TaxTMI Updates e-Newsletter
Mar 18,2024

Cancellation of GST registration for continuous non-filing of returns - limitation for preferring appeal under Section 107 of the Central Goods and Services Tax Act, 2017 - equitable restoration/revival of GST registration subject to compliance and payment of dues - non-utilisation of Input Tax Credit pending departmental scrutiny and approval - direction to tax authorities to enable filing and payment on the GST portal

Limitation for preferring appeal under Section 107 of the Central Goods and Services Tax Act, 2017 - cancellation of GST registration for continuous non-filing of returns - Whether the appellate authority was justified in rejecting the appeal as time barred and whether the cancellation of registration for non filing of returns could be sustained. - HELD THAT: - The Court observed that the appellate authority's rejection of the appeal as time barred cannot be faulted having regard to the language of Section 107 of the CGST Act, 2017 and that the cancellation order records non filing of returns for a continuous period exceeding six months. However, exercising equitable jurisdiction and having regard to previous practice in related writ petitions, the Court held that the petitioner should not be left remediless merely because the statutory appeal was time barred. The Court therefore granted relief by directing restoration of registration on specified conditions, treating the statutory bar as not precluding equitable restoration subject to compliance with conditions imposed by the Court. [Paras 4]

Appellate rejection as time barred upheld, but cancellation may be remedied by restoration on compliance with court directed conditions.

Equitable restoration/revival of GST registration subject to compliance and payment of dues - non-utilisation of Input Tax Credit pending departmental scrutiny and approval - direction to tax authorities to enable filing and payment on the GST portal - On what conditions and by what mechanism the petitioner's GST registration is to be restored. - HELD THAT: - The Court directed restoration of registration conditional upon the petitioner filing returns for the period prior to cancellation, paying tax dues with interest and the fee for belated filing within 45 days, and filing returns for the period subsequent to cancellation declaring correct values of supplies. The Court prohibited making such payments by utilising any unutilised Input Tax Credit until such credit is scrutinised and approved by a competent officer; only approved ITC may thereafter be utilised for future tax liability. On payment of tax, penalty and uploading of returns, registration shall stand revived forthwith. The respondents were directed to instruct the GST Network to make necessary changes to the GST web portal to permit filing and payment, to be completed within 30 days. Restoration is expressly made subject to these conditions. [Paras 5, 6]

Registration to be restored forthwith on fulfilment of specified conditions; ITC cannot be utilised until departmental scrutiny and approval; respondents to facilitate filing on the GST portal within 30 days.

Final Conclusion: Writ petition allowed to the extent that the petitioner's GST registration is to be restored on compliance with directions: file and pay outstanding returns, taxes, interest and fees within prescribed time, abstain from utilising unapproved Input Tax Credit until departmental scrutiny and approval, and respondents to enable portal facilitation; petition disposed of on these terms with no costs.

Natural justice - ex parte order - access to electronic portal frustrated by retrospective cancellation of registration - re-adjudication/remand for fresh adjudication - opportunity of personal hearing as per Section 75(4) CGST Act - re-adjudication within the period prescribed under Section 75(3) CGST Act - order passed under Section 73 of the CGST Act, 2017 (demand determination)

Access to electronic portal frustrated by retrospective cancellation of registration - natural justice - ex parte order - Impugned demand order could not be sustained insofar as it was passed solely because the taxpayer did not file a reply when the taxpayer was unable to access the portal due to retrospective cancellation of registration. - HELD THAT: - The Court recorded that the petitioner was unable to access the GST portal after its registration was cancelled retrospectively and placed screenshots showing absence of assessment years in the portal. The impugned order treated the matter as ex parte on the ground that no reply/explanation was received despite reminders; however, the inability to access the show cause notice and to file a reply meant that the absence of a reply could not properly be treated as an election by the taxpayer to not participate. In those circumstances, passing a demand order solely for non-filing of a reply without affording effective access and a real opportunity of hearing offended principles of natural justice and could not be sustained. [Paras 5, 6, 7]

Impugned order set aside to the extent it was passed for non-filing of reply when the taxpayer could not access the portal; such ex parte conclusion quashed.

Re-adjudication/remand for fresh adjudication - opportunity of personal hearing as per Section 75(4) CGST Act - re-adjudication within the period prescribed under Section 75(3) CGST Act - Matter remitted for fresh adjudication with directions to permit filing of reply, provide personal hearing and pass a fresh speaking order within the statutory period. - HELD THAT: - Having set aside the impugned order, the Court directed that the petitioner be permitted to file its reply to the show cause notice within two weeks. Thereafter the Proper Officer is to re-adjudicate the show cause notice after giving an opportunity of personal hearing in accordance with the provisions of the Act and to pass a fresh speaking order in accordance with law within the period prescribed under Section 75(3). The Court expressly declined to express any view on the merits, reserving rights of the parties. [Paras 7, 8, 9]

Proceedings remitted to the Proper Officer for re-adjudication with directions to permit filing of reply, afford personal hearing and pass a fresh speaking order within the statutory period; merits left open.

Final Conclusion: Impugned demand order dated 22.12.2023 is set aside insofar as it was passed on account of non-filing of reply when the taxpayer could not access the portal; the matter is remitted for re-adjudication after the petitioner files a reply and after affording personal hearing, with a fresh speaking order to be passed within the period prescribed under Section 75(3) of the Act; merits are not decided.

Cancellation of GST registration with retrospective effect - Requirement of reasoned order and opportunity to be heard before retrospective cancellation - Retrospective cancellation under Section 29(2) requiring objective satisfaction - Modification of effective date of cancellation - Power to recover tax, penalty or interest despite modification of registration cancellation

Requirement of reasoned order and opportunity to be heard before retrospective cancellation - Show Cause Notice and the impugned order were vitiated for failing to specify cogent reasons and for not putting the petitioner on notice of retrospective cancellation, thereby denying effective opportunity to object. - HELD THAT: - The Show Cause Notice merely recited a generic allegation about issuance of invoices without supply and did not specify any particular factual or legal basis for retrospective cancellation, nor did it inform the petitioner that cancellation would be retrospective. The impugned order likewise failed to record reasons for cancellation and contained inconsistent entries (stating liability to cancel while showing nil demand). For these reasons the notices and order lacked the reasoned articulation necessary to permit meaningful contest and cannot be sustained insofar as they effected retrospective cancellation without prior notice and opportunity to be heard. [Paras 4, 5, 6, 10]

Show Cause Notice and impugned order were infirm for want of reasons and denial of opportunity in respect of retrospective cancellation.

Retrospective cancellation under Section 29(2) requiring objective satisfaction - Cancellation of GST registration with retrospective effect under Section 29(2) cannot be mechanical or purely subjective and must be based on objective satisfaction; retrospective cancellation cannot be imposed for periods when the taxpayer was compliant merely because returns for some periods were not filed. - HELD THAT: - Section 29(2) empowers cancellation from such date as the proper officer may deem fit; however the court held that the satisfaction to impose retrospective effect must rest on objective criteria and cannot be applied mechanically. The mere non-filing of returns for certain periods does not justify cancelling registration with retrospective effect covering periods during which returns were filed and compliance was squarely made. Additionally, retrospective cancellation has consequences (for example, denial of input tax credit to recipients) and therefore should be imposed only where such consequences are warranted. [Paras 11, 12]

Retrospective cancellation under Section 29(2) must be supported by objective satisfaction and cannot be mechanically applied to periods of compliance.

Modification of effective date of cancellation - Power to recover tax, penalty or interest despite modification of registration cancellation - In view of petitioner's cessation of business and the infirmities in the impugned order, the court modified the cancellation to take effect from the date of the Show Cause Notice (18.02.2021) and left open the respondents' right to pursue recovery, including steps that may include retrospective cancellation if lawfully justified. - HELD THAT: - Both parties sought cancellation of registration for different reasons and the petitioner no longer intends to carry on business. Taking account of the defective notice and order, the court limited relief by treating the registration as cancelled from the date the Show Cause Notice was issued. The petitioner was directed to comply with statutory formalities under Section 29. The respondents were expressly not precluded from initiating lawful recovery measures, including steps for retrospective cancellation if properly warranted and justified in accordance with law. [Paras 13, 14, 15]

Registration is to be treated as cancelled with effect from 18.02.2021; respondents remain entitled to pursue recovery or other lawful steps.

Final Conclusion: The court held that the Show Cause Notice and cancellation order were defective for want of reasons and denial of opportunity to contest retrospective cancellation; directed that cancellation be treated as effective from 18.02.2021, required compliance with Section 29, and left open the respondents' lawful rights to recover tax, penalty or interest or to take other steps including retrospective cancellation if properly justified.

Suspension and cancellation of GST registration - Interpretation of statutory timelines - mandatory or directory - Rule 22(3) of the Central Goods and Service Tax Rules, 2017 - 30 day timeline for passing order - Rule 21A(2A) - suspension on anomalies in returns - Deemed conclusion of adjudication under Section 75(10) of the CGST Act - Tests for construing 'shall' as mandatory or directory

Rule 22(3) of the Central Goods and Service Tax Rules, 2017 - 30 day timeline for passing order - Interpretation of statutory timelines - mandatory or directory - Deemed conclusion of adjudication under Section 75(10) of the CGST Act - Whether the failure to pass an order within thirty days as prescribed in Rule 22(3) renders the adjudicatory proceedings void or whether the timeline is directory. - HELD THAT: - The Court examined Rule 22(3) read with Rule 21A(2A) and the wider scheme of the Act, including Sections 73, 74 and Section 75(10) which contain express statutory consequences and time limits for adjudication. Noting that Rule 22(3) prescribes that the proper officer "shall issue an order" within thirty days but that no consequence of forfeiture is stipulated for non compliance, the Court applied established tests for construing whether "shall" is mandatory or directory. The Court observed that where the statute expressly provides for consequences on non compliance (as in Sections 73/74 and Section 75(10)), but no such contingency is provided in the Rule, this indicates the Rule's timeline is directory. The Court further reasoned that treating Rule 22(3) as mandatory would create anomalous results - for example, it would deny a taxpayer the benefit of a voluntary cancellation application if the officer were thereby divested of power - and that the absence of an express penal or invalidating consequence weighs against a mandatory construction. Applying authorities on statutory construction, the Court concluded that the 30 day stipulation in Rule 22(3) is directory and does not extinguish the proper officer's power to adjudicate after its lapse. [Paras 14, 27, 29]

The requirement in Rule 22(3) to pass an order within thirty days is directory and failure to do so does not render the proceedings incapable of adjudication.

Suspension and cancellation of GST registration - Rule 21A(2A) - suspension on anomalies in returns - Procedural relief - direction to adjudicate expeditiously - Whether the impugned Show Cause Notice dated 22.06.2023 had lapsed for want of adjudication and whether the Court should grant relief to the petitioner on that ground. - HELD THAT: - Applying the conclusion that the 30 day timeline in Rule 22(3) is directory, the Court found that the authorities had not forfeited the right to decide the Show Cause Notice dated 22.06.2023 despite the passage of time. The Court therefore rejected the petitioner's contention that the notice had lapsed and declined to strike down the proceedings on that ground. In the exercise of supervisory jurisdiction, however, the Court directed the Proper Officer to expeditiously decide the Show Cause Notice, preferring a two week timeline for disposal, while expressly reserving consideration of the merits and all contentions of the parties. [Paras 29, 30, 31]

The Show Cause Notice dated 22.06.2023 had not lapsed by reason of the expiry of the 30 day period under Rule 22(3); the petition is disposed of with a direction to the Proper Officer to decide the notice expeditiously.

Final Conclusion: The Court held that the 30 day requirement in Rule 22(3) is directory and does not bar subsequent adjudication; the petition was disposed of by directing the proper officer to expeditiously decide the Show Cause Notice dated 22.06.2023 (preferably within two weeks), with all substantive rights and contentions reserved.

Detention, seizure and release of goods - requirement to carry e-Invoice and e-Way Bill during transit - duty of revenue authorities to verify digital documents from the portal - digital invoice dispenses with physical signature requirement - maintainability of appeal after payment under detention/seizure proceedings

Requirement to carry e-Invoice and e-Way Bill during transit - duty of revenue authorities to verify digital documents from the portal - detention, seizure and release of goods - Whether imposition of penalty under detention/seizure provisions was justified when authentic e-Invoice and e-Way Bill were produced (in digital form) and the revenue failed to verify them from the portal. - HELD THAT: - The Court found as a matter of fact and law that the e-Invoice and e-Way Bill were generated and produced in digital form and that Part-A and Part-B of the e-Way Bill were complete. Once such documents are produced, the statutory duty rests on the revenue to verify their authenticity from the common portal; all soft copies are within official reach and verification is a simple procedure which the authorities failed to undertake. Given that the authenticity of the documents was not disputed and hard copies were also produced before the Mobile Squad during proceedings on the same day, there was no occasion for detention, seizure or imposition of penalty. The revenue cannot fasten penalty on the taxpayer for the department's failure to verify digital documents. [Paras 24, 26, 27, 34]

Penalty quashed as there was no cause for detention or seizure after authentic documents were produced and not verified by the revenue.

Digital invoice dispenses with physical signature requirement - Rule 46 signature requirement - Whether absence of a physical signature on the digital tax invoice justified penal action. - HELD THAT: - The Court observed that the driver was in possession of a digital tax invoice which did not bear the physical signature of the authorised signatory; this objection was misconceived because the requirement of signatures is dispensed with in respect of digital invoices by operation of the proviso to Rule 46. Therefore, lack of a physical signature on a digitally generated invoice did not constitute non-compliance justifying penalty. [Paras 25, 26]

Absence of a physical signature on the digital invoice did not justify imposition of penalty.

Maintainability of appeal after payment under detention/seizure proceedings - right to challenge proceedings culminating in order under section 129 - Whether payment of the penalty/tax to secure release of goods bars the assessee from filing an appeal against the detention/seizure order. - HELD THAT: - The Court held that although an assessee may opt to pay the amount or furnish security under Section 129(1), such payment does not disentitle the assessee from challenging the order under Section 107. Citing consistent judicial exposition, the Court found that the right to appeal against proceedings culminating in an order under Section 129 survives payment, and therefore the appeal filed by the petitioner was maintainable. [Paras 28, 29, 30, 31]

Payment to secure release does not bar an appeal; the appeal is maintainable.

Final Conclusion: Impugned orders dated 04.01.2023 and 09.05.2023 are quashed; amount deposited by the petitioner shall be refunded in accordance with law and the writ petition is allowed.

Condonation of delay under the proviso to Section 100(2) of the CGST Act, 2017 - appellate power to admit delayed appeals under Section 101(1) of the CGST/TNGST Acts, 2017

Condonation of delay under the proviso to Section 100(2) of the CGST Act, 2017 - Whether the 21 days delay in filing the appeal against AAR Order No. 105/AAR/2023 dated 05.09.2023 is condonable and the appeal may be admitted for consideration on merits. - HELD THAT: - The Appellate Authority examined receipt of the AAR order (reported received by the appellant on 18.09.2023) and the prescribed 30 day limitation under Section 100(2) of the CGST Act, 2017. The proviso to Section 100(2) permits the Appellate Authority to allow presentation of the appeal within a further period not exceeding thirty days if the appellant was prevented by sufficient cause. The appeal was filed after a delay of 21 days beyond the normal 30 day period (filed 03.11.2023; received 06.11.2023) but within the additional condonable period. Medical evidence on record shows that the Managing Director underwent prior cardiac treatment and, by certificate dated 11.10.2023, was advised three weeks' rest for chest pain around the relevant filing deadline. On the basis of the documentary medical evidence and the timing, the Authority was satisfied that the appellant was prevented by a sufficient cause from presenting the appeal within the normal period and that the delay is therefore condonable under the proviso. The Authority also noted its power under Section 101(1) to pass appropriate orders in admitting appeals. [Paras 6, 7]

The delay of 21 days in filing the appeal is condoned under the proviso to Section 100(2) of the CGST Act, 2017, and the appeal is admitted for consideration on merits.

Final Conclusion: Delay in filing the appeal was condoned on medical grounds and the appeal shall proceed to be considered on its merits.

Classification of goods - advance ruling - set aside and remand for fresh consideration - re-examination in view of fresh evidence - opportunity of personal hearing

Set aside and remand for fresh consideration - advance ruling - The AAR order No. 20/AAR/2023 dated 19.06.2023 is to be set aside. - HELD THAT: - The Appellate Authority found that the Advance Ruling Authority had earlier passed an order classifying the appellant's treated effluent as water under Heading 2201 and granting Nil rate notification benefit. Subsequent to that order, the appellant produced documents including a SITRA test report in respect of the appellant's own sample, the Tamil Nadu Pollution Control Board consent order and process explanations which were not before the AAR when it rendered its decision. In view of the availability of these material documents that could bear upon the classification, the Appellate Authority concluded that the earlier ruling cannot stand and has accordingly set it aside to enable reconsideration in light of the fresh material. [Paras 6, 7]

Advance Ruling No. 20/AAR/2023 dated 19.06.2023 is set aside.

Re-examination in view of fresh evidence - opportunity of personal hearing - classification of goods - The matter is remanded to the AAR for re-examination and fresh adjudication taking into account the documents now produced and after affording a personal hearing. - HELD THAT: - The Appellate Authority directed remand because the AAR had relied on a test report relating to another unit and on analogy with treated sewage, whereas a SITRA report specific to the appellant, the pollution control board consent specifying the product as RO Permeate for reuse, and process details were subsequently placed on record. Given that these materials are germane to the central question of classification of the treated effluent (including whether it falls under Heading 2201 or another heading such as a residuary heading for inorganic compounds or demineralized water), the Appellate Authority held that justice requires re-examination. The AAR is to consider all aspects afresh, take cognizance of the newly tendered documents, and decide the classification and applicable treatment of tax after following the principles of natural justice and offering the appellant an opportunity of personal hearing. [Paras 6]

Remitted to the AAR for re-examination and fresh orders after considering the newly submitted documents and after affording a personal hearing; all aspects kept open.

Final Conclusion: The Appellate Authority set aside Advance Ruling No. 20/AAR/2023 dated 19.06.2023 and remitted the matter to the AAR for fresh consideration of the classification of the appellant's treated effluent in the light of documents now produced, directing the AAR to afford the appellant a personal hearing and to pass appropriate orders in accordance with law.

Schedule III of the CGST Act - warehoused goods - transfer of title within FTWZ - FTWZ as customs bonded warehouse - interpretation of paragraph 8(a) and 8(b) of Schedule III - remand for fresh consideration - binding nature of advance ruling

Schedule III of the CGST Act - interpretation of paragraph 8(a) and 8(b) of Schedule III - transfer of title within FTWZ - FTWZ as customs bonded warehouse - remand for fresh consideration - Whether the Authority for Advance Ruling erred in restricting its decision to paragraph 8(a) of Schedule III and thereby failed to decide whether the proposed transactions in FTWZ are covered by any entry in Schedule III of the CGST Act. - HELD THAT: - The Appellate Authority found that the AAR confined its analysis to paragraph 8(a) of Schedule III and did not address paragraph 8(b) or other relevant entries despite the appellant having sought a ruling on whether the proposed transfers within an FTWZ fall under Schedule III. The Appellate Authority recorded that the AAR omitted consideration of the appellant's contentions that FTWZ may be treated as customs bonded warehouse and that transfers prior to customs clearance are akin to high-sea sales or bonded warehouse transactions expressly contemplated by Schedule III. The Appellate Authority also observed that earlier rulings and statutory referential provisions relied upon by the appellant were not examined. In consequence, the Appellate Authority held that the AAR had not answered the question in its entirety and that the matter requires fresh consideration, including determination of whether the activities fall under entry 8(a), 8(b) or any other entry of Schedule III, and whether FTWZ units should be classified as customs bonded warehouses; the AAR is directed to afford an opportunity of hearing and decide afresh on all aspects. [Paras 6, 7]

The AAR's order is set aside and the matter is remanded to the AAR for fresh consideration of the applicability of Schedule III (including paragraphs 8(a) and 8(b)) and related contentions, after providing the parties an opportunity of hearing.

Integrated Tax Circular No. 3/1/2018 - binding nature of advance ruling - Whether the question regarding applicability of IGST Circular No. 3/1/2018 dated 25.05.2018 remains alive in the appeal. - HELD THAT: - The Appellate Authority noted the appellant's concession in its grounds of appeal that the question relating to the IGST Circular had become irrelevant because the Circular has been rescinded. The Appellate Authority therefore recorded that the second question in the original application does not survive and the appeal proceeds only on the first question regarding Schedule III. [Paras 6]

Question No. 2 concerning applicability of IGST Circular No. 3/1/2018 is no longer relevant and does not survive in the appeal.

Final Conclusion: The Advance Ruling No. 23/ARA/2023 dated 20.06.2023 is set aside and the matter is remanded to the Authority for Advance Ruling for fresh adjudication on whether the proposed transfers in the FTWZ fall within Schedule III (including entries 8(a) and 8(b)) and related contentions, after granting the parties an opportunity of hearing; the question on applicability of IGST Circular No. 3/1/2018 is held not to survive.

Admissibility of application for advance ruling - principles of natural justice - distinction between 'proceedings' and 'investigation' for admissibility - remand for fresh consideration and opportunity of hearing

Admissibility of application for advance ruling - principles of natural justice - distinction between 'proceedings' and 'investigation' for admissibility - remand for fresh consideration and opportunity of hearing - Whether the rejection of the appellant's advance ruling application by the Advance Ruling Authority was in accordance with law and principles of natural justice. - HELD THAT: - The Appellate Authority examined the Advance Ruling Authority's rejection which rested on the view that an investigation by DGGI pending at the time of filing rendered the application inadmissible. The determinative finding is that the lower authority relied upon material (letter dated 03.04.2023 from DGGI) that had not been furnished to the applicant and did not afford the applicant an opportunity to comment thereon. The Appellate Authority held that failure to share the DGGI material and to afford a further personal hearing amounted to a deviation from principles of natural justice. Given this procedural infirmity, the appropriate remedy is to set aside the impugned order and remit the matter to the Advance Ruling Authority with directions to forward the DGGI letter and any enclosures to the applicant, permit the applicant to comment and to afford another personal hearing before deciding admissibility and the application on merits in accordance with law. The decision does not resolve, on merits, the legal question whether a mere investigation/summons constitutes 'proceedings' for the purpose of admissibility; rather, the case is remanded for fresh consideration after compliance with natural justice. [Paras 6, 7]

Advance Ruling No. 18/ARA/2023 dated 19.06.2023 is set aside and the matter is remitted to the Advance Ruling Authority to forward the DGGI communication to the applicant, permit comments, afford another personal hearing and decide the matter afresh in accordance with law.

Final Conclusion: The Appellate Authority set aside the AAR's rejection for failure to follow principles of natural justice and remanded the application to the Advance Ruling Authority with directions to supply the DGGI material to the applicant, afford an opportunity to comment and to hold a further personal hearing before passing a fresh decision.

Services by an employer to its employees as perquisites not subject to GST where provided under contractual agreement - Entry 1 of Schedule III - services by an employee to employer and corollary for employer perquisites - composite supply including supply of food treated as supply of services (Entry 6 of Schedule II) - input tax credit blocked under Section 17(5)(b) with proviso for supplies obligatory under law - facilitator role where employer collects and remits third-party charges does not constitute supply by employer - mandate by pollution control authority rendering gardening an input service eligible for ITC

Composite supply including supply of food treated as supply of services (Entry 6 of Schedule II) - services by an employer to its employees as perquisites not subject to GST where provided under contractual agreement - GST liability on amount charged from employees for use of employer-operated canteen - HELD THAT: - The Authority found that where the employer itself operates the canteen on its own account the provision of food to employees constitutes a composite supply falling under Entry 6 of Schedule II and is therefore a supply of service on which GST is leviable. While perquisites provided under a contractual agreement between employer and employee may fall outside GST (by virtue of the corollary to Entry 1 of Schedule III and CBIC Circular), the applicant did not furnish employment contracts to establish that the canteen charges constituted such contractual perquisites. Distinguishing precedents where a third party supplied canteen services, the Authority held that in the applicant's facts (own-account canteen at Hosur) the amounts charged, whether nominal or otherwise, are consideration for taxable supply and GST must be discharged by the employer. [Paras 8]

GST is liable to be discharged by the applicant on amounts charged to employees for the canteen service operated by the applicant.

Input tax credit blocked under Section 17(5)(b) with proviso for supplies obligatory under law - services by an employer to its employees as perquisites not subject to GST where provided under contractual agreement - Availability of Input Tax Credit on GST paid for canteen services where canteen is a statutory obligation under the Factories Act - HELD THAT: - Section 17(5)(b) ordinarily blocks ITC for food and related services, but the proviso makes ITC available where the inward supply is used to make an outward supply of the same category or where the supply is obligatory for the employer under any law. The Authority noted that Section 46 of the Factories Act requires provision of canteens where more than 250 workers are ordinarily employed. Applying the CBIC clarification that the proviso applies to the whole of clause (b), the Authority held that ITC is admissible for inward supplies relating to provision of food where the establishment has more than 250 employees; however, the proportionate credit corresponding to the cost recovered from employees must be reversed. [Paras 8]

ITC is eligible on inward supplies for provision of food where the establishment has more than 250 employees, subject to reversal of proportionate credit to the extent cost is recovered from employees.

Facilitator role where employer collects and remits third-party charges does not constitute supply by employer - Entry 1 of Schedule III - services by an employee to employer and corollary for employer perquisites - GST applicability on recovery of medical insurance premium collected by employer and remitted to insurer - HELD THAT: - The Authority observed that where the employer merely collects premium at actuals from employees and remits the same to the insurance company, no consideration accrues to the employer and the employer is not the service provider. Such activity is a facilitator role and does not amount to supply by the applicant in the course or furtherance of business. Further, where insurance cover is provided pursuant to the employer's HR policy as a contractual perquisite, it falls outside GST by virtue of Entry 1 of Schedule III and the CBIC Circular. On these facts, the Authority held there is no supply by the applicant and GST is not exigible on such recoveries. [Paras 8]

GST is not leviable on recoveries of medical insurance premium collected at actuals and remitted to insurers, where the applicant is only a facilitator and the cover is provided under the employment contract.

Facilitator role where employer collects and remits third-party charges does not constitute supply by employer - services by an employer to its employees as perquisites not subject to GST where provided under contractual agreement - GST applicability on recovery of nominal amount from employees for transportation provided through third-party operators - HELD THAT: - The Authority applied the same reasoning as for insurance: transportation services are actually supplied by third-party cab operators. The applicant pays the service providers and recovers only a nominal part from employees, with the remainder borne by the applicant. No consideration inures to the applicant and, where the transportation is provided pursuant to HR policy as a contractual perquisite, the transaction does not amount to a supply by the applicant. Reliance on advance rulings dealing with third-party provision supports this view. [Paras 8]

GST is not leviable on the nominal recoveries from employees for transportation provided through third parties where the applicant is not the service provider and the facility is in terms of the employment contract.

Entry 1 of Schedule III - services by an employee to employer and corollary for employer perquisites - services by an employer to its employees as perquisites not subject to GST where provided under contractual agreement - GST applicability on car facility (lease premium paid by employer and recovered from employee) - HELD THAT: - The Authority examined whether the car facility qualified as a perquisite. The applicant admitted that the entire lease premium is paid by the employer and subsequently recovered from the employee's salary (i.e., no portion is borne by the employer). The Authority held that when the employer does not bear any part of the cost and the full lease premium is recovered from the employee, the element of 'perquisite' is absent. The cars are provided on the company's account and the applicant is the provider; accordingly the transaction constitutes a supply by the applicant and GST is applicable even if provided in the course of employment. [Paras 8]

GST is applicable on the car facility extended to employees where the employer provides the service on its own account and the element of perquisite is absent because the full lease premium is recovered from the employee.

Input tax credit blocked under Section 17(5)(b) with proviso for supplies obligatory under law - facilitator role where employer collects and remits third-party charges does not constitute supply by employer - Availability of ITC on expenses for employee wellbeing such as vaccination and medical benefits - HELD THAT: - The Authority distinguished liability to GST from ITC eligibility and held that medicines and related supplies are essentially for personal consumption. Section 17(5)(b) blocks ITC for health services and related items unless provision of such services is obligatory under law. The applicant did not substantiate that such medical facilitation is mandated by any law or forms an obligatory statutory requirement. As a result, ITC on expenses incurred for vaccination and other health benefits to employees is not admissible. [Paras 8]

ITC cannot be availed on expenses incurred for employee wellbeing such as vaccination and other health benefits.

Mandate by pollution control authority rendering gardening an input service eligible for ITC - input tax credit blocked under Section 17(5)(b) with proviso for supplies obligatory under law - Availability of ITC on GST charged for gardening and green-belt maintenance within factory premises mandated by pollution control authority - HELD THAT: - The Authority noted that the applicant produced consent orders from the Tamil Nadu Pollution Control Board mandating development of a green belt and planting density within the unit's premises. Given the wide definitions of 'input service' and ITC entitlement ('any' service used in the course or furtherance of business), and the CBIC/GST Council clarifications widening ITC where supplies are obligatory under law, the Authority concluded that gardening services mandated by the pollution control authority qualify as input services and ITC is available on such inward supplies. [Paras 8]

ITC is available on input services relating to gardening activities carried out within the factory premises where such activities are mandated by the pollution control authority.

Final Conclusion: The Authority ruled that (a) GST is payable on employer-operated canteen charges; (b) ITC on canteen supplies is available when the establishment has more than 250 employees subject to reversal for amounts recovered from employees; (c) recoveries of insurance premiums and third party transportation charges collected at actuals and remitted by the employer do not attract GST where the employer is only a facilitator and the benefit is provided under employment contract; (d) GST is leviable on car lease facilities provided on employer's account where no perquisite element exists; (e) ITC is not available on vaccination and other employee health benefits absent a statutory obligation; and (f) ITC is available on gardening/green belt maintenance mandated by the pollution control authority.

Reopening assessment under section 148/147 - Non-application of mind in recording reasons and in granting approval under section 151 - Obligation to examine information in the context of records before forming a belief - Failure to truly and fully disclose material facts - proviso to section 147 - Duty of the Commissioner while granting approval under section 151

Reopening assessment under section 148/147 - Failure to truly and fully disclose material facts - proviso to section 147 - Validity of the notice dated 31.03.2021 under Section 148 read with Section 147 insofar as it reopens assessment for AY 2015-16. - HELD THAT: - The Court found that the reasons recorded by the Assessing Officer do not demonstrate that he formed an independent satisfaction that income chargeable to tax had escaped assessment. The reasons incorrectly state that no regular assessment under Section 143(3) was made despite an assessment order of December 2017, showing non-application of mind. Further, where reopening is sought beyond four years and a regular assessment under Section 143(3) has been completed, the proviso to Section 147 requires a clear indication of failure to truly and fully disclose material facts; the reasons here contain no cogent material to that effect. Reliance on DG GST information, without examining the assessee's records (which disclosed the transaction as a loan and were reflected in Form 3CD and the balance sheet), is held to be insufficient. The Court applied the principle that information received must be examined in the context of the facts of the case to see if it prima facie gives rise to a reasonable belief of escapement of income; that exercise was not performed. [Paras 4, 6, 7, 8, 9]

Impugned notice under Section 148/Section 147 quashed for want of valid reasons and non-application of mind.

Non-application of mind in recording reasons and in granting approval under section 151 - Duty of the Commissioner while granting approval under section 151 - Validity of the approval under Section 151 by the Range Head and the Principal Commissioner of Income Tax. - HELD THAT: - The Range Head's certificate stated he had gone through records and was satisfied, but the record shows the existence of a prior assessment order and other material which should have been considered; hence his statement is incorrect and indicative of non-application of mind. The Principal Commissioner, while recording satisfaction, relied on the same defective reasons and did not independently verify whether there was failure to disclose material facts or whether the reopening complied with the temporal limits; this fell short of the obligations laid down in precedents. Consequently, the approval process required by Section 151 is vitiated by lack of application of mind. [Paras 5, 9]

Approval under Section 151 held vitiated for non-application of mind and quashed.

Obligation to examine information in the context of records before forming a belief - Reopening assessment under section 148/147 - Whether information received from DG GST regarding alleged bogus entities, without contextual examination of the assessee's books and disclosures, justified reopening. - HELD THAT: - The reasons relied on DG GST investigation into third parties and patterns in their bank accounts. The Court held that mere transactional linkage is not enough where the assessee's own records, including Form 3CD disclosures and balance sheet entries classifying the transaction as an unsecured loan, were not examined. Precedents require the Assessing Officer to test received information against the factual record to see if it prima facie establishes escapement; that exercise was not undertaken and therefore the notice issued on that basis is bad in law. [Paras 4, 6, 7, 8]

Information from third party investigation could not, without examination of the assessee's records, sustain a belief for reopening; notice issued on that basis quashed.

Final Conclusion: Petition allowed; the notice dated 31.03.2021, the order disposing objections dated 24.02.2022, the reassessment/assessment order dated 23.03.2022, the notice of demand dated 23.03.2022 and the show cause notice for levy of penalty dated 23.03.2022 are quashed and set aside on grounds of non-application of mind and invalidity of the reopening.

Reopening of assessment under Section 147/148 of the Income Tax Act, 1961 - reason to believe on correct facts - non-application of mind in recording reasons / order on objections - quashing of notice and order on objections - order under Section 148A(d) and reply under Section 148A(b)

Reopening of assessment under Section 147/148 of the Income Tax Act, 1961 - reason to believe on correct facts - non-application of mind in recording reasons / order on objections - quashing of notice and order on objections - Validity of the notice dated 31st March 2021 issued under Section 148 and the order dated 17th January 2022 dismissing objections to reopening for AY 2016-2017. - HELD THAT: - The Court found that the reasons recorded for reopening proceeded on fundamentally incorrect facts, including attribution of a transaction to the petitioner which pertained to another entity and incorrect references to assessment dates and time-limits. The order on objections failed to address these material factual errors and contained further inconsistent statements, demonstrating total non-application of mind by the Assessing Officer. Relying on the settled principle that jurisdiction to reopen under Section 147 arises only where the AO has a reason to believe, based on correct facts, that income has escaped assessment, the Court held that no valid reason to believe existed on the facts as found and adverse inference was warranted against the Revenue. Accordingly the notice and the order on objections were quashed. [Paras 9, 10, 11, 12, 13]

Notice dated 31st March 2021 and order dated 17th January 2022 quashed; petition allowed.

Order under Section 148A(d) and reply under Section 148A(b) - quashing of order under Section 148A(d) and consequential notice - Validity of the order dated 28th March 2023 passed under Section 148A(d) and the consequential notice under Section 148 for the petitioner in WP/154/2024. - HELD THAT: - The Revenue, through counsel, conceded that the Assessing Officer had overlooked the fact that the petitioner had replied to the Section 148A(b) notice on 28th March 2023. In view of that missed fact the Court held the impugned order under Section 148A(d) and the consequential notice under Section 148 could not survive and therefore were quashed. The Court disposed the petition while keeping all rights and contentions open. [Paras 1, 2, 3]

Order under Section 148A(d) dated 28th March 2023 and consequential notice under Section 148 quashed; petition disposed.

Final Conclusion: The High Court quashed the reopening notice and the order dismissing objections in WP/3459/2022 for lack of a valid reason to believe and non-application of mind, and quashed the order under Section 148A(d) and consequential notice in WP/154/2024 because the AO had missed the petitioner's reply; rights and contentions reserved.

Notice issued to a non-existent entity - reassessment and penalty proceedings against a dissolved/amalgamated company - scheme of amalgamation and effect of appointed date - Non-filers Monitoring System (NMS) information cannot sustain action where entity ceased to exist - quashing of notice, reassessment order and penalty notices where foundational jurisdictional fact is absent

Notice issued to a non-existent entity - scheme of amalgamation and effect of appointed date - quashing of notice, reassessment order and penalty notices where foundational jurisdictional fact is absent - Validity of notices under Section 148, the reassessment order and consequential penalty notices issued in respect of LSIPL after its amalgamation with the petitioner - HELD THAT: - The Court found that LSIPL, a wholly owned subsidiary, stood amalgamated with the petitioner with the appointed date of 1 April 2012 pursuant to a scheme of amalgamation sanctioned by the Delhi High Court and that this fact was placed on record by the petitioner to the revenue. Notwithstanding that LSIPL had ceased to exist for all relevant purposes with effect from the appointed date, notices and a reassessment order and penalty notices were issued to LSIPL. The revenue's stated basis for issuing the notices was information from the Non-filers Monitoring System (NMS)/ITBA indicating non-filing by LSIPL for the relevant assessment years. However, the revenue itself admitted that LSIPL was not required to file returns from the appointed date under the amalgamation scheme. Consequently, the foundational factual premise for issuing the notices - that LSIPL remained an existing, non-filing assesseee - collapsed. In these circumstances the notices, reassessment order and penalty notices issued to an entity which had ceased to exist were invalid and liable to be quashed. [Paras 4, 5, 6, 8]

Notices dated 27 March 2021, the reassessment order dated 27 March 2022 and the penalty notices dated 27 March 2022 issued to LSIPL were quashed and set aside.

Final Conclusion: Writ petitions allowed; the impugned notices, reassessment orders and penalty notices issued to the amalgamated/non-existent entity were quashed for being founded on a collapsed premise and the petitions disposed. Appeals filed by the petitioner are to be withdrawn within two weeks as undertaken.

Reopening assessment - reason to believe - proviso to Section 147 of the Income Tax Act - failure to truly and fully disclose - Explanation 2(c) to Section 147 - deemed escapement - sanction requirement under Section 151 of the Income Tax Act - non-application of mind

Reopening assessment - reason to believe - non-application of mind - Validity of notices under Section 148 to reopen assessment for AY 2013-2014 on the basis of recorded reasons to believe. - HELD THAT: - The Court found that the reasons recorded for reopening do not establish a valid 'reason to believe' that income chargeable to tax had escaped assessment. The reasons relied on aggregated information from the ITBA and bank data which, on scrutiny, showed a single bank account with total cash deposits certified by the bank as Rs. 1,87,39,187/-, and the AO nevertheless treated the figures as duplicative to reach a higher alleged escapement. The AO failed to explain how the larger figure was derived despite the bank certificate and did not address the petitioner's objections that the cash deposits had been offered to tax. This demonstrates absence of an adequate application of mind by the AO (and by the sanctioning authority), rendering the recorded reasons factually incorrect and legally insufficient to support reopening. [Paras 11, 13, 14, 15, 18]

Reasons for reopening are unsustainable for want of a valid reason to believe; the reopening notices are quashed.

Proviso to Section 147 of the Income Tax Act - failure to truly and fully disclose - Explanation 2(c) to Section 147 - deemed escapement - Application of the proviso to Section 147 and applicability of Explanation 2(c) where reassessment is sought beyond four years. - HELD THAT: - The Court observed that the proviso to Section 147 applies because the reopening notices were issued after the four-year period following the end of the assessment year and a scrutiny assessment had been completed. Under the proviso, reassessment is impermissible unless there has been a failure to truly and fully disclose material facts. The petitioner produced bank statements and a certificate and averred that the cash deposits were included in the original return and offered to tax. The AO did not accept or establish any failure of disclosure but proposed to verify facts in reassessment; the Court held that mere reliance on Explanation 2(c) without confronting the specific certified facts and the petitioner's documented disclosures is impermissible and does not justify reopening. [Paras 10, 13, 14, 15]

Proviso to Section 147 operates to prohibit reassessment absent proven failure to truly and fully disclose; Explanation 2(c) could not be invoked on the record before the Court.

Sanction requirement under Section 151 of the Income Tax Act - non-application of mind - Validity of the sanction granted for reopening under the sanctioning provision and effect of non-application of mind by the sanctioning authority. - HELD THAT: - The Court found that both the AO and the Principal Commissioner who granted sanction failed to apply their minds to the certified bank information and the petitioner's objections. The sanction was accorded despite the reasons being founded on incorrect factual premises (duplication of the same cash deposit figures) and without resolving the factual discrepancies highlighted by the petitioner. In such circumstances the sanction cannot validate materially flawed reasons; had the approving authority applied its mind properly, it would have required the AO to rework the reasons or would not have granted approval. [Paras 11, 15, 16]

Sanction is vitiated by non-application of mind and does not cure the invalidity of the reopening.

Final Conclusion: Writ petition allowed; notices dated 30th March 2021 and 21st June 2021 under Section 148 and the order dated 3rd February 2022 rejecting objections are quashed; reassessment proceedings in respect of AY 2013-2014 set aside for the reasons stated.

Reopening of assessment under Section 148A(d) of the Income Tax Act, 1961 - non-filer cases classified under Risk Management Strategy (RMS) - nexus between information on high-value transaction and liability of the assessee - requirement to seek information from the correct person (husband versus assessee) - sanction for initiation of proceedings by the Principal Chief Commissioner

Reopening of assessment under Section 148A(d) of the Income Tax Act, 1961 - nexus between information on high-value transaction and liability of the assessee - requirement to seek information from the correct person (husband versus assessee) - sanction for initiation of proceedings by the Principal Chief Commissioner - Validity of the order dated 31st March 2023 passed under Section 148A(d) reopening assessment proceedings against the petitioner for A.Y.-2016-2017 - HELD THAT: - The AO issued a notice based on information from RMS/Insight alleging high-value immovable property purchase and that no return was filed. The petitioner, through her representative, produced the registered agreement and bank details showing that her husband alone made the payments and that the petitioner did not make any payment for acquisition; the AO nonetheless passed the order under Section 148A(d) on the ground that source of funds for the payment by the husband was not explained. The Revenue accepted that the details sought about the source of payment by the husband pertain to the husband's assessment and not to the petitioner since the AO had accepted that the petitioner had not made the payments. The Principal Chief Commissioner also accorded sanction for issuance of the order instead of directing the AO to drop proceedings against the petitioner. In these circumstances the court found that there was no proper basis to reopen the petitioner's assessment: the information relied upon did not establish a sufficient nexus to the petitioner's liability once the explanation and documents showing non-payment by the petitioner were accepted, and the proper course was to pursue inquiries, if any, against the husband. The order under Section 148A(d) was therefore not sustainable. [Paras 3, 4, 5, 6]

Order dated 31st March 2023 under Section 148A(d) quashed and set aside; proceedings against the petitioner discontinued.

Final Conclusion: The High Court set aside the AO's order under Section 148A(d) for A.Y.-2016-2017, holding that once it was accepted that the petitioner had not made the payments for the immovable property and the particulars of source of funds related to the husband, reopening the petitioner's assessment was not justified; petition disposed.

Reopening of assessment under Section 148 - formation of reason to believe by the Assessing Officer - capital gains charge under Section 45 - transactions not regarded as transfer - gift under Section 47(iii) - mode of computation of capital gains under Section 48 - inapplicability of proviso to Section 48 where Section 47(iii) applies - inapplicability of subsequent provisions (Section 50D/Section 50CA) to prior years and to transfers without consideration

Reopening of assessment under Section 148 - formation of reason to believe by the Assessing Officer - Validity of the notice dated 12th March 2015 under Section 148 reopening assessment for AY 2010-2011 - HELD THAT: - The Court held that even where a return is accepted under Section 143(1), the Assessing Officer must have a prima facie reason to believe that income chargeable to tax has escaped assessment before issuing a notice under Section 148. At the stage of judicial scrutiny the AO need not conclusively establish escapement but must rely on tangible material. On the facts, the reasons recorded merely duplicated the transaction (transfer by gift) and did not furnish tangible material to support a belief that taxable income had escaped assessment. Consequently the recorded reasons lacked validity and could not sustain reopening. [Paras 10, 11, 20]

Notice under Section 148 and the order rejecting objections were quashed for want of valid reason to believe.

Capital gains charge under Section 45 - transactions not regarded as transfer - gift under Section 47(iii) - Whether the transfer of shares by way of gift attracts chargeability to tax as capital gains - HELD THAT: - Section 45 charges profits or gains arising from transfer of a capital asset as capital gains; three conditions are necessary - capital asset, transfer, and profit or gain. Section 47(iii) expressly excludes transfers by way of gift from the operation of Section 45. Where the transfer is a gift (admitted here to be without consideration), Section 45 does not apply and no capital gains liability arises. The proviso to Section 47(iii) was inapplicable on the facts. The Court therefore concluded that the transaction did not invite tax liability under the capital gains provisions. [Paras 13, 14, 15, 16]

Transfer by way of gift falls under Section 47(iii) and does not give rise to capital gains charge under Section 45.

Mode of computation of capital gains under Section 48 - inapplicability of proviso to Section 48 where Section 47(iii) applies - Whether the Assessing Officer could treat market value as consideration under the proviso to Section 48 to compute capital gains on the gift of shares - HELD THAT: - Section 48 provides the mode of computing capital gains by reference to the full value of consideration received or accruing. The proviso to Section 48 (deeming market value as full value of consideration) applies only in cases covered by the proviso to Section 47(iii). Since the transfer in question falls within the main provision of Section 47(iii) (i.e., excluded from Section 45) and not within its proviso, the proviso to Section 48 cannot be invoked to treat market value as consideration. Thus the mode of computation in Section 48 does not apply to negate the exclusion under Section 47(iii). [Paras 12, 17]

Proviso to Section 48 could not be pressed into service to treat market value as consideration where Section 47(iii) excludes the transfer from Section 45.

Inapplicability of subsequent provisions (Section 50D/Section 50CA) to prior years and to transfers without consideration - Whether reliance on Sections 50D or 50CA could validate reopening or impose liability for the gift of quoted shares in AY 2010-2011 - HELD THAT: - The Court rejected the Revenue's reliance on Section 50CA because it was inserted effective 1 April 2018 and applies to unquoted shares where consideration is received; here the shares were quoted and the transfer was without consideration. Section 50D likewise postulates receipt of consideration and was inserted with effect from 1 April 2013; it therefore could not be applied to create a charge where no consideration was received for the 2010-11 transfer. Consequently these subsequent provisions could not justify reopening or create a capital gains liability for the year in question. [Paras 18]

Sections 50D and 50CA are inapplicable to the facts and cannot sustain reopening or a tax charge for AY 2010-2011.

Reopening of assessment under Section 148 - formation of reason to believe by the Assessing Officer - Respondent's contention that the Trust nature of the assessee permits an inference of consideration was rejected - HELD THAT: - The Court declined to entertain an after thought submission that because the assessee is a Trust the transfer should be presumed to have been for consideration. Such a hypothesis was not pleaded or stated in the reasons to believe, the objection order, or the affidavit; the Court refused to proceed on presumptuous or speculative arguments. Moreover, if the transfer were invalid, the property would remain with the Trust and no capital gain could arise. [Paras 19]

No presumption of consideration could be drawn from the assessee being a Trust; the submission was rejected as speculative.

Final Conclusion: Rule made absolute; the notice dated 12th March 2015 under Section 148 and the order dated 18th August 2015 rejecting objections are quashed insofar as they seek reopening for Assessment Year 2010-2011, the Court finding no valid reason to believe that income chargeable to tax had escaped assessment given the transfer was a gift excluded by Section 47(iii).

Reopening of assessment under Section 148/147 - claim of deduction under Section 36(1)(viia) - provision for bad and doubtful debts - availability of Section 36(1)(viia) deduction only for rural advances - change of opinion as an invalid ground for reopening - query raised during assessment construed as consideration by the Assessing Officer

Reopening of assessment under Section 148/147 - change of opinion as an invalid ground for reopening - claim of deduction under Section 36(1)(viia) - provision for bad and doubtful debts - query raised during assessment construed as consideration by the Assessing Officer - availability of Section 36(1)(viia) deduction only for rural advances - Validity of the notice under Section 148 and order rejecting objections to reassessment for AY 2010-11 in respect of deduction claimed under Section 36(1)(viia). - HELD THAT: - The Court found that the Assessing Officer had specifically raised queries during scrutiny asking for details of provisions under Section 36(1)(viia) and for proof regarding rural branches, and the assessee had replied with details including that no deduction was claimed for rural advances and the basis of its 7.5% claim. Once a query is raised in assessment proceedings and the assessee replies, that query is a matter considered by the AO while completing assessment; an assessment order need not recite those queries or reasoning to evidence consideration. The reasons recorded for reopening relied on the Supreme Court decision that Clause (viia) applies only to rural advances, but that decision was already available when the original assessment was completed and the AO, having been satisfied with the assessee's explanation, formed an opinion allowing the claim. The Court held that reopening the assessment in these circumstances amounted to a mere change of opinion by the AO, which does not constitute a permissible reason to form a belief that income has escaped assessment. Given that the assessee had asserted (and the AO had accepted in the assessment) that no deduction for rural advances was claimed, there was no basis for escapement of income; accordingly the notice and the order rejecting objections were held to be without jurisdiction and liable to be quashed. [Paras 15, 16, 17, 18, 19]

Notice dated 31st March 2015 under Section 148 and the order dated 29th February 2016 rejecting objections were quashed as the reopening was based on change of opinion and there was no basis for escapement of income for AY 2010-11.

Final Conclusion: Writ allowed; the reassessment notice and the order rejecting objections in respect of the deduction claimed under Section 36(1)(viia) for AY 2010-11 are quashed on the ground that the reopening amounted to a change of opinion and there was no material to show escapement of income.

Reopening of assessment - reason to believe - tangible material - failure to disclose fully and truly material facts under proviso to Section 147 - satisfaction of the Assessing Officer - audit objections as source of fresh tangible material

Reopening of assessment - reason to believe - failure to disclose fully and truly material facts under proviso to Section 147 - satisfaction of the Assessing Officer - Validity of reopening assessment beyond four years where proviso to Section 147 requires failure to disclose fully and truly all material facts - HELD THAT: - The Court examined whether the jurisdictional preconditions for reopening after four years were satisfied, focusing on whether there was a failure by the assessee to disclose fully and truly material facts and whether the AO possessed tangible material to form a reason to believe that income had escaped assessment. The reasons recorded for reopening were founded on assessment records (computation of income, P&L account and related documents) that were in the AO's possession at the time of the original assessment and had been furnished by the assessee during the original proceedings. The Court held that where the proviso to Section 147 applies, mere disagreement with the view taken in the original assessment based on the same material does not constitute a failure to disclose; the AO must identify fresh tangible information or a failure to disclose, and be personally satisfied leading to a reasonable belief. In the present case the AO's reasons referred only to material already available and replied to in the original assessment, and did not aver any nondisclosure by the assessee. Accordingly, the jurisdictional requirement for reopening was not met. [Paras 14, 15, 18]

Reopening was invalid for want of failure to disclose and absence of fresh tangible material; the AO lacked jurisdiction to reopen the assessment beyond four years.

Tangible material - audit objections as source of fresh tangible material - reason to believe - Whether revenue audit memos constituted fresh tangible material justifying reopening - HELD THAT: - The Court considered the reliance placed by the Department on revenue audit objections. The record showed that the AO had called for and received explanations from the assessee (and its advisers) in response to the audit queries during the original assessment process, and that the AO had actually responded to the audit objections. The petition averred, and the Department did not controvert, that no corrective steps were taken for a long period thereafter. The Court concluded that the audit memos did not amount to new tangible material because they were part of the assessment records and had been answered; the AO did not demonstrate that any audit communication brought new facts to his notice after completion of assessment. Consequently, the audit objections could not be treated as fresh material to form a reason to believe for reopening. [Paras 16, 17, 18]

Audit objections did not constitute fresh tangible material; they could not justify reopening of assessment.

Final Conclusion: The writ petition is allowed: the notice dated 27th March 2021 under Section 148 and the order dated 21st December 2021 rejecting objections are quashed for want of jurisdiction to reopen; rule made absolute with no order as to costs.

Reopening of assessment under Section 147 consequent to notice under Section 148 - change of opinion doctrine - fresh and tangible material requirement for reassessment - non-disclosure or failure to disclose material facts - distinction between review and reassessment - subjective satisfaction of the Assessing Officer at the notice stage - role of audit objection as source of fresh information

Reopening of assessment under Section 147 consequent to notice under Section 148 - fresh and tangible material requirement for reassessment - change of opinion doctrine - Validity of the notice dated 27.03.2021 under Section 148 and the order dated 21.12.2021 rejecting objections, insofar as they reopen the assessment for AY 2016-17. - HELD THAT: - The Court held that the reopening was without valid jurisdiction because the Assessing Officer did not have any fresh tangible material that was not available during the original assessment; all material and documents relevant to the CSR expenditure and the Section 80G claim had been disclosed and considered during the original proceedings. The judgment reiterates the settled principle that reassessment cannot be effected by a mere change of opinion and that reassessment must be founded on fresh tangible material or deliberate non-disclosure by the assessee. Reliance is placed on the distinction between review and reassessment and on authorities which require a live link between the reasons recorded and the formation of belief. Although the Department invoked the audit objection as the source of information, the Court found that the audit party's objection did not amount to fresh material since the AO was already seized of the same information and had earlier considered and rejected the audit adjustment while completing the original assessment. The Court also cautioned against a mechanical application of the principle of subjective satisfaction at the notice stage, emphasising that such satisfaction must be based on material not previously available that demonstrates non-disclosure or escapement of income. Applying these principles to the facts, the Court concluded that the notice and the order rejecting objections amounted to reopening based on change of opinion and were therefore legally unsustainable. [Paras 14, 15, 16, 17, 18]

Notice dated 27.03.2021 under Section 148 and order dated 21.12.2021 rejecting objections are quashed as reopening was based on re-examination of existing material (mere change of opinion) and lacked fresh tangible material or non-disclosure.

Final Conclusion: Writ petition allowed; the impugned notice under Section 148 and the order rejecting objections are quashed for lack of jurisdiction to reopen-the reassessment was founded on a mere change of opinion and not on fresh tangible material or deliberate non-disclosure.

Remand for fresh consideration - Grant of registration/approval under section 12AB - Exemption under section 11 - Form No.10AC-evidence of approval - Natural justice-opportunity of hearing - Admissibility/maintainability of appeal against intimation where rectification proceedings are pending

Exemption under section 11 - Grant of registration/approval under section 12AB - Form No.10AC-evidence of approval - Remand for fresh consideration - Natural justice-opportunity of hearing - Whether the claim of exemption under section 11 should be re examined by the Assessing Officer in view of the new approval/registration under section 12AB produced before the Tribunal. - HELD THAT: - The assessee, a trust registered under section 12A, claimed exemption under section 11 in the return for AY 2021-22. The return was processed by CPC and exemption was disallowed on the ground that details of new approval under section 12AB were not on record. Before the Tribunal the assessee produced a copy of the new approval in Form No.10AC dated 8/2/2022 (page 51 of the paper book). Considering this material and the submissions of the authorised representative, the Tribunal did not decide the exemption claim on merits but directed that the matter be remitted to the Assessing Officer for fresh examination of the approval produced. The AO is to decide the issue afresh after affording the assessee a reasonable opportunity of being heard and in accordance with law. [Paras 3, 5]

Matter remitted to the Assessing Officer to examine the Form No.10AC approval and decide the exemption claim under section 11 afresh after affording opportunity of hearing.

Admissibility/maintainability of appeal against intimation where rectification proceedings are pending - Remand for fresh consideration - The effect of the Appellate Commissioner having dismissed the appeal as inadmissible where the assessee had also filed an appeal against the rectification order under section 154. - HELD THAT: - The Tribunal noted that the Ld. CIT(A) dismissed the appeal as inadmissible because an appeal against the rectification order under section 154 was also filed. The Tribunal did not uphold or reverse the admissibility ruling as a final adjudication. Instead, in view of the fresh approval produced before the Tribunal and the need for factual and legal re examination by the Assessing Officer, the Tribunal allowed the grounds for statistical purposes and remitted the matter, thereby leaving the question of maintainability to be addressed in the course of fresh proceedings as may be appropriate. [Paras 5]

Grounds allowed for statistical purposes and the question of admissibility/maintainability is effectively left open pending fresh consideration by the Assessing Officer; appeal remitted.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes and remitted the matter to the Assessing Officer to examine the approval in Form No.10AC (page 51) and decide the exemption claimed under section 11 after affording the assessee a reasonable opportunity of hearing; the admissibility issue was not finally decided and is left open in the course of fresh proceedings.

Condonation of delay and sufficient cause under Section 5 of the Limitation Act, 1963 - burden on appellant to explain each day of delay - dismissal of appeal for delay

Condonation of delay and sufficient cause under Section 5 of the Limitation Act, 1963 - burden on appellant to explain each day of delay - dismissal of appeal for delay - Whether the Commissioner (Appeals) rightly refused to condone the delay of 895 days in filing the appeal and dismissed the appeal on that ground. - HELD THAT: - The Tribunal upheld the conclusion of the Ld. CIT(A)-NFAC that the delay of 895 days in filing the appeal could not be attributed to any reasonable cause but was the result of negligence and deliberate inaction by the assessee. The burden to demonstrate 'sufficient cause' for each day of delay rests heavily on the appellant; in absence of plausible reasons the discretion to admit the delayed appeal cannot be exercised. Reliance was placed on the principle that delay avoidable by due care does not constitute sufficient cause. The assessee filed no representation before the Tribunal and had not furnished any satisfactory explanation before the CIT(A), hence the condonation petition was correctly dismissed and the appeal was properly not admitted for adjudication on merits. [Paras 6, 7]

The Tribunal finds no infirmity in the CIT(A)'s refusal to condone the delay and dismisses the appeal.

Final Conclusion: The appeal is dismissed for non-condonation of delay; the order of the Ld. CIT(A)-NFAC refusing to admit the belated appeal is upheld and the appeal is not adjudicated on merits.

Section 68 - buyback of shares - exemption under section 10(34A) - tax on distributed income under section 115QA - Rule 11UA valuation - identity, creditworthiness and genuineness test under section 68 - compliance with Companies Act procedural requirements for buyback

Section 68 - buyback of shares - exemption under section 10(34A) - tax on distributed income under section 115QA - identity, creditworthiness and genuineness test under section 68 - compliance with Companies Act procedural requirements for buyback - Rule 11UA valuation - The addition of the buyback proceeds to the assessee's income as unexplained under section 68 was not justified and the transaction was genuine and exempt under section 10(34A). - HELD THAT: - The Tribunal endorsed the findings of the Commissioner (Appeals) that the Assessing Officer erred in treating the buyback proceeds as unexplained income under section 68. The AO issued a show-cause with an unduly short timeline and incorporated only parts of the assessee's reply before concluding lack of genuineness. The identity of the payer, Uday Management Services Pvt. Ltd. (UMS), was not disputed; UMS's creditworthiness was evident from its audited reserves and balance sheets; the buyback complied with statutory procedures under the Companies Act and requisite forms and approvals were filed with the Registrar of Companies. Valuation reports prepared under Rule 11UA were on record and were used to determine the buyback price. UMS paid tax under section 115QA on the buyback, and by virtue of that tax being paid the income to the shareholder on buyback is exempt under section 10(34A). In these circumstances the ingredients for invoking section 68-failure to establish identity, creditworthiness or genuineness-were absent. The Tribunal therefore sustained the CIT(A)'s deletion of the addition and rejected the Revenue's contrary conclusion. [Paras 6, 9, 10]

The addition made by the Assessing Officer under section 68 is deleted and the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal confirms the deletion of the addition of the buyback proceeds under section 68, holding that the buyback was genuine, complied with Companies Act formalities, valuation under Rule 11UA was on record, tax under section 115QA was paid and the income is exempt under section 10(34A); Revenue's appeal is dismissed.

Penalty under section 271(1)(c) - disallowance on estimate basis - concealment of income - bonafide claim of expenditure - Explanation 1(B) to section 271(1) - penal liability for concealment

Penalty under section 271(1)(c) - disallowance on estimate basis - concealment of income - bonafide claim of expenditure - Levy of penalty under section 271(1)(c) in respect of additions made by disallowing 10% of claimed expenses on an adhoc/estimate basis - HELD THAT: - The Tribunal found that the assessing officer accepted the tax audit particulars and framed assessment on the basis of the tax audit turnover and related particulars but made an adhoc disallowance of 10% of the expenses claimed for want of supporting evidence. The addition therefore arose from an estimate/adhoc disallowance to cover possible revenue leakage and not from detection of any fraudulent concealment or furnishing of inaccurate particulars. Following the principle that mere disallowance on the ground that expenditure is large or vouchers are not available is insufficient to sustain penalty absent material indicating mala fides or that the claim was not bonafide, the Tribunal held that the facts did not establish concealment of particulars of income. The Tribunal also noted that the commissioner of income tax (appeals) did not deal with the assessee's contention that the disallowance was estimate based nor verify the assessee's plea regarding assurance given at the time of withdrawal of quantum appeal, but on the material before it the Tribunal concluded there was no justification for imposing penalty under section 271(1)(c). [Paras 8, 9, 10, 11]

The penalty imposed under section 271(1)(c) is deleted.

Final Conclusion: The Tribunal allowed the assessee's appeal for AY 2013-14 and deleted the penalty under section 271(1)(c) imposed in respect of the adhoc/estimate disallowance of expenses, concluding that the additions did not amount to concealment of particulars of income.

Deduction of expenses only on actual payment under section 43B - mercantile system of accounting and payment before due date of return - treatment of GST collected as current liability / trust liability - relevance of audit report clause 26(i)(B)(b) regarding duties and taxes not paid - precedential distinction between Chowringhee Sales Bureau and Noble & Hawitt

Deduction of expenses only on actual payment under section 43B - mercantile system of accounting and payment before due date of return - treatment of GST collected as current liability / trust liability - relevance of audit report clause 26(i)(B)(b) regarding duties and taxes not paid - Whether the addition on account of GST shown as unpaid in the audit report but paid before the due date of filing the return could be disallowed under section 43B - HELD THAT: - The Tribunal observed that the assessee had not debited the GST amounts to the profit and loss account nor claimed any deduction in respect thereof; instead the amounts were shown in the books as current liabilities under duties and taxes (Schedule 7) and reported in clause 26(i)(B)(b) of the audit report as unpaid as on the date of audit. The Tribunal held that where a taxpayer following the mercantile system of accounting discloses the GST as a liability (and not as an expense) and makes payment of the same before the due date for filing the income-tax return, the proviso in section 43B (i.e., denial of deduction until actual payment) does not operate to deny the deduction. The Tribunal rejected application of Chowringhee Sales Bureau to the facts because in the present case the liability was not an estimated or debited expenditure; instead it was a disclosed current liability subsequently paid before filing the return. The Tribunal applied the ratio of Noble & Hawitt (I)(P) Ltd. as squarely applicable and accordingly held that the addition made by the assessing authority/NFAC could not be sustained. [Paras 7, 8]

Addition on account of unpaid GST (as per audit report) deleted to the extent paid before the due date of filing the return; appeal allowed.

Final Conclusion: The Tribunal allowed the assessee's appeal for assessment year 2020-21, holding that disclosed GST liabilities treated as current liabilities and paid before the due date of filing the return are not to be disallowed under section 43B; the addition made by the authorities was deleted.

Reopening of assessment - change of opinion - reason to believe - 1st proviso to Section 147 - reopening after four years requiring failure to disclose fully and truly all material facts - requirement of fresh material or information to justify reassessment - assessing officer cannot review his own order

Reopening of assessment - change of opinion - reason to believe - requirement of fresh material or information to justify reassessment - 1st proviso to Section 147 - reopening after four years requiring failure to disclose fully and truly all material facts - assessing officer cannot review his own order - Validity of reopening of the concluded assessment for A.Y.2010-11 and correctness of quashing the reassessment on grounds of change of opinion and non-compliance with the first proviso to Section 147. - HELD THAT: - The Tribunal found that the reasons recorded for reopening (referred in the assessment record) showed no fresh material or information coming to the AO after framing the original scrutiny assessment dated 17.04.2012; the reopening merely re-appreciated facts already available on record and amounted to a 'change of opinion' of the successor AO. Reliance was placed on the settled principle that reassessment cannot be initiated on mere change of opinion and that the AO cannot use Section 147 as a device to review his predecessor's order. Further, since the original assessment was framed under Section 143(3) and the notice under Section 148 was issued beyond four years from the end of the relevant assessment year, the first proviso to Section 147 required the AO to have reason to believe that escapement of income was due to the assessee's failure to disclose fully and truly all material facts; no such failure was shown. In these circumstances the reassessment was vitiated for want of jurisdiction and was rightly quashed by the CIT(A). The Tribunal accordingly upheld the CIT(A)'s order dismissing the revenue's appeal for A.Y.2010-11. [Paras 21, 22, 23, 24, 25]

Reopening for A.Y.2010-11 was invalid as it was based on mere change of opinion and did not satisfy the first proviso to Section 147; reassessment quashed and revenue's appeal dismissed.

Reopening of assessment - change of opinion - reason to believe - requirement of fresh material or information to justify reassessment - 1st proviso to Section 147 - reopening after four years requiring failure to disclose fully and truly all material facts - Validity of reopening of the concluded assessment for A.Y.2012-13 and correctness of quashing the reassessment on the ground of change of opinion. - HELD THAT: - The Tribunal observed that the AO reopened the assessment for A.Y.2012-13 to revisit the predecessor AO's view on entitlement to deduction under Section 80IA and the adjustment of earlier year losses; no fresh material or information had come to the AO's notice after the original order dated 03.03.2015. The reopening therefore constituted a mere change of opinion, which is not a permissible basis for reassessment. The Tribunal applied the same reasoning and authorities relied upon in the A.Y.2010-11 disposal and held that the CIT(A) correctly quashed the reassessment for want of valid assumption of jurisdiction. Consequently, the revenue's appeal in respect of A.Y.2012-13 was dismissed. [Paras 31, 32, 33, 34, 35]

Reopening for A.Y.2012-13 was invalid as based on mere change of opinion without fresh material; reassessment quashed and revenue's appeal dismissed.

Final Conclusion: Both revenue appeals (ITA Nos. 321/RPR/2023 and 322/RPR/2023) are dismissed; the reassessment orders for A.Y.2010-11 and A.Y.2012-13 are quashed for being founded on mere change of opinion and, where applicable, for non-compliance with the first proviso to Section 147 which requires failure to disclose fully and truly all material facts.

Presence of Advocate during Interrogation - Recording/Videography of Interrogation - Interrogation under Section 108 of the Customs Act - Non-appearance not excused by absence of counsel or videographer

Presence of Advocate during Interrogation - Interrogation under Section 108 of the Customs Act - Petitioner's advocate permitted to be present at a visible but not audible distance during interrogation under Section 108 of the Customs Act. - HELD THAT: - Having considered the petition and the Division Bench decision in Civil Writ Petition No.6558 of 2021, the Court allowed the petitioner's request that his advocate be present when he is summoned for interrogation. The presence is qualified: the advocate may remain at a visible but not audible distance during the interrogation. The Court recorded that the petitioner is willing to cooperate and referred to the earlier precedent to grant similar relief. The permission is thus subject to the specified limitation on proximity and audibility so as to accommodate investigative requirements while permitting legal assistance in a limited form. [Paras 6]

Advocate permitted to remain present at a visible but not audible distance during interrogation.

Recording/Videography of Interrogation - Interrogation under Section 108 of the Customs Act - Videography of the petitioner's interrogation permitted at the petitioner's cost. - HELD THAT: - Relying on the judicial precedent cited by the petitioner, the Court authorised videography of the interrogation. The permission is expressly conditional on the petitioner bearing the cost of videography. The order balances the petitioner's request for a record of the proceedings with the administrative prerogatives of the investigating authority by imposing the cost obligation on the petitioner. [Paras 6]

Videography of the interrogation permitted, subject to payment of costs by the petitioner.

Non-appearance not excused by absence of counsel or videographer - Absence of the advocate or the person videographing will not be a ground for the petitioner to refuse to attend interrogation when summoned. - HELD THAT: - The Court qualified its grants by making clear that the petitioner cannot decline to appear before the appropriate authority on the ground that his advocate is unable to remain present or that the person appointed to videograph is not available. This ensures that the investigatory process is not stalled by contingencies relating to the presence of counsel or recording arrangements and preserves the authority's ability to summon the petitioner. [Paras 7]

Petitioner's obligation to attend when summoned is not excused by non-availability of advocate or videographer.

Final Conclusion: Writ petition allowed: advocate permitted to remain at a visible but not audible distance during interrogation and videography permitted at petitioner's cost; however, petitioner must attend when summoned regardless of absence of advocate or videographer.

Revocation of customs broker licence - subletting of custom broker licence - misuse of G-Card and login credentials - violation of Customs Broker Licensing Regulations - proportionality of punishment - concurrent findings of fact - no substantial question of law under Section 130 of the Customs Act, 1962

No substantial question of law under Section 130 of the Customs Act, 1962 - concurrent findings of fact - Whether the appeal before the High Court under Section 130 of the Customs Act, 1962 raises a substantial question of law. - HELD THAT: - The High Court examined the impugned orders and the materials and found that the challenge raised only factual contentions. The Court noted the statutory gateway under Section 130 requires satisfaction that a substantial question of law is involved; in the present matter the Tribunal and the Commissioner reached concurrent factual findings based on admissions and record. Consequently, the Court held that no substantial question of law is made out to entertain the appeal under Section 130 and declined to reappraise the concurrent factual findings. [Paras 9, 10, 17]

The appeal does not raise any substantial question of law; the High Court will not interfere with concurrent factual findings.

Revocation of customs broker licence - subletting of custom broker licence - misuse of G-Card and login credentials - violation of Customs Broker Licensing Regulations - proportionality of punishment - Whether revocation of the appellant's customs broker licence was disproportionate in view of the admitted conduct. - HELD THAT: - The Court accepted the factual finding that the appellant admitted permitting third parties to use his licence, login ID, password and digital signature card in return for monthly remuneration and that such statements were not retracted. The Court observed the important fiduciary role of a customs broker and the strict compliance required by the Customs Broker Licensing Regulations, noting Regulation 10 (prohibition on sale/transfer) and Regulation 11 (mandatory personal transaction or authorised employee). Distinguishing precedent where misuse arose from employee actions, the Court referred to authority upholding revocation where subletting and mens rea were present and concluded that permitting licence use for consideration constituted serious misconduct. Applying these principles, the Court held that cancellation of the licence was not disproportionate to the misconduct. [Paras 13, 14, 15, 16, 17]

Revocation of the customs broker licence was not disproportionate and is upheld.

Final Conclusion: The appeal is dismissed: no substantial question of law arises under Section 130 of the Customs Act, 1962, and the revocation of the customs broker licence for admitted subletting and misuse of credentials is upheld as not disproportionate.

Interference with statutory summons and investigation under the Customs Act - Maintainability of writ jurisdiction under Article 226 to quash summons - Jurisdiction and competence of investigative agencies: Directorate of Revenue Intelligence vis-a -vis Customs Department - Preliminary-stage investigations and the threshold for judicial interference - Scope of investigation: tariff valuation inquiries versus wider DRI probe

Interference with statutory summons and investigation under the Customs Act - Maintainability of writ jurisdiction under Article 226 to quash summons - Jurisdiction and competence of investigative agencies: Directorate of Revenue Intelligence vis-a -vis Customs Department - Whether the writ petition seeking quashing of the summons dated 09.02.2024 issued by the DRI, Chennai should be entertained and the investigation by DRI ordered to be conducted in Hyderabad instead of Chennai - HELD THAT: - The Court held that interference with summons and ongoing preliminary investigations is justified only in extraordinary cases or where the issuing authority lacks jurisdiction or authority. The earlier proceedings had been initiated by the Customs Department in Hyderabad and the present summons emanated from the DRI, Chennai; the petitioner is based in Uttar Pradesh, distinguishing this case from the Division Bench precedent relied upon where the appellant and its properties were located in Chennai. At this preliminary stage the Court declined to second-guess the object and scope of the DRI's investigation, noting that the ambit of the Customs Department's probe (confined to tariff value) differs from the broader mandate of the DRI. Absent a demonstrated lack of jurisdiction or exceptional circumstances, the discretionary remedy under Article 226 was not available to stay or quash the DRI summons. [Paras 6, 7]

Writ petition dismissed; no interference with the summons dated 09.02.2024 issued by the DRI, Chennai.

Final Conclusion: The petition seeking to quash the DRI summons was dismissed; the High Court declined to interfere with the preliminary investigation conducted by the Directorate of Revenue Intelligence, Chennai, and closed the connected miscellaneous petition.

Advance ruling and its binding effect on classification - conformity of imported foodstuffs with FSSAI standards - administrative reliance on departmental chemical analysis vis-a -vis statutory regulatory opinion - provisional release of imported goods on payment of duty - detention certificate and waiver of custodial charges

Advance ruling and its binding effect on classification - conformity of imported foodstuffs with FSSAI standards - provisional release of imported goods on payment of duty - Whether the respondents could refuse clearance of the assessed consignment despite a prior CAAR classification and an FSSAI opinion that the goods conformed to applicable standards, and whether the goods should be released on payment of duty. - HELD THAT: - Prior to import the petitioner obtained a CAAR ruling classifying the goods under CTH 21069030 and the Bill of Entry was finally assessed accepting that classification (paras 3, 9). The departmental request to FSSAI resulted in a test report recording that the sample "conforms to the standard" under Regulation 2.3.55 (paras 4, 10, 11). The respondents nevertheless sought further analysis from DYCC and then declined clearance on the basis that the goods "may not be ready to use" and contain "kernel husk fragments" (paras 6-7, 11-12). The Court examined the DYCC report and the material on record and held that the DYCC observation about kernel husk fragments did not establish any objectionable or prohibitory impurity or a ground to displace the CAAR and FSSAI findings; there was no justification for refusing clearance where the statutory regulator and the advance ruling supported classification and fitness for consumption (paras 11-15). Applying these conclusions, the Court directed release of the goods on payment of duty and allowed the prayer for clearance (paras 15-16). [Paras 9, 10, 11, 15, 16]

The respondents' refusal to clear the assessed consignment was unsustainable; the goods shall be released on payment of duty in accordance with the CAAR classification and FSSAI opinion.

Administrative reliance on departmental chemical analysis vis-a -vis statutory regulatory opinion - Whether the DYCC observation that the sample "contains pieces of kernel husk fragments" justified characterising the goods as contaminated, impure, or "not ready to use" so as to override the FSSAI opinion. - HELD THAT: - The DYCC report noted presence of kernel husk fragments and stated the product "may not be ready to use" (para 6). The respondents' affidavit treated that observation as indicating impurities and non-conformity with the advance ruling (para 7, 11). The Court analysed the nature of "kernel husk" and concluded that such fragments do not necessarily amount to objectionable or fatal impurity that would render the goods prohibitory or justify displacing the FSSAI's conformity finding; the department could not read into the DYCC report a conclusion not recorded by the analyst (paras 14-15). Accordingly, the departmental characterisation was rejected. [Paras 6, 7, 11, 14, 15]

The DYCC observation did not establish impurity or justify overriding the FSSAI opinion; the respondents' reliance on that observation to deny clearance was rejected.

Detention certificate and waiver of custodial charges - Whether a detention certificate should be issued for the period of custody and related charges waived following clearance. - HELD THAT: - The petition sought issuance of a detention certificate and waiver of detention and custodial charges in respect of the goods lying in the customs bonded warehouse (para 5). Having allowed the petition and directed release of the goods on payment of duty, the Court further directed that, if applied for by the petitioner, a detention certificate be issued for the relevant period within three weeks of release (para 16, Order b). [Paras 5, 16]

A detention certificate shall be issued on application for the relevant period; the petitioner's claim for such relief is allowed.

Final Conclusion: The petition is allowed: the assessed consignment shall be released on payment of duty in accordance with the CAAR classification and FSSAI opinion; the DYCC observations do not justify denial of clearance; and, on application, a detention certificate shall be issued for the period of custody.

Retracted statement and voluntariness of confession - corroboration and cross-examination of prosecution witnesses - confiscation under Customs Act - onus under Section 123

Retracted statement and voluntariness of confession - corroboration and cross-examination of prosecution witnesses - Reliability and evidentiary value of the statement recorded from the appellant during panchanama and of the statement of the co-noticee - HELD THAT: - The Tribunal found that the statement recorded from Mr. A. Praveen Kumar on 10.03.2020 at the time of interception was not freely given, having been made while he was detained with his wife and sister and under apprehension of their arrest; he retracted that statement at the earliest opportunity in his bail application. The statement of Mr. V.B. Vimal of M/s Srinidhi Gold was held to be not inspiring confidence: it was self-contradictory, recorded after a search that disclosed stock shortage, and contained admissions that did not furnish reliable details of suppliers. The Tribunal treated the absence of opportunity for cross-examination as a factor undermining the weight of the prosecution statements relied upon, observing that reliance solely on such uncorroborated statements is inappropriate. On these grounds the recorded statements were not accepted as establishing smuggling or foreign origin of the seized gold. [Paras 25, 26]

The panchanama statement of the appellant and the statement of the co-noticee are unreliable and do not justify confiscation in the absence of independent corroboration or proper cross-examination.

Confiscation under Customs Act - onus under Section 123 - Whether the appellants discharged the onus to prove lawful source of the seized gold and whether confiscation and penalties should be upheld - HELD THAT: - The Tribunal examined independent external evidence produced by the appellants, including the GST tax invoice from M/s Aryan Gold, Bangalore and the seller's bank statement showing payment received within a short period after sale. The Tribunal found that payment through banking channels and the seller's corroborative statement constitute prima facie evidence of genuineness and that the appellants discharged the statutory onus under Section 123 to explain the source of the gold with certainty. In view of the accepted external evidence and the unreliability of the prosecution statements, the Tribunal concluded that the requirements for confiscation under the Customs Act were not made out and that penalties premised on such confiscation could not stand. [Paras 26, 27, 28]

Appellants have discharged the onus under Section 123; confiscation and penalties set aside and appellants entitled to return of gold or sale proceeds with interest as per rules.

Final Conclusion: Appeals allowed: confiscation order and penalties set aside; appellants entitled to the return of the seized gold or, if already disposed, to the sale proceeds with interest in accordance with the Rules.

Mis-declaration of quantity - confiscation - redemption fine - penalty under Section 112(a) of the Customs Act, 1962 - leniency in quantum of penalty where no profit is shown and goods remain in departmental custody

Penalty under Section 112(a) of the Customs Act, 1962 - mis-declaration of quantity - leniency in quantum of penalty where no profit is shown and goods remain in departmental custody - Whether the penalty imposed under Section 112(a) should be sustained or reduced - HELD THAT: - The appellant challenged the penalty imposed under Section 112(a) arising from mis-declaration of quantity in an import consignment. The Commissioner (Appeals) had earlier reduced the original penalty and observed factors favouring mitigation - relinquishment of rights over the consignment, perishable nature of the goods, absence of profit in the transaction and that the goods remained in departmental custody. The Tribunal accepted the lenient approach adopted by the Commissioner (Appeals) and, applying the same considerations (absence of profit margin, departmental custody of confiscated goods and relevant facts already noted by the lower appellate authority), concluded that further reduction of the monetary penalty was warranted in the interests of justice. On that basis the Tribunal modified the impugned order by reducing the penalty quantum. [Paras 4, 5]

Penalty reduced from Rs.10,00,000 to Rs.5,00,000 under Section 112(a) and directed to be paid forthwith by the appellant.

Final Conclusion: The Tribunal allowed the appeal in part by further reducing the penalty imposed under Section 112(a) of the Customs Act, 1962 from Rs.10,00,000 to Rs.5,00,000, to be paid forthwith; all other aspects of the impugned order were left intact.

Effect of cancellation of duty free scrips on duty liability - restoration of status quo ante by High Court - remand for fresh adjudication of show cause notice - show cause notice under section 28 of the Customs Act, 1962

Effect of cancellation of duty free scrips on duty liability - restoration of status quo ante by High Court - remand for fresh adjudication - Whether the impugned order confirming duty liability and penalties should be sustained in view of subsequent setting aside of the cancellation of the scrips by the High Court and whether the matter requires fresh adjudication. - HELD THAT: - The Tribunal noted that the show cause notice and the consequential adjudication proceeded after cancellation of the duty free scrips by the licensing authority. The High Court of Telangana later set aside that cancellation and restored the status quo ante. The Tribunal held that the High Court's restoration of the scrips materially affects the foundation on which the impugned order was based, placing that order in jeopardy. In view of this intervening decision, the Tribunal considered it appropriate that the adjudicating authority re examine the show cause notice and decide the matter afresh on the available facts and circumstances. The Tribunal therefore set aside the impugned order and directed fresh disposal rather than finally adjudicating the merits itself. [Paras 5]

Impugned order set aside and matter remanded to the adjudicating authority for fresh disposal of the show cause notice.

Remand for fresh adjudication - time bound disposal - Whether a time limit should be prescribed for the adjudicating authority to decide the remanded proceedings. - HELD THAT: - The Tribunal directed that the adjudicating authority should dispose of the show cause notice afresh and preferably within four months from the receipt of the Tribunal's order, thereby rendering the remand time bound to ensure expeditious resolution. [Paras 5]

Remand made subject to a direction that the adjudicating authority preferably decide the matter within four months of receipt of this order.

Final Conclusion: The Tribunal set aside the Commissioner's order confirming duty, interest and penalties because the High Court had restored the scrips, and remitted the matter to the adjudicating authority for fresh, time bound disposal of the show cause notice (preferably within four months).

Penalty under section 114 of the Customs Act, 1962 - Confiscation under section 113 of the Customs Act, 1962 - Admissibility of statements recorded under section 108 of the Customs Act, 1962 - Right to cross-examination under section 138B of the Customs Act, 1962 - Re-determination of assessable value under section 14(1) of the Customs Act, 1962 - Ex-parte market enquiries and principles of natural justice - Substitution of goods after departmental examination - Liability of proprietor for acts or omissions giving rise to confiscation

Penalty under section 114 of the Customs Act, 1962 - Confiscation under section 113 of the Customs Act, 1962 - Liability of proprietor for acts or omissions giving rise to confiscation - Sustainability of penalty under section 114 against the proprietor of the exporting concern in light of confiscation and the material relied upon to connect him with the offences. - HELD THAT: - The Tribunal accepted that confiscation of the goods under section 113 was not in dispute. However, imposition of penalty under section 114 requires a proven causal connection between the noticee's act or omission and the circumstances rendering the goods liable to confiscation. The adjudicating authority's finding linking the appellant to the fraudulent export rested substantially on documentary material and statements which were not subjected to the safeguards of section 138B and on market enquiries conducted without the noticee's participation. The officer responsible for examination was absolved on the facts, and there was no evidence before the authority to exclude the possibility of substitution after examination. In those circumstances the defects in the material connecting the appellant to the misconduct deprived the penalty finding of a reliable basis. The Tribunal therefore concluded that the penalty could not be sustained and set aside the impugned order. [Paras 3, 10, 11]

Penalty imposed under section 114 set aside and appeal allowed.

Admissibility of statements recorded under section 108 of the Customs Act, 1962 - Right to cross-examination under section 138B of the Customs Act, 1962 - Ex-parte market enquiries and principles of natural justice - Whether statements recorded and market enquiries made without compliance with cross-examination requirements and without giving the noticee an opportunity to participate could be relied upon to establish culpability. - HELD THAT: - The Tribunal observed that much of the case against the appellant derived from statements and from market valuation enquiries undertaken without associating the noticee. Statements recorded under section 108 were retracted and had not been put through the procedural rigour of section 138B, and the market enquiries relied upon were conducted ex parte. The Tribunal held that such material, lacking the mandated procedural safeguards and transparency, could not furnish a dependable foundation to link the appellant to mis-declaration or fraudulent exportation for purposes of imposing penalty. [Paras 4, 10]

Statements and ex parte market enquiries could not be treated as conclusive evidence to sustain penalty; they did not suffice to connect the appellant to the misconduct.

Right to cross-examination under section 138B of the Customs Act, 1962 - Whether denial of the appellant's request to cross-examine certain persons required remand of the matter to the adjudicating authority for further proceedings. - HELD THAT: - The Tribunal acknowledged that ordinarily denial of an opportunity to cross-examine persons whose evidence is relied upon may justify remand for fresh consideration. It noted, however, the exceptional factual posture of the present matter - considerable lapse of time since the events and completion of adjudication - and treated the plea for remand as lacking practical efficacy. Having considered the delay and the surrounding circumstances, the Tribunal declined to remand and proceeded to decide the substantive challenge to the penalty itself. [Paras 7]

Remand for cross-examination declined in view of the delay and factual circumstances; Tribunal proceeded to decide the appeal on merits.

Substitution of goods after departmental examination - Liability of proprietor for acts or omissions giving rise to confiscation - Effect of the adjudicating authority's finding absolving the examining officer and the absence of evidence of substitution on the appellant's liability. - HELD THAT: - The Tribunal recorded that the officer entrusted with examination was found not derelict and was given the benefit of doubt. There was no material before the authority to demonstrate substitution of goods after lawful examination, and no appeal from the dropping of charges against the officer was pursued by Revenue. Given that the goods, at the time the statutory examination regime applied, were found to conform to the declarations, and in absence of proof of substitution or other post-examination tampering, the appellant could not be held to have contributed to confiscation on the basis of the untested documentary and testimonial material. [Paras 8, 9]

Absence of proof of substitution and absolution of the examining officer entitled the appellant to the benefit of that finding; appellant's liability for penalty could not be sustained on that basis.

Final Conclusion: The Tribunal set aside the penalty order under section 114 of the Customs Act, 1962 and allowed the appeal, holding that the material relied upon to fix penal liability on the proprietor was procedurally and evidentially deficient and, in the circumstances, did not establish a culpable connection with the confiscation.

Suspension of customs broker licence under Regulation 16 of the Customs Broker Licensing Regulations, 2018 - duty to grant opportunity of hearing within fifteen days after suspension - requirement to issue notice proposing revocation or penalty within ninety days under Regulation 17 - continuation of suspension without inquiry or issuance of notice unlawful - revocation of suspension and power to proceed with inquiry as per regulations

Suspension of customs broker licence under Regulation 16 of the Customs Broker Licensing Regulations, 2018 - requirement to issue notice proposing revocation or penalty within ninety days under Regulation 17 - continuation of suspension without inquiry or issuance of notice unlawful - Whether the prolonged suspension of the appellant's customs broker licence without conducting the inquiry or issuing the statutory notice for revocation or penalty was sustainable. - HELD THAT: - The Tribunal found that Regulation 16 permits suspension in appropriate cases but mandates that the Commissioner shall give an opportunity of hearing within fifteen days and thereafter proceed. Regulation 17 contemplates that, upon receipt of an offence report, the Principal Commissioner or Commissioner shall issue a notice within ninety days proposing revocation of licence or imposition of penalty and thereafter complete the inquiry and further proceedings within the timelines prescribed. The continuous suspension of the appellant's licence without either conducting the inquiry or issuing the notice proposing revocation or penalty amounted to a failure to follow the prescribed procedure and was therefore bad in law. The Tribunal declined to adjudicate the merits of the underlying allegations but held that the suspension order could not be sustained where no proceedings under Regulation 17 had been initiated; at the same time the Commissioner was left free to proceed in accordance with the Regulations. [Paras 8, 9]

The suspension of the customs broker licence was set aside; the appeal was allowed and the Commissioner was granted liberty to proceed afresh in accordance with the Customs Broker Licensing Regulations, 2018.

Final Conclusion: The order confirming continuance of the suspension is quashed and the appellant's licence suspension is revoked; the Commissioner may, if warranted, initiate and complete proceedings in accordance with the timelines and procedure prescribed in the Regulations.

Rejection of declared transaction value under Rule 12 - Transaction value as basis of valuation under Section 14 - Corroboration requirement for entries in private/rough notebooks - Comparability of contemporaneous imports and anti-dumping findings as corroborative evidence

Rejection of declared transaction value under Rule 12 - Corroboration requirement for entries in private/rough notebooks - Transaction value as basis of valuation under Section 14 - Comparability of contemporaneous imports and anti-dumping findings as corroborative evidence - Whether the transaction value declared in the seven Bills of Entry could be rejected and re-determined on the basis of entries in private rough notebooks and diaries resumed during searches - HELD THAT: - The Tribunal examined the department's reliance on 33 entries recovered from three private notebooks and diaries and the legal scheme under section 14 of the Customs Act and Rule 12 of the 2007 Valuation Rules. Rule 12 authorises rejection of declared value where the proper officer has reasonable doubt, but entries in private/rough notebooks cannot by themselves be treated as conclusive evidence unless corroborated by tangible supporting material. The Tribunal found contemporaneous import assessments by other importers and the value determined in the designated authority's Final Anti Dumping Finding to be comparable to the declared transaction value, and therefore relevant corroborative factors. Statements of the persons confronted with the notebooks indicated that the entries were rough estimates/target discussions and not records of payments, and supporting witnesses confirmed payments were made through banking channels. In that factual matrix, the Tribunal held that the notebooks/diaries did not furnish adequate corroboration to justify rejection of the declared transaction value under Rule 12 and section 14, and the re determination of assessable value based solely on those rough entries could not be sustained. [Paras 19, 32, 33, 37, 38]

The rejection of the declared transaction value and the consequent re determination based on the private notebooks/diaries is unsustainable; the adjudicating order confirming undervaluation is set aside.

Final Conclusion: The appeals are allowed; the impugned order of 06.01.2020 confirming undervaluation (and penalty consequences) is set aside with consequential relief, and the re determination of transaction value based on the rough notebook entries is rejected.

Maintainability of criminal proceedings against company directors - vicarious liability in criminal law and 'alter ego' doctrine - exercise of inherent jurisdiction under Section 482 CrPC to quash criminal proceedings - private initiation of criminal prosecution despite appointment of provisional liquidator - disputed questions of fact not to be adjudicated on quashing applications

Maintainability of criminal proceedings against company directors - vicarious liability in criminal law and 'alter ego' doctrine - Whether criminal proceedings against the directors can be maintained on the allegations in the FIR and whether directors can be held liable merely by virtue of their office - HELD THAT: - The Court applied Supreme Court guidance that criminal law does not generally impose vicarious liability on directors unless their personal conduct and control over the company justify imputing criminality (the 'alter ego' principle). On the face of the FIR the applicants (directors) were alleged to have actively negotiated with the informant, participated in meetings and induced transfer of funds to the accused company, and the route of payment is disputed. Having regard to these averments, the Court held that prima facie conduct of the directors who control day-to-day affairs is questionable and a prima facie case is made out against them; these allegations are matters of fact for trial rather than grounds for quashing at this stage. [Paras 9, 10, 13, 18]

Criminal proceedings against the directors are maintainable on the averments in the FIR and cannot be quashed at this stage.

Exercise of inherent jurisdiction under Section 482 CrPC to quash criminal proceedings - disputed questions of fact not to be adjudicated on quashing applications - Whether the Court should exercise its inherent jurisdiction under Section 482 CrPC to quash the chargesheet and cognizance order - HELD THAT: - Relying on settled principles for exercise of Section 482 jurisdiction, the Court observed that quashing is appropriate where no offence is prima facie disclosed or where proceedings are an abuse of process. However, the Court must not enter into detailed inquiry of disputed facts or evidence. Applying these principles to the record, the Court found that the FIR, read as a whole, discloses prima facie offences and that disputed factual contentions (such as the route of funds or existence of a tripartite arrangement) cannot be resolved on a quash petition. No mala fide or patent abuse was shown that would warrant quashing. [Paras 12, 17, 18]

Section 482 relief to quash the criminal proceedings is not warranted; the application is dismissed.

Private initiation of criminal prosecution despite appointment of provisional liquidator - maintainability of criminal proceedings against corporate parties in liquidation - Whether appointment of a provisional liquidator for the informant company barred institution of the criminal proceedings by the company or its directors - HELD THAT: - The Court noted that no final winding up order had been passed and that the provisional liquidator had limited powers to preserve assets. The Court reiterated that, in criminal jurisprudence, any person may set the criminal law in motion unless a statute provides otherwise; prior sanction to initiate proceedings on behalf of a company is directed to protecting company assets and does not bar courts from entertaining criminal prosecutions under the CrPC. The order appointing a provisional liquidator for limited purposes and subsequent dismissal of the company petition did not render the FIR or prosecution invalid. [Paras 14, 15, 16]

Appointment of a provisional liquidator did not bar initiation or continuation of the criminal proceedings.

Arraignment of company in charge sheet and court's power to issue process - court's power under Section 190/204/319 CrPC to proceed against unarraigned persons - Whether non arraignment of the accused company in the charge sheet invalidates the cognizance taken against the directors - HELD THAT: - The Court observed that the FIR had named the company as accused and that although the charge sheet did not formally arraign the company, mere technical non arraignment is not sufficient to quash proceedings where prima facie offences are disclosed against persons named. The trial court is not bound by the police report and may, after considering the material, issue process against others if warranted (including under Section 319 CrPC). Hence the applicants' objection on this ground can be urged before the trial court but does not justify quashing at this stage. [Paras 11, 18]

Failure to arraign the company in the charge sheet is not a ground to quash proceedings against the directors at this stage; the trial court may consider issuing process against the company if justified.

Final Conclusion: The petition under Section 482 CrPC is dismissed; the cognizance and criminal proceedings are not quashed and the applicants may agitate their objections and disputed factual contentions before the trial court.

Limitation for appeals under Section 61 of the Insolvency and Bankruptcy Code, 2016 - condonation of delay limited to fifteen days under proviso to Section 61(2) IBC - limitation runs from date of order, not date of knowledge - IBC as a complete code with overriding effect on the Limitation Act - requirement of due diligence to obtain certified copy of the order - strict and time bound framework of the IBC

Limitation for appeals under Section 61 of the Insolvency and Bankruptcy Code, 2016 - condonation of delay limited to fifteen days under proviso to Section 61(2) IBC - IBC as a complete code with overriding effect on the Limitation Act - Whether the period of limitation for filing an appeal under Section 61(2) of the IBC is 30 days from the date of the order, with a further extension of not more than 15 days, and whether this statutory limitation can be extended beyond that period. - HELD THAT: - The Tribunal held that Section 61(2) prescribes a primary limitation of thirty days from the date of the impugned order and permits extension only up to a further fifteen days subject to satisfaction of sufficient cause. IBC is a self-contained code with overriding effect on other statutes; therefore the Limitation Act or other procedural provisions cannot be used to enlarge the period beyond what Section 61(2) permits. Reliance was placed on binding precedents of the Hon'ble Supreme Court which emphasise that the governing provision for limitation in IBC appeals is Section 61 and that the power to condone delay is strictly circumscribed to the fifteen days provided in the proviso. Consequently, no appeal can be entertained if filed after the expiry of the extended fifteen days. [Paras 11, 12, 15, 16, 22]

The limitation for filing an appeal under Section 61(2) IBC is thirty days from the date of the order, with a further condonable period not exceeding fifteen days; the Tribunal has no power to extend limitation beyond those statutory limits.

Limitation runs from date of order, not date of knowledge - requirement of due diligence to obtain certified copy of the order - strict and time bound framework of the IBC - Whether the appellant's plea that limitation should run from the date he became aware of the order (and that intervening holidays, bereavement and ill health justify exclusion of time) warranted condonation of delay in the present case. - HELD THAT: - The Tribunal applied settled law that, unlike some company law provisions, Section 61 omits any phrase making limitation dependent on availability or knowledge of the copy of the order; therefore limitation commences on the date the order is pronounced. The appellant's assertions of ignorance were negatived by record evidence showing the Registry had sent the impugned order by email within thirty days and that the appellant participated in subsequent proceedings (including attending a CoC meeting). The availability of the Appellate Registry's e filing during vacation/holiday periods precluded the claim that holidays prevented filing. Bereavement and illness were considered but, in the factual matrix where the appellant had been served the order and had not exercised due diligence to file within the statutory window, such reasons did not constitute sufficient cause to justify condonation within the proviso. The Tribunal therefore found no basis to admit the appeal filed after the statutory extended period. [Paras 19, 20, 21, 22, 23]

The appellant did not demonstrate sufficient cause to justify condonation of delay; the plea that limitation should run from date of knowledge, holidays, bereavement or ill health did not excuse the delay, and the condonation application was dismissed.

Final Conclusion: The application for condonation of delay is dismissed and the appeal is rejected: appeals under Section 61 IBC must be filed within thirty days from the date of the order, with a maximum discretionary extension of fifteen days; limitation runs from the date of the order and the appellant failed to show sufficient cause for the delay in this case.

Interim protection against investigation under the PMLA - bar on grant of injunctions in matters under PMLA - power to issue summons under Section 50 of the PMLA - ECIR as an internal departmental document - independent investigation under PMLA notwithstanding earlier proceedings

Interim protection against investigation under the PMLA - bar on grant of injunctions in matters under PMLA - independent investigation under PMLA notwithstanding earlier proceedings - Interim relief to stay the ED investigation, quash the ECIR and impugned summons was refused. - HELD THAT: - The Court declined to grant ad-interim or interim orders staying the Enforcement Directorate's investigation or quashing the ECIR/summons. The Court emphasised that protection cannot be granted at the initial stage by ignoring the statutory scheme of PMLA which restricts interference and bars injunctions in matters entrusted to authorities under the Act. Orders or findings in prior fora (including NCLT/NCLT-related orders or anticipatory bail in proceedings under the FIR) do not, at this stage, oust the jurisdiction of the ED to conduct an independent money laundering investigation. The petitioner has not been absolved of the scheduled offences by discharge, acquittal or quashing, and therefore the statutory safeguards and processes under the PMLA (including mandate in relation to bail and investigation) cannot be bypassed by issuing protective relief. [Paras 11, 13]

No interim stay/quashing of the ED investigation, ECIR or summons; application for interim relief dismissed.

Power to issue summons under Section 50 of the PMLA - ECIR as an internal departmental document - The summons issued by the ED were not vitiated merely because they did not specify the documents and records sought or disclose material relied upon in the ECIR. - HELD THAT: - The Court held that ECIR is an internal document prepared prior to initiation of prosecution and that it is not necessary for the ED to reveal the evidence or all material relied upon at the summons stage. For purposes of inquiry/investigation, competent officers have statutory power to summon persons and call for records whose attendance or production is considered necessary. Non specification of documents in the annexure to the summons does not automatically render the summoning invalid or transform the inquiry into a fishing expedition absent other demonstrable arbitrariness. [Paras 12]

Summons upheld as not vitiated by non mention of particular documents or by reliance on an internal ECIR.

Final Conclusion: The petition for interim relief is dismissed; no observations were made on the merits of the ED investigation and all substantive questions are left open for determination in light of the ongoing investigation.

Service tax demand based on third party Income Tax data - Deemed receipts and arbitrary computation of tax - Threshold exemption/abatement under Notification No.33/2012 - Taxability of reimbursed warranty costs post-amendment to valuation provisions - No tax on tax component and discounting of VAT-paid sales - Remand for fresh adjudication to consider corroboration and abatements

Service tax demand based on third party Income Tax data - Remand for fresh adjudication to consider corroboration and abatements - Sustenance of service tax demand founded solely on Income Tax Returns/26AS and profit & loss figures obtained from third party sources without independent corroboration. - HELD THAT: - The Tribunal held that a demand premised only on third party data (Income Tax Returns, Form 26AS and balance sheet figures) and not corroborated by independent evidence is unsustainable. Reliance on such data to compute tax without separate verification or supporting material leads to figures that are artificially worked out and arbitrary. The Court reiterated the settled principle that tax cannot be levied on figures worked out merely on assumed or third party information unless correlated with other evidence. In consequence, the impugned demand, interest and penalty founded on that basis cannot be sustained and require re examination. [Paras 1, 5, 7]

Demand based solely on third party ITR/26AS and P&L figures set aside; matter remanded for fresh adjudication with directions to verify and correlate the data and consider corroborative evidence.

Deemed receipts and arbitrary computation of tax - Taxability of reimbursed warranty costs post-amendment to valuation provisions - Validity of computing service tax on a 'deemed' basis by taking whole year figures for specific sub periods (October 2014-March 2015 and parts of 2017 18) and taxability of warranty services prior to the relevant amendment. - HELD THAT: - The Tribunal found that treating whole year receipts as receipts for a specific half year and computing tax on that presumed basis is arbitrary and illegal. The decision notes that reimbursement elements relating to warranty services prior to the relevant amendment (as relied upon from the Apex Court decision cited in the record) could not validly be included for tax before the amended valuation provision became applicable. Further, amounts for the post GST period (from 01.07.2017) were inappropriately included where service tax was not leviable. The method of working out tax for these specific periods is thus unsustainable and must be re worked on actuals and in light of applicable law. [Paras 2, 4, 5]

Computation on a deemed/assumed basis for the specified sub periods is set aside; the matter is remitted for re computation on actuals and in accordance with the applicable valuation/taxability rules, excluding periods where service tax was not leviable.

Threshold exemption/abatement under Notification No.33/2012 - No tax on tax component and discounting of VAT-paid sales - Entitlement of the appellant to threshold exemption/abatement and discounting of sales on which VAT was paid while computing taxable value and service tax liability. - HELD THAT: - The Tribunal recognised that the entitlement to abatement/threshold exemption is a substantive right of the appellant which the adjudicating authority must consider before quantifying any tax liability. It was held that amounts representing VAT paid sales and the tax component per se cannot be subjected to service tax and that due abatement and discounting of VAT paid sales must be taken into account. The appellant's pleaded computations showing net taxable value after applying threshold exemption were to be examined by the lower authority during fresh adjudication. [Paras 3, 4, 5, 6]

Lower authority directed to consider and allow, if admissible, threshold exemption and to discount sales on which VAT was paid while re adjudicating the demand.

Final Conclusion: The Tribunal set aside the impugned order and remanded the matter to the adjudicating authority for fresh adjudication: the authority must verify and corroborate third party data before computing any liability, recompute tax on actuals (excluding periods not leviable to service tax), and consider admissible threshold exemptions and deduction of VAT paid sales before passing a fresh decision.

Service tax liability of sub-contractors - Master Circular No. 96/7/2007-S.T. dated 23.08.2007 - limitation and extended period of limitation - knowledge of department by reason of audit - time barred demand

Service tax liability of sub-contractors - Master Circular No. 96/7/2007-S.T. dated 23.08.2007 - limitation and extended period of limitation - knowledge of department by reason of audit - time barred demand - Whether the show cause notices issued on 13.10.2011 invoking the extended period of limitation for the period April 2006 to March 2009 could sustain a demand against sub contractors who did not pay service tax though the main contractor had discharged the tax liability. - HELD THAT: - The Tribunal found that, on the plain terms of the Master Circular, the respondents as sub contractors were liable to discharge service tax; however the Revenue had knowledge of the non payment by the respondents as early as 2008 when audits of the main contractors were conducted and it was known that the main contractors were discharging tax on work done by the sub contractors. Despite that knowledge, no action was taken against the respondents and the show cause notices were issued only on 13.10.2011, almost three years after the Revenue became aware of the non payment. Given the Department's earlier knowledge arising from the audit, the Tribunal held that the extended period could not be validly invoked in the circumstances and the entire demand was therefore barred by limitation. The adjudicating authority's decision to drop proceedings against the respondents was upheld for this reason. [Paras 2, 7, 8]

Demand held time barred; impugned orders dropping proceedings against the respondents affirmed and the Revenue's appeals dismissed.

Final Conclusion: Appeals dismissed. The Tribunal upheld the adjudicating authority's orders dropping proceedings against the sub contractors for the period April 2006 to March 2009 on the ground that the demand was barred by limitation in view of the Department's prior knowledge arising from audit, and the extended period could not be invoked.

Real estate agent services - in relation to sale or purchase of real estate - transfer/administrative charges not exigible to service tax - provider of service must act as real estate agent (principal-to-principal vs agent distinction)

Real estate agent services - in relation to sale or purchase of real estate - transfer/administrative charges not exigible to service tax - Whether transfer/administrative charges collected by M/s Vatika Ltd. for recording substitution of purchasers in its records are exigible to service tax as real estate agent services. - HELD THAT: - The Tribunal found that Vatika Ltd. charged administrative/transfer expenses solely for incorporating the name of the new buyer in its records when the original buyer transferred the unit and that there is no material on record showing Vatika acted as a mediator or as a real estate agent involved in negotiations between seller and buyer. The Tribunal applied the established test that to levy tax under real estate agent services the provider must be acting as a real estate agent and the service rendered must be in relation to sale, purchase, leasing or renting of real estate. Changes in the developer's records for substitution of names are not causative of the sale and the developer dealt with parties on a principal-to-principal basis rather than as an agent. The Tribunal relied on consistent precedent (including the Ansal Properties decisions and subsequent CESTAT authorities) holding that transfer/administrative charges of this character are not taxable as real estate agent services, and concluded that the demand confirmed by the adjudicating authority could not be sustained. [Paras 6, 7]

Transfer/administrative charges received by M/s Vatika Ltd. for changing buyer names in its records are not exigible to service tax as real estate agent services; demand set aside.

Final Conclusion: Revenue appeals ST/2743/2012 and ST/3070/2012 dismissed; appeal ST/60130/2016 filed by M/s Vatika Ltd. allowed. Application to change cause title granted.

Information Technology Software Service - right to use information technology software for commercial exploitation - classification of paper licenses/COA as documents of title conveying right to use IT software - sale versus service distinction for packaged software and related licenses - reverse charge liability on import of services under Section 66A read with Rule 2(l)(d)(iv) of the Service Tax Rules, 1994

Information Technology Software Service - classification of paper licenses/COA as documents of title conveying right to use IT software - sale versus service distinction for packaged software and related licenses - reverse charge liability on import of services under Section 66A read with Rule 2(l)(d)(iv) of the Service Tax Rules, 1994 - Purchase/import of Certificate of Authenticity (COA)/stickers/labels on high sea sale basis and their affixation on Thin Clients is a transaction of sale (goods) and not a taxable service under ITSS; consequently, reverse charge service tax liability cannot be sustained. - HELD THAT: - The Tribunal examined the license agreement, the import classification by Customs and the Board circulars explaining the distinction between packaged software, paper licenses and PUK cards. The licensing arrangement authorised the appellant to reproduce and embed MS binaries into Thin Clients but expressly required permanent affixation of a COA for distribution; the appellant was not a reseller of standalone software and clause 'm' prohibited separate marketing of the licensed product apart from the embedded system. Customs had assessed the imported stickers under CTH 49070030 as "documents of title conveying the right to use Information Technology Software" in line with the Board's Circulars of 04.11.2009 and 18.03.2011 which distinguish paper licenses (goods) from software media and from services. Absent any transfer of copyright or a grant entitling commercial exploitation in the sense of transferring IPR, the mere import and affixation of COAs to identify authentic embedded software does not amount to receiving an IT software service chargeable under ITSS. The appellate authority's reliance on cases concerning distribution or sale of software where rights to exploit or distribute software passed to the buyer was found inapposite, because the factual matrix here involved sale of an embedded system with incidental documentation (COA) and no transfer of copyright. On this basis, the Tribunal held the transaction to be a sale in nature and set aside the reverse charge demand. [Paras 6, 18, 19, 20, 21]

Demand of service tax on COAs/stickers under ITSS and consequent reverse charge liability was set aside; the imported stickers/labels are goods and the transaction is a sale, not a service.

Limitation and extended period - suppression and knowledge of department - Show-cause notice dated 23.06.2011 for 01.04.2008 to 31.03.2010 invoking extended period of limitation was unsustainable as there was no suppression; imports were declared and assessed by Customs and warehoused under supervision. - HELD THAT: - The Tribunal recorded that the appellant had filed Bills of Entry for importation of stickers/labels, these were assessed by Customs as goods and re-warehoused under proper procedure. Given that the Customs records disclosed the imports and the Department had the means to know of the activity, the allegation of suppression of facts was not established. In these circumstances the invocation of extended period of limitation, and ancillary imposition of interest and penalties premised on suppression, could not be sustained. [Paras 22, 23]

Demand confirmed by invoking extended period was set aside as barred by limitation and for lack of suppression.

Final Conclusion: The appeal is allowed: the imported COAs/stickers affixed on Thin Clients are goods and the transaction is a sale not taxable as Information Technology Software Service; consequently, reverse charge service tax demand is unsustainable and the demand for the period 01.04.2008 to 31.03.2010 is also barred by limitation.

Exemption under Central Excise Notification for supplies under International Competitive Bidding - importer-specific conditions not applicable to domestic suppliers - documentary requirements by importers vis-a -vis domestic manufacturers - reliance on precedential tribunal decision

Exemption under Central Excise Notification for supplies under International Competitive Bidding - importer-specific conditions not applicable to domestic suppliers - documentary requirements by importers vis-a -vis domestic manufacturers - Appellants entitled to exemption under Central Excise Notification No. 12/2012-CE for supplies to ONGC made under International Competitive Bidding and need not comply with importer-specific conditions under the corresponding Customs Notification. - HELD THAT: - The Appellants supplied goods to ONGC under International Competitive Bidding and availed exemption under Central Excise Notification No.12/2012-CE; the Department did not dispute that the goods themselves were eligible for exemption. The Department's demand rested on invocation of condition No.41 c(iv) of Customs Notification No.12/2012-Customs, namely the requirement of an affidavit and other documentary requisites applicable to importers. The Tribunal held that such conditions are stipulated for importers and do not apply to domestic manufacturers or suppliers who satisfy the condition of supply under International Competitive Bidding. The reasoning accords with the Tribunal's earlier decision in Kent Introl Pvt. Ltd v Commissioner of Central Excise, Nashik , where similar importer-centric conditions were held inapplicable to domestic suppliers once the goods are eligible and supplied under ICB. Applying that principle here, the department's reliance on importer-specific documentary requirements to deny central excise exemption to domestic supplies was unsustainable, and the confirmed demand was consequently set aside. [Paras 4, 5]

Impugned orders set aside; appeals allowed and exemption sustained for supplies made under International Competitive Bidding, with consequential relief as per law.

Final Conclusion: Appeals allowed; impugned orders set aside on the ground that importer-specific documentary conditions under the Customs Notification cannot be invoked to deny Central Excise exemption to domestic suppliers who have supplied eligible goods under International Competitive Bidding. Consequential relief, if any, to follow in accordance with law.

Valuation of physician's samples on pro-rata basis - application of Rule 4 read with Rule 11 of the Central Excise Valuation Rules, 2000 - inapplicability of Rule 8 (captive consumption valuation) to physician's samples - treatment of medicaments as specified goods under Section 4A (MRP/retail sale price) - imposition of penalty under Rule 25 of the Central Excise Rules, 2002

Application of Rule 4 read with Rule 11 of the Central Excise Valuation Rules, 2000 - valuation of physician's samples on pro-rata basis - treatment of medicaments as specified goods under Section 4A (MRP/retail sale price) - inapplicability of Rule 8 (captive consumption valuation) to physician's samples - Physician samples cleared to principal manufacturer or cleared on job work basis are to be valued under Rule 4 read with Rule 11 of the Central Excise Valuation Rules, 2000 and not under Rule 8. - HELD THAT: - The Tribunal applied the principle laid down by the Supreme Court in Medley Pharmaceuticals that physician samples are to be valued on a pro-rata basis. Following the Larger Bench in Cadila and the reasoning of the Bombay High Court, the Tribunal held that Rule 4 is the general rule for valuation where the value of such goods can be based on value of such goods sold by the assessee at a time nearest to removal; Rule 11 aids application of Rule 4 when a direct sale price is not available. Physician samples are physically and functionally the same as market-sold medicaments and are not cleared for captive consumption; therefore Rule 8, which applies to goods used for consumption in manufacture of other articles, does not apply. The Tribunal noted that notification under Section 4A making medicaments specified goods (MRP) does not displace the applicability of Rule 4 for physician samples. Applying these precedents, the Tribunal upheld the demands of differential duty with interest by assessing physician samples under Rule 4 read with Rule 11. [Paras 6, 7, 9, 10]

Valuation under Rule 4 read with Rule 11 sustained; Rule 8 held inapplicable; differential duty with interest upheld.

Imposition of penalty under Rule 25 of the Central Excise Rules, 2002 - Penalty under Rule 25 is not appropriate where the dispute concerns interpretation of valuation rules. - HELD THAT: - While upholding the differential duty and interest, the Tribunal exercised discretion in respect of penalty. Observing that the controversy arises from interpretation of valuation rules and established precedents govern the valuation question, the Tribunal found no merit in imposing penalty under Rule 25 on the appellant for the valuation-related dispute. Consequently, the impugned orders were modified to set aside the penalties while maintaining the duty and interest demands. [Paras 10]

Penalty under Rule 25 set aside; demand of differential duty with interest maintained.

Final Conclusion: Appeals disposed by upholding differential duty with interest for physician samples (period January 2005 to April 2010) assessed under Rule 4 read with Rule 11 of the Valuation Rules, 2000, and by setting aside penalties imposed under Rule 25 of the Central Excise Rules, 2002.

Debarment from using CENVAT credit upon default under Rule 8(3A) of the Central Excise Rules, 2002 - substitution of manner of payment of duty by debit of CENVAT balance - imposition of penalty under section 11AC of the Central Excise Act, 1944 - penalty under Rule 27 of the Central Excise Rules, 2002 as alternative to penalty proposed - binding precedential effect of Tribunal decisions

Debarment from using CENVAT credit upon default under Rule 8(3A) of the Central Excise Rules, 2002 - substitution of manner of payment of duty by debit of CENVAT balance - binding precedential effect of Tribunal decisions - Legality of the adjudicating authority's substitution permitting discharge of duty for March 2011 to July 2011 by debit of CENVAT balance despite earlier defaults attracting Rule 8(3A) - HELD THAT: - The Tribunal held that the adjudicating authority correctly applied the precedent (Solar Chemferts) in treating the duty as discharged by CENVAT debit once the dues together with interest were paid, and that the reviewing authority erred in attempting to overturn that approach merely on the basis that statute and rules should prevail over judgments. The order records a clear finding that the duty and interest had been paid by the stage of adjudication and that none of the ingredients for penal consequences under section 11AC existed; reliance on the binding Tribunal precedent was therefore appropriate. The appeal did not controvert the factual finding of payment with interest, and there was no contrary precedent cited to displace the binding authority relied upon. [Paras 4, 5, 6]

Adjudicating authority's substitution allowing discharge by CENVAT debit for March 2011 to July 2011 was upheld; reliance on binding Tribunal precedent was proper.

Imposition of penalty under section 11AC of the Central Excise Act, 1944 - penalty under Rule 27 of the Central Excise Rules, 2002 as alternative to penalty proposed - Validity of penalty imposed (penalty of Rs. 5,000 under Rule 27) instead of penalty proposed under Rule 25 and the question whether penal ingredients under section 11AC existed - HELD THAT: - The Tribunal noted the adjudicating authority's finding that the necessary ingredients for imposition of penalty under section 11AC were absent. The authority imposed a limited penalty under Rule 27, following the binding precedent, rather than the heavier penalty proposed under Rule 25 in the show cause notice. The reviewing authority's contention that the Commissioner had erred in imposing a penalty not proposed in the notice was rejected because the adjudicating authority acted within the scope of judicially sanctioned discretion as reflected in precedent and there was no successful challenge to the factual conclusion that penal ingredients under section 11AC were not made out. [Paras 4, 5]

Imposition of a smaller penalty under Rule 27 (instead of Rule 25) was sustained and the finding that ingredients for penalty under section 11AC were not made out was accepted.

Payment of duty accompanied by interest - Whether duty discharge must be accompanied by payment of interest as directed by the impugned order - HELD THAT: - The Tribunal recorded that the impugned order required payment of interest on the duties and that there was no appeal against that part of the order. That direction therefore stood unchallenged and was not interfered with by the Tribunal. [Paras 7]

Direction that duty discharge be accompanied by payment of interest is maintained.

Final Conclusion: The appeal is dismissed; the impugned order is affirmed - the adjudicating authority's substitution permitting discharge by debit of CENVAT balance (subject to payment of interest) and the reduced penalty imposed under Rule 27 are upheld, reliance on the binding Tribunal precedent is sustained, and the direction to pay interest remains intact.

Clandestine removal - burden of proof of clandestine removal - benefit of doubt to the assessee - veracity and admissibility of computerized accounting (SAP) records - inconsistent departmental stand / estoppel by inconsistent reliance on records - physical stock verification and methodology of stock-taking - valuation of inter-unit stock transfer and revenue-neutrality - duty on packaging drums/liners transferred between related units - penalty and requirement of conscious suppression / mens rea - limitation / extended period (invocation where suppression/misstatement alleged)

Veracity and admissibility of computerized accounting (SAP) records - physical stock verification and methodology of stock-taking - inconsistent departmental stand / estoppel by inconsistent reliance on records - Sustainability of duty demand founded on comparison between SAP accounts and a defunct manual RG1 register where Department previously relied on RG1 for confiscation but later relied on SAP to allege shortage. - HELD THAT: - The Tribunal found as an admitted fact that the appellants were maintaining day to day production and clearance records in their SAP system and that this was brought to the notice of officers during visits and by correspondence. The Department nonetheless compared physical stock with a defunct RG1 register to arrive at excess for confiscation, and later compared SAP figures with RG1 to allege shortage and demand duty. The Tribunal held that the Department cannot adopt inconsistent positions in the same investigation - it cannot reject SAP records for one purpose and then rely on them for another. The stock taking and comparisons made by officers suffered anomalies; the Department did not verify the veracity of SAP records nor bring independent evidence to justify the divergent approaches. Given these defects in methodology and the lack of proper cross verification, the demand based on such comparisons is unsustainable. [Paras 10, 11, 12, 14, 15]

Demand based on comparison between SAP and defunct RG1 register is not sustainable and is set aside.

Clandestine removal - burden of proof of clandestine removal - benefit of doubt to the assessee - Whether clandestine removal of the alleged quantities was proved so as to sustain duty demand. - HELD THAT: - The Tribunal emphasised that allegations of clandestine removal must be supported by cogent and tangible evidence and cannot rest on assumption or surmise. It noted absence of incriminating documents or independent evidence of clandestine clearances, and that for removal of such large quantities corresponding unaccounted purchases of raw/packing materials were not shown. The stock discrepancies between two visits (huge excess on first visit and negligible shortage on second) further indicate flawed verification. Where physical verification is not foolproof and anomalies exist, the assessee is entitled to benefit of doubt. On the material, the Department failed to discharge the burden to prove clandestine removal. [Paras 12, 13, 14, 15]

Clandestine removal not proved; duty demand founded on alleged clandestine removal is set aside.

Valuation of inter-unit stock transfer and revenue-neutrality - Sustainability of demand on alleged undervaluation of fruit pulp stock transferred to sister unit. - HELD THAT: - The Tribunal accepted that the appellants adopted comparable price for valuation and that no favourable treatment was afforded. Further, the transferred stock was used by the sister unit to manufacture final products which were cleared on payment of duty or exported under bond, so any duty paid would be available as Cenvat credit to the recipient unit, rendering the transaction revenue neutral. On these findings the differential duty confirmed is not sustainable. [Paras 16]

Demand for differential duty on stock transfers to sister unit is not sustainable and is set aside.

Duty on packaging drums/liners transferred between related units - revenue-neutrality - Liability to pay duty on MS drums and LDPE liners alleged to have been transferred between units without payment of duty. - HELD THAT: - The Tribunal accepted the appellants' case that MS drums and liners procured under the relevant exemption were used for packing fruit pulp either in Unit I or Unit II and that filled drums were cleared on payment of duty or under bond; no evidence was produced by the Department of sale of drums/liners to outsiders without duty. Given the related unit usage and absence of contrary evidence, and the revenue neutral character of the inter unit flow, the demand on account of drums/liners is unsustainable. [Paras 17]

Demand on account of MS drums and LDPE liners is not sustainable and is set aside.

Penalty and requirement of conscious suppression / mens rea - Sustainability of penalties imposed on the company and on Shri Sameer Sharma. - HELD THAT: - The Tribunal found absence of conscious and deliberate suppression or wilful mis declaration and held that mens rea was not established. Shri Sameer Sharma performed duties as an employee and there was no showing of personal undue gain. In absence of requisite mens rea or suppression, imposition of penalties is not sustainable. [Paras 18]

Penalties on the company and on Shri Sameer Sharma are set aside.

Final Conclusion: All impugned orders confirming duty, interest and penalties were set aside: demands based on alleged clandestine removal (arising from inconsistent use of RG1 and SAP records and flawed stock taking) were not sustained; valuation of inter unit transfers and duty on drums/liners found unsustainable; penalties set aside for lack of conscious suppression or mens rea. Appeals allowed with consequential reliefs in accordance with law.

Additional consideration flowing from the buyer - Section 4(1)(b) - valuation where price is not the sole consideration - transaction value under Section 4(1)(a) - Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - addition of money value of supplies by buyer - Explanation (1) to Rule 6 - drawings, designs and engineering work as additional consideration - buyers' assist versus items necessary for production

Additional consideration flowing from the buyer - Section 4(1)(b) - valuation where price is not the sole consideration - Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - addition of money value of supplies by buyer - transaction value under Section 4(1)(a) - Whether the notional cost of specification drawings and designs supplied free of cost by Maruti should be included in the assessable value of parts/components manufactured by vendors and cleared to Maruti under Section 4(1)(b) and Rule 6. - HELD THAT: - The Court held that Section 4(1)(b) and Rule 6 apply only where there is an additional consideration flowing from the buyer to the manufacturer in connection with a sale. The specifications in the present cases were supplied by Maruti at the pre-tender/Request for Quotation stage to potential vendors before any contract of sale or letter of intent crystallised; after issuance of the letter of intent Maruti paid only the agreed price and did not pay any further consideration. Consequently, no additional consideration for sale was received by the appellants from Maruti and neither Section 4(1)(b) nor Rule 6 could be invoked to include a notional cost of such specifications in the assessable value. The Court emphasised the distinction between situations where the buyer relieves the manufacturer of costs by supplying items used in production and the present facts where the supply of specifications occurred as part of the tendering process and not as a payment over and above the sale price. [Paras 29, 30, 50]

The notional cost of drawings and designs supplied free by Maruti cannot be included in the assessable value under Section 4(1)(b) and Rule 6; appeals allowed on this ground.

Explanation (1) to Rule 6 - drawings, designs and engineering work as additional consideration - buyers' assist versus items necessary for production - Whether the specification drawings/designs supplied by Maruti fall within clauses (ii) or (iv) of Explanation (1) to Rule 6 as items 'used in the production' or 'necessary for the production' of the goods so as to be treated as additional consideration. - HELD THAT: - The Court interpreted clauses (ii) and (iv) of Explanation (1) to Rule 6 to cover only drawings, designs and engineering work that are used in or necessary for the production of the goods - i.e., items a manufacturer would otherwise have prepared for production but which the buyer supplies free or at reduced cost. Specification drawings supplied at the tender stage that merely state the buyer's requirements or dimensions are 'buyers' assist' and do not constitute engineering inputs necessary for manufacture. The factual record showed that appellants prepared detailed drawings and designs (with technical support and licensed technology from their parent) which were essential for manufacture; the Maruti specifications were layout/dimension requirements and were not sufficient for production. On that basis clauses (ii) and (iv) could not be invoked to add value of those specifications to assessable value. [Paras 35, 36, 42, 44, 46]

Specification drawings supplied by Maruti at the tender/shortlisting stage are not 'used in production' nor 'necessary for production' within Explanation (1) to Rule 6 and therefore are not includible as additional consideration; appeals allowed on this ground.

Central excise levy on non-manufacturers - Whether the adjudicating authority could fasten central excise duty on traders who did not undertake manufacturing activities. - HELD THAT: - Certain appeals were by entities that were traders and did not manufacture the components. The Tribunal noted that central excise duty could not be levied on them as manufacturers where they did not undertake manufacturing; the adjudicating authority had erroneously treated such traders as manufacturers and issued show cause notices on that basis. Given the primary conclusion that drawings' notional cost is not includible and that traders were not manufacturers, the appeals by these traders were allowed. [Paras 15, 52]

Appeals filed by traders held not sustainable and allowed; impugned orders set aside.

Final Conclusion: The Tribunal held that specification drawings and designs supplied free by Maruti at the tender/shortlisting stage do not amount to additional consideration under Section 4(1)(b) or Explanation (1) to Rule 6 and are not includible in the assessable value; accordingly all impugned orders confirming differential central excise duty were set aside and the appeals allowed, including appeals by traders who were not manufacturers.