s 263 cannot be sustained in the eyes of law. Appeal of the assessee is allowed.

Reopening of assessment - returned loss under the head “income from other sources” on account of interest income earned, having claimed huge interest expenses against the same, and further noting that as per section 57(iii) this interest expenses were allowable only when they were incurred for the purpose of earning interest income - case of the CIT was that the assessee’s claim of interest expenses was not examined by the AO in the light of the provisions of section 57(iii) while passing his order u/s 147 allowing the entire claim of interest expenses.

HELD THAT:- PCIT, we find has completely misdirected himself in his finding of error in the order of the AO. While he finds the order erroneous for the AO not having examined claim of the assessee to interest expenses against interest income earned, in terms of section 57(iii) of the Act, the scope of which is to allow only those expenses incurred wholly and exclusively to earn income, the error found by him actually relates to genuineness of the said expenses, which is not the concern of section 57(iii) - PCIT records no error in the order with regards to eligibility of claim of interest expenses u/s 57(iii) of the Act.

Even from the standpoint of genuineness, considering the facts noted by him, we find there is no error found by the PCIT. He notes the assessee to have deducted TDS on interest expenses and thereafter directs the AO to verify whether the interest expenses have been returned to tax by the recipients of the same.

When the only fact noted by him is of TDS having been deducted on the interest expenses, how does it by any way create any doubt on the genuineness of the claim, we fail to understand. In fact there is no doubt about the genuineness of the claim of interest expenses also. He has only directed the AO to verify further, which the Ld. PCIT, we hold, has no power to do u/s 263. Section 263 of the Act requires the Ld. PCIT to record finding of error in the order. Without himself recording any error he cannot exercise any power u/s 263 of the Act.

In the present case therefore, we find that there is no error found by the Ld. PCIT in the order passed in the case of the assessee u/s 147 of the Act, vis-a-vis allowability of claim of interest expenses either in terms of section 57(iii) of the Act, for which purpose the case of the assessee was initially reopened, or for that matter with respect to the genuineness of the claim. Appeal of the assessee is allowed.

Smuggling of Gold jewellery - Baggage rules - despite repeated representations, petitioner did not receive any communication regarding show cause notices or orders against him - HELD THAT:- The present petition being a writ petition under Article 226, non-disclosure of relevant facts would go to the root of the matter. The Supreme Court in Shri K Jayaram & Ors vs Bangalore Development Authority [2021 (12) TMI 1439 - SUPREME COURT] has held that non-disclosure of past & present litigations concerning dispute amounts to suppression of material facts which would disentitle a litigant from discretionary remedy under Article 226 of the Constitution.

Thus, a Petitioner who approaches the Court with unclean hands by suppressing litigation and his involvement therein is disqualified from seeking discretionary relief under Article 226 of the Constitution.

On a query from the Court as to why the copy of the authority letter and the fact that the authorized representative had received the order, was not stated in the petition, it is submitted that the authority letter has been cancelled, however, no copy is being placed on record. Also no convincting answer is forthcoming - The receipt of the Order in Original by the said authorised representative has been placed on record by the Respondent. A perusal of the same would show that the Petitioner had complete knowledge of the said order and that he has failed to avail of his remedies in accordance with law.

Since the order has itself permitted the Petitioner to redeem the goods subject to the payment of a fine of Rs. 58,000/- and a penalty of Rs. 47,000/-, let the Petitioner deposit the same with the Customs Department within a period of four weeks from the date of release of this order.

Conclusion - Petitioner had complete knowledge of the order and that he has failed to avail of his remedies in accordance with law. The deposit of the fine and penalty for the release of the goods ordered.

Petition disposed off.

Maintainability of petition - availability of alternative remedy - Challenge to an order demanding duty drawback and interest under the Customs Act, 1962, and Customs and Central Excise Drawback Rules, 2017 - petitioner had undergone a corporate insolvency resolution process (CIRP) and was acquired by QVC Exports Ltd - HELD THAT:- In the present case the respondents did not lodge their demand in respect of the duty drawbacks against the petitioner during the CIRP. Admittedly, the claim of the respondents is not a part of the approved resolution plan. It is therefore, abundantly clear that a claim brought to the fore during the pendency of the moratorium period after the claims have been recorded by the adjudicating authority would stand waived off in terms of Section 31A of the code.

It is not inclined to relegate the petitioner to the remedy of an appeal as the case of the petitioner is squarely covered by the decisions of the Hon’ble Supreme Court in Ghanashyam [2021 (4) TMI 613 - SUPREME COURT] and in the view of the well-settled position of law.

Conclusion - Once a resolution plan is approved, all claims not part of the plan are waived. The duty drawback demand was raised after the moratorium period during CIRP, which precluded such actions. The impugned order demanding duty drawbacks is quashed.

Petition allowed.

Seeking issuance of an appropriate writ for quashing of the impugned Order-in-Original - suspected misdeclaration and undervaluation in the import of rubber compound, un-vulcanized rubber compound and nylon chords - HELD THAT:- On the basis of the allegations stated in the impugned SCN, the DRI raised various demands against the Petitioners including interest and penalty. The impugned SCN was however not adjudicated for a substantial period of time by the concerned assessing authority.

Petition disposed off.

Time limitation - Smuggling of gold bars and gold ornaments - burden to proof towards the gold being smuggled on the Revenue - delayed passing of the de novo adjudication order - HELD THAT:- Both under the Section 128A (4A) of the Customs Act 1962 as well as under the Customs Manual, it is specified that within the time-frame given to the Commissioner (Appeals), he ‘shall’ and ‘would’ decide the appeal within 6 months. This is subject to the clause ‘wherever possible’. It is to be noted that the word ‘may’ is not used in both the places. This shows that the Commissioner (Appeals) is required to follow the time-frame given to him for passing the OIA.

In the present case, it is seen at para 12 above that both Section 128A(4A) and the Customs Manual [Chapter 31], gives the time frame of six months to the Commissioner (Appeals) to pass the Order in Appeal.

In the Kopertek Metals Pvt Ltd., decided by the Principal Bench – Delhi Tribunal [2024 (12) TMI 269 - CESTAT NEW DELHI], it has been held that non adjudication of the order, with no reason being given to the effect that the order could not be passed within specified time limit due to circumstance beyond control, would be fatal to the legality of the order.

In the present case, it has taken nearly Two years for the Commissioner (Appeals) to even take up the Personal Hearing proceedings on 28.08.2020 for the Appeal filed on 06.09.2018. The appellant has attended the same. Hence, there is no delay on their part. After this, the OIA was passed on 24.09.2020. No reason whatsoever has been given as to what necessitated the Commissioner (Appeals) to wait for nearly two years to grant the Personal Hearing and as to why the OIA could not be passed within the time frame of Six Months. The OIA has been passed after 2 years as against the time-frame of Six months given under Section 128A(4A).

The ownership of the gold was being claimed by the Appellant right from the beginning when the first statement was recorded. He also named the persons from whom he had procured the gold. The very fact that these persons are residents of the area gets proven from the Election Records and Gram Panchayat Certificates brought in by the appellant - the initial onus to prove its smuggled nature cast upon the Revenue, has not been discharged by the Revenue as also noted by the first Commissioner (Appeals) while he remanded the matter to the Adjudicating Authority.

One glaring visible error on the part of the Revenue is seizure of gold ornaments. The quantity seized is to the tune of 86.230 grams. From the Jewelry, it cannot be ascertained that the same is of foreign origin or not. Admittedly no chemical examination was undertaken either for the gold bars or for the ornaments. But still the appellant was made to run from pillar to post for the next more than 13 years, having to approach CESTAT and having to wait for the adjudication of the de novo proceedings for release of the gold ornaments. The very fact that the Dept did not file any appeal on the gold jewelry released to the appellant shows that it is an admitted error on the part of the Revenue - in spite of the foreign markings in the gold bars, without verifying the claim of the appellant about their purchase from three persons and making a sweeping statement that the licit purchase claim by the appellant is an ‘after thought’, does not carry the case of the Revenue any further, when the appellant has made these claims on the date of seizure itself.

Conclusion - i) The delay in adjudication and appeal proceedings, without plausible explanation, invalidated the orders. ii) The Department failed to discharge its burden of proof regarding the smuggling allegations, as the appellant provided credible evidence of licit possession.

The impugned Order is not sustainable even on merits - Appeal allowed.

Classification of imported ‘Mixed Hydrocarbon Oil’ - to be classified under Customs Tariff Item (CTI) 27011990 or as Automotive Diesel Fuel' under CTI 27101944 - applicability of the relevant import conditions prescribed under ITC-HS policy of FTP - restricted item or not - HELD THAT:- From the specific report of the samples of the impugned goods, it transpires that the imported goods under dispute are mixture of hydrocarbon oil, though containing diesel fraction, does not fulfil the standard requirements as specified under IS:1460:2005 to be considered as Automotive Diesel Fuel. In view of the above specific factual record establishing that the classification of impugned goods cannot be categorised under CTI 2710 1944, inasmuch as these goods do not fulfil the criteria mentioned for Automotive Diesel Fuel as per IS:1460:2005, the conclusion arrived at in the original order and which is confirmed in the impugned order, by the authorities below does not stand the scrutiny of law.

There are force in the argument advanced by the learned Advocate for the appellants that statements given by the appellantsimporter alone cannot form the basis to confirm the charge of misclassification and to re-classify the goods from ‘Mixed Hydrocarbon oil’ to ‘Automotive Diesel Fuel’. The law is well settled in these matters as the Hon’ble Supreme Court in the case of H.P.L. Chemicals Limited (supra) have held that classification of goods is a matter relating to chargeability and the burden of proof is squarely upon the Revenue. If the Department intends to classify the goods under a particular heading or sub-heading or tariff item different from that claimed by the assessee, the Department has to adduce proper evidence and discharge the burden of proof.

From the test report given by the CRCL laboratory and from relevant tariff entries in First Schedule to the Customs Tariff Act, it is quite clear that the goods are classifiable as ‘other’ residuary goods‘ including ‘Mixed Hydrocarbon oil’ under CTI 2719 1990 and not as ‘Automotive Diesel Fuel’ under CTI 2710 1944. Department’s own Chemical Examiner of CRCL laboratory after examining the chemical composition of the representative samples of imported goods has said that it is not fulfilling the requirements of Automotive Diesel Fuel. On the other hand, after examining the chemical composition he has opined that the impugned is to be treated as mixture of hydrocarbon oil.

It is also a settled position of law that merely because an assessee has, under the stress of investigation, signed a statement admitting tax liability, it cannot lead to self-assessment or self-ascertainment. In the case of Vinod Solanki Vs. Union of India [2008 (12) TMI 31 - SUPREME COURT], the Hon’ble Supreme Court has ruled that the initial burden to prove that the confession was voluntary is upon the department andthat evidence brought by confession if retracted, must be corroborated by other independent and cogent evidence.

It is made clear that none of the evidences relied upon by the department, to allege the misclassification and mis-declaration of the description resorted to by the appellants, stand the scrutiny of Law. The department failed to substantiate the allegations by cogent and legally admissible evidences. Hence, under the facts and in the circumstances of the case, there are no hesitation in allowing the appeal in favour of the appellants by setting aside the impugned order.

Conclusion - i) The classification of goods must be based on conformity to relevant standards and supported by evidence. ii) The classification of the goods under CTI 27101990 as 'Mixed Hydrocarbon Oil' upheld.

The appeal is allowed by setting aside the impugned order.

Admissibility of SFIO investigation report - deeming fiction treating SFIO report as police report for framing of charges - inspector's report admissibility and authentication - scope of proceedings under Section 212(14A) based on SFIO report - harmonious construction to avoid rendering provision otiose

Admissibility of SFIO investigation report - deeming fiction treating SFIO report as police report for framing of charges - scope of proceedings under Section 212(14A) based on SFIO report - harmonious construction to avoid rendering provision otiose - Whether the SFIO's 2nd investigation report filed under Section 212 is inadmissible in evidence by reason of Section 212(15) read with Section 223(5), and whether it can be relied upon in proceedings under Section 212(14A). - HELD THAT: - The Court held that Section 212(15) is a limited deeming provision which treats the SFIO report as akin to a police report under Section 173 CrPC only for the purpose of filing it with the Special Court for framing of charges. The legislative scheme, particularly the insertion of Section 212(14A), contemplates initiation of Tribunal proceedings by the Central Government on the basis of the SFIO report; to interpret Section 212(15) as rendering the SFIO report wholly inadmissible for purposes of proceedings under Section 212(14A) would make sub-section (14A) otiose. Section 223(5) merely excludes the authentication procedure specified in Section 223(4) for inspector's reports from applying to reports under Section 212 and does not mean that SFIO reports are inadmissible in all legal proceedings. Applying principles of harmonious construction and the settled approach to legal fictions, the deeming fiction in Section 212(15) must be confined to its context and purpose and cannot be extended to negate the evidentiary or procedural role assigned to SFIO reports under Section 212(14A). Consequently the NCLT did not err in holding that the 2nd SFIO report and the compilation of documents could be considered in the MA filed under Section 212(14A). [Paras 30, 33, 36]

The 2nd SFIO report and the compilation of documents were held to be admissible for consideration in proceedings under Section 212(14A); Section 212(15) does not render such reports wholly inadmissible and Section 223(5) does not have the effect contended for by the appellants.

Inspector's report admissibility and authentication - admissibility of SFIO investigation report - scope of proceedings under Section 212(14A) based on SFIO report - Whether the compilation of documents filed by the Union of India on 07.02.2024 (extracted from the 2nd SFIO report) could be rejected on the ground of absence of specific pleadings in the Company Petition / MA. - HELD THAT: - The Tribunal observed that the MA under Section 212(14A) and accompanying pleadings did refer to and rely upon the SFIO reports and the investigation that formed the basis of the application. While pleading rules require that reliefs and the material basis for them be disclosed, the contention that the compilation must be thrown out at the interlocutory stage merely because every document in the compilation was not separately appended to earlier pleadings was not a ground to exclude the compilation at that stage. Questions about the sufficiency of pleadings and the evidentiary weight of material are matters to be examined when the applications are decided on merits; the lack of a specific pleading in every respect cannot be a ground for summary exclusion of the compilation. [Paras 11, 37, 38]

The objection that there were no sufficient pleadings relating to the compilation of documents was rejected as a basis for excluding the compilation at that interlocutory stage; the matter of pleadings and admissibility is to be considered on merits.

Harmonious construction to avoid rendering provision otiose - admissibility of SFIO investigation report - Whether the impugned order of the NCLT rejecting the appellants' IAs was legally unsustainable. - HELD THAT: - Applying statutory interpretation principles, including that no provision should be rendered meaningless and that legal fictions must be confined to their purpose, the Court found that the NCLT correctly interpreted Section 212(15) and Section 223(5) in a manner consistent with the statutory scheme. The NCLT's conclusion that the SFIO report and compilation could be considered for adjudicating MA No.2070 of 2019 was consistent with the object and language of Section 212 and the added sub-section (14A). No jurisdictional or interpretative error was shown that would justify interference. [Paras 34, 35, 36]

The impugned NCLT order was held to be sustainable in law; no grounds for interference were made out.

Final Conclusion: All appeals are dismissed; the NCLT's order rejecting the IAs was upheld and the 2nd SFIO report and the compilation of documents were held to be examinable in proceedings under Section 212(14A). Parties shall bear their own costs.

Seeking to challenge the order passed by the National Company Law Appellate Tribunal (NCLAT), Chennai - rejection of Section 7 application due to a delay in filing a rejoinder affidavit - HELD THAT:- Both NCLT and NCLAT committed an egregious error in taking a very technical or rather pedantic view of the matter.

Having permitted the Bank to file their rejoinder after condoning the delay, it was too much for the NCLT to say that the Bank shall not be permitted to rely on any assertions made in the rejoinder. It was expected of the NCLAT to correct such an error. Unfortunately, the Appellate Tribunal also fell into the same error.

Appeal allowed.

Rejection of Section 7 Application filed by the appellant - demand of amount of Interest Free Maintenance Security (IFMS) from the corporate debtor, towards maintenance of common area services, installation, common passage, etc. - financial debt or not - HELD THAT:- The Hon’ble Supreme Court in ‘Global Credit Capital Limited & Anr.’ Vs. ‘Sach Marketing Pvt. Ltd. & Anr.’ [2024 (4) TMI 1067 - SUPREME COURT], has laid down that for finding out the character of the debt, nature of the transaction entered between the parties has to be captured and find out and it is only after determining the real nature of transaction, issue can be answered as to whether there is a financial debt or not.

The amount which is paid by the allottee towards IFMS security is the amount which is paid towards obtaining services and the amount is payable to the vendors/nominated maintenance agencies. The services thus are to be provided by vendor or maintenance agencies. For being a financial debt within meaning of Section 5(8), the amount needs to be disbursed against the consideration of time value of money and includes thus disbursement for time value of money is a condition precedent for falling any transaction within a definition of financial debt.

Conclusion - The finding of the Adjudicating Authority holding that amount in question i.e., IFMS does not amount to financial debt, suffers from no infirmity.

Appeal dismissed.

Existence of preexisting dispute under Section 8(2) of the Insolvency and Bankruptcy Code, 2016 - admission of liability and acknowledgement for limitation purposes under Section 18 of the Limitation Act - operational debt and demurrage - crystallisation and disputability - scope of adjudicating authority in Section 9 proceedings and application of the Mobilox test

Existence of preexisting dispute under Section 8(2) of the Insolvency and Bankruptcy Code, 2016 - scope of adjudicating authority in Section 9 proceedings and application of the Mobilox test - Whether the Operational Creditor established an undisputed operational debt and default so as to sustain admission of a Section 9 petition. - HELD THAT: - Applying the test in Mobilox, the Tribunal examined the correspondence between the parties and the documentary material placed on record. The communications from the Corporate Debtor beginning with the reply dated 09.03.2020, subsequent emails and the detailed reply of 10.01.2023 disclose plausible, specific contentions: (a) assertions that payments were made by third parties (Samruddha/BST/Globe Chart), (b) requests for supporting debit notes and RBI/CAcompliant documents, and (c) explicit statements that the claim was timebarred. The Corporate Debtor did not unequivocally accept liability; at best it agreed to examine and discuss the claim. The material therefore manifests a real dispute that is neither spurious nor illusory and which requires investigation by a competent forum rather than summary determination in a Section 9 proceeding. Consequently the condition precedent of an undisputed debt and default for initiation of CIRP under Section 9 was not satisfied. [Paras 21, 23, 31, 33]

Debt and default were disputed; the Section 9 petition could not be maintained as the existence of a plausible preexisting dispute precluded initiation of CIRP.

Operational debt and demurrage - crystallisation and disputability - scope of adjudicating authority in Section 9 proceedings and application of the Mobilox test - Whether the demurrage claim was an undisputed operational debt and sufficiently crystallised to ground a Section 9 petition. - HELD THAT: - The Tribunal analysed the timing and content of the debit note for demurrage and the Corporate Debtor's contemporaneous communications. The debit note dated 27.12.2017 (raised months after the freight invoice) and the Corporate Debtor's explicit statement in the 09.03.2020 reply that "We and Broker have not confirmed the demurrage" demonstrate that demurrage was disputed and not admitted or crystallised. Given that demurrage remained contested and unconfirmed, it could not be treated as an undisputed operational debt for the limited/summarised adjudication under Section 9; the defence as to demurrage could not be characterised as feeble or purely tactical. [Paras 24, 27, 28, 30]

The demurrage claim was disputed and not crystallised; it could not support admission of the Section 9 petition.

Final Conclusion: The impugned order admitting the Section 9 petition was set aside; the appeal is allowed and the Corporate Debtor is released from the rigours of CIRP. The Operational Creditor remains free to pursue other remedies available under law.

Money Laundering - Seeking grant of bail - Practicing chartered accountant (CA) - assisting the co-accused to convert the tainted money into untainted money and connived in the laundering thereto - petition dismissed primarily on the ground that the petitioner has failed to meet the threshold of Section 45 of PMLA - it was held by High Court that 'The petitioner is admitted to bail on furnishing personal bond in the sum of Rs. 5 lakhs with a surety of the like amount to the satisfaction of the trial court on the terms and conditions imposed' - HELD THAT:- There are no good ground to interfere with the impugned order passed by the High Court in view of the pendency of trial.

SLP dismissed.

Exemption from service tax - services provided by the petitioners, specifically related to Solid Waste Management, are exempt from Service Tax under the Finance Act, 1994 - Section 66-B of the Finance Act, 1994 - validity of SCN - notice proposing to levy service tax, can be construed as a notice for recovery while affirming a final demand or not? - HELD THAT:- The Section 65-B (44) of the Finance Act 1994, defines the term ‘service’. Section 65-B (51) of the Finance Act, defines taxable service as – ‘taxable service’ means any service on which service tax is leviable under section 66B. Section 66B of the Finance Act provides that there shall be levied a tax on the value of all services other than those specified in the Negative List - Section 66D of Finance Act, 1994, provides for the negative list, while Section 93 of the Finance Act provides power to the Central Government to grant exemption for taxable service from service tax. Accordingly, unless the service is one that falls in the negative list or a notification of exemption, the same would fall within the service tax net.

This Court in M/s Sapthagiri Cleaning Services Versus The Joint Commissioner of Central Tax Bengaluru, The Deputy Commissioner of Central Tax Bengaluru [2024 (9) TMI 1418 - KARNATAKA HIGH COURT], while considering setting aside of the show cause notice in an identical factual matrix had declined to issue a writ as sought for while observing that the relief sought for required interpretation of work order in the context of the exemption notification and accordingly, relegated the matter to the stage of post show cause notice. There is no reason that the present writ petitions seeking setting aside of show cause notice on the ground of exemption or non-chargability to service tax are to be disposed off on different grounds.

The interpretation of the work orders/ contracts would be necessary in order to arrive at a conclusion as regards non chargeability or as regards the application of exemption notification. It is relevant to note the observations made by the Apex Court in Union of India and another v. VICCO Laboratories [2007 (11) TMI 21 - SUPREME COURT], wherein it is held that the Writ Courts could interfere at the stage of show cause notice only under exceptional circumstances and when factual adjudication is warranted, the interference by the Writ Court is ruled out.

While the writ petitions challenging validity of the show cause notice are disposed of by relegating the petitioners to the stage post show cause notice reserving liberty to file additional reply and to file reply if not already filed permitting the assessees to raise all other contentions in support of their case of being within the exemption notification or outside the service tax net, the other writ petitions raising identical grounds assailing the adjudicating order (Order-in-Original) are also allowed by setting aside the adjudicating order and relegating the assessees to the same stage of post show cause notice. Such order is passed noticing substantial contentions are raised in matters where show cause notices are assailed.

In light of the contention of the revenue that the receiver of service i.e., BBMP/ local authority or Government is not a business entity registered as body corporate, such aspect is also kept open for consideration by the authority upon remand of the matters to the stage of post-show cause notice.

Conclusion - The writ jurisdiction is not the appropriate forum for resolving complex factual disputes involving tax assessments. The court set aside adjudicating orders and remanded the matters to the stage of post-show cause notice to ensure uniformity and consistent adjudication by the tax authorities.

Petition disposed off.

Levy of service tax - amounts collected as damages/penalties for breach of contract - Section 66E(e) of the Finance Act, 1994 - HELD THAT:- The amount recovered by the appellant towards penalty is not a consideration for any activity which has been undertaken by the appellant and as a result there is no ‘service’ in terms of Section 65B(44) of the Act. The facts of the present case do not suggest that there is any other independent agreement to refrain or tolerate, or to do an act between the parties hence the issue is decided in favour of the appellant. The other issues related to invocation of extended period of limitation, penalty and interest are not required to be gone into as the issued on merits stands decided in favour of the appellant.

The impugned order deserves to be set aside - The appeal is, accordingly allowed.

Liability to pay service tax - full consideration received for providing the ‘Manpower Supply Service’, including salary, PF and ESIC - HELD THAT:- The issue raised in the present case is whether the appellant is liable to pay service tax on the full consideration received for providing the ‘Manpower Supply Service’, including salary, PF and ESIC, which has been considered in the case of appellant themselves by the Hon’ble Rajasthan High Court, titled as Bhanwar Lal Gurjar Vs. Commissioner of CGST & Service Tax – Jaipur [2019 (12) TMI 890 - RAJASTHAN HIGH COURT], where the Division Bench considered the same issue and following the decision of the Hon’ble Apex Court in the case of Union of India Vs. Intercontinental Consultants and Technocrats Pvt. Ltd. [2018 (3) TMI 357 - SUPREME COURT].

The period involved in the show cause notice is April 2012 to July 2012 and the demand has been made by virtue of Section 67 of the Act read with Rule 5 of the Service Tax (Determination of Value) Rules, 2006. In view of the law laid down by the Hon’ble Apex court in Intercontinental Consultants and Technocrats Pvt. Ltd., the demand made under Section 67 is not sustainable as it does not include the reimbursable expenses for providing such service during the period in question.

Conclusion - The appellant was not liable to pay service tax on the full consideration received for providing 'Manpower Supply Service' and that the demand made under Section 67 was not sustainable.

There are no merits in the impugned order and the same is hereby set aside - appeal allowed.

Classification of service - Works Contract Service (WCS) - respondent had received payments from their customers but not shown the taxable value in their ST-3 returns - HELD THAT:- This Tribunal taking note of the CBEC Circular No.108/02/2009-ST dated 29.01.2009 in CC,CE&ST Vs. Pragati Edifice Pvt. Ltd. [2019 (9) TMI 792 - CESTAT HYDERABAD] case has held that 'it is well settled legal position that whether the service is rendered as service simpliciter or as a works contract, no Service Tax can be levied on construction of residential complex prior to 1-7-2010.'

Conclusion - i) Construction services completed before the execution of a sale deed, where the property is transferred post-construction, are considered self-service and not subject to service tax prior to 01.07.2010. ii) The CBEC Circular No.108/02/2009-ST applies to cases where construction is completed before sale, exempting such transactions from service tax.

There are no merit in the appeal filed by the Revenue - Revenue’s appeal is dismissed.

Place of Provision of Services Rules, 2012 - Rule 10 (place of provision for goods transport agency) - Service Tax Rules, 1994 - Rule 2(1)(d) (liability in respect of goods transport agency) - Export of Services - Rule 6A of Service Tax Rules, 1994 - Notification No.30/2012ST - reverse charge mechanism for GTA services - Extended period of limitation - proviso to Section 73 of the Finance Act, 1994

Place of Provision of Services Rules, 2012 - Rule 10 (place of provision for goods transport agency) - Service Tax Rules, 1994 - Rule 2(1)(d) (liability in respect of goods transport agency) - Notification No.30/2012ST - reverse charge mechanism for GTA services - Export of Services - Rule 6A of Service Tax Rules, 1994 - Extended period of limitation - proviso to Section 73 of the Finance Act, 1994 - Whether appellant (GTA) was liable to pay service tax on transportation to Nepal and whether demand could be sustained by invoking the extended period. - HELD THAT: - The Tribunal examined Rule 2(1)(d) of the Service Tax Rules, Rule 10 of the Place of Provision of Services Rules, 2012 and Notification No.30/2012ST together with the Export of Services criteria. Rule 10 makes the place of provision for GTA services the location of the person liable to pay tax; Rule 2(1)(d) places liability on the person who pays freight, with the proviso that if that person is located in a nontaxable territory the provider becomes liable. The impugned transactions involved consignments to Nepal where the freight was paid by consignees (corporate entities) located outside taxable territory. On a combined and harmonious reading of the cited rules and the notification, the Tribunal found that the appellant had a bona fide belief, supported by the notification and documents, that no service tax was payable by it. Consequently the invocation of the extended period for demand under the proviso to Section 73 could not be sustained, and the demand based on extended limitation was set aside. [Paras 4]

Demand set aside as not sustainable on the test of limitation; appellant's bona fide belief based on the rules and notification negated invocation of extended period.

Refund / claim of service tax paid - role of ST-3 returns and Section 11B remedy - Adjudication scope of show cause notice under Section 73 - Whether amount of service tax voluntarily paid by the appellant in respect of domestic clients was refundable in these proceedings. - HELD THAT: - The Tribunal noted that the appellant had paid service tax for commission amounts relating to clients within India but that refund of such amounts was not the subjectmatter of the show cause notice under Section 73. The adjudicating authorities had rejected the appellant's refund claim for lack of supporting documents. The Tribunal observed that a refund claim, if maintainable, ought to have been pursued by an application under Section 11B of the Central Excise Act, 1944 (read with Section 83 of the Finance Act, 1994) where legally permissible. In absence of such application and given that refund was not raised in the demand proceeding, the contention for refund had no merit in this appeal. [Paras 4, 5]

Refund claim not entertained in these demand proceedings and no relief granted; appellant should pursue appropriate refund remedy if permissible.

Penalty provisions - Section 78 and Sections 77(1)(d), 77(2) of the Finance Act, 1994 - Whether penalties imposed upon the appellant were sustainable after the finding on limitation and bona fide belief. - HELD THAT: - The Tribunal noted that the Adjudicating Authority and Commissioner (Appeals) had earlier imposed penalties under Sections 78, 77(1)(d) and 77(2) on the basis of suppression and noncompliance. However, having set aside the demand as barred by limitation because the appellant entertained a bona fide belief based on the notification and rules, the Tribunal found no justification to sustain the penalties. Accordingly, the penalties were set aside along with the demand. [Paras 4, 5]

Penalties confirmed by lower authorities were set aside in view of the finding that the demand failed the limitation test and the appellant's bona fide belief.

Final Conclusion: The appeal is allowed: the demand based on extended period of limitation is set aside as the appellant entertained a bona fide belief, grounded in Rule 2(1)(d), Rule 10 and Notification No.30/2012ST, that no service tax was payable; consequentially the penalties are also set aside; the appellant's separate refund contention was not entertained in these demand proceedings and should be pursued by appropriate remedy if maintainable.

Non/short-payment of service tax - it is alleged that the appellant had received substantial amounts towards the provision of taxable services, but has not discharged due service tax - recovery with interest and penalties - HELD THAT:- Undisputedly the services provided by the appellant qualify to be treated as export of services. Thus, from the impugned order it is evident that Commissioner (Appeal) has himself dropped the demands in respect of all the services provided for which the BRC’s were produced. However in respect of the demands where the BRC’s were not produced he proceeded to uphold the demand made along with the interest and penalties.

The appellant have stated and produced a copy of certificate from Chartered Accountant to the effect that the amount which i.e. Rs.2,49,41,667/- was also received in foreign exchange - By the above certificate, it has been certified that appellant have received the amount also in convertible foreign exchange through banking channels.

As this certificate was not produced before the Commissioner (Appeal) at the time of adjudication, it is deemed fit to remand the matter back to Commissioner (Appeals) for re-consideration of differential demand confirmed.

Conclusion - i) The services provided by the appellant qualified as export of services, and demands were dropped where supporting documents were produced. However, demands without supporting documents were upheld along with interest and penalties. ii) The appellant presented a certificate from a Chartered Accountant during the appeal, certifying that a specific amount was received in foreign exchange through banking channels, which was not produced before the Commissioner (Appeals). The Tribunal deemed it fit to remand the matter back to the Commissioner (Appeals) for reconsideration in light of the new evidence.

Appeal allowed by way of remand.

Condonation of delay in filing appeal - appeal rejected on the grounds of limitation holding that the appeal filed on 16.08.2022 is beyond permissible condonable time limit of one month - HELD THAT:- The impugned order has been passed on the presumption by the learned Commissioner (Appeals) that the Order-in-Original dated 23.12.2021 was served on the Appellant, on the basis of the evidence of dispatch and the contention of the Department that such dispatch was not returned back by the Post office.

The learned Commissioner have erred in making the presumption in the absence of proof of delivery not produced by the Department. During the relevant time as per the provisions of Section 37C(1)(a), any order passed under the Act was to be served through Registered Post or Speed Post to the person for whom it was entitled or his authorized agent with acknowledgement due as proof of delivery. Thus, it was incumbent upon the Revenue to produce evidence of delivery or service which is the mandate as per the Section 37C(1)(a) of the Act. In absence of proof of delivery of order dated 23.12.2021, the same cannot be deemed as served on the Appellant as has been held by the Hon’ble Rajasthan High Court in the case of R. P. Casting Pvt. Ltd. [2016 (6) TMI 996 - RAJASTHAN HIGH COURT].

Conclusion - In absence of proof of delivery, it is held that the presumption is not sustainable and accordingly the appeal of the Appellant cannot be held as barred by limitation.

It is deemed appropriate to remand the matter to the learned Commissioner (Appeals) to decide the appeal on merits after giving proper opportunity to the Appellant without further visiting the aspect of limitation.

Appeal allowed by way of remand.

Levy of penalty u/r 26 of Central Excise Rules, 2002 - illicit removal of LLDPE and HDPE without payment of duty - appellant abetted M/s. Vraj Packaging, whose case has been settled under SVLDRS-2019 - HELD THAT:- When the demand in the case of main appellant M/s. Vraj packaging Pvt. Limited has been settled under SVLDRS-2019 vide order No. A/11013/2021 dated 10.03.2021, the case of co-noticee for penalty will not sustain.

The same view has been taken by this Tribunal in the case of M/s. Siemens Limited [2023 (5) TMI 377 - CESTAT MUMBAI] that penalty on the co-noticee will not sustain when the main party’s case of confirmed demand is settled under SVLDRS-2019. Therefore, following the above precedent, the penalty imposed upon the appellant in this case is not sustainable.

The impugned order-in-appeal set aside - appeal allowed.

Time limitation for filing refund claim - whether the refund claim was filed within one year from the last date of the order, from which refund claim pertains? - Section 11B of the Central Excise Act, 1944 - HELD THAT:- As Commissioner (Appeals) has specifically acknowledged that in the entire case refund claim was being filed within one year from the last date of the order, from which refund claim pertains.

The issue is squarely covered by the various precedent decisions. In case of Suretex Prophylactics India Pvt. Ltd [2020 (5) TMI 225 - KARNATAKA HIGH COURT], Hon’ble Karnataka High Court has observed that 'time-limit has to be computed from the last date of the last month of the quarter which would be the relevant date for the purposes of examining if the claim is filed within the limitation prescribed under Section 11B or otherwise.'

In the case of M/s Span Infotech (India) Pvt. Ltd. [2018 (2) TMI 946 - CESTAT BANGALORE] Larger Bench of this Tribunal has observed that 'we conclude that in respect of export of services, the relevant date for purposes of deciding the time limit for consideration of refund claims under Rule 5 of the CCR may be taken as the end of the quarter in which the FIRC is received, in cases where the refund claims are filed on a quarterly basis.'

Conclusion - The refund claims were filed within the limitation period specified under Section 11B.

Appeal of Revenue dismissed.

Invocation of Extended period of limitation - suppression of fact of receipt of raw material free of cost from the supplier - fact of non-inclusion of the value of the said raw material in the value of final products manufactured by them suppressed from the knowledge of the department with intent to evade payment of central excise duty - HELD THAT:- The respondent were manufacturing ZDF for the specific needs of Nuclear Fuel Complex, Hyderabad, a unit of Department of Atomic Energy, Government of India, who manufactures Zirconium Alloy Tubes which are further used for making Nuclear Fuel Bundles, containing Uranium Oxide pellets and are used in the Nuclear Reactors by the Nuclear Power Corporation managed by Government of India for generation of power. Further, it is found that as per the purchase order, the respondent were only paying the central excise duty on the job work charge and not including the free supply of sand made by Nuclear Fuel Complex, Hyderabad and as per the department, the said free supply should be included in the transaction value for the purpose of payment of duty.

The learned Commissioner, after analyzing all the submissions of the party, vide detailed impugned order, has confirmed the demand only for the normal period and has come to the conclusion that extended period of limitation cannot be invoked as the respondent had a bona fide belief that the levy on free supply is not to be included in the transaction value. Further, it is also found that the invocation of extended period of limitation is totally unwarranted in the present case because the Revenue has not been able to establish any of the ingredients mentioned in Section 11A(1) of the Act for invoking the extended period of limitation. Further, the respondent had acted bona fidely as per the clauses of the purchase orders received by them from the Regional Director, HRPU, Nuclear Fuel Complex, Hyderabad, a unit of the Department of Atomic Energy, Government of India and there was no wilful act or omission of any kind whatsoever on their part leading to mens rea for invoking the penal provisions.

Conclusion - The invocation of extended period of limitation is totally unwarranted in the present case because the Revenue has not been able to establish any of the ingredients mentioned in Section 11A(1) of the Act for invoking the extended period of limitation.

There is no infirmity in the impugned order - appeal of Revenue dismissed.

Entitlement to the benefit of prospective effect as contemplated under Section 56 (2) of the MVAT Act - Appellant Trust is a deemed dealer under section 2 (8) of MVAT Act 2002 liable for registration and payment of tax under MVAT Act or not - whether it is not necessary for levy of Sales Tax, that the Appellant must carry on ‘business’ in the capacity of the dealer? - sale of movable or immovable property, to be ascertained by the field officers at the appropriate stage.

Whther the appellant is a 'deemed dealer' as contemplated under the explanation to section 2 (8) of the MVAT Act? - HELD THAT:- The Appellant became the full and absolute owner of the loans and the stressed assets [by virtue of the Transfer Deed dated 30th September 2004] and the only person legally entitled to recover those loans or any part thereof. To ensure that the Appellant could in fact avail of quick remedies of recovery under the provisions of the RDDB Act, 1993, as well as the SARFAESI Act, 2002, the Government, in exercise of powers conferred by sub-clause (ii) of clause (h) of Section 2 of the RDDB Act, 1993 specified/notified the Appellant to be a financial institution for the purposes of the said clause. On perusing the clauses of the Trust Deed as well as the Transfer Deed, it is clear that the objects of the Appellant Trust were for recovering debts of defaulting borrowers by disposing of the stressed assets inter alia under the provisions of the SARFAESI Act, 2002.

The deemed dealer provision under the MVAT Act becomes operational when the categories thereunder sell any goods, whether by auction or otherwise. The Explanation which introduces the deeming provision further stipulates that the deemed dealer provision would operate notwithstanding anything contained in Section 2 (4) [the definition of the word “business”] or any other provisions of the MVAT Act - The Explanation in clear terms provides that the enumerated entities would be deemed to be a “dealer” when they sell any goods, by auction or otherwise. Thus, the definition itself specifies that the sale of goods, whether by auction or otherwise would render the person/body/entities enlisted in the clauses to the Explanation to be a dealer.

Whether the Appellant would fall within any of the ten clauses as set out in the Explanation to Section 2 (8) of the MVAT Act? - HELD THAT:- Clause (x) of the Explanation clearly stipulates that any corporation, company, body or authority owned or constituted by or subject to the administrative control of the Central Government, any State Government or any local authority, would be deemed to be a dealer for the purposes of the MVAT Act. It can hardly be disputed that the Appellant is a body constituted by the Central Government. This is abundantly clear from the Trust Deed which in fact constitutes and sets up the Appellant as a Trust and the settlor of this Trust is the Central Government. The Appellant therefore is clearly a body constituted by the Central Government. Once this is the case, we find that the Appellant is certainly a deemed dealer for the purposes of the MVAT Act.

Denial of benefit of prospective effect to the DDQ order (u/s 56(2) of the MVAT Act) - HELD THAT:- Under Section 56 (1), if any question arises regarding, inter alia, a person being a dealer, or whether such person is required to be registered as a dealer, or any particular thing done to any goods amounts to or results in the manufacture of goods, or any transaction is a sale or purchase etc., and such a question/s is posed to the Commissioner, the Commissioner shall determine such question/s in terms of Section 56 (1) of the MVAT Act. Section 56 (2) gives the power and discretion to the Commissioner to direct that the determination made by him under sub-section (1) shall not affect the liability under the MVAT Act in respect of any sale or purchase effected prior to the determination - the Commissioner has the power and discretion to put a quietus to transactions entered into prior to his DDQ Order. It is, of course, needless to clarify that this discretion has to be exercised on sound judicial principles and cannot be on the ipse dixit of the Commissioner.

Whether the Petitioner had made out a case for getting the benefit of prospective effect to the DDQ Order? - HELD THAT:- There is a force in the argument of Ms. Badheka that by virtue of Article 285 of the Constitution of India the Appellant was of the bona fide opinion that it being set up and constituted by the Central Government, and all the proceeds that it recovers from sale of stressed assets are to go to the Central Government, coupled with the fact that if for any reason the stressed assets are not sold during the tenure of the Trust, the same would vest in the Central Government, it was not liable to collect any tax on the sale of securities of the stressed assets - the Appellant ought to have been extended the benefit of prospective effect to the DDQ Order.

Conclusion - The Appellant is a deemed dealer under the MVAT Act and liable for sales tax on the sale of movable properties. However, the Appellant is granted prospective effect to the DDQ Order, exempting it from liability for past transactions.

Appeal disposed off.

Calculation of limitation in filing a complaint case under the Consumer Protection Act, 2019 - six months are required to be counted from the date of the indemnity cum undertaking, i.e. 10th January 2015 or not - HELD THAT:- The initial cause of action indeed arose in July 2015 after the six-month period expired, however, the Court cannot be amiss to the fact that the parties had been pursuing the matter with the respondent by way of letters, meetings, and even with the escrow agent, who, in turn, did his own back and forth with the owner, before finally releasing the flats in escrow in favour of the appellants. Further, as can be seen from the reliefs extracted supra, what has been claimed is the security of the title they received upon the respondent's default. The complaint case has not been filed seeking the flats in escrow for which the cause of action did arise on 10th July 2015, and hence the same limitation cannot be applied to a subsequent situation, which is that the appellants already have the flats with them. They only seek that the same be registered in their name and not alienated to any third party henceforth.

The NCDRC have committed an error on the face of record. Finding the view taken by it to be ex-facie erroneous, the impugned order set aside with particulars mentioned in paragraph 1 of this order. The complaint filed by the appellant is within time.

Appeal disposed off.

Ownership and possession of suit property - right, title, or interest in the subject matter of the agency of holder of the General Power of Attorney (GPA) along with an Agreement to Sell, to execute the registered sale deed - legality of registered sale deed.

Relationship between the Executant and Holder of General Power of Attorney - HELD THAT:- A power of attorney derives its basic principles from Chapter X of the Contract Act which provides for "Agency" along with Sections 1A and 2 respectively of the Powers of Attorney Act, 1882. Agency is a fiduciary relationship between two persons, where one explicitly or implicitly agrees that the other will act on their behalf to influence their legal relations with third parties, and the other similarly agrees to act in this capacity or does so based on an agreement. The relationship between the executant of a general power of attorney and the holder of the power is one of principal and agent. A principal is bound by the acts done by an agent or the contracts made by him on behalf of the principal. Likewise, power of attorney in the nature of contract of agency authorizes the holder to do acts specified by the executant, or represent the executant in dealings with third persons.

In the case of Syed Abdul Khader v. Rami Reddy & Ors., [1978 (11) TMI 158 - SUPREME COURT], this Court held that the relation between the donor of the power and the donee of the power is one of the principal and agent having its genesis in a contract. It further observed that the term "agency" refers to the relationship in which one person has the authority or ability to establish legal relations between a principal and third parties. This relationship arises when a person, known as the agent, has the authority to act on behalf of another, called the principal, and agrees to do so.

In State of Rajasthan v. Basant Nahata, [2005 (9) TMI 620 - SUPREME COURT], while dealing with the challenge to the constitutional validity of Section 22A of the Registration Act, it was held that a deed of power of attorney is a document of convenience empowering the agent to act for the principal or manage the affairs of the principal.

From the above exposition of law, it is settled that power of attorney is a creation of an agency by which the grantor/donor/executant authorizes the grantee/donee/holder/attorney to do the acts specified on his behalf, which will be binding on the executant as if the acts were done by him - In the present case, the original owner, executant of the POA, holds the position of a principal. Whereas, the holder of the POA is an agent. There is no gainsaying in the fact that the original owner by executing the POA dated 04.04.1986 in favour of the holder entered into a principal-agent relationship with each other.

Independent Reading of the General Power of Attorney and the Agreement to Sell - 'Interest' in Power of Attorney - HELD THAT:- In the present case, it is evident from para 1 of the GPA executed by the original owner in favor of the holder that the POA was to look after, maintain, manage the Scheduled Property. Para 2 states that the attorney can enter into any agreement with any person with respect to the Scheduled Property for any amount, receive advance amount, to execute deeds in favor of such persons, issue proper discharge - Lastly, para 8 states that the attorney is generally entitled to do all acts required in respect of the Suit Property which are not specifically mentioned and that the GPA is irrevocable.

Nature of Power of Attorney - HELD THAT:- The import of the word "general" in a POA refers to the power granted concerning the subject matter. The test to determine the nature of POA is the subject matter for which it has been executed. The nomenclature of the POA does not determine its nature. Even a POA termed as a 'general power of attorney' may confer powers that are special in relation to the subject matter. Likewise, a 'special power of attorney' may confer powers that are general in nature concerning the subject matter. The essence lies in the power and not in the subject-matter.

A three-Judge Bench of this Court settled the rules of interpretation applicable to power of attorney in Timblo Irmaos Ltd., Margo v. Jorge Anibal Matos Sequeira, [1976 (12) TMI 193 - SUPREME COURT]. It was held that words used in a POA must be interpreted in the context of the whole; the purpose of the powers conferred must then be examined through the circumstances in which it was executed; and finally, necessary powers must be implied.

Further, a mere use of the word 'irrevocable' in a POA does not make the POA irrevocable. If the POA is not coupled with interest, no extraneous expression can make it irrevocable. At the same time, even if there is no expression to the effect that the POA is irrevocable but the reading of the document indicates that it is a POA coupled with interest, it would be irrevocable.

Applying the above exposition of law in the facts of the present case, it is evident from the tenor of POA that is not irrevocable as it was not executed to effectuate security or to secure interest of the agent. The holder of POA could not be said to have an interest in the subject-matter of the agency and mere use of the word 'irrevocable' in a POA would not make the POA irrevocable. The High Court was right in holding that the holder did not have any interest in the POA. When the High Court observes that the power of attorney does not explicitly state the reason for its execution, it implies that its nature is general rather than special.

From the independent reading of the POA and the agreement to sell, the submissions of the appellants fail on two grounds, first, the POA is general in nature and does not secure agent's right in the subject-matter of the agency, and secondly, an agreement to sell simpliciter does not confer ownership in the immovable property so as to transfer a better title to anyone else.

Combined Reading of the General Power of Attorney and the Agreement to Sell - HELD THAT:- Section 17(1)(b) prescribes that any document which purports or intends to create, declare, assign, limit or extinguish any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards to or in immovable property is compulsorily registerable. Whereas, Section 49 prescribes that the documents which are required to be registered under Section 17 will not affect any immovable property unless it has been registered - Even from the combined reading of the POA and the agreement to sell, the submission of the appellants fails as combined reading of the two documents would mean that by executing the POA along with agreement to sell, the holder had an interest in the immovable property. If interest had been transferred by way of a written document, it had to be compulsorily registered as per Section 17(1)(b) of the Registration Act. The law recognizes two modes of transfer by sale, first, through a registered instrument, and second, by delivery of property if its value is less than Rs. 100/-.

The High Court rightly held that even though the GPA and the agreement to sell were contemporaneous documents executed by the original owner in favour of the holder, this alone cannot be a factor to reach the conclusion that she had an interest in the POA - even though the GPA and the agreement to sell were contemporaneous documents executed by the original owner in favour of the same beneficiary, this cannot be the sole factor to conclude that she had an interest in the subject-matter. Even if such an argument were to persuade this Court, the document must have been registered as per Section 17(1)(b) of the Registration Act. In the absence of such registration, it would not be open for the holder of the POA to content that she had a valid right, title and interest in the immovable property to execute the registered sale deed in favour of appellant no. 2.

Effect of Suit for Injunction simpliciter - HELD THAT:- Where the question of title is "directly and substantially" in issue in a suit for injunction, and where a finding on an issue of title is necessary for granting the injunction, with a specific issue on title raised and framed, a specific prayer for a declaration of title is not necessary. As a result, a second suit would be barred when facts regarding title have been pleaded and decided by the Trial Court. In the present suit, the findings on possession rest solely on the findings on title. The Trial Court framed a categorical issue on the ownership of the appellants herein. To summarize, where a finding on title is necessary for granting an injunction and has been substantially dealt with by the Trial Court in a suit for injunction, a direct and specific prayer for a declaration of title is not a necessity.

Conclusion - The GPA and the agreement to sell were contemporaneous documents executed by the original owner in favor of the holder, but this alone cannot be a factor to conclude that she had an interest in the POA. Even if such an argument were to persuade the Court, the document must have been registered as per Section 17(1)(b) of the Registration Act. The practice of transferring an immovable property via a GPA and agreement to sell has been discouraged.

It is concluded that no error not to speak of any error of law could be said to have been committed by the High Court in passing the impugned judgment - appeal dismissed.

Jurisdiction of the Civil Court in entertaining the suit having barred either expressly or by necessary implication - challenge to ex parte ad interim order of injunction passed by the Trial Court at the behest of the defendant/respondent who neither appeared in the said suit at the time of passing impugned order nor filed the pleading raising such issue - HELD THAT:- The question often arises when the regulatory authority is not empowered to execute its order or direction as a decree of a Civil Court whether it can exercise such power vested upon the Appellate Tribunal under the said Act. It is no longer res integra that the authority exercises the powers and assumes jurisdiction on the basis of a statute enacted in this regard and cannot travel beyond the peripheral thereof. The moment the legislatures consciously did not incorporate specific provision conferring the power and the jurisdiction in such manner, the regulatory authority cannot assume such jurisdiction.

The exclusion of the jurisdiction of a Civil Court should not be inferred readily except when it is so excluded explicitly or by necessary implication and/or the statute in question provides adequate and satisfactory alternative remedy to a party; in other words, the ouster of Civil Court can only be assumed if the authority under the statute can exercise all powers vested upon the Civil Court. In the event the statute provides that the authority is vested with the power not only to adjudicate the dispute which is capable to be adjudicated by the Civil Court but also to execute the same in the manner as is done by the Civil Court, the exclusion can be inferred by necessary implication in absence of any express provision.

Inspiration in this regard can be drawn from a Division Bench judgment of this Court in case of Mandira Mookerjee vs. District Consumer Disputes Redressal Forum & Ors., [2004 (12) TMI 737 - CALCUTTA HIGH COURT] where an identical issue arose whether the Consumer Forum is competent to pass an order for specific performance of an agreement for sale of an immovable property. It is held that under the Specific Relief Act which recognises the right of the specific performance of a contract available to a party agreed but it does not contain any express provision that it can only be done by the Civil Court and not otherwise. The reference was made to a hypothetical situation where the parties under an agreement agreed to resolve the dispute through private fora i.e. arbitration and the arbitrator was empowered to pass an order for specific performance.

Section 79 of the Act has to be interpreted in such a manner and the moment the jurisdiction of the Civil Court is ousted, it cannot pass any order be it in a form of ex parte, interim or temporary injunction. The Apex Court in Hasham Abbas Sayyad vs. Usman Abbas Sayyad & Ors., [2006 (12) TMI 491 - SUPREME COURT] held that any order passed by an authority lacking the inherent jurisdiction would be regarded as nullity.

Conclusion - RERA Act being a complete Code providing the exhaustive mechanism not only for the adjudication of the disputes, adherence of an obligation of the respective parties but also to execute the same as if it is a decree passed by the Civil Court. It thus excludes the jurisdiction of the Civil Court.

Appeal allowed.

Entitlement to restoration of the subject property - petitioner has not made a pre-deposit in terms of Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - HELD THAT:- The petitioner does not dispute that the property was mortgaged by the father on 13th April, 2012. The petitioner also does not dispute that the medical document alleging her father’s mental illness or incapacity is dated 22nd August, 2015, i.e., post the creation of the mortgage. This submission alongwith the contention that her share in the said property cannot be put to auction by the bank are all disputed questions of facts which can only be adjudicated by DRT or DRAT. It is apparent from the submissions that the petitioner has stepped into the shoes of the borrower as she is claiming her rights upon the mortgaged property. It is also clear that the respondent no.1/bank has the first charge on the said mortgage property.

It is apparent that the petitioner has to comply with the statutory requirement of making a pre-deposit in terms of Section 18 of the SARFAESI Act. No application seeking waiver of the pre-deposit was filed before the DRAT. In the present petition, there is no averment as to why pre-deposit has not been made by the petitioner. It is trite that pre deposit is mandatory in the absence whereof, the DRAT may not be able to entertain an appeal filed by a party.

Petition dismissed.