TaxTMI Updates e-Newsletter
Mar 19,2020

Detention and seizure - release of goods and conveyance on payment of tax and penalty - confiscation under Section 130 - intention to evade payment of tax - requirement of recorded reasons for invoking confiscation at the threshold - application of mind by authority

Release of goods and conveyance on payment of tax and penalty - detention and seizure - Whether the conveyance (truck no. GJ-12-AZ-5184) and the goods contained therein were to be released upon payment of the tax as directed by this Court. - HELD THAT: - This Court recorded and reaffirmed the ad-interim direction of a coordinate Bench permitting release of the conveyance and goods on payment of the tax determined by the authorities. The writ applicant availed of that interim order and obtained release of the vehicle and goods on payment of the tax amount. The present writ was disposed of after noting that the vehicle and goods had been released pursuant to the interim direction and that the underlying adjudicatory proceedings (show-cause notice under Section 130) remain pending and will continue in accordance with law. [Paras 4, 5, 8]

Conveyance and goods were directed to be released on payment of the tax; the interim release has been effected and the writ is disposed of to that extent.

Confiscation under Section 130 - intention to evade payment of tax - requirement of recorded reasons for invoking confiscation at the threshold - application of mind by authority - Whether the show-cause notice in Form GST MOV-10 under Section 130 should be quashed or discharged at this stage. - HELD THAT: - The Court did not quash or set aside the show-cause notice. Instead, it observed that the writ applicant is at liberty to make submissions and rely upon the Court's recent exposition in Synergy Fertichem Pvt. Ltd. (paras 99-104) concerning the limited circumstances in which Section 130 may be invoked at the threshold, the need for material on which the authority forms its belief, and the requirement that invocation of confiscation reflect an application of mind and, where appropriate, recorded reasons. The present proceedings are at the stage of the show-cause notice and are to proceed in accordance with law; it is open to the applicant to make good its case before the adjudicating authority. [Paras 6, 7]

The challenge to the show-cause notice is left open; the applicant may rely on the observations in Synergy Fertichem and pursue the adjudication-the notice is not quashed and proceedings shall continue.

Final Conclusion: The petition is disposed of insofar as this Court directed (and the petitioner obtained) release of the vehicle and goods on payment of the tax; challenge to the show-cause notice under Section 130 remains undecided on merits and the adjudicatory proceedings shall continue, with the petitioner being at liberty to make submissions including reliance on the Court's observations in Synergy Fertichem.

Claim of input tax credit via FORM GST TRAN-1 - technical glitches on GST common portal - extension of time for submission of TRAN-1 under rule 117(1A) read with section 168 - direction to revenue authorities to permit online filing - writ remedy under Article 226

Claim of input tax credit via FORM GST TRAN-1 - technical glitches on GST common portal - extension of time for submission of TRAN-1 under rule 117(1A) read with section 168 - Writ-applicant entitled to file FORM GST TRAN-1 despite failure to upload earlier on account of technical glitches and to seek credit of pre-GST balances. - HELD THAT: - The writ court accepted that the TRAN-1 could not be uploaded on the common portal due to technical glitches and that the failure was not attributable to the writ-applicant. The court held that the writ-applicant falls within the class of registered persons contemplated by Order No.01/2020-GST (Ministry of Finance, 7 February 2020), which extended the period for submitting FORM GST TRAN-1 where non-submission was on account of technical difficulties and where cases were recommended by the Council. Applying that order, the court directed the respondent to permit the writ-applicant to file TRAN-1 and claim the credit reflected in earlier returns, subject to completion of the prescribed exercise by the revenue within the specified timeframe. [Paras 7, 8, 9, 10]

Respondent directed to permit filing of FORM GST TRAN-1 and to complete the exercise within two weeks of receipt of the order.

Final Conclusion: Writ petition allowed to the extent that the respondent is directed to permit the petitioner to file FORM GST TRAN-1 on account of technical portal failures, and to complete the process within two weeks; writ disposed of.

Commensurate reduction in prices - Section 171 of the CGST Act, 2017 - anti-profiteering - Methodology and Procedure under Rule 126 - suo motu jurisdiction - show cause notice - Consumer Welfare Fund - prohibition of netting off/zeroing in profiteering computation

Suo motu jurisdiction - Rule 126 - Section 171 of the CGST Act, 2017 - Authority and DGAP were empowered to take suo motu cognizance and initiate investigation into alleged non-passing of benefit of GST rate reduction. - HELD THAT: - The Authority derives power under Section 171(2) to examine whether reductions in tax rate have been passed on; Rule 127 assigns duties to the Authority and Rule 126 empowers it to determine methodology. The Authority's notified Methodology & Procedure (para 9) permits it to take suo motu cognizance. The Authority acted on the Respondent's own submissions (letter dated 23.04.2018) and there were sufficient grounds to refer the matter to the Standing Committee and DGAP. Consequently, initiation of proceedings on suo motu basis and reference to DGAP were within statutory powers and did not offend principles of natural justice where notices and multiple hearings were afforded. [Paras 81, 82, 83]

Suo motu initiation and investigation were held lawful and not violative of natural justice.

Commensurate reduction in prices - Section 171 of the CGST Act, 2017 - anti-profiteering - Respondent contravened Section 171(1) by not passing the benefit of GST rate reductions to recipients. - HELD THAT: - Section 171(1) mandates that reduction in tax rate or benefit of ITC be passed by way of commensurate reduction in prices. The Authority examined invoices, MRPs and other material and found that post rate-reduction the Respondent had, in many instances, increased base prices and failed to reduce MRPs or otherwise demonstrably pass benefit to recipients. Notices were issued, opportunities were given, and re-investigation addressed Respondent's contentions; the Authority concluded the benefit was denied to consumers and the statutory requirement remained unfulfilled. [Paras 77, 78, 89, 100]

Respondent was found to have violated Section 171(1) and thus to have profiteered.

Methodology and Procedure under Rule 126 - commensurate reduction in prices - prohibition of netting off/zeroing in profiteering computation - Methodology adopted by DGAP-comparison of average base price for 01.11.2017-14.11.2017 with invoice-wise post reduction base prices for 15.11.2017-31.03.2019-was held acceptable and binding for computation of profiteering; netting off was rejected. - HELD THAT: - The Authority explained practical and legal reasons for the methodology: (i) difficulty of buyer wise matching pre and post reduction purchases, (ii) need to compute benefit to each recipient on actual transactions post reduction, and (iii) short pre rate reference period used to derive representative average base prices. The Authority, empowered under Rule 126 to determine methodology, held that SKU/unit wise computation is required and that netting off positive and negative variances (zeroing) would deny benefits to individual recipients; hence netting off is not permissible for anti profiteering. [Paras 80, 85, 91, 96]

DGAP's methodology was upheld and netting off/zeroing was rejected as inconsistent with Section 171.

Show cause notice - natural justice - Procedural fairness: Respondent received requisite notices and multiple hearings; re-investigation was directed and fresh report considered before final adjudication. - HELD THAT: - Record shows DGAP issued initial notice and the Authority issued further show cause notices; Respondent was granted numerous hearings and opportunities to file submissions and documents. The Authority referred the matter back to DGAP for re-investigation on identified discrepancies and considered the revised report. The proceedings thus complied with audi alteram partem and did not amount to bias or denial of natural justice. [Paras 83, 86]

No breach of natural justice; procedural requirements satisfied.

Quantification of profiteering - Consumer Welfare Fund - Quantum of profiteering fixed at Rs. 75,08,64,019/-; Respondent directed to reduce prices commensurately and deposit the profiteered amount in the Consumer Welfare Fund with interest; show cause issued for penalty under Section 171(3A). - HELD THAT: - After rectification of arithmetic and re examination of submissions, DGAP revised the profiteering figure to Rs. 75,08,64,019/-. The Authority accepted this computation (Rule 133(1)) and ordered reduction of prices (Rule 133(3)(a)), deposit of the determined amount into the Central/State Consumer Welfare Funds (Rule 133(3)(c)) with 18% interest from dates of realization, and directed issuance of a show cause notice seeking reasons why penalty under Section 171(3A) should not be imposed. [Paras 71, 100, 101]

Profiteering quantified at Rs. 75,08,64,019/-, to be deposited in CWF with interest; show cause issued for penalty.

Final Conclusion: The Authority upheld DGAP's re investigation and methodology, found M/s Patanjali Ayurveda Ltd. in breach of Section 171(1) for not passing on GST rate reductions, fixed net profiteering at Rs. 75,08,64,019/-, directed commensurate price reduction and deposit of the amount (with interest) into the appropriate Consumer Welfare Funds, and issued a show cause notice for imposition of penalty under Section 171(3A).

Denying exemption u/ss 11 and 12 - whether the activities carried out by the Assessee fall under the 4th limb i.e., “the advancement of any other object of General Public Utility” of the definition of the term “charitable purpose” under Section 2(15) of the Act and not under the 2nd limb “education”? -

Assessee's activities are held to be activities of 'education' and the denial of exemption under Sections 11 and 12 was set aside by HC [2017 (5) TMI 430 - DELHI HIGH COURT] - HELD THAT:- Petitioner (s), on instructions issued by the Department of Revenue, Ministry of Finance vide F.No.390/Misc./116/20l7-JC, dated 22.08.2019, seeks permission to withdraw these special leave petition(s) along with pending applications therein due to low tax effect.

Permission granted, subject to just exceptions.

Exclusion of net (and not gross) income when computing deduction under sections 80-I, 80-IA and 80HH - Netting of income and related expenditure for determining deductible income - Allowability of amounts derived from sale of scrap, empty containers and similar receipts for deduction under section 80I - Characterisation of interest from debtors as income derived from eligible business for the purpose of section 80I - Treatment of pre-operative/borrowing cost interest where new facility is expansion of existing business - Remand for verification of a claim under section 35AB

As decided by HC [2014 (10) TMI 388 - GUJARAT HIGH COURT] Tribunal's and CIT(A)'s conclusions upholding netting (net and not gross exclusion), allowance of various receipts under section 80I and interest from debtors, and deletion of project interest disallowances were affirmed; the section 35AB claim was remanded to the AO for fresh verification.

HELD THAT:- Though the entire tax effect in the present matter has been stated to be to the tune of ₹ 11.21 crores, it is admitted that in respect of question as framed at page 49, the tax effect is less than ₹ 2 crores.

In the circumstances, we see no reason to interfere in the matter. This special leave petition is, accordingly, dismissed.

Addition of unexplained income - seized documents as evidence - corroboration of third-party diary entries - concurrent findings of fact - reassessment under Section 147

Addition of unexplained income - seized documents as evidence - corroboration of third-party diary entries - concurrent findings of fact - Validity of the reassessment addition made on the basis of seized material from a third party linking the respondent to undisclosed cash transactions. - HELD THAT: - The Court examined whether the material seized from the premises of the B.M. Gupta group and statements recorded in the search proceedings sufficiently established that the respondent had advanced cash and thus had unexplained income. The Tribunal had relied on coordinate-bench decisions which held that abbreviated or coded entries in the seized diary were not linked to the assessee without adequate corroboration. The CIT(A) and the ITAT rendered concurrent findings that the assessing officer had not established a connection between the entries in the seized documents and the respondent, and that no further independent inquiry or corroborative evidence was gathered by the AO to bridge that gap. The Court noted that the Revenue failed to produce cogent material to fasten liability on the respondent and could not point to perverse findings warranting interference with the concurrent factual conclusions. [Paras 11, 12, 13, 14]

The reassessment addition based on the seized material was not sustainable as the link between the third-party records and the respondent was not established; the deletions made by the CIT(A) and confirmed by the ITAT are upheld.

Final Conclusion: The Revenue's appeal is dismissed; no substantial question of law arises and the concurrent factual findings that the seized material did not establish liability of the respondent are affirmed.

Validity of notice under Section 131 of Income-tax Act - Legality of search and seizure under Section 132 of Income-tax Act - Requirement of recording reasons for conversion of survey into search - Inspection or disclosure of reasons at pre-assessment stage - Return of seized bank deposits subject to security/bank guarantee

Validity of notice under Section 131 of Income-tax Act - Legality of search and seizure under Section 132 of Income-tax Act - Requirement of recording reasons for conversion of survey into search - Inspection or disclosure of reasons at pre-assessment stage - Challenge to the notice issued under Section 131 and to the search and seizure conducted under Section 132 was considered on the basis of recorded reasons and pleadings in the writ petition. - HELD THAT: - The Court examined whether the satisfaction/reasons recorded at the time of converting the survey into a search were non-existent or arbitrary and found that reasons had been recorded and could not be said to be non existent or arbitrary. Reliance was placed upon the principle, as stated by the Supreme Court, that reasons for such satisfaction are necessary for accountability but that inspection or disclosure of the reasons at the pre assessment stage is not ordinarily required and may be premature. The Court declined to entertain contentions or facts not raised in the writ petition, holding that arguments outside the scope of the pleaded reliefs could not be considered in the writ proceedings.

The challenge to the notice and to the legality of the search and seizure was not upheld on the basis that reasons were recorded; the Court refused to adjudicate matters not pleaded and applied the principle that pre assessment disclosure of reasons is generally not warranted.

Return of seized bank deposits subject to security/bank guarantee - Whether the amounts seized (held as bank deposits) could be returned to the petitioner pending further proceedings. - HELD THAT: - The Court directed that the seized amount may be refunded to the petitioner upon the petitioner furnishing an adequate bank guarantee/surety for the seized amount together with accrued interest in the interregnum. The Court recorded that the petitioner had no objection to furnishing security and noted a factual dispute as to whether any demand was pending, but nonetheless framed a conditional remedy allowing provisional refund upon provision of security.

Petitioner directed to furnish a bank guarantee for the seized amount (including accrued interest) and, on receipt, the revenue shall refund the amount to the petitioner.

Final Conclusion: The writ petition was not allowed insofar as it sought to quash the notice and impugn the search and seizure on the grounds raised; the Court found recorded reasons for converting the survey into a search and declined to examine arguments beyond the pleadings, but granted conditional relief by ordering refund of the seized bank deposits upon the petitioner furnishing an adequate bank guarantee (including accrued interest).

Notice under Section 148 invalid as issued to non-existing company - Amalgamation and cessation of legal existence - Substantive illegality distinguishable from curable procedural defects under Section 292B - Knowledge of revenue via Registrar of Companies/transfer memo/Compliance Response Sheet - Limitation under the first proviso to Section 147 - Change of opinion

Notice under Section 148 invalid as issued to non-existing company - Amalgamation and cessation of legal existence - Knowledge of revenue via Registrar of Companies/transfer memo/Compliance Response Sheet - Substantive illegality distinguishable from curable procedural defects under Section 292B - Validity of the notice dated 28/03/2018 issued under Section 148 (and consequential orders) which was addressed to the amalgamating company that had ceased to exist on amalgamation - HELD THAT: - The Court found that M/s. Taxsmile.com India Pvt. Ltd. had been amalgamated with M/s. eMudhra Ltd. by an earlier order and the department had actual notice of the amalgamation as evidenced by the Registrar of Companies' notice, the transfer memo and the Compliance Response Sheet acknowledging the merger. A jurisdictional notice under Section 148 issued to an entity which has ceased to exist amounts to substantive illegality and is not a curable defect under Section 292B. Reliance was placed on the reasoning in the Apex Court's decision in Maruti Suzuki India Ltd., where initiation of proceedings against an entity that has ceased to exist was held to be void ab initio. In the facts of the present case, given the department's knowledge of amalgamation and that the notice under Section 148 was issued after the amalgamation and at the last moment before limitation lapsed, remanding for fresh consideration would be futile because the defective issuance of the jurisdictional notice cannot be cured at this stage. The Court therefore quashed the notice dated 28/03/2018 under Section 148, the order overruling objections dated 29/11/2018, and the subsequent notice under Section 142(1) dated 11/12/2018, without adjudicating other contentions concerning limitation, change of opinion or tangibility of material. [Paras 10, 11, 12, 13, 14]

Notice dated 28/03/2018 under Section 148, the order overruling objections dated 29/11/2018, and Notice dated 11/12/2018 under Section 142(1) are quashed as issued to a non-existing company.

Final Conclusion: Writ petition allowed; the proceedings and notices issued to the amalgamating company that had ceased to exist are quashed on grounds of substantive illegality and the matter is disposed.

Appropriation of profit - loss of potential profit - sale of goods to members at concessional price - distinction between sale below cost and concession above cost - ascertainment of cost price including direct and indirect costs - remand to Assessing Officer for fresh determination

Sale of goods to members at concessional price - appropriation of profit - loss of potential profit - ascertainment of cost price including direct and indirect costs - remand to Assessing Officer for fresh determination - Whether the difference between market/levy price and concessional sale price of sugar sold to members warrants addition as appropriation of profit, and the remit required to the Assessing Officer. - HELD THAT: - The Tribunal accepted that notional or potential profit foregone by selling sugar to members at a price lower than market price is, in general, a loss of potential profit and not an appropriation of profit taxable in the hands of the assessee. Appropriation of profit arises only where the concessional sale results in a transfer of profit that had been earned from normal business operations to members, which occurs when the concessional price is below the assessee's cost price. Accordingly, a straight difference between market/levy price and concessional price cannot be treated as appropriation of profit. Where concessional sale price exceeds or equals cost, the differential is merely potential profit foregone and not chargeable. Where concessional sale price is below cost, the shortfall (the part below cost) represents appropriation/distribution of profit and may be brought to tax. The Tribunal therefore set aside the addition confirmed by the CIT(A) insofar as it treated the entire difference between market/levy price and concessional price as appropriation of profit, and remitted the matter to the Assessing Officer to ascertain the cost price of sugar for the factory (including all direct and indirect costs and all items of debit to the Trading and Profit & Loss account) and to compute/add only that portion which represents sale below cost; the assessee is to be afforded a reasonable opportunity of hearing in such fresh proceedings. [Paras 6]

Order of the CIT(A) set aside on this issue and matter restored to the file of the Assessing Officer with directions to determine cost fully and make additions only to the extent concessional sale price is below cost; assessee to be heard.

Final Conclusion: Appeal allowed for statistical purposes; the addition made by the authorities treating the entire difference between market/levy price and concessional price as appropriation of profit is set aside and the matter remitted to the Assessing Officer to determine cost (including direct and indirect costs) and to compute any taxable appropriation only to the extent concessional sale price is below cost, with opportunity of hearing.

Allowability of deduction under section 36(1)(viia) for provision for bad and doubtful debts where no rural branches/advances exist - interpretation of the dual-limbed formula in section 36(1)(viia) - 7.5% of total income vis-a -vis 10% of rural advances - allowability of business expenditure under section 37(1) - application of section 14A and Rule 8D - apportionment/allocation of interest to exempt income

Allowability of deduction under section 36(1)(viia) for provision for bad and doubtful debts where no rural branches/advances exist - interpretation of the dual-limbed formula in section 36(1)(viia) - 7.5% of total income vis-a -vis 10% of rural advances - Deduction under section 36(1)(viia) is allowable to a co-operative bank that has no rural branches/advances to the extent of 7.5% of total income, subject to making the provision in the books of account; the 10% of rural advances limb is inapplicable where there are no rural advances. - HELD THAT: - The Tribunal, having considered earlier decisions and relying on its pronouncement in Bhagni Nivedita Sahakari Bank Ltd. v. DCIT (Pune Bench, 30.11.2018), held that when a bank does not have rural branches or rural advances the proviso/second limb (10% of rural advances) cannot operate, but the first limb (7.5% of total income) remains available. The Tribunal observed that the Catholic Syrian Bank decision relied upon by the Revenue was not a bar to allowability under clause (viia) in the facts of this case and followed the Tribunal view which applied the ratio permitting the 7.5% deduction with the rider that the provision must be reflected in the books. The finding was applied consistently to the three assessment years on appeal. [Paras 8, 9]

Allowed the claim under section 36(1)(viia) to the extent of 7.5% of total income for the assessee-bank which has no rural branches/advances; the 10% rural-advances limb is inapplicable.

Allowability of business expenditure under section 37(1) - Expenditure on certain newspaper advertisements (death notices, birthday greetings, congratulatory messages for politicians) is not allowable as business expenditure under section 37(1). - HELD THAT: - The Assessing Officer and the Commissioner (Appeals) found that the payments were for obituary/birthday/congratulatory advertisements concerning persons not related to the bank and that the assessee failed to demonstrate business expediency or nexus with the bank's business. The assessee had also admitted inability to substantiate business expediency during assessment proceedings. The Tribunal found the orders below fair and reasonable and declined to interfere with the disallowance. [Paras 12, 13]

The disallowance of the advertisement expenditure was sustained and the ground is dismissed.

Application of section 14A and Rule 8D - apportionment/allocation of interest to exempt income - Disallowance under Rule 8D(2)(ii) set aside (allowance granted) where investments in shares were made out of interest-free funds; disallowance under Rule 8D(2)(iii) confirmed as conceded. - HELD THAT: - The Assessing Officer made disallowance under Rule 8D(2)(ii) and (iii). The assessee demonstrated that total investments were funded out of substantial interest-free funds (reserves) and not by borrowed funds, and relied on binding authority of the Bombay High Court in CIT v. Reliance Utilities and Power Ltd. The Tribunal accepted that there was no diversion of interest-bearing funds towards the investments and held the disallowance under Rule 8D(2)(ii) to be uncalled for, directing the AO to allow that portion. The portion under Rule 8D(2)(iii) (which the assessee did not contest) was confirmed. [Paras 14, 15, 16]

Partly allowed: disallowance under Rule 8D(2)(ii) deleted; disallowance under Rule 8D(2)(iii) confirmed.

Final Conclusion: The three appeals are partly allowed: deduction under section 36(1)(viia) is permitted to the extent of 7.5% of total income for the bank which has no rural branches/advances; the advertisement expenditure disallowance under section 37(1) is sustained; and the disallowance under Rule 8D is partly deleted (Rule 8D(2)(ii) allowed, Rule 8D(2)(iii) confirmed). The decisions are applied to A.Y. 2011-12, 2012-13 and 2013-14.

Reopening of assessment upon formation of belief - scope of reassessment and manner of computation - application of Section 69C - peak credit method of computation - circular transactions / paper entries - evidentiary value of statements recorded during survey under section 133A - retraction of statement

Reopening of assessment upon formation of belief - scope of reassessment and manner of computation - Validity of reassessment and whether additions made on a different statutory head than recorded reasons travelled beyond the scope of reassessment. - HELD THAT: - The Tribunal held that the reasons recorded for reopening (formation of belief that bogus purchases were booked) were confined to a prima-facie belief that income had escaped assessment. The Assessing Officer, upon examining the material, adopted Section 69C as the statutory head to quantify the escapement; that choice of provision as a manner of computation did not render the reassessment beyond the recorded reasons. Explanation 3 to the reopening provision was considered but no new issue surfaced during reassessment that would invalidate the proceedings. Consequently the additional ground that reassessment was beyond scope was dismissed. [Paras 4]

Reassessment was valid; additional ground that additions under Section 69C exceeded the scope of reopening is dismissed.

Retraction of statement - evidentiary value of statements recorded during survey under section 133A - Whether the retraction of a statement by a different director cured the effect of the earlier statement and the evidentiary weight to be accorded to survey statements. - HELD THAT: - The Tribunal observed that a retraction must be made by the same person who originally made the statement; a retraction by another director cannot be accepted to neutralise the earlier statement. At the same time, the Tribunal reiterated the settled principle that statements recorded during survey under section 133A do not carry high evidentiary value unless supported by corroborative material, following the authority relied upon by the parties. [Paras 5]

Retraction by a different person was rightly disregarded; however, survey statements alone are insufficient without corroboration.

Application of Section 69C - peak credit method of computation - circular transactions / paper entries - Sustainability and quantum of additions made under Section 69C on the basis of peak credit and treatment of identified circular/paper transactions. - HELD THAT: - The Tribunal accepted the Assessing Officer's finding that certain transactions were suspected but also recorded that transactions amounting to Rs. 1,163.89 lakhs were circular/paper entries subsequently reversed and reflected in closing stock, with no quantitative discrepancies in stock records for AY 2010-11 and AY 2011-12. Those circular transactions were to be disregarded for making additions. As to the remaining purchases (approximately Rs. 384.03 lakhs) where cheque payments of Rs. 382.72 lakhs were made and the assessee admitted procuring material in cash from the open market regularised by bills, the Tribunal held that the mechanical peak credit method was inappropriate. An ad hoc estimate to reflect the profit element from procurement in the grey/unorganised market was applied: an addition of 5% on the balance purchases was held to meet the ends of justice, with the balance additions deleted. [Paras 5]

Circular/paper-entry purchases of Rs. 1,163.89 lakhs disregarded; addition sustained only at 5% of remaining purchases (estimated addition confirmed); balance additions deleted.

Final Conclusion: Appeal partly allowed. Reassessment upheld as valid; retraction by a different director disregarded but survey statements require corroboration; circular/paper transactions removed from consideration and the addition sustained only by way of an estimated 5% of the balance purchases, with the remaining additions deleted.

Penalty under section 271(1)(c) for concealment or furnishing inaccurate particulars - Estimation of income and additions on estimate/ad hoc basis - Ad hoc estimation and non leviability of penalty - Reliance on third party information without independent inquiry - Onus on the Department to prove positive concealment

Penalty under section 271(1)(c) for concealment or furnishing inaccurate particulars - Estimation of income and additions on estimate/ad hoc basis - Ad hoc estimation and non leviability of penalty - Reliance on third party information without independent inquiry - Onus on the Department to prove positive concealment - Deletion of penalty under section 271(1)(c) where additions were made by ad hoc estimation of profit element on purchases treated as non genuine. - HELD THAT: - The Tribunal upheld the Commissioner (Appeals) in deleting penalty imposed under section 271(1)(c) because the Assessing Officer made only an ad hoc estimation of the profit element on certain purchases (gross profit restricted at 12.5%) without conclusive proof of positive concealment or furnishing of inaccurate particulars. The AO's reliance on information from the Sales Tax Department and third party statements, without conducting independent enquiries or producing concrete evidence of bogus purchases, rendered the additions estimate based. Established authority (including decisions of coordinate Benches and High Courts cited in the order) supports that penalty cannot be sustained where the assessment or additions rest on estimation alone and there is no affirmative evidence of deliberate concealment; the onus to prove positive concealment lies on the Department. Applying these principles to the facts for A.Ys. 2009-10, 2010-11 and 2011-12, the Tribunal found no infirmity in the CIT(A)'s conclusion to delete the penalty.

Penalty deleted; additions being estimate based do not attract section 271(1)(c) in the absence of proof of positive concealment.

Final Conclusion: Revenue appeals dismissed; order of the Commissioner (Appeals) deleting penalty under section 271(1)(c) for the assessment years 2009-10, 2010-11 and 2011-12 is upheld.

Genuineness of intra-family rental arrangement - treatment of self-occupied and let-out portions of same property - apportionment of interest expense between let-out and self-occupied portions - requirement of speaking order on quantification by Assessing Officer - tax benefit from genuine arrangements cannot be disregarded

Genuineness of intra-family rental arrangement - tax benefit from genuine arrangements cannot be disregarded - Validity of recognizing rental income from the assessee's major son and daughter and not treating the arrangement as a mere tax-avoidance device - HELD THAT: - The Tribunal found that mere unusualness of an arrangement, or the fact that rent is paid by close family members, is not conclusive to ignore rental income where there is no material on record to demonstrate that the arrangement is fake. The Revenue's doubt, unsupported by probing of relevant facts (such as area let, composition of accommodation, mode and source of payment, or continuity of arrangement), was insufficient to reject the claim. The Tribunal applied the principle that a genuine arrangement which results in tax minimisation cannot be disregarded merely because it benefits the assessee, and therefore accepted the assessee's claim in principle that the rentals could be recognised. [Paras 5]

Rental receipts from the major son and daughter are not to be disregarded merely because they are family members; the arrangement is acceptable in principle as genuine on the material before the Tribunal.

Treatment of self-occupied and let-out portions of same property - apportionment of interest expense between let-out and self-occupied portions - requirement of speaking order on quantification by Assessing Officer - Extent to which interest on borrowed capital is allowable against rental income where the same building is partly self-occupied and partly let out - HELD THAT: - The Tribunal held that where a single self-owned residential property is partly let out and partly self-occupied, interest claimed for the entire property cannot be allowed wholly against the rental income which relates only to the let-out portion. The assessee must provide a reasonable basis for allocation (for example, area let, composition of accommodation, number of occupants, fair rental value, mode and source of receipts) so that interest attributable to the let-out portion can be determined. In the absence of a working basis on record, the interest claim cannot be sustained in full; the self-occupied part's interest limit under the statute (as already allowed) remains applicable. The Tribunal directed remand to the AO to adjudicate the apportionment and quantification of interest on the basis of material and a reasonable allocation furnished by the assessee, and to pass a speaking order giving reasons for any disagreement. [Paras 5, 6]

Interest must be apportioned between the let-out and self-occupied portions; the assessee to supply a reasonable allocation basis and the AO to determine and quantify allowable interest by a speaking order within a reasonable time.

Final Conclusion: The appeal is partly allowed: the Tribunal accepted in principle the genuineness of the intra-family rental arrangement and remitted the matter to the Assessing Officer for apportionment and quantification of interest between the let-out and self-occupied portions on the basis of a reasonable allocation furnished by the assessee, with the AO to pass a speaking order.

Deduction under section 80IA(4) - developer versus works contractor - involvement in making investment - shouldering technical risk - liability for liquidated damages - employment of technical and administrative qualified team - bogus / unexplained purchases - increase in eligible profit as consequence of disallowance - reopening of assessment on fresh material - effect of statement recorded during search/seizure and subsequent retraction

Deduction under section 80IA(4) - developer versus works contractor - involvement in making investment - shouldering technical risk - liability for liquidated damages - employment of technical and administrative qualified team - Whether the assessee was carrying on eligible infrastructure business and entitled to deduction under section 80IA(4). - HELD THAT: - The Tribunal examined the tender/bid and concession agreements for the projects undertaken by the assessee and applied the benchmark test adopted in the Tribunal's earlier decisions. The contracts show retention/security deposits, bank guarantees, mobilization/plant advances, obligations to procure material and men, indemnity and maintenance obligations, defects liability and express clauses for liquidated damages and staffing/technical requirements. These features demonstrate financial involvement, assumption of technical risk, liability for liquidated damages and employment of qualified technical and administrative personnel. Relying on the coordinate-bench reasoning in the assessee's earlier years and applying the criteria derived from precedent, the Tribunal held that the assessee is a developer and not merely a works contractor and therefore entitled to claim deduction under section 80IA(4). [Paras 24, 25, 26, 27]

Deduction under section 80IA(4) allowed; assessee held to be a developer for the projects in issue.

Bogus / unexplained purchases - effect of statement recorded during search/seizure and subsequent retraction - increase in eligible profit as consequence of disallowance - Validity of additions on account of alleged bogus purchases and whether the increased profit resulting from such disallowance is eligible for deduction under section 80IA(4). - HELD THAT: - The Assessing Officer made additions treating certain purchases as accommodation entries, relying on statements recorded during search/seizure. The CIT(A) upheld the disallowance but allowed the corresponding increase in profit to be treated as eligible for deduction under section 80IA(4). The Tribunal noted that the AO had disallowed despite documents having been furnished by the assessee and that the statement relied upon had been retracted. The Tribunal observed that the disallowance, insofar as it increased profit, had no practical impact on the taxable income because the profits arise from the eligible infrastructure business; accordingly the CIT(A)'s treatment was not disturbed. The Tribunal also observed that given the scale of the assessee's business and the pre-existing claim to 80IA(4) benefits, there was no commercial incentive to take the small accommodation entries alleged. [Paras 23, 26, 33]

The finding on bogus purchases was not disturbed for the assessment years before the Tribunal; the increased profit arising from any disallowance was held to be eligible for deduction under section 80IA(4).

Reopening of assessment on fresh material - statement recorded during search/seizure - Whether reopening of assessment was valid in respect of AY 2008-09. - HELD THAT: - The Tribunal considered the revenue's contention that reopening was improper and the assessee's challenge that the reasons were a change of opinion. The material before the AO (information from search/seizure and statements) was treated as fresh material which was not considered at the original assessment under section 143(3). On facts the Tribunal found that reopening was based on fresh information and that the AO's action in reopening the assessment was not shown to be vitiated by non-application of mind. [Paras 37, 38]

Reopening of assessment held valid.

Final Conclusion: The Tribunal dismissed the revenue's appeals and the assessee's appeals. It confirmed that the assessee is entitled to deduction under section 80IA(4) for the projects in issue, treated any increase in profit (even if arising from disallowance of certain purchases) as eligible for 80IA(4) where profits derive from the eligible infrastructure business, and upheld the validity of the reopening of assessment on the material before the Assessing Officer.

Service of notice by affixture - reopening of assessment and notice under section 148 - modes of service under section 282 and saving under section 292B - requirement to quote PAN in immovable property transactions and consequences of non-PAN transaction - validity of registered sale deed as primary documentary evidence against oral evidence - treatment of unexplained investment/purchase as income from undisclosed sources

Service of notice by affixture - reopening of assessment and notice under section 148 - modes of service under section 282 and saving under section 292B - requirement to quote PAN in immovable property transactions and consequences of non-PAN transaction - Validity of issuance and service of notice under section 148 and assumption of jurisdiction to reopen assessment - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that the AO had recorded reasons for reopening and was satisfied that income had escaped assessment, justifying issuance of notice under section 148. The AO received AIR/registering-authority information concerning a non-PAN transaction of purchase of immovable property, and no return was on record to verify source of investment; the assessee had not quoted PAN despite statutory requirement. The notice dated 21.03.2016 was addressed to the last known address in the registered sale deed; after attempts at ordinary service and enquiries (including dispatch by registered post), service by affixture in presence of two local witnesses was effected. Reliance on the Supreme Court ratio in Pr. CIT v. M/s. I-Ven Interactive Limited supported the proposition that, where the assessee has not intimated change of address or updated PAN database, the AO may act on the available address and subsequent actual service is immaterial when procedural prerequisites are met; the Tribunal found the facts here justified affixture and that the assessee was aware of proceedings (correspondence before AO and filing of appeal within statutory period), so service was valid and also saved under section 292B. [Paras 8, 9]

Service of notice under section 148 by affixture at the last known address was valid; reopening and assessment proceedings are maintainable; Grounds 1 to 3 dismissed.

Validity of registered sale deed as primary documentary evidence against oral evidence - treatment of unexplained investment/purchase as income from undisclosed sources - requirement to quote PAN in immovable property transactions and consequences of non-PAN transaction - Sustenance of addition of the purchase consideration as unexplained investment by relying on the registered sale deed - HELD THAT: - The Tribunal affirmed the CIT(A)'s view that the registered sale deed dated 22.12.2008, which records the sale consideration and co-purchaser, is primary documentary evidence and cannot be contradicted by subsequent oral statements or plain-paper affidavits absent allegations of fraud, misrepresentation, lack of execution, mistake or ambiguity in the deed. The assessee's claim that she was an adopted daughter and that no consideration was paid was supported only by affidavits and village certificates; no legal adoption under the Hindu Adoption and Maintenance Act was proved. The sale deed expressly recites payment of consideration (albeit paid prior to registration at seller's home) and bears witnesses; in the absence of legally acceptable exception, oral evidence cannot overturn the registered instrument. Given also the non-availability of PAN and lack of return explaining source of funds, the investment was held unexplained and added to income. [Paras 15]

Addition treating the purchase consideration as unexplained investment upheld; Grounds 4 to 6 dismissed.

Final Conclusion: The Tribunal dismissed the appeal in its entirety; the CIT(A)'s order upholding reopening of assessment, validity of service by affixture, and the addition treating the purchase as unexplained investment is affirmed.

Deduction under section 80P(2)(a)(i) - deduction under section 80P(2)(d) - exclusion of co-operative banks by section 80P(4) - character of income - interest on surplus or idle funds not business/operational income - interest on deposits with scheduled/commercial banks not eligible for 80P benefits - investments with co-operative societies versus co-operative banks

Deduction under section 80P(2)(a)(i) - interest on deposits with scheduled/commercial banks not eligible for 80P benefits - character of income - interest on surplus or idle funds not business/operational income - Claim for deduction under section 80P(2)(a)(i) in respect of interest earned on deposits with scheduled/nationalised banks and interest on surplus funds was disallowed. - HELD THAT: - The Tribunal upheld the view that interest earned by a co operative society on deposits or investments of idle or surplus funds does not change its character into operational income merely because it is deposited with a bank. Reliance is placed on the jurisdictional High Court decision in State Bank of India v. CIT that interest on deposits with commercial banks is not exempt under section 80P(2)(a)(i). The Tribunal noted coordinate bench decisions holding that such interest, whether earned from nationalised banks or co operative banks, is not income from the society's business of providing credit to members and therefore does not qualify for deduction under section 80P(2)(a)(i). The Tribunal accepted the coordinate bench approach and rejected the assessee's contention that overdraft/advances or the fact of being a co operative society converts such interest into deductible business income.

Deduction under section 80P(2)(a)(i) for interest on deposits with scheduled/nationalised banks and for interest on surplus/idle funds is not allowable; the appeal is dismissed on this ground.

Deduction under section 80P(2)(d) - exclusion of co-operative banks by section 80P(4) - investments with co-operative societies versus co-operative banks - character of income - interest on surplus or idle funds not business/operational income - Claim for deduction under section 80P(2)(d) in respect of interest earned from KDCC Bank (a co operative bank) was disallowed. - HELD THAT: - The Tribunal followed coordinate bench and High Court reasoning that clause (d) of section 80P(2) applies to interest or dividend derived from investment in another co operative society and does not extend to income from co operative banks, which conduct banking business regulated by the Banking Regulation Act, 1949. The Tribunal accepted the view that section 80P(4) excludes co operative banks (other than primary agricultural credit societies) from the benefits of section 80P and that the character of interest on surplus funds remains non operational irrespective of whether earned from a co operative bank. Consequently, interest from KDCC Bank does not qualify for deduction under section 80P(2)(d). The reproduced coordinate bench reasoning also directed that pro rata expenses in respect of interest earned from deposits with nationalised banks may be allowed after verification, a principle the Tribunal adopted from those precedents.

Deduction under section 80P(2)(d) for interest earned from the co operative bank (KDCC Bank) is not allowable; appeal dismissed.

Final Conclusion: The assessee's appeal for A.Y. 2015-16 is dismissed; interest earned on deposits or investments of surplus/idle funds-whether with nationalised banks or co operative banks-does not qualify as operational/business income for deduction under section 80P(2)(a)(i) or 80P(2)(d), and the Tribunal followed coordinate bench and High Court authorities in rejecting the deductions (with the coordinate bench approach regarding pro rata expenses on deposits with nationalised banks noted for verification by the assessing officer).

Deduction under Section 80P(2) of the Income-tax Act - Assessing Officer's inquiry into activities of the assessee society - registration certificate not binding on the Assessing Officer - rectification under section 154 - classification as Primary Agricultural Credit Society - interest income from investments to be treated as income from business

Deduction under Section 80P(2) of the Income-tax Act - Assessing Officer's inquiry into activities of the assessee society - registration certificate not binding on the Assessing Officer - rectification under section 154 - Whether the CIT(A) could, by way of rectification under section 154, deny the claim of deduction under section 80P(2) without a factual inquiry into the activities of the assessee-society. - HELD THAT: - The Tribunal held that the Larger Bench of the Kerala High Court in The Mavilayi Service Co-operative Bank Ltd. v. CIT requires the Assessing Officer to conduct an inquiry into the factual activities of the assessee-society to determine eligibility for deduction under section 80P after introduction of sub-section (4). A registration certificate classifying a society (e.g., as a Primary Agricultural Credit Society) does not preclude factual verification by the Assessing Officer. The CIT(A) erred in invoking section 154 to deny the deduction without directing such verification. In view of the legal principle that each assessment year is a separate unit, the issue of entitlement to deduction under section 80P(2) is restored to the Assessing Officer to examine activities and determine eligibility for the relevant assessment year(s). [Paras 8]

The Tribunal set aside the CIT(A)'s rectification to the extent it denied the section 80P(2) claim and remanded the matter to the Assessing Officer for factual enquiry and determination of eligibility.

Interest income from investments to be treated as income from business - deduction under Section 80P(2) of the Income-tax Act - Assessing Officer's inquiry into activities of the assessee society - The correct treatment of interest earned on investments with banks/treasury and whether such interest qualifies for deduction under section 80P(2). - HELD THAT: - The Tribunal noted a coordinate Bench decision holding that interest on investments with treasuries and banks forms part of the banking activity and may be assessable as income from business rather than other sources. However, grant of deduction under section 80P on such interest must follow the law laid down by the Larger Bench in Mavilayi: the Assessing Officer must examine the assessee-society's activities before allowing section 80P relief on that interest. Accordingly, assessment treatment as business income is indicated, but entitlement to section 80P deduction on that interest is remitted to the Assessing Officer for examination under the principles enunciated by the High Court. [Paras 8]

Interest income may be treated as business income; entitlement to deduction under section 80P on such interest is remanded to the Assessing Officer for determination after examining the society's activities.

Final Conclusion: Appeals allowed for statistical purposes; the Tribunal set aside the CIT(A)'s section 154 modifications insofar as they denied section 80P(2) relief without factual enquiry and remitted the matters to the Assessing Officer to examine the activities of the assessee-societies and determine eligibility for deduction (with interest income treatment to be examined as indicated); stay applications dismissed as infructuous.

Exclusion of business losses from set-off against salary income under section 71(2A) - treatment of unabsorbed depreciation as part of business loss - non-availability of set-off of unabsorbed depreciation against income under the head Salaries - carry forward of unabsorbed depreciation under section 32(2) and section 72 - distinction between business loss and unabsorbed depreciation

Exclusion of business losses from set-off against salary income under section 71(2A) - treatment of unabsorbed depreciation as part of business loss - non-availability of set-off of unabsorbed depreciation against income under the head Salaries - Whether unabsorbed depreciation under the head "Profits and gains of business or profession" can be set off against income assessable under the head "Salaries". - HELD THAT: - The Tribunal examined the language of section 71(2A) and the explanatory memorandum to the Finance Act, 2004 (effective 01/04/2005) and held that, from AY 2005-06 onwards, losses under the head profits and gains of business or profession cannot be set off against income assessable under the head salaries. Unabsorbed depreciation, being an allowance/part of computation under business income (section 32 and related provisions), forms part of the business loss for the assessment year and does not have an independent existence separable from profits and gains of business and profession for the purpose of set-off against salary income. Reliance on earlier decisions distinguishing unabsorbed depreciation from business loss was rejected as not applicable in view of the specific statutory exclusion enacted by section 71(2A). For these reasons the Tribunal upheld the disallowance of the set-off of unabsorbed depreciation against salary income and sustained the findings of the Assessing Officer and the Commissioner (Appeals). [Paras 8, 9]

Set-off of unabsorbed depreciation against income under the head Salaries is not permissible and the disallowance was upheld.

Carry forward of unabsorbed depreciation under section 32(2) and section 72 - treatment of unabsorbed depreciation as part of business loss - Whether unabsorbed depreciation, disallowed against salary income, may be carried forward to subsequent years. - HELD THAT: - The Tribunal noted that while set-off against salary income is barred by section 71(2A), there is no statutory bar in section 72 to carrying forward unabsorbed depreciation, subject to the conditions contained therein. Accordingly, where the assessee fulfills the conditions prescribed for carry forward, the Assessing Officer was directed to allow carry forward of unabsorbed depreciation to subsequent years in accordance with law and the relevant provisions governing carry forward and set-off. [Paras 10]

Assessee may carry forward unabsorbed depreciation to subsequent years if conditions in section 72 are satisfied; AO directed to allow such carry forward.

Final Conclusion: Appeals partly allowed: disallowance of set-off of unabsorbed depreciation against salary income upheld; however the assessee is entitled to carry forward unabsorbed depreciation to subsequent years if statutory conditions for carry forward are met.

Suspension of Lookout Circular - conditional permission to travel pending investigation - parity with order of another investigating agency - obligation to cooperate with investigation and prohibition on tampering with evidence - security/forfeiture of fixed deposit as assurance

Suspension of Lookout Circular - conditional permission to travel pending investigation - obligation to cooperate with investigation and prohibition on tampering with evidence - security/forfeiture of fixed deposit as assurance - parity with order of another investigating agency - Order suspending the Lookout Circular issued by the Enforcement Directorate till 31.05.2020 to permit the petitioner to travel abroad subject to specified conditions. - HELD THAT: - The petitioner, against whom investigations were pending before both the CBI and the Enforcement Directorate arising from the same cause of action, sought lifting of the ED-issued lookout circular to travel abroad. The Special Court (CBI) had earlier suspended the CBI lookout circular till 31.05.2020 subject to enumerated conditions (including furnishing an FDR, furnishing itinerary, maintaining a working mobile number, non-contact with witnesses, and appearing when directed). Respondents did not dispute that a similar conditional suspension could protect investigative interests. The Court, without expressing views on the merits of the underlying investigations, applied the principle of parity with the CBI order and directed suspension of the ED lookout circular till 31.05.2020 on the same lines. The suspension is expressly conditional: the petitioner must furnish a fixed deposit receipt as security, provide travel itinerary and contact details, refrain from contacting witnesses or tampering with evidence, and remain available to the investigating agency; breach of conditions will render the security forfeitable. The Court limited relief to the specified period and disallowed any extension of the suspension beyond 31.05.2020 on the present application.

The ED Lookout Circular is suspended until 31.05.2020 to allow the petitioner to travel abroad subject to specified conditions (security by FDR, itinerary and contact details, non-contact with witnesses, appearance when directed), and the FDR stands forfeitable on breach; no extension permitted.

Final Conclusion: Writ petition disposed by suspending the Enforcement Directorate's lookout circular until 31.05.2020 to permit the petitioner's foreign travel on compliance with enumerated conditions mirroring the CBI Court's order; relief confined to the stated period and conditional on cooperation and maintenance of the security.

Appealability of order - condonation of delay - consideration of time spent in parallel proceedings for condonation - remand of contested issues to appellate authority - cross-examination issues to be considered on appeal

Appealability of order - condonation of delay - consideration of time spent in parallel proceedings for condonation - Whether the appellate authority shall take into account the time consumed in the writ petition when adjudicating an application for condonation of delay in filing the appeal against the Order in Original dated 11th December, 2019. - HELD THAT: - The petitioner conceded that the Order in Original dated 11th December, 2019 is appealable and did not press the writ petition. In light of the limited submission, the Court disposed of the petition as not pressed but directed that, if an appeal is preferred, the concerned Appellate Authority shall appreciate and take into account the period consumed from the filing of this writ petition until the date of the order when deciding any application for condonation of delay. This direction requires the appellate authority to consider the pendency of parallel judicial proceedings as a relevant circumstance in adjudicating condonation applications, without deciding the merits of any such application. [Paras 1, 2, 4]

Petition disposed of as not pressed; appellate authority to consider the time consumed in the writ petition when adjudicating condonation of delay in the appeal against the Order in Original dated 11th December, 2019.

Remand of contested issues to appellate authority - cross-examination issues to be considered on appeal - Disposition of issues relating to cross-examination which were adjudicated at length below but are not pressed before this Court. - HELD THAT: - The petitioner elected not to press the questions relating to cross-examination before this Court, stating the intention to press them before the Appellate Authority. The Court therefore did not adjudicate those questions on merit and directed that the Appellate Authority shall consider the questions of cross-examination and pass appropriate orders in accordance with law. Thus the matters on cross-examination are left for fresh consideration by the appellate forum. [Paras 3]

Questions relating to cross-examination are not decided and shall be considered and decided afresh by the Appellate Authority in accordance with law.

Final Conclusion: Writ petition disposed of as not pressed; petitioner permitted to prefer an appeal and the Appellate Authority is directed to take into account the time consumed in the writ petition for purposes of condonation of delay, while questions on cross-examination remain undetermined and are to be considered afresh by the Appellate Authority.

Classification of goods by HSN: Rule 3(a) preference for most specific heading - Chapter Note 1(b) of Chapter 71: articles wholly or partly of precious metal - Consumable adjuncts versus parts of machinery for tariff classification - Notification as evidentiary but not determinative of classification - Application of section and chapter notes in tariff classification - Precedent on classification of machinery parts: Pankaj Jain Agencies

Classification of goods by HSN: Rule 3(a) preference for most specific heading - Chapter Note 1(b) of Chapter 71: articles wholly or partly of precious metal - Consumable adjuncts versus parts of machinery for tariff classification - Application of section and chapter notes in tariff classification - Notification as evidentiary but not determinative of classification - Precedent on classification of machinery parts: Pankaj Jain Agencies - Sputtering targets exported by the applicant are classifiable under Chapter 71 (articles of precious metal) and not under Chapter 85 (electrical machinery), and the Commissioner (Appeals)'s rejection of the drawback claim is upheld. - HELD THAT: - The authorities correctly applied Rule 3(a) of the General Rules for the Interpretation of the Harmonized System of Nomenclature, which gives preference to the heading providing the most specific description, together with Chapter Note 1(b) of Chapter 71 which directs that articles wholly or partly of precious metal are to be classified in that chapter. The items in question are sputtering targets composed predominantly of silver and thereby fall within Chapter 71. Although the applicant relied on classification under Chapter 85 and on foreign tariff rulings, no new facts were produced that contradict the findings of the Commissioner (Appeals) that the goods are consumables of precious metal used up in the process and not parts of the machine covered by Chapter 85. A notification recording silver sputtering targets under Chapter 71 was noted as supportive but the order correctly treats a notification as not independently decisive of classification. The decision in Pankaj Jain Agencies was applied to reaffirm that section and chapter notes govern classification where applicable. In these circumstances the Revision Application does not merit interference and the appellate authority's conclusion stands.

Revision application rejected; Order-in-Appeal upholding classification under Chapter 71 and rejection of drawback claim affirmed.

Final Conclusion: The revision application is dismissed and the Commissioner (Appeals)'s order rejecting the drawback claim on the ground of classification of sputtering targets under Chapter 71 is upheld; no interference is warranted.

Re-export of detained imported goods - non-declaration under Section 77 of the Customs Act, 1962 - detention and confiscation under Section 111(d) of the Customs Act, 1962 - redemption fine under Section 125 of the Customs Act, 1962 - penalty under Section 112 of the Customs Act, 1962 - ownership of seized goods

Ownership of seized goods - non-declaration under Section 77 of the Customs Act, 1962 - re-export of detained imported goods - redemption fine under Section 125 of the Customs Act, 1962 - Re-export of the absolutely confiscated gold biscuits allowed on payment of a redemption fine. - HELD THAT: - The Revisionary Authority found on the record that the applicant is the bona fide owner of the impugned goods and had sought re-export. The Authority accepted the applicant's uncontradicted contention that no baggage declaration under Section 77 was filed because the goods were intercepted after immigration before reaching the green channel, and noted that the applicant returned to a foreign country after a short visit. In view of Section 80 read with the statutory scheme permitting re-export of detained imported goods on the passenger's request where return to a foreign country after a short visit is established, and having regard to earlier administrative practice condoning non-declaration by NRIs/foreigners in similar cases, the Authority allowed re-export subject to payment of a redemption fine under Section 125. The order therefore modifies the appellate order to permit re-export on the stated conditions. [Paras 5, 6]

Re-export of the confiscated gold biscuits allowed on payment of a redemption fine of Rs. 2,00,000/- under Section 125; payment to be made within 30 days.

Detention and confiscation under Section 111(d) of the Customs Act, 1962 - penalty under Section 112 of the Customs Act, 1962 - Confiscation upheld but the penalty imposed under Section 112 is maintained. - HELD THAT: - While the Authority accepted the applicant's ownership and allowed re-export subject to redemption fine, it concurrently upheld the absolute confiscation as ordered by the original adjudicating authority and affirmed the penalty of Rs. 50,000 imposed under Section 112. The revision therefore does not disturb the penalty; only the consequence of absolute confiscation was ameliorated by permitting re-export upon payment of the redemption fine. [Paras 5, 6]

Penalty of Rs. 50,000/- imposed under Section 112 is upheld; Order-in-Appeal is modified accordingly.

Final Conclusion: The revision application is allowed in part: re-export of the confiscated gold biscuits is permitted on payment of the redemption fine under Section 125 within 30 days, while the penalty under Section 112 as imposed by the lower authority and affirmed on appeal is upheld; the Order-in-Appeal is modified accordingly.

Ineligibility of non-ornamental silver as duty-free baggage - confiscation for breach of baggage rules and Foreign Trade Policy - commercial import disguised as passenger baggage - undisclosed import in breach of Section 77 of the Customs Act, 1962 - option under Section 125 of the Customs Act, 1962 to pay redemption fine

Ineligibility of non-ornamental silver as duty-free baggage - confiscation for breach of baggage rules and Foreign Trade Policy - Whether the silver items brought by the applicant qualified as bona fide passenger baggage and were eligible for duty-free clearance - HELD THAT: - The Court examined Rule 3 of the Baggage Rules, 2016 and Annexure I which expressly excludes "Gold or silver in any form other than ornaments" from duty free baggage allowance. Paragraph 2.26 of the Foreign Trade Policy (2015 2020) confirms that bona fide household goods and personal effects are governed by the Baggage Rules. The applicant admitted owning a shop dealing in silver utensils and produced a cash memo for purchase in Yangon; the goods were eight silver bowls brought for commercial use. On these findings the Court held that the silver did not fall within bona fide baggage and that import in violation of the statutory scheme rendered the goods liable to confiscation. [Paras 5, 6, 7, 9]

Silver items in any form other than ornaments are not eligible for duty free baggage allowance; confiscation under the Customs regime was lawful.

Commercial import disguised as passenger baggage - undisclosed import in breach of Section 77 of the Customs Act, 1962 - Whether the facts established that the applicant attempted to smuggle the silver articles and thereby violated Section 77 of the Customs Act, 1962 - HELD THAT: - The applicant crossed the green channel without declaring the silver articles; his voluntary statement and the purchase invoice established that he bought the items for resale. The adjudicating authority found, and the Court accepted, that the applicant attempted to evade customs duty by not declaring the consignment. This conduct amounted to undisclosed import in violation of Section 77 and supported the confiscation and imposition of penalty under the Customs Act and related rules. [Paras 3, 4, 7]

The applicant's failure to declare the imported silver and the commercial nature of the import amounted to smuggling/undisclosed import under Section 77; confiscation and penalty were justified.

Option under Section 125 of the Customs Act, 1962 to pay redemption fine - Whether the seized goods should have been released on payment of a redemption fine under Section 125 - HELD THAT: - Section 125 confers discretion on the adjudicating officer to permit payment of a fine in lieu of confiscation in certain cases. The Court noted that the adjudicating authority and the Commissioner (Appeals) considered the nature of the offence and declined to exercise that discretion in favor of the applicant. Given the findings of commercial importation and deliberate nondisclosure, the Court found no infirmity in the refusal to allow redemption under Section 125. [Paras 8]

Discretion under Section 125 to allow redemption was rightly not exercised in view of the nature of the offence; release on payment of fine was not warranted.

Final Conclusion: The revision application is rejected: the silver items were not eligible as duty free baggage, the facts establish undisclosed commercial import in breach of Section 77, confiscation and penalty were lawful, and the discretion to allow redemption under Section 125 was rightly not exercised.

Cessation of corporate debtor's liability upon approval of a resolution plan under Section 32A of the IBC - non-prosecution of the corporate debtor post-CIRP where management or control has changed to unrelated persons - continuing criminal liability of erstwhile promoters, designated partners and officers in default - effect of change in management or control under an approved resolution plan

Cessation of corporate debtor's liability upon approval of a resolution plan under Section 32A of the IBC - non-prosecution of the corporate debtor post-CIRP where management or control has changed to unrelated persons - effect of change in management or control under an approved resolution plan - The petitioner (corporate debtor) is discharged from prosecution and liability for offences committed prior to CIRP upon approval of the resolution plan where management/control has changed to persons not connected with the previous management. - HELD THAT: - The Court examined the text of Section 32A as inserted by the 2019 Ordinance and held that the provision expressly provides that the liability of a corporate debtor in relation to offences committed prior to the corporate insolvency resolution process shall cease from the date the resolution plan is approved by the adjudicating authority, provided the resolution plan effects a change in management or control to persons who were not promoters, in management or control, related parties, or persons implicated by the investigating authority. Applying that statutory mandate to the facts, the Court noted that a resolution plan had been approved by the NCLT and that management of the petitioner had been taken over by new promoters who are not connected with the previous management. In those circumstances the petitioner cannot be prosecuted and is entitled to be discharged and relieved of the impugned criminal proceedings instituted against it. [Paras 5, 6, 7, 8]

Impugned cognizance order and summons quashed and the complaint against the petitioner set aside; the petitioner discharged from prosecution under Section 32A of the IBC.

Continuing criminal liability of erstwhile promoters, designated partners and officers in default - non-application of Section 32A protection to persons directly involved in offences - Prosecution of erstwhile promoters, designated partners or officers in default who were directly or indirectly involved in the commission of offences is not affected by the discharge of the corporate debtor. - HELD THAT: - The Court clarified that Section 32A itself preserves criminal liability of persons who were 'designated partners' or 'officers in default', or who were in charge of or responsible to the corporate debtor and were directly or indirectly involved in the commission of the offence as per the investigating authority's report or complaint. Accordingly, while the corporate debtor is discharged upon approval of the resolution plan, such individuals remain amenable to prosecution and punishment under the law. The Court emphasised that its order setting aside proceedings against the corporate debtor does not impinge on any continuing prosecutions against those persons. [Paras 5, 9]

Order does not affect prosecution of erstwhile promoters or officers directly responsible for the offences; such persons continue to remain liable.

Final Conclusion: The petition is allowed: the Trial Court's order taking cognizance and the subsequent summons issued to the petitioner are set aside and the complaint against the corporate debtor is quashed under Section 32A of the IBC, while prosecutions against erstwhile promoters or officers directly involved in offences remain unaffected.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Overriding effect of Section 238 of the Insolvency and Bankruptcy Code - Provisional attachment by statutory authorities during CIRP - Control and custody of assets by the Interim Resolution Professional under Section 25 of the Insolvency and Bankruptcy Code - Inconsistency between the Insolvency and Bankruptcy Code and other laws

Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Overriding effect of Section 238 of the Insolvency and Bankruptcy Code - Provisional attachment by statutory authorities during CIRP - Control and custody of assets by the Interim Resolution Professional under Section 25 of the Insolvency and Bankruptcy Code - Validity and effect of provisional attachments/encumbrances created by the GST Department over assets of the corporate debtor and whether such attachments must be released to enable the IRP to take control during CIRP. - HELD THAT: - The Adjudicating Authority applied the non-obstante doctrine embodied in section 238 of the IBC and the moratorium mandated by section 14 to conclude that proceedings or actions inconsistent with the IBC cannot be permitted to frustrate the CIRP. The Tribunal relied on precedents holding that where there is inconsistency between the IBC and other laws the IBC prevails and that CIRP is not a recovery proceeding. In that context provisional attachments and orders by statutory authorities which impede the IRP from taking custody and control of assets and carrying out the insolvency resolution process would thwart the time-bound scheme and objectives of the Code. Although the respondent contended that provisional attachments were effected prior to the moratorium and hence valid, the Tribunal held that the overriding effect of section 238 and the moratorium under section 14 require release of such attachments so that the IRP can collate claims and manage the corporate debtor as a going concern in the prescribed timeline. [Paras 7]

The GST Department's attachments of the corporate debtor's assets are to be released to enable the IRP to take custody and control; the IA is allowed and directions are issued for release of assets so the CIRP may proceed.

Final Conclusion: The application by the IRP is allowed: the Tribunal directed release of the assets attached by the GST Department, holding that the moratorium under the IBC and the overriding effect of section 238 displace contrary statutory encumbrances so that the IRP may take custody and carry out the CIRP within the prescribed timeline.

Initiation of CIRP under section 9 of the IBC - date of default - time-barred debt - limitation under Article 137 of the Limitation Act, 1963 - acknowledgement/payment within limitation extending limitation - proof of service of Demand Notice - proof of service of invoices/Delivery Challans/Lorry Receipts

Date of default - time-barred debt - Correct date(s) of default and their effect on limitation of the petition under the Limitation Act. - HELD THAT: - The Tribunal examined the invoice dates and the five-day grace period specified in the invoice on record and found that the asserted single date of default (26.03.2014) in the petition is incorrect. Calculating the date of default invoice-wise yields dates between 01.04.2014 and 13.08.2014, the last being 13.08.2014 (para 11-12). Applying the settled law in B.K. Educational Services and Sagar Sharma, Article 137 of the Limitation Act governs applications under section 9 of the IBC; the three year limitation runs from the date of default. Even taking the latest calculated date of default (13.08.2014), the three year limitation expired on 12.08.2017, whereas the petition was filed on 15.05.2018 (para 17-19). Accordingly, the claim before this Adjudicating Authority is time barred. [Paras 11, 12, 17, 19]

The petition is barred by limitation because the correct dates of default fall between 01.04.2014 and 13.08.2014 and the three year limitation expired before the filing of the petition.

Proof of service of invoices/Delivery Challans/Lorry Receipts - Existence of proof of delivery/service of the invoices and supporting delivery documents. - HELD THAT: - The Tribunal noted that only one invoice is annexed to the petition and there is no proof of service of the other invoices on the Corporate Debtor in the form of signatures, Delivery Challans, or Lorry Receipts (para 3, 7, 11, 13). The absence of such proof was recorded as a deficiency in the petitioner's case, bearing on the establishment of the claimed debt for the purposes of the petition (para 13). [Paras 7, 11, 13]

There is no proof on record of service/delivery of the invoices in respect of the claimed transactions.

Proof of service of Demand Notice - Whether there is proof of service of the statutory Demand Notice on the Corporate Debtor. - HELD THAT: - The Tribunal found that the Operational Creditor did not place on record postal receipts, acknowledgement cards, tracking reports, or evidence of hand delivery to prove service of the Demand Notice (para 8, 14). In the absence of such proof, the service of the notice required under section 8 could not be established for the purposes of the petition before this Adjudicating Authority (para 14). [Paras 8, 14]

No proof of service of the Demand Notice has been furnished on the record.

Acknowledgement/payment within limitation extending limitation - time-barred debt - Whether any acknowledgement of liability or payment within the limitation period extended the period of limitation. - HELD THAT: - The Tribunal recorded that there is no evidence of any acknowledgement of liability by the Corporate Debtor or of any payment made within the limitation period that could operate to extend the limitation under sections 18 or 19 of the Limitation Act (para 16). In consequence, no basis existed to apply principles that would save the petition from being time barred (para 16-19). [Paras 16, 19]

There is no proof of acknowledgement or payment within the limitation period to extend limitation; therefore, the petition cannot be saved from being time barred.

Final Conclusion: The Tribunal dismissed the petition under section 9 of the IBC as barred by limitation: the correct dates of default fall between 01.04.2014 and 13.08.2014, no acknowledgement or payment within limitation was shown, and the petition filed on 15.05.2018 was beyond the three year period under Article 137 of the Limitation Act; ancillary deficiencies noted include lack of proof of service of invoices and the Demand Notice. Any observations made are without prejudice to the Operational Creditor's rights before other forums.

Maintainability of petition under section 9 of the Insolvency and Bankruptcy Code, 2016 - operational debt arising from tax or duty collected and deposited with Government - effect of failure to provide statutory Form C within contractual time - absence of debt/default where amount has been deposited with Government Exchequer

Maintainability of petition under section 9 of the Insolvency and Bankruptcy Code, 2016 - effect of failure to provide statutory Form C within contractual time - Whether the petition under section 9 for initiation of Corporate Insolvency Resolution Process was maintainable where the purchaser (Operational Creditor) submitted C-Form after removal of goods in breach of the Letter of Award and the seller had deposited the VAT with the Government. - HELD THAT: - The Tribunal examined the Letter of Award which expressly required submission of Form 'C' before removal of goods for the seller to refund the VAT component. The factual record established that goods were removed between 30.06.2015 and 24.07.2015 whereas the C-Forms were furnished on 26.11.2015 and 08.05.2016 (see observations at paras 14, 14.1-14.4). Because the Form 'C' was not provided within the contractual time or before the seller deposited the VAT with the Government, the seller was obliged to collect and deposit CST at the applicable rate. The Tribunal held that the amount claimed by the applicant was the VAT/CST amount which had already been collected from the applicant and deposited with the Government Exchequer (para 14.6). On that basis the Tribunal concluded there was no outstanding operational debt payable by the Corporate Debtor to the Operational Creditor which could constitute a 'default' under the Code, and therefore the section 9 petition was not maintainable. [Paras 14]

The petition under section 9 is rejected because the Operational Creditor failed to submit Form 'C' within the time stipulated in the Letter of Award and the VAT amount claimed had already been deposited with the Government, so there is no recoverable operational debt/default.

Final Conclusion: The petition under section 9 of the Insolvency and Bankruptcy Code, 2016 is dismissed: the Operational Creditor did not furnish Form 'C' in the period required by the Letter of Award and the VAT/CST amount claimed was already collected and deposited by the Corporate Debtor with the Government; parties are directed to pursue any refund, if available, before appropriate tax authorities.

Limitation and condonation under Section 42 of the PMLA, 2002 - statutory maximum period for extension and absence of power to condone beyond it - preclusive/prohibitory proviso excluding application of general condonation power - rules of limitation founded on public policy (interest reipublicae ut sit finis litium)

Limitation and condonation under Section 42 of the PMLA, 2002 - statutory maximum period for extension and absence of power to condone beyond it - Whether the delay in filing the appeal against the Appellate Tribunal's order dated 29.08.2019 could be condoned. - HELD THAT: - The Court examined the temporal limits in Section 42 of the PMLA, 2002 which prescribes 60 days from communication with a proviso permitting the High Court to allow filing within a further period not exceeding 60 days. The Court applied the established principle that where a statute prescribes a final outer limit by mandatory or preemptory language, the judicial power to condone delay under the general Limitation Act cannot be invoked to extend beyond that outer limit. Reliance on the line of authorities cited by the respondents established that preclusive wording in a proviso operates to exclude any further extension beyond the maximum period prescribed. The admitted chronology showed the Appellate Tribunal's order dated 29.08.2019 was received on 11.09.2019 and the appeal impugned was filed on 22.01.2020, which was beyond the cumulative maximum (60 + 60 days = 120 days) permitted by Section 42. Applying these legal principles, the Court held it had no power to condone the present delay and dismissed the condonation application. [Paras 36, 37]

The application for condonation of delay was dismissed and the appeal was rejected as barred by limitation.

Preclusive/prohibitory proviso excluding application of general condonation power - withdrawal and refiling of a purported earlier filing - Whether the alternative prayer to withdraw the filed appeal with liberty to file an earlier purported appeal (dated 24.12.2019) could be allowed so as to remedy the limitation defect. - HELD THAT: - The Court noted that the purported earlier appeal (diary No.1621374/2019) was not before the Court and remained a registry matter returned under objections. The Court held that the lacuna could not be cured by permitting withdrawal and refiling to circumvent the statutory limitation regime. Given the absence of the earlier appeal before the Court and the final statutory limits under Section 42, the alternative prayer to withdraw and refile was rejected as impermissible. [Paras 33, 34, 38]

The prayer to withdraw the appeal with liberty to file the purported earlier appeal was rejected.

Final Conclusion: The application for condonation of delay was dismissed and the appeal rejected as time barred under Section 42 of the PMLA, 2002; the alternative prayer to withdraw and refile the purported earlier appeal was also refused.

Pre-adjudication consultative hearing - pre-decisional consultation - regularisation of proceedings - effect of non-compliance with consultative process - scope and validity of show cause notice

Pre-adjudication consultative hearing - regularisation of proceedings - scope and validity of show cause notice - Whether failure to follow the pre-adjudication consultative process vitiated the adjudicatory proceedings and the effect of subsequently affording the consultative hearing. - HELD THAT: - The Court recorded that, pursuant to the order dated 16.12.2019, the petitioner appeared before the Assessing Officer on 02.01.2020 and a pre-adjudication consultation was thereafter conducted, with a pre-consultative order dated 09.01.2020. The petitioner accepted that the five points considered during that consultation were identical to the points in the show cause notice. Having been heard and with the pre-consultative order on record, the Court held that the procedural irregularity alleged on the ground of absence of pre-decisional consultation stood cured and the proceedings were regularised; consequentially, assessment/adjudication proceedings under the show cause notice will continue.

The proceedings are regularised by virtue of the pre-adjudication consultation conducted and recorded on 09.01.2020; assessment/adjudication shall proceed.

Pre-decisional consultation - effect of non-compliance with consultative process - Validity of paragraph 11 of the show cause notice which declined pre-adjudication consultation on the basis of discussions with the Audit Commissioner. - HELD THAT: - The Court observed that the pre-adjudication/consultation contemplated was with the Assessing Officer and not with the Audit Commissioner. The reference in paragraph 11 of the show cause notice to discussions with the Audit Commissioner and the consequent conclusion that pre-adjudication consultation would serve no purpose was found to be erroneous. That portion of the show cause notice was set aside, and the error was rectified by the subsequent pre-consultative proceedings.

Paragraph 11 of the impugned show cause notice is set aside as erroneous; the remainder of the proceedings shall continue.

Final Conclusion: Writ petition disposed: the pre-adjudication consultative process has been afforded and regularises the proceedings; paragraph 11 of the show cause notice is set aside; the petitioner may file objections within two weeks of receipt of this order and the Assessing Officer shall complete proceedings after hearing the petitioner.

Strict construction of exemption notification - limitation for refund claims computed from date of export - substantive conditions in exemption notification - refund under Section 11B of the Central Excise Act, 1944

Limitation for refund claims computed from date of export - substantive conditions in exemption notification - Application for refund under Notification No. 41/2007-ST was time barred for the periods claimed - HELD THAT: - The Court upheld the findings of the authorities and CESTAT that the appellant failed to comply with the time limits and substantive documentary conditions prescribed by Notification No. 41/2007 ST. The Assistant Commissioner, Commissioner (Appeals) and CESTAT applied Circular No. 112/06/2009 ST which computes the limitation period from the date of export, and concluded that the refund application was filed after the prescribed period and therefore barred. The Court observed that exemption notifications must be strictly construed and that non compliance with the conditions disentitles the claimant to relief; on that basis the appellate orders rejecting the refund as time barred were affirmed. [Paras 5, 6, 7, 8, 19]

Refund claim rejected as time barred and non compliant with the substantive conditions of the exemption notification

Refund under Section 11B of the Central Excise Act, 1944 - strict construction of exemption notification - Compliance with Section 11B time limit did not cure non compliance with the notification's conditions or revive a time barred claim - HELD THAT: - The appellant's contention that filing within one year from payment under Section 11B of the Act sufficed was considered and rejected. The Court emphasised that notification conditions and their time limits form part of the eligibility for exemption and must be strictly obeyed; adherence to Section 11B did not override or obviate the separate substantive and temporal requirements of the exemption notification as interpreted by CESTAT and the lower authority. [Paras 11, 14, 15, 16, 19]

Section 11B compliance did not entitle the appellant to refund where the notification's prescribed conditions and time limits were not met

Final Conclusion: The appeal is dismissed; the question of law framed is answered against the appellant and the orders of the authorities and CESTAT upholding the rejection of the refund claim as time barred and non compliant with the exemption notification are affirmed.

Right to hearing - natural justice - reasoned order - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - relief for cases under investigation and audit where duty is quantified and communicated or admitted by statement on or before 30.06.2019 - rejection of declaration for non-communication/non-quantification of demand

Right to hearing - natural justice - rejection of declaration for non-communication/non-quantification of demand - Validity of the order rejecting the petitioner's declaration without prior notice or hearing. - HELD THAT: - The Court found that respondent No.2 rejected the petitioner's declaration under the Scheme on the stated ground that the concerned investigative authority had informed that the amount was neither finally quantified nor communicated to the assessee till 30.06.2019. The petitioner had contended, including by a letter dated 25.11.2019 and earlier correspondence, that relief under the Scheme was available where the duty involved had been admitted by the assessee in a statement on or before 30.06.2019 and that the petitioner had quantified and admitted liability in its letter dated 06.08.2018. Given this plea, the Court held that an opportunity of hearing should have been afforded before passing an adverse order. On that basis the impugned order dated 10.12.2019 was set aside and the matter was directed to be placed for hearing. [Paras 5, 6]

Impugned rejection set aside for failure to afford opportunity of hearing; petitioner to be afforded hearing.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - relief for cases under investigation and audit where duty is quantified and communicated or admitted by statement on or before 30.06.2019 - reasoned order - Requirement for fresh consideration of the petitioner's eligibility under the Scheme and issuance of a reasoned order after hearing. - HELD THAT: - The Court directed that respondent No.2 shall give the petitioner an opportunity of hearing and, after considering the petitioner's contentions including the assertion of earlier admission/quantification of liability, pass a reasoned order. The remand was for fresh consideration of the eligibility and merit of the declaration in light of the petitioner's submissions; the rights and contentions of the parties were expressly left open for decision following hearing. [Paras 6]

Matter remitted to respondent No.2 for hearing and disposal by a reasoned order within the timeframe specified by the Court.

Final Conclusion: The Court set aside the order dated 10.12.2019 which rejected the declaration without affording hearing, directed the petitioner to appear before respondent No.2 on the appointed date, and remitted the matter for fresh consideration with directions to hear the petitioner and pass a reasoned order by 25.03.2020; rights and contentions left open.

Opportunity of hearing - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Section 127 of the Scheme - eligibility under the Scheme - rejection of application without quantification or communication - remand for fresh consideration

Opportunity of hearing - Section 127 of the Scheme - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - eligibility under the Scheme - Communications rejecting the petitioner's application under the Scheme were issued without affording the petitioner an opportunity of hearing and therefore required to be set aside. - HELD THAT: - The Court accepted the petitioner's contention that Section 127 of the Scheme contemplates that the Designated Committee must give the declarant an opportunity of hearing before passing an adverse order. The petitioner had also relied on the Board's Circular No.1071/4/2019-CX.8 dated 27th August, 2019 to press eligibility despite the Department not having quantified or communicated the amount to the assessee by the relevant cutoff. In the facts of the case the impugned communications were issued without prior notice or hearing; for that reason the Court found the communications infirm and set them aside, leaving the rights and contentions of the parties open. [Paras 4]

Impugned communications dated 26th November, 2019 and 19th December, 2019 set aside for want of opportunity of hearing.

Remand for fresh consideration - reasoned order - opportunity of hearing - The petitioner's application under the Scheme was remanded to the designated authority for fresh decision after affording hearing and for issuance of a reasoned order within a stipulated time. - HELD THAT: - Having set aside the impugned communications, the Court directed respondent no.1 to list the matter and decide the petitioner's application after giving an opportunity of hearing. The Court mandated that a reasoned order, following the hearing, be passed by respondent no.1 within the specified timeframe, thereby entrusting the authority to reconsider the eligibility and merits in accordance with the Scheme while preserving the parties' contentions. [Paras 5, 6]

Matter remanded to respondent no.1 for fresh decision after hearing; respondent directed to pass a reasoned order within the time specified by the Court.

Final Conclusion: The writ petition was disposed of by setting aside the rejection communications for failure to afford hearing and by directing respondent no.1 to decide the petitioner's application afresh after hearing, by way of a reasoned order within the timeframe fixed by the Court; rights and contentions of the parties remain open.

Manufacture - customisation - manufacture as per Section 2(f) of Central Excise Act, 1944 - trading activity vs manufacture - eligibility for rebate - rebate in cash - Cenvat credit re credit - exports where duty paid by way of accumulated Cenvat credit

Manufacture - customisation - manufacture as per Section 2(f) of Central Excise Act, 1944 - trading activity vs manufacture - Whether the applicant undertook any customisation amounting to manufacture of the exported JCB machine and thereby became entitled to rebate. - HELD THAT: - The record shows the export order and packing list separately describe the machine, engine and accessories; the applicant purchased the machine and exported it with standard bought out accessories. The claim that the applicant fitted the cold start kit into the engine and custom modified tyres is not corroborated by the export documents or other evidence. The applicant was not registered with Central Excise authorities to undertake such manufacturing or modification activities. The activities undertaken on the facts were trading in nature; bought out items were duty paid and Cenvat credit was availed and debited on export. The Commissioner (Appeals)'s factual finding that no manufacture as defined under Section 2(f) occurred and that the operations amounted to trading is supported by the documentary record and reasoning in the order. [Paras 4]

No customisation amounting to manufacture was proved; the activity is trading and no rebate is admissible.

Eligibility for rebate - rebate in cash - Cenvat credit re credit - exports where duty paid by way of accumulated Cenvat credit - Whether the applicant is entitled to rebate in cash or re credit of debited Cenvat credit in respect of the exported goods. - HELD THAT: - Since no manufacturing activity was established and the transaction was held to be trading with export of duty paid bought out items, the statutory entitlement to rebate in cash does not arise. Consequently, the applicant's alternative plea for re credit of Cenvat debited at the time of export also lacks merit because the foundational claim of manufacture/eligible export rebate was not established. The Government found no deficiency in the Commissioner (Appeals)'s rejection of the rebate claim. [Paras 4, 5]

Claim for rebate in cash and claim for re credit of debited Cenvat credit are rejected.

Final Conclusion: The revision application is dismissed; the Commissioner (Appeals)'s order rejecting the rebate claim is upheld on the finding that no manufacture or customisation sufficient to attract rebate was proved and the transaction amounted to trading, hence neither cash rebate nor re credit of Cenvat is admissible.

CENVAT Credit - Rule 6(3)(b) of the CENVAT Credit Rules, 2004 - reversal of CENVAT credit - maintenance of prescribed records - erstwhile Rule 6(2) - retrospective amendment under the Finance Act, 2010 - de novo adjudication / remand

CENVAT Credit - reversal of CENVAT credit - maintenance of prescribed records - Rule 6(3)(b) of the CENVAT Credit Rules, 2004 - Whether demand under Rule 6(3)(b) for payment equal to 10% of sale price of exempted goods is sustainable in view of appellant's claim of reversal of CENVAT credit and maintenance of records. - HELD THAT: - The Tribunal found that the adjudicating authority did not specifically address the appellant's contention that proportionate CENVAT credit attributable to inputs used for manufacture of exempted final products had been reversed. There is a contradiction between the parties on whether the records maintained satisfied the statutory requirements; the appellant relies on statutory records kept under the Drugs & Cosmetics Act, 1940, whereas the department invoked Rule 6(3) to hold that prescribed CENVAT records were not maintained. Because this factual and legal divergence was not examined in the impugned order, the matter requires fresh appraisal at the original level including scrutiny of the records, application of Rule 6(3)(b) and consideration whether reversal of credit precludes a separate demand under Rule 6(3)(b). The Tribunal did not express any view on the merits. [Paras 6]

Issue remanded to the original authority for fresh consideration and de novo adjudication after affording opportunity of hearing.

Erstwhile Rule 6(2) - Rule 6(3)(b) of the CENVAT Credit Rules, 2004 - retrospective amendment under the Finance Act, 2010 - Whether the erstwhile Rule 6(2), the amended provisions of Rule 6, and the retrospective amendment effected by the Finance Act, 2010 are applicable to the facts and period in question. - HELD THAT: - The Tribunal observed that the applicability of the erstwhile Rule 6(2) (effective up to February 2008), the subsequent amended provisions of Rule 6 and the retrospective amendment introduced by the Finance Act, 2010, were not finally considered in the impugned order. Given the legal complexity and potential retrospective effect, the Tribunal refrained from expressing any opinion and directed the original authority to examine these statutory provisions in detail, along with relevant judicial precedents relied upon by the parties, while conducting the de novo adjudication. [Paras 6]

Issue remanded to the original authority for fresh consideration and determination in the course of de novo adjudication.

Final Conclusion: The impugned order is set aside and the appeal is allowed by way of remand; the matter is directed to the original authority for de novo adjudication on the identified issues (including record sufficiency, effect of reversal of CENVAT credit, and applicability of Rule 6 and its amendments) after affording the appellant adequate opportunity of hearing.

MRP-based valuation - affixation of Maximum Retail Price on outer pack containing multiple pieces - treatment of pre-packed multiple pieces under the Standards of Weights & Measures regime - entitlement to refund under Notification No. 56/2002-CE

MRP-based valuation - affixation of Maximum Retail Price on outer pack containing multiple pieces - treatment of pre-packed multiple pieces under the Standards of Weights & Measures regime - entitlement to refund under Notification No. 56/2002-CE - Whether appellants manufacturing insecticides/pesticides packed in pouches of 10 gms or less and affixing MRP on a larger outer box were liable to pay duty on MRP under Section 4(A) and thereby entitled to refunds under Notification No. 56/2002-CE. - HELD THAT: - The Tribunal found on the material on record that the appellants packed small pouches (less than 10 gms) into a larger carton and affixed the MRP on that larger box. Applying the statutory scheme in the Standards of Weights & Measures enactment - which requires the manufacturer to affix MRP where multiple pieces are packed in a bigger box - the Tribunal held that the correct mode of valuation was MRP-based. The Tribunal relied on its earlier decision in the appellant's own case for the earlier period and, on that basis, concluded that duty paid under Section 4(A) was legally sustainable. Consequentially, refunds claimed under Notification No. 56/2002-CE in respect of duty paid in cash were held to have been correctly taken. The Tribunal therefore set aside the adjudicated demands and allowed the appeals. [Paras 3, 5]

Appeals allowed; impugned orders set aside as appellants were liable to pay duty under Section 4(A) on MRP of the outer packed box and were correctly entitled to refunds under Notification No. 56/2002-CE.

Final Conclusion: The Tribunal allowed the appeals, holding that where small pre-packed pouches are packed into a larger box on which the manufacturer affixes the MRP, duty is payable on MRP under Section 4(A) and refunds under Notification No. 56/2002-CE were correctly claimed; impugned recovery orders were quashed.

Refund under Rule 5 of the CENVAT Credit Rules, 2004 - limitation under Section 11B of the Central Excise Act, 1944 - relevant date for refund

Refund under Rule 5 of the CENVAT Credit Rules, 2004 - limitation under Section 11B of the Central Excise Act, 1944 - relevant date for refund - Refund claim of accumulated CENVAT credit under Rule 5 is subject to the limitation period prescribed by Section 11B and can be denied as time-barred. - HELD THAT: - The Tribunal applied the ratio in GTN Engineering and held that where refund is claimed under Rule 5, the relevant date for the purpose of limitation is the date of export and the claim must satisfy the time-limit prescribed under Section 11B of the Central Excise Act, 1944. The Tribunal rejected authorities which treated Rule 5 claims as outside the Section 11B limitation, observing that Rule 5 read with the notification requires invocation of the statutory limitation. Following that precedent, the learned Commissioner (Appeals) correctly denied the refund on the ground of limitation and this Tribunal finds no infirmity in that conclusion. [Paras 2, 3]

Appeal dismissed; refund claim under Rule 5 held to be barred by limitation under Section 11B.

Final Conclusion: The appeal is dismissed; the refund claimed under Rule 5 of the CENVAT Credit Rules, 2004 was correctly denied as barred by the limitation prescribed under Section 11B of the Central Excise Act, 1944.

Interest on delayed refund - relevant date for commencement of liability to pay interest - expiry of three months from date of receipt of refund application - commencement of statutory provision governing payment of interest - application of Supreme Court precedents in revenue refund claims

Interest on delayed refund - expiry of three months from date of receipt of refund application - Entitlement to interest on sanctioned refunds prior to the introduction of Section 35FF and the date from which interest is payable. - HELD THAT: - The Tribunal applied the ratio of the Supreme Court in Ranbaxy Laboratories Ltd. which held that liability of the revenue to pay interest under the statutory provision governing refunds commences from the expiry of three months from the date of receipt of the refund application. The Tribunal noted that the appellant's refund claims were filed between 7-3-1993 and 28-4-1994 and that Section 11BB was introduced with effect from 26-8-1995. Since three months had elapsed from the date of filing and the commencement of Section 11BB, the Tribunal held that appellants were entitled to interest from 26-8-1995 until sanction of the refund, rather than from the later date when interest was introduced under Section 35FF or from the date of the refund orders. [Paras 4, 5]

Appeals allowed; interest on the sanctioned refunds to be paid from 26-8-1995 until sanction of refund.

Final Conclusion: The Tribunal allowed the appeals, holding that in view of the Supreme Court decisions the revenue is liable to pay interest on the refund claims from 26-8-1995 (the commencement of the statutory provision) until the date of sanction of the refund.

Validity of selection process - Disqualification for non-production of NOC - Equitable relief against disqualification for non-disclosure of employment - Departmental discretion to consider post-facto NOC - Appointment of selected candidates

Validity of selection process - Appointment of selected candidates - Whether the selection itself was vitiated and whether the Department may be permitted to hold a fresh selection - HELD THAT: - The Court found no infirmity in the selection process and declined to permit the Department to conduct a fresh selection. The Court refused to re-examine the ranking challenge and accepted the Tribunal's direction appointing the available candidate. The determinative consideration was that there was no fault in the selection warranting interference, and consequently the Department's request for a fresh selection was rejected. [Paras 7]

Selection upheld; Department's prayer for a fresh selection declined.

Disqualification for non-production of NOC - Equitable relief against disqualification for non-disclosure of employment - Whether Liksy Joseph could be considered for appointment despite non-disclosure of employment and production of an NOC not from the appointing/controlling authority - HELD THAT: - The Court held that Liksy Joseph had not disclosed in her application that she was employed with Central Railways and had not filed the required NOC with the application. The NOC produced subsequently was from a Senior Officer of the Central Railways Sports Association and not from the appointing or controlling authority. Given the specific requirement in the notification to furnish an employer's NOC and the non-disclosure of employment in the application, the candidate was disentitled to equitable consideration and liable to be treated as disqualified. [Paras 9]

Liksy Joseph disentitled to consideration; disqualification upheld.

Disqualification for non-production of NOC - Departmental discretion to consider post-facto NOC - Appointment of selected candidates - Whether Alwin Francis should be disqualified for non-production of NOC and whether his case merits consideration despite initial disqualification - HELD THAT: - The Court recognised that Alwin Francis was on medical leave during the application period and that obtaining an NOC might have been practically impossible while on long medical leave. The Court found no ground to grant an automatic exemption to the requirement that the NOC accompany the application but observed that the Tribunal had only directed consideration of his subsequent submission. The Court declined to interfere with that discretionary direction and remitted the matter to the Department to consider whether any exemption or relaxation could be granted in respect of the missing NOC, directing the Department to decide the matter within two months. [Paras 8, 10]

Alwin Francis's case remitted to the Department for fresh consideration of his post-facto NOC; Department to decide within two months.

Final Conclusion: The selection was upheld; the Department's request for a fresh selection was refused. Arathi Sarah Sunil, as the available rank-holder, is entitled to appointment and the appointment order shall be issued within two weeks of receipt of the certified copy of this judgment. Liksy Joseph's disqualification for non-disclosure and defective NOC was upheld. Alwin Francis's contention was remitted to the Department to consider his post-facto NOC and any exemption within two months. Original petitions dismissed.