TaxTMI Updates e-Newsletter
Mar 19,2024

Maintainability of contempt petition - compliance with court order - representation under Section 129(3) of the Central Goods and Services Tax Act, 2017 - scope of contempt jurisdiction - remedy by statutory challenge of administrative order

Maintainability of contempt petition - scope of contempt jurisdiction - Contempt petition was not maintainable as the High Court's order had been complied with by the competent authority. - HELD THAT: - The court examined whether the contemnor had violated the High Court's directions of 4.8.2023. Having regard to the principle that contempt powers must be exercised sparingly and confined to the four corners of the order relied upon, the court noted that the competent authority passed an order on 21.9.2023 addressing the representation referred to in the writ court's order. Since the direction in the writ disposal was to have the representation adverted to and decided, and such a decision was taken, there was no breach of the court's order warranting contempt proceedings. The court therefore upheld the limited scope of contempt jurisdiction and declined to treat the matter as one of contempt.

Contempt petition dismissed as not maintainable because the representation called for by the High Court was decided by the competent authority.

Representation under Section 129(3) of the Central Goods and Services Tax Act, 2017 - compliance with court order - remedy by statutory challenge of administrative order - The proper remedy for the appellant is to challenge the competent authority's order under the statutory scheme and not to proceed by way of contempt. - HELD THAT: - The court observed that the writ disposal directed the competent authority to advert to and decide the petitioner's representation. The competent authority produced an order dated 21.9.2023 recording that proceedings had been concluded in accordance with law. Once that compliance was shown, the court held the appropriate course for the appellant is to challenge the impugned administrative order by invoking the statutory remedies available under the Act rather than maintain a contempt petition. The court therefore afforded the appellant liberty to challenge the administrative order in accordance with law.

Appellant granted liberty to challenge the order dated 21.9.2023 by the competent authority; contempt route is inappropriate.

Final Conclusion: The petition is dismissed: the competent authority has decided the representation called for by the High Court's order and, in view of the limited scope of contempt jurisdiction, no contempt is made out; the petitioner may challenge the administrative order by appropriate statutory remedy.

Writ of mandamus - Extension of limitation for filing appeal - Penal provisions under Sections 129 and 130 of the CGST Act - Discrimination in notification - Administrative discretion to amend notification - Direction to executive to consider representation

Writ of mandamus - Administrative discretion to amend notification - Court's power to issue a writ directing the Central Government to include Sections 129 and 130 in Notification No.53/2023-Central Tax - HELD THAT: - The Court considered the petitioner's plea that Notification No.53/2023-Central Tax, which extends the time to file appeals under Section 107(1) of the CGST Act until January 31, 2024, deals only with orders under Sections 73 and 74 and omits orders under Sections 129 and 130, producing alleged discrimination. The Court held that it is not in a position to issue a writ of mandamus directing the Central Government to amend the notification. While recognising the petitioner's grievance, the Court declined to compel the executive to exercise its policy or legislative discretion, and therefore refused to issue the requested mandamus. [Paras 4]

Prayer for a writ of mandamus directing the Central Government to include Sections 129 and 130 in the notification is refused.

Extension of limitation for filing appeal - Penal provisions under Sections 129 and 130 of the CGST Act - Direction to executive to consider representation - Relief by administrative direction to respondents to consider inclusion of Sections 129 and 130 in the notification - HELD THAT: - Although the Court would not grant mandamus, it observed that the Government could consider adding Sections 129 and 130 so that the benefit given to orders under Sections 73 and 74 may be extended. Accordingly, the Court directed the GST Council and the Central Board of Indirect Taxes and Customs to examine the matter at the earliest. The direction is administrative in character, inviting executive consideration rather than imposing a judicially-mandated change. [Paras 4, 5]

GST Council and the Central Board of Indirect Taxes and Customs are directed to look into the possibility of including Sections 129 and 130 in the notification and consider the petitioner's grievance.

Final Conclusion: The Court refused to issue a writ of mandamus compelling amendment of Notification No.53/2023-Central Tax but directed the GST Council and the Central Board of Indirect Taxes and Customs to consider, at the earliest, whether Sections 129 and 130 of the CGST Act should be included so as to extend the same benefit; matter adjourned sine die with liberty to mention and interlocutory steps ordered.

Provisional attachment under the CGST Act - pre-deposit for filing appeal under the CGST Act - right to operate bank account to make statutory pre-deposit - use of electronic transfer (NEFT/RTGS) for depositing statutory pre-deposit

Provisional attachment under the CGST Act - pre-deposit for filing appeal under the CGST Act - right to operate bank account to make statutory pre-deposit - use of electronic transfer (NEFT/RTGS) for depositing statutory pre-deposit - Permission to operate the petitioner's bank account to withdraw and deposit the amount required as pre-deposit for filing an appeal against the Order in Original, and limited lifting of the provisional attachment to that extent. - HELD THAT: - The Court examined the petitioner's request to utilise funds in the provisionally attached bank account solely for making the statutory pre deposit (10% of the disputed tax) necessary to institute an appeal under the CGST regime. The Court accepted that permitting withdrawal for the purpose of depositing the pre deposit does not constitute use of the funds for a private purpose but enables the petitioner to avail its statutory right of appeal. Relying on the same view taken in other proceedings, the Court authorised a limited and conditional relief: the provisional attachment is to be lifted only to the extent of the specified amount, the withdrawal shall be a single transaction and the petitioner may effect the deposit by electronic means (NEFT/RTGS). The permission is time bound as directed by the Court and does not decide or prejudice the merits of the underlying assessment or the appeal, which are kept open for adjudication on their merits. [Paras 3, 4]

Petitioner permitted to operate the specified bank account to withdraw the specified amount for deposit as the statutory pre deposit; the provisional attachment is lifted only to that extent for a single transaction and electronic transfer is permitted; deposit to be made within the time directed by the Court; merits kept open.

Final Conclusion: The petition is disposed of by authorising a limited lifting of the provisional attachment to permit a single withdrawal and electronic deposit of the required pre deposit for filing the appeal; all other contentions on merits are left open; no costs.

Search and seizure under the Act - Penalty proceedings under the Act - Jurisdiction to initiate penalty proceedings after search and seizure - Invalidity of proceedings for lack of jurisdiction

Search and seizure under the Act - Penalty proceedings under the Act - Jurisdiction to initiate penalty proceedings after search and seizure - Validity of penalty proceedings under Section 129(3) of the Act where search and seizure proceedings under Section 67 of the Act were carried out at the premises of the petitioner - HELD THAT: - The Court found that penalty proceedings under Section 129(3) were initiated despite a search and seizure having been carried out under Section 67 at the petitioner's godown. Relying on the coordinate Bench decision in Mahavir Polyplast Pvt. Ltd., the Court accepted that invoking Section 129(3) in such circumstances was without jurisdiction because the authorities proceeded against goods lying in a godown notwithstanding that the search/seizure context required compliance with the Act and the existence of jurisdictional predicates. Having regard to the factual position recorded in the writ petition and the precedent relied upon, the Court concluded that the proceedings drawn up under Section 129(3) lacked a legal foundation and could not be sustained. [Paras 3, 4, 5, 6]

Proceedings and impugned orders under Section 129(3) initiated after search and seizure under Section 67 are quashed and set aside for want of jurisdiction.

Final Conclusion: Writ petition allowed; impugned orders dated June 15, 2018 and May 1, 2019 quashed and set aside; no order as to costs.

Principles of natural justice - opportunity of personal hearing - mandatory hearing under Section 75(4) of the UPGST Act, 2017 - adverse order under Section 74 of the UPGST Act, 2017 - prohibition of best judgment assessment while adjudicating under Section 74 - de novo assessment after hearing

Principles of natural justice - opportunity of personal hearing - mandatory hearing under Section 75(4) of the UPGST Act, 2017 - adverse order under Section 74 of the UPGST Act, 2017 - Impugned orders under Section 74 were passed without granting opportunity of personal hearing as mandated by Section 75(4), amounting to violation of principles of natural justice. - HELD THAT: - The Court held that Section 75(4) requires that when an adverse order is contemplated under Section 74, the affected person must be afforded an opportunity of personal hearing. The statutory use of 'or' in Section 75(4) confirms that a personal hearing is required either on application or when an adverse order is being considered, making personal hearing a fundamental safeguard of procedural fairness. Having found that the impugned adjudication proceeded without affording such opportunity, the Court concluded that the orders suffer from illegality for want of compliance with mandatory hearing requirements and thus cannot stand. [Paras 5, 7]

Orders under challenge quashed for failure to afford mandatory personal hearing; matter to be reconsidered afresh after hearing.

Prohibition of best judgment assessment while adjudicating under Section 74 - de novo assessment after hearing - Adjudication under Section 74 cannot be conducted by resorting to best judgment assessment or mechanical guidelines; the assessments made in the impugned orders were impermissible and require fresh adjudication. - HELD THAT: - Relying on the Court's earlier exposition that Section 74 adjudications must not be converted into best judgment assessments (which are permissible only under Section 62 and in limited circumstances), the Court found that the authorities had quantified tax and imposed penalty by adopting impermissible methods and guidelines. The appellate order likewise failed to give reasons and compounded the error. Consequently, the Court set aside the assessments and directed a de novo adjudication, to be undertaken after affording the petitioner a hearing within the time directed. [Paras 3, 6, 7]

Impugned assessments held impermissible as best judgment quantification under Section 74; assessments quashed and remitted for de novo determination after hearing within three months.

Final Conclusion: Writ petition allowed; impugned orders dated February 22, 2023 and January 16, 2023 are quashed and set aside and the matter is remitted for de novo assessment after affording the petitioner a personal hearing, to be completed within three months; no order as to costs.

Application of incentive scheme after substitution of tax statute - mutatis mutandis operation of scheme on replacement of VAT by GST - promissory estoppel against the State in respect of a sanctioned subsidy - finality of Registration Certificate (RC II) and estoppel against belated scrutiny - validity of administrative notice under scheme during pendency of writ - late objections to eligibility criteria and waiver by acquiescence

Application of incentive scheme after substitution of tax statute - mutatis mutandis operation of scheme on replacement of VAT by GST - Clause 19.2 of the West Bengal State Support for Industries Scheme, 2008 applies where the VAT Act is subsumed by a new indirect tax regime and the scheme continues to operate mutatis mutandis after introduction of GST. - HELD THAT: - Clause 19.2 expressly provides that if the West Bengal Value Added Tax Act, 2003 is replaced by any other Act, the provisions of the Scheme shall apply mutatis mutandis after the new Act comes into force. The Court found that GST subsumed pre existing indirect tax statutes, including the VAT Act, and no other statute specifically replaced the VAT Act. The respondents had previously honoured the Scheme after GST by disbursing a substantial amount including GST components on September 1, 2017, which reinforced that the Scheme was being administered post GST. The argument that Clause 19.2 contemplates only a statute replacing VAT narrowly, and not the GST regime which subsumed multiple indirect taxes, was rejected. The Court held that the Scheme continues to govern entitlements post GST pursuant to Clause 19.2 and that the Centre-State distribution of GST revenues does not negate operation of the Scheme. [Paras 20, 21, 23, 38, 39]

Clause 19.2 applies; the petitioners remain entitled to benefits of the Scheme notwithstanding introduction of GST.

Promissory estoppel against the State in respect of a sanctioned subsidy - Doctrine of promissory estoppel applies to bar the State from denying the petitioners' entitlement to the sanctioned subsidy under the Scheme. - HELD THAT: - The petitioners were issued RC I and RC II, their application was sanctioned, and a substantial portion of the subsidy was disbursed after GST was in force. The petitioners continued commercial production relying on the representation and sanction by the State. Having sanctioned and acted upon the Scheme and having partially disbursed funds, the respondent authorities were estopped from taking a contrary position belatedly. The Court rejected the submission that estoppel or promissory estoppel is inapplicable to incentive schemes in the circumstances of this case, noting the respondents' prior conduct and the acceptance of the concession by the petitioners. [Paras 26, 27, 28, 29, 30]

Promissory estoppel applies; respondents are precluded from denying the petitioners' entitlement to the sanctioned subsidy.

Finality of Registration Certificate (RC II) and estoppel against belated scrutiny - validity of administrative notice under scheme during pendency of writ - The notice issued invoking Clause 7.2 and the belated attempt to question the validity of RC II during pendency of the writ petition are unlawful and are set aside; respondents are estopped from reopening RC II at this stage. - HELD THAT: - The notice dated March 30, 2023 (invoking Clause 7.2) was issued during pendency of the writ and asserted defects in RC II. The Court held that, having previously issued RC II and disbursed a substantial portion of the subsidy, the respondents cannot now question RC II or issue a notice to frustrate the writ. The issuance of the notice was viewed as a belated attempt to render the petition infructuous and was held to be contrary to the prior representations and conduct of the authorities. Consequently, the notice and any consequential acts were set aside. [Paras 31, 32, 33, 41]

The Clause 7.2 notice and any challenge to RC II issued during the writ proceedings are set aside as unlawful; respondents are estopped from reopening RC II.

Late objections to eligibility criteria and waiver by acquiescence - The contention that the petitioners' product was not a 'new unit' under Clause 3.1.6.3 was raised belatedly and is precluded by the respondents' prior sanction and conduct. - HELD THAT: - Clause 3.1.6.3 defines a 'new unit' to include expansion for a new product in the same location. The respondents now assert that the product was not new because the petitioners previously produced the same item. The Court observed that this objection was first taken at final hearing and was not pressed earlier; moreover the sanction dated November 16, 2016 admitted entitlement. Having not raised the alleged deficiency earlier or acted under the Scheme when sanctioning and disbursing funds, the respondents are precluded from taking the eligibility plea at this belated stage. [Paras 15, 34, 35, 36, 37]

The late challenge to eligibility under Clause 3.1.6.3 is precluded; respondents may not rely on that objection now.

Final Conclusion: The impugned order refusing disbursement of the subsidy is set aside and the March 30, 2023 notice is quashed. Respondents are directed to disburse the balance claim under the West Bengal State Support for Industries Scheme, 2008, subject to compliance with other formalities, preferably within two months; WPA No. 8525 of 2023 is disposed of and there is no order as to costs.

Levy of interest under Section 50(3) of the West Bengal Goods and Service Tax Act, 2017 - wrong availment and reversal of input tax credit - retrospective amendment by the Finance Act, 2022 with effect from 1 July 2017 - relegation to the adjudicating authority for fresh consideration

Levy of interest under Section 50(3) of the West Bengal Goods and Service Tax Act, 2017 - wrong availment and reversal of input tax credit - retrospective amendment by the Finance Act, 2022 with effect from 1 July 2017 - Validity of levying interest under Section 50(3) in cases of wrong availment and subsequent reversal of input tax credit in light of the retrospective amendment and subsequent administrative and judicial developments. - HELD THAT: - The High Court noted that the question whether interest under Section 50(3) can be levied where input tax credit had been wrongly availed and subsequently reversed is no longer res integra in view of Circular No. 192/04/2023 - GST (dated 17.7.2023) and several High Court decisions referred to in the order. The respondents admitted that Section 50(3) was amended by the Finance Act, 2022 with retrospective effect from 1 July 2017, which, as accepted by the respondents' counsel, entitles the petitioner not to pay interest on the input tax credit so availed and reversed; however the benefit of that amendment had not been given to the petitioner. On that basis the Court set aside the impugned orders and relegated the petitioner to the adjudicating authority for fresh consideration in accordance with law, thereby directing fresh adjudication taking into account the retrospective amendment and the subsequent administrative and judicial pronouncements.

Impugned orders dated 15.10.2020 and 11.01.2022 set aside; matter remitted to the adjudicating authority for fresh consideration in accordance with law.

Final Conclusion: Writ petition allowed; earlier orders setting interest liability aside and matter remanded to the adjudicating authority for fresh consideration in light of the retrospective amendment by the Finance Act, 2022 and the later Circular and judicial decisions.

Service of notice under Section 169(2) of applicable GST statutes - requirement of personal hearing before assessment - reliance on internet-sourced material to attribute values and arbitrariness - quashing of assessment orders subject to adjustment from electronic credit ledger - remand for fresh assessment with opportunity for personal hearing

Requirement of personal hearing before assessment - reliance on internet-sourced material to attribute values and arbitrariness - Validity of the impugned assessment orders where the assessing officer proceeded without hearing the petitioner and attributed values on the basis of information obtained from a website. - HELD THAT: - The Court examined the show cause notice and noted that a personal hearing had been offered to the petitioner; however, the impugned assessment orders reveal that the petitioner was not heard and the assessing officer attributed values to construction materials based on information available on a particular website. The Court found that, in the absence of a hearing which would have enabled the petitioner to place relevant materials to rebut the estimates, the assessments were unsustainable. For these reasons the assessments were quashed and the matters remitted to the assessing officer for fresh adjudication after affording the petitioner a reasonable opportunity, including a personal hearing.

Impugned assessment orders quashed and remitted for fresh assessment after affording the petitioner a personal hearing.

Quashing of assessment orders subject to adjustment from electronic credit ledger - Condition on which the quashing of the assessment orders is to be granted and the interim adjustment of tax demand from the electronic credit ledger. - HELD THAT: - On instructions from the petitioner, the Court permitted an interim arrangement whereby 10% of the disputed tax demand under each assessment order shall be adjusted against the credit available in the petitioner's electronic credit ledger. The Court made quashing of the assessment orders subject to this condition and directed the assessing officer to be satisfied that such adjustment has been duly made in respect of each assessment year before proceeding to fresh assessment.

Quash subject to petitioner adjusting 10% of each disputed tax demand from the electronic credit ledger; assessing officer to proceed only after being satisfied of such adjustment.

Remand for fresh assessment with opportunity for personal hearing - Scope of proceedings to be followed on remand and consequences for recovery proceedings. - HELD THAT: - The Court directed that upon receipt of the petitioner's reply (filed within fifteen days from receipt of the order) and satisfaction regarding the 10% adjustment from the electronic credit ledger, the assessing officer shall provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter pass a fresh assessment order for each assessment year. As a necessary consequence of quashing the assessment orders, the recovery notice issued pursuant to those orders does not survive and no action shall be taken pursuant thereto.

Assessing officer to conduct fresh assessments after receipt of petitioner's reply and confirmation of adjustment; recovery notice set aside.

Final Conclusion: The writ petitions succeed: the assessment orders are quashed subject to the petitioner adjusting 10% of each disputed tax demand from the electronic credit ledger and filing replies within fifteen days; on proof of such adjustment the assessing officer shall afford a personal hearing and pass fresh assessment orders; consequential recovery notice is set aside.

Revocation of cancellation of registration under section 30 - extension of time by notification GSR.246(E) dated 31.03.2023 - period of limitation for filing application - restoration of registration by furnishing final return under section 45 - liberal approach in granting statutory relief where cancellation causes business cessation

Revocation of cancellation of registration under section 30 - period of limitation for filing application - extension of time by notification GSR.246(E) dated 31.03.2023 - liberal approach in granting statutory relief where cancellation causes business cessation - Permissibility of permitting the petitioner to file an application under section 30 for revocation of cancellation despite the statutory time having lapsed - HELD THAT: - The Court observed that cancellation of GST registration has serious civil consequences and statutory provisions such as sections 30 and 45 are intended to provide an opportunity for restoration so that business may continue. Although the prescribed period under section 30 had lapsed and a departmental notification (GSR.246(E) dated 31.03.2023) had earlier fixed a limited window for revocation applications, the Court took a liberal view in the facts of the case and exercised its writ jurisdiction to permit the petitioner to file the revocation application. This permission was made subject to the petitioner making payment of dues and other statutory amounts, including any interest, penalty and late fee as required for moving an application under section 30. The Court accordingly directed that the period of limitation for filing the application shall be counted from the date of the order and fixed a 30-day timeline for filing. [Paras 7, 8]

Petitioner permitted to file application under section 30 within 30 days from the date of the order, subject to payment of dues and statutory amounts; limitation to be reckoned from this order.

Final Conclusion: Writ petition allowed in part: petitioner granted relief to file an application for revocation of cancellation under section 30 within 30 days from this order, subject to payment of outstanding dues and statutory payments; other reliefs not granted.

Mandatory personal hearing under Section 75(4) of the CGST Act - violation of principles of natural justice by denial of personal hearing - condonation of delay in filing appeal where natural justice violated - appellate authority to decide appeal on merits after personal hearing - pre-deposit and stay of recovery pending disposal of appeal

Mandatory personal hearing under Section 75(4) of the CGST Act - violation of principles of natural justice by denial of personal hearing - Whether the appellate authority and adjudicating authority were required to afford personal hearing before passing orders adverse to the petitioner and whether failure to do so amounted to violation of principles of natural justice. - HELD THAT: - The Court held that the statutory scheme requires that opportunity of personal hearing must be granted where an adverse decision is contemplated, as articulated in Section 75(4) of the Act; consequently, where the show cause notice left date, time and venue of personal hearing blank and no personal hearing was afforded prior to passing the adjudication order, the principles of natural justice were violated. The Court relied on the Division Bench decision in Goutam Bhowmik which held that personal hearing is mandatory where an adverse decision is contemplated. Applying that principle, the appellate order which dismissed the appeal on limitation without addressing the absence of personal hearing was set aside, and the matter was remitted to the appellate authority to grant personal hearing and decide the appeal on merits.

Violation of natural justice by failure to afford personal hearing; impugned appellate order set aside and appeal remitted for fresh personal hearing and decision on merits.

Condonation of delay in filing appeal where natural justice violated - extension of limitation by appellate authority - Whether the delay in filing the appeal could be condoned in the circumstances where the petitioner was not afforded personal hearing. - HELD THAT: - The Court accepted that delay in filing the appeal could be condoned in view of violation of natural justice and relied upon precedents of this Court dealing with extension of time by the Appellate Authority. Reference was made to Murtaza B Kaukawala and to MAT 81 of 2022 (S.K. Chakraborty & Sons) where it was held that the appellate authority has discretion to extend the period for filing appeals in appropriate circumstances. Applying those principles, the Court condoned the delay and entertained the writ petition to enable adjudication on merits after granting personal hearing.

Delay in filing the appeal condoned; appeal to be heard on merits after personal hearing.

Pre-deposit and stay of recovery pending disposal of appeal - Whether recovery proceedings should be stayed pending disposal of the remanded appeal where the petitioner has deposited the prescribed pre-deposit. - HELD THAT: - Having noted that the petitioner had deposited the statutory pre-deposit of 10% of the disputed tax, the Court directed that recovery proceedings shall remain stayed until the appellate authority disposes of the appeal after affording personal hearing. This direction implements the protective consequence of making the pre-deposit and ensures that the appeal is adjudicated without coercive recovery in the interim.

Stay of recovery proceedings granted until disposal of the appeal, in view of the pre-deposit made by the petitioner.

Final Conclusion: Writ petition allowed; impugned appellate order dated 17.01.2024 set aside for violation of natural justice, delay in filing the appeal condoned, matter remitted to the appellate authority for personal hearing and decision on merits, and recovery proceedings stayed till disposal of the appeal given the pre-deposit.

Interference with tax assessment orders - Writ jurisdiction under Article 226 - Assessment officer's application of mind - Opportunity of hearing and evidence appraisal - Exemption under Schedule III - Appellate remedy and limitation

Interference with tax assessment orders - Writ jurisdiction under Article 226 - Assessment officer's application of mind - Opportunity of hearing and evidence appraisal - Exemption under Schedule III - Validity of the impugned assessment orders and whether they warrant interference under Article 226 - HELD THAT: - The Court examined the assessment orders and the material placed on record by the petitioner. The assessing officer expressly referred to and considered the petitioner's submissions and documents (purchase documents, government approvals, sale deeds, development fee receipts and statements of purchases) but found them to be non-specific, not reconciled project-wise, and insufficient to establish the claimed nature of business and entitlement to the exemption under Schedule III. The operative findings in the assessment orders show that the assessing officer engaged with the evidence and entered conclusions after appraisal rather than making a non-speaking or perverse order. In that factual and legal setting, the High Court held that there was no failure to provide reasonable opportunity nor was there non-application of mind such as would justify exercise of extraordinary writ jurisdiction to set aside the assessment orders; the appropriate remedy is to pursue the statutory appellate route. [Paras 5, 6]

Writ petitions challenging the assessment orders are not maintainable on merits; no interference with the assessment orders under Article 226.

Appellate remedy and limitation - Opportunity of hearing and evidence appraisal - Direction regarding filing of appeals and consideration of limitation by the appellate authority - HELD THAT: - The Court noted that rectification petitions had been disposed and that the petitioner intended to pursue statutory appeals. In the interest of providing an effective remedy, the Court directed that if the petitioner files appeals within 15 days from receipt of the present order, the appellate authority shall consider and dispose of those appeals on merits without going into the question of limitation. This constitutes a procedural direction facilitating exercise of the appellate remedy rather than an adjudication on the merits of the assessment. [Paras 7]

If appeals are filed within 15 days from receipt of this order, the appellate authority shall decide them on merits without addressing limitation.

Final Conclusion: Writ petitions dismissed. The assessment orders are left intact; petitioner is permitted to file statutory appeals within 15 days from receipt of this order, which the appellate authority shall decide on merits without raising limitation. No costs.

Inadvertent and bona fide errors in GST returns during nascent GST period - permissibility of rectification/amendment of GSTR returns - failure to consider relevant submissions and mechanical decision-making - personal hearing before adjudicating tax demand - remand for fresh adjudication and reconsideration of contentions

Failure to consider relevant submissions and mechanical decision-making - personal hearing before adjudicating tax demand - remand for fresh adjudication and reconsideration of contentions - Impugned order confirming demand and imposing penalty set aside for want of consideration of petitioner's submissions; matter remitted for fresh adjudication with opportunity for personal hearing. - HELD THAT: - The Court found that the order dated 09.11.2023 affirming the demand and imposing penalty was passed in a routine or mechanical manner without dealing with the detailed reply and contentions raised by the petitioner. For that reason the impugned order was interdicted and set aside. The matter is remitted to respondent No.1 for fresh consideration on merits, with a direction to grant a fresh personal hearing to the petitioner and to decide after taking into account the entire factual matrix and the petitions' submissions. The petitioner was directed to appear on 27.02.2024 and no fresh notice was required to be issued for that appearance. [Paras 9, 10, 11]

Impugned order set aside; matter remitted for fresh consideration and personal hearing, petitioner to appear on 27.02.2024.

Inadvertent and bona fide errors in GST returns during nascent GST period - permissibility of rectification/amendment of GSTR returns - Court recognised precedents permitting correction of inadvertent errors in early GST period and directed the adjudicating authority to consider such decisions while reconsidering the matter. - HELD THAT: - The Court took note of decisions of several High Courts which, in the context of the nascent stage of GST implementation, have recognised that inadvertent and bona fide errors may be permitted to be rectified and have directed facilitation of amendments to GSTR returns where there is no loss of revenue. While the Court did not itself order rectification in this case, it expressly recorded those authorities and directed respondent No.1 to take such decisions into account while adjudicating afresh on the petitioner's contentions. [Paras 6, 8, 10]

Adjudicating authority to consider relevant High Court precedents on rectification of inadvertent errors while deciding the remitted matter.

Final Conclusion: Writ petition allowed; order dated 09.11.2023 set aside and matter remitted to respondent No.1 for fresh adjudication after granting personal hearing to the petitioner on 27.02.2024; no order as to costs.

Condonation of delay - statutory limitation for filing appeal - appellate authority's power to extend time limited to thirty days - exclusion of Section 5 of the Limitation Act - fee for filing appeal under Rule 106

Condonation of delay - statutory limitation for filing appeal - appellate authority's power to extend time limited to thirty days - exclusion of Section 5 of the Limitation Act - Whether the Appellate Authority could condone the delay in filing the appeal which was beyond the thirty days extension permitted by the proviso to Section 100(2) of the CGST Act, 2017 - HELD THAT: - The Appellate Authority found that the advance ruling was communicated on 03.04.2021 and the statutory last date for filing the appeal (including the 30-day extension under the proviso) expired long before the actual filing on 07.11.2023, resulting in a delay of 920 days (para 5.4). Although the appellant subsequently paid the additional fee required under sub rule (1) of Rule 106 (para 5.2) and relied on pandemic-era decisions, the proviso to Section 100(2) permits indulgence only for a further period not exceeding thirty days. The Authority held that it lacks power to condone delay beyond that thirty-day outer limit and that Section 5 of the Limitation Act cannot be invoked to exceed the statutory cap, following the reasoning in Singh Enterprises (paras 5.5, 5.10-5.11). Orders cited by the appellant were distinguished as factually and legally inapplicable (para 5.7). Consequently, the appeal was held to be time barred and the Authority declined to decide the merits (paras 5.9, 5.11-5.12). [Paras 5]

The Appellate Authority is not empowered to condone the delay beyond the thirty days permitted by the proviso to Section 100(2) and, as the appeal was filed beyond that period, it is dismissed as time barred without adjudication on merits.

Final Conclusion: The appeal by M/s Arun Cooling Home is dismissed on the ground of time limitation because the Appellate Authority has no power to condone delay beyond the thirty days permitted by the proviso to Section 100(2); the merits were not considered.

Benefit of exemption under Section 11 - Violation of Section 13 - Denial of exemption restricted to diverted income - Alteration of objects after registration under Section 12A - Expenditure on new objects and intimation to the Commissioner - Admissibility of substantial question of law

Benefit of exemption under Section 11 - Violation of Section 13 - Denial of exemption restricted to diverted income - Whether proposed substantial questions (A), (B) and (C) raise any substantial question of law. - HELD THAT: - The Court held that no substantial question of law arises in respect of questions (A), (B) and (C) because the issue is covered by earlier authority in Audyogik Shikshan Mandal which, after examining Bharat Diamond Bourse, accepts the view that the denial of exemption need not necessarily extend to the entire income and may be restricted to the income diverted for the benefit of persons covered by Section 13. The Court observed that Bharat Diamond Bourse did not decide whether denial must be total or limited to diverted funds and therefore the Tribunal's approach following Fr. Mullers and the cited precedents is binding for present purposes. Consequently, the proposed substantial questions framed as (A), (B) and (C) do not furnish a ground for admission. [Paras 5]

No substantial question of law arises as to whether denial of exemption under Section 11 must be total; questions (A)-(C) are covered by existing precedent.

Additions and appellate challenge - Whether proposed substantial question (D) raising commerciality and alleged bogus capital gains arises for consideration. - HELD THAT: - The Court recorded that the CIT(A) had deleted the addition and the department did not challenge that deletion before the ITAT. In view of the absence of challenge, the factual and legal contention now advanced in question (D) does not survive as a substantial question of law for this appeal. [Paras 6]

Proposed question (D) does not arise.

Expenditure outside India - Denial of exemption restricted to diverted income - Whether proposed question (F) concerning expenditure incurred outside India without prior approval is maintainable separately. - HELD THAT: - The Court observed that question (F) has been addressed while disposing of questions (A)-(C): only that part of expenditure which is not covered by exemption would be disallowed. Therefore no separate substantial question is made out in (F). [Paras 8]

Proposed question (F) does not raise a separate substantial question of law.

Donations for specific purposes - Corpus versus revenue receipts - Whether proposed question (G) concerning the characterisation of donations for specific purposes was raised and decided below. - HELD THAT: - The Court recorded that no specific ground was taken in the appeal concerning donations given for specified purposes and accordingly there is no finding in the impugned ITAT order on that point. The department and counsel agreed that the substantial question as framed does not arise. [Paras 9]

Proposed question (G) does not arise.

Alteration of objects after registration under Section 12A - Expenditure on new objects and intimation to the Commissioner - Whether expenditure on new objects is eligible for exemption under Section 11 where such new objects were not intimated to the CIT and the objects of the trust were altered after registration under Section 12A. - HELD THAT: - The Court admitted the appeal on this question of law for substantive consideration. It identified the controversy as whether the assessee's incurrence of expenditure on objects introduced after registration, without intimation to the concerned Commissioner, affects the foundation of registration granted under Section 12A and consequently the trust's entitlement to exemption under Section 11. The matter was directed to be listed for hearing and the original record summoned from the Tribunal for inspection and completion of the paper book. [Paras 7, 10, 13]

Appeal admitted on the question whether expenditure on new objects not intimated to the CIT, following alteration of objects after registration under Section 12A, affects entitlement to exemption under Section 11; matter listed for hearing.

Final Conclusion: The High Court refused to admit proposed substantial questions (A)-(C), (D), (F) and (G) as they are either covered by precedent or do not arise; the appeal is admitted only on the question whether expenditure on new objects not intimated to the Commissioner, following alteration of objects after registration under Section 12A, affects the trust's entitlement to exemption under Section 11, and the matter is directed to be placed for hearing with the Tribunal record summoned.

Power to condone delay - appeal against acquittal under Section 378 Cr.P.C. - extension of time under Section 5 of the Limitation Act, 1963 - exclusion of Limitation Act by a special law under Section 29(2) of the Limitation Act, 1963 - doctrine of binding precedent of the Supreme Court - special law doctrine

Power to condone delay - appeal against acquittal under Section 378 Cr.P.C. - extension of time under Section 5 of the Limitation Act, 1963 - exclusion of Limitation Act by a special law under Section 29(2) of the Limitation Act, 1963 - doctrine of binding precedent of the Supreme Court - Maintainability of an application for condonation of delay in instituting an application seeking special leave to appeal against an acquittal under Section 378 Cr.P.C. - HELD THAT: - The High Court held that it is bound by the decision of the Hon'ble Supreme Court in Mohd. Abaad Ali v. Directorate of Revenue Prosecution Intelligences, which considered and rejected contentions that Section 378 Cr.P.C. or any other provision of the Code operates as a special law excluding the applicability of Section 5 of the Limitation Act, 1963. The Court noted that Mohd. Abaad Ali examined the relationship between the old and new Codes and Limitation Acts, dealt with precedents including Kaushalya Rani, Mangu Ram, Gopal Sardar and Hukumdev Narain Yadav, and concluded that Section 5 (read with Sections 2 and 3) of the Limitation Act is available in appeals against acquittal unless a special law expressly excludes it. Reliance on the binding nature of the Supreme Court's ratio and authorities concerning stare decisis led the Court to reject attempts to revisit or distinguish that precedent on grounds that certain arguments were not earlier urged or inadequately considered. For these reasons the Court held that there is power and jurisdiction to condone delay in filing an application seeking leave to appeal against an acquittal or in entertaining an appeal against acquittal under the Code of 1973. [Paras 14, 16, 24, 27, 32]

The application for condonation of delay in seeking special leave to appeal against acquittal is maintainable; the High Court will follow the Supreme Court's decision in Mohd. Abaad Ali and decline to revisit that precedent.

Power to condone delay - merits of cause shown for condonation - Further disposal and remand for adjudication on merits of the condonation application - HELD THAT: - Having held the application to be maintainable, the Court refrained from adjudicating the merits of the cause shown for condonation of delay. The Single Judge is directed to proceed to consider Criminal Misc. Application No. 253 of 2019 on its merits. The High Court thus confined its decision to the jurisdictional question and remitted the matter for fact-specific and merit-based determination by the learned Single Judge. [Paras 33, 34]

Reference disposed; matter remitted to the learned Single Judge to decide the condonation application on merits.

Final Conclusion: The reference is disposed by holding that the High Court has the power to condone delay in instituting an application seeking special leave to appeal against an acquittal (the Court will follow Mohd. Abaad Ali). The question of maintainability is answered in favour of the applicant Department and the matter is remitted to the Single Judge to decide the condonation application on its merits.

Validity of pre-deposit requirement for stay under Section 220(6) - Discretion of Assessing Officer under Section 220(6) - Office Memorandum as administrative guidance not fetter - Principles for grant of interim stay - prima facie case, undue hardship and safeguarding revenue - Adjustment of refunds against disputed demand without consideration of pending stay application - Remand for fresh consideration of stay application

Validity of pre-deposit requirement for stay under Section 220(6) - Office Memorandum as administrative guidance not fetter - Discretion of Assessing Officer under Section 220(6) - Whether the OM prescribing 20% (or 15%) deposit operates as a mandatory pre-condition to the exercise of power under Section 220(6) of the Income-tax Act. - HELD THAT: - The Court held that the OMs of 29 February 2016 and 31 July 2017 provide administrative guidance as to a standard rate (15% revised to 20%) but do not and cannot operate as an inflexible, mandatory pre-condition limiting the statutory discretion conferred by Section 220(6). The OM itself contemplates that the assessing officer may require a higher or lower amount depending on facts of a case and envisages referral to higher authorities where appropriate. The Supreme Court's decision in Principal Commissioner of Income Tax v. LG Electronics was cited to underscore that the administrative circular cannot fetter the quasi judicial discretion of the authority and that it remains open to the authority to direct a deposit of a lesser (or, in appropriate circumstances, greater) amount. The determinative legal principle applied is that the AO must exercise the discretion under Section 220(6) judicially, considering factors such as prima facie case, undue hardship and safeguarding the interests of the Revenue; the OM cannot be read as ousting that duty or prescribing an absolute rule of universal application. [Paras 11, 12, 13, 14, 16]

The 20% (or 15%) referred to in the OMs is not an inviolable or mandatory pre-condition; the AO's discretion under Section 220(6) must be exercised judicially on the facts of each case.

Adjustment of refunds against disputed demand without consideration of pending stay application - Remand for fresh consideration of stay application - Principles for grant of interim stay - prima facie case, undue hardship and safeguarding revenue - Whether the respondents were justified in adjusting the demand for AY 2018-19 against refunds for other years while the petitioner's application under Section 220(6) remained pending. - HELD THAT: - The Court found that on the dates when adjustments were made the petitioner's application under Section 220(6) had not been considered or disposed of. Proceeding to adjust the disputed demand against available refunds without attending to the pending stay application was arbitrary and unfair. The Court reiterated that applications for stay must be decided by applying recognised interim-relief principles - assessment of prima facie case, balance of convenience/undue hardship and protection of revenue - and that the OM does not licence summary denial of stay petitions or the mechanical insistence on the standard deposit without application of mind. Given the pending and unadjudicated stay petition, the respondents' action in effecting adjustments was held to be improper. [Paras 19, 20, 21]

The adjustments effected while the stay application under Section 220(6) remained pending were arbitrary; the matter is remittted to the respondents for fresh consideration of the petitioner's Section 220(6) application in accordance with the Court's observations.

Final Conclusion: Writ petition allowed. The respondents acted improperly in adjusting refunds against the disputed demand for AY 2018-19 while the petitioner's Section 220(6) application was pending. The matter is remitted to the respondents to decide the stay application afresh in accordance with the Court's directions (applying the statutory discretion under Section 220(6) and the principles identified), and the quantum of refund to be released shall follow that decision.

Validity of reference to Valuation Officer under section 55A - prospective application of statutory amendment - assessment year applicability of an amendment - quashing assessment/revision for want of jurisdiction

Validity of reference to Valuation Officer under section 55A - prospective application of statutory amendment - assessment year applicability of an amendment - Reference by the Assessing Officer to the Valuation Officer (DVO) under section 55A for determination of fair market value as on 01-04-1981 in Assessment Year 2012-13 was not sustainable because the amendment to section 55A effective from 01-07-2012 applies from Assessment Year 2013-14. - HELD THAT: - The Tribunal examined whether the AO could validly refer the matter to the DVO in assessment proceedings for Assessment Year 2012-13 after the amendment to section 55A took effect on 01-07-2012. It applied the settled principle that an amendment to the Income-tax Act which comes into force on a date other than the first day of the relevant assessment year operates from the subsequent assessment year beginning the next 1st April. Consequently, the amendment to section 55A effective 01-07-2012 could not be applied to Assessment Year 2012-13 and therefore the statutory power to make the broader reference (as introduced by the amendment) was not available for that year. Because the value claimed by the assessee exceeded the value determined by the DVO, the pre-amendment text of section 55A did not permit the AO to refer the valuation in those circumstances. On this basis the Tribunal concluded that the reference and the consequent revision/addition were unsustainable and amounted to action without jurisdiction. [Paras 3, 4]

Reference to the Valuation Officer under section 55A in Assessment Year 2012-13 quashed and the addition deleted; appeal allowed.

Final Conclusion: The Tribunal allowed the assessee's appeal, holding that the amendment to section 55A effective 01-07-2012 could not be applied to Assessment Year 2012-13; therefore the reference to the Valuation Officer and the consequent revision/addition were unsustainable and are quashed.

Allowability of expenditure wholly and exclusively for the purpose of earning income under section 57(iii) - nexus between interest-bearing funds and income from other sources - disallowance of interest by comparing interest paid and interest charged on advances

Allowability of expenditure wholly and exclusively for the purpose of earning income under section 57(iii) - nexus between interest-bearing funds and income from other sources - disallowance of interest by comparing interest paid and interest charged on advances - Whether the disallowance of interest expenses of Rs. 54,32,948/- under section 57(iii) was sustainable where the Assessing Officer disallowed the portion of interest paid in excess of the rate at which the assessee had advanced loans. - HELD THAT: - The Tribunal held that the Assessing Officer's disallowance was unsustainable because the AO had accepted that interest-bearing funds were used to earn interest income by allowing that portion of interest expense which paralleled the interest charged by the assessee on advances. Section 57(iii) permits deduction of expenditure incurred wholly and exclusively for the purpose of earning income from other sources; the determinative test is nexus of the expenditure with earning such income, not that the expenditure must yield a profit. The AO's reasoning that expenses could be denied because the assessee had an overall loss on the head (i.e., interest paid exceeded interest received) was erroneous and factually incorrect insofar as the assessee did report interest income. The AO's method of disallowing the excess by comparing rates of interest charged and paid was inconsistent with his own finding that funds borrowed were used to make interest-bearing advances; absent a reasoned finding negating nexus, the summary disallowance could not stand. Accordingly the disallowance under section 57(iii) was quashed. [Paras 3, 5]

The disallowance of interest under section 57(iii) is incorrect and is deleted; the assessee's grounds are allowed.

Final Conclusion: The appeal is allowed; the Tribunal quashed the disallowance of interest expenses made under section 57(iii) and directed deletion of the addition for AY 2013-14.

Deduction under section 80P(2)(a)(i) of the Income tax Act for co operative societies - characterisation of interest on deposits as operational income v. income from surplus/idle funds - distinction between investments with another co operative society and deposits with co operative banks - application and distinguishability of Totgars Co operative Sale Society Ltd. precedent - followance of Vavveru Cooperative Rural Bank Ltd. (Andhra Pradesh High Court) on treatment of interest from bank deposits

Deduction under section 80P(2)(a)(i) of the Income tax Act for co operative societies - characterisation of interest on deposits as operational income v. income from surplus/idle funds - distinction between investments with another co operative society and deposits with co operative banks - Assessee entitled to deduction under section 80P(2)(a)(i) in respect of interest earned on deposits with Krishna District Central Cooperative Bank Limited - HELD THAT: - The Tribunal examined whether interest earned on deposits with KDCC Bank lost the character of business income attributable to activities covered by clause (a) of section 80P(2) and therefore became ineligible for deduction. The Revenue relied on Totgars to contend that interest from investments of surplus/idle funds is not operational income. The Tribunal held Totgars distinguishable on facts and declined to apply it: where investments originate from monies that are the society's own receipts derived from activities listed in section 80P(2)(a), the character of that income is not obliterated merely by placing funds in bank deposits. Relying on and following the Andhra Pradesh High Court decision in Vavveru Cooperative Rural Bank Ltd., and consistent coordinate bench decisions, the Tribunal accepted that investments in nationalised/co operative banks made out of funds produced by the qualifying activities retain their character as profits and gains of business attributable to those activities and are therefore eligible for deduction under section 80P(2)(a)(i). Applying that principle to the facts, the Tribunal found the assessee's deposits traceable to operational receipts and allowed the deduction claimed, setting aside the disallowance by the Assessing Officer and the appellate authority's order upholding the disallowance. [Paras 5, 6, 7]

Addition disallowing deduction in respect of interest on KDCC Bank deposits quashed; appeal of the assessee allowed.

Final Conclusion: The Tribunal allowed the assessee's appeal for AY 2020 21, holding that interest on deposits with KDCC Bank constituted income attributable to activities covered by section 80P(2)(a)(i) and was deductible; the disallowance by the Assessing Officer was set aside.

Service permanent establishment - virtual service permanent establishment - furnishing of services "within" a Contracting State - 90 day threshold under Article 5(6)(a) of the DTAA - business profits taxable only through a permanent establishment (Article 7) - exclusion of vacation, business development days and common days in computing presence - treatment of entries in Form 26AS and onus to prove receipt - interest under section 234A - filing within extended due date - interest under section 234B and applicability of proviso to advance tax computation

Service permanent establishment - furnishing of services "within" a Contracting State - 90 day threshold under Article 5(6)(a) of the DTAA - business profits taxable only through a permanent establishment (Article 7) - virtual service permanent establishment - Assessee does not constitute a service PE or a virtual service PE in India for AY 2020-21 and AY 2021-22. - HELD THAT: - Applying Article 5(6)(a) of the India Singapore DTAA, the Tribunal held that physical performance of services "within" the source State is essential for constituting a service PE and that the 90 day threshold is to be computed on days of actual physical presence performing services. For AY 2020 21 the employees' total presence of 120 days, when vacation (36 days), business development days (35 days) and common days (5 days) are excluded on the facts and evidence furnished, yields 44 days of actual service performance, which is below the 90 day threshold. For AY 2021 22 no employees were physically present in India. The Tribunal rejected the AO's reliance on the concept of a virtual service PE absent any treaty provision adopting virtual PE and found ABB FZ LLC and OECD interim materials inapplicable to alter the treaty text. Consequently the receipts in both years are business profits not taxable in India in absence of a PE under Article 7 read with Article 5(6)(a) of the DTAA. [Paras 12]

Grounds challenging constitution of service PE and virtual service PE allowed; assessee held not to constitute service PE/virtual service PE for AY 2020 21 and AY 2021 22.

Attribution of profits to permanent establishment - Attribution issues regarding allocation of receipts to the alleged PE become academic in view of the finding that no PE exists. - HELD THAT: - Since the Tribunal has decided that no service PE or virtual service PE exists for the relevant years, all grounds relating to attribution of business profits to an alleged PE (including methodology of allocation and exclusion of reimbursed expenses) need not be adjudicated on merits and are rendered academic. [Paras 13]

Grounds on attribution of profits are academic and need no adjudication.

Interest under section 234A - filing within extended due date - Issue of levy of interest under section 234A restored to Assessing Officer for verification. - HELD THAT: - The assessee contended that returns were filed within the extended due dates and therefore interest under section 234A should not apply. The Tribunal observed that the claim is supported by filed ITRs and, as the matter requires verification of filing date vis a vis statutory due date, it restored the issue to the file of the AO for fresh verification and decision in accordance with law. [Paras 16]

Matter restored to the AO for verification and fresh decision on interest under section 234A.

Interest under section 234B and applicability of proviso to advance tax computation - Interest under section 234B deleted. - HELD THAT: - Relying on the proviso to the advance tax provision and following the Tribunal and High Court precedent in Amadeus IT Group SA (as applied by the Coordinate Bench and affirmed by the Delhi High Court), the Tribunal held that where tax is deductible at source and TDS has been paid/credited, levy of interest under section 234B is not called for. On this basis the interest charged under section 234B was deleted. [Paras 17]

Interest levied under section 234B deleted.

Treatment of entries in Form 26AS and onus to prove receipt - Additions made solely on the basis of entries in Form 26AS (ICICI Bank receipt and interest on income tax refund) are not sustainable and the matters are restored to the AO for verification and grant of corresponding TDS credit if the assessee did not receive the amounts. - HELD THAT: - The Tribunal observed that mere reflection of amounts in Form 26AS is insufficient to bring charges to tax if the assessee denies receipt; the onus shifts to Revenue to prove actual receipt. Following precedent, the Tribunal held that additions based only on Form 26AS cannot stand and therefore directed the AO to verify whether the assessee actually received the amounts; if the assessee did not receive them, the additions are to be deleted and corresponding TDS credit be granted. [Paras 21, 22, 23, 24]

Additions based on Form 26AS deleted if AO's verification confirms non receipt; matters remitted to AO to verify and grant TDS credit as warranted.

Initiation of penalty proceedings - premature - Challenge to initiation of penalty proceedings under section 270A held to be premature and not adjudicated. - HELD THAT: - The Tribunal noted that penalty proceedings were at a preliminary stage and therefore refrained from adjudicating the contention, recording that the ground is premature. [Paras 18]

Grounds relating to initiation of penalty proceedings held premature and not decided.

Final Conclusion: Appeals allowed on merits: assessee held not to have constituted service PE or virtual service PE for AY 2020 21 and AY 2021 22 and receipts are not taxable in India for those years; interest under section 234B deleted; additions based solely on Form 26AS and the question of interest under section 234A restored to the Assessing Officer for verification and fresh decision; penalty initiation held premature. Appeals allowed for statistical purposes.

Assessment under Section 153A in case of search - Requirement of incriminating material to disturb completed assessments - Interference with completed assessments only on basis of material unearthed during search - Credibility of retracted statement not supported by corroborative incriminating material

Assessment under Section 153A in case of search - Requirement of incriminating material to disturb completed assessments - Interference with completed assessments only on basis of material unearthed during search - Validity of additions made under proceedings initiated after search where assessments for the years were completed on the date of search - HELD THAT: - The Tribunal applied the ratio of Kabul Chawla and subsequent High Court and Supreme Court decisions (as summarised in the judgment) to hold that while Section 153A mandates assessment/reassessment for six years following a search, completed assessments can be interfered with under Section 153A only if there is some incriminating material unearthed during the search or requisition that relates to the particular assessment year. The AO in the present case did not point to any incriminating material seized or otherwise brought on record that would support disturbing the completed assessments; consequently the additions (including those framed as share capital/premium and commission expense) were not sustained. [Paras 4, 5, 7, 9, 10]

Additions made in the assessments pursuant to the post-search proceedings were deleted as there was no incriminating material found during search to justify interference with completed assessments.

Credibility of retracted statement not supported by corroborative incriminating material - Whether the retracted statement recorded during the search could independently sustain additions - HELD THAT: - The Tribunal noted that the statement of a person recorded during search was subsequently retracted and was not corroborated by any seized or incriminating material. In absence of any corroboration, the retracted statement could not be given credence to justify making additions under the post-search assessment proceedings. [Paras 6, 9]

The retracted statement was held unreliable and insufficient to sustain the additions.

Final Conclusion: Applying the settled principle that completed assessments may be reopened under Section 153A only on the basis of incriminating material found in search/requisition, and finding no such material or corroboration for the retracted statement, the Tribunal dismissed the Revenue's appeals and upheld the deletions made by the CIT(A).

Condonation of delay - Limitation and sufficient cause - Exercise of discretion under Section 5 of the Limitation Act - Dismissal of appeal as barred by limitation - Failure to provide plausible explanation / lackadaisical conduct

Condonation of delay - Limitation and sufficient cause - Failure to provide plausible explanation / lackadaisical conduct - Application for condonation of 161 days' delay in filing the appeal was rejected and the appeal held barred by limitation. - HELD THAT: - The Tribunal examined the assessee's inconsistent statements regarding receipt of the CIT(A) order and his affidavit that the order came to his notice only when his Chartered Accountant accessed the income-tax portal. The Tribunal found the explanation that lack of familiarity with technology prevented timely filing to be unconvincing because the portal was accessible to the assessee's Chartered Accountant, thereby rendering the excuse an "eye wash" and indicative of lackadaisical conduct (paras. 6-11). Applying the established approach to condonation applications, the Tribunal held that unexplained or inordinate delay coupled with negligence does not merit liberal exercise of discretion; the law of limitation must be strictly construed and condonation cannot be granted mechanically (paras. 12-14). In view of the absence of a plausible, bonafide cause for the 161-day delay and the assessee's conduct, the Tribunal declined to exercise its discretion to condone the delay and dismissed the appeal as barred by limitation (para.15). [Paras 8, 11, 12, 13, 15]

Condonation application dismissed; appeal dismissed as barred by limitation.

Final Conclusion: The Tribunal refused to condone the 161-day delay for want of a plausible explanation and, without addressing the merits, dismissed the appeal as barred by limitation.

Exemption under section 10(37) of the Income tax Act - compulsory acquisition and its character not altered by subsequent settlement on compensation - capital gains taxation under section 45(5) and year of taxability - definition and character of agricultural land under section 2(14)(iii) - relevance of date of transfer/acquisition for applicability of exemption - application of precedent on compulsory acquisition (Balakrishnan )

Exemption under section 10(37) of the Income tax Act - definition and character of agricultural land under section 2(14)(iii) - Whether the compensation received by the assessee on compulsory acquisition of the land is exempt under section 10(37). - HELD THAT: - The Tribunal upheld the CIT(A)'s finding that all conditions of section 10(37) were satisfied: the land was agricultural in character as evidenced by the Final Award and Tehsildar reports; the transfer was by way of compulsory acquisition; and compensation was received after 1.4.2004. The AO had taxed the amount under section 45(5) solely because the land fell within municipal limits, but the Tribunal accepted the view that section 10(37) was inserted to mitigate hardship where urban proximate agricultural land is compulsorily acquired and that the past character of the land must be examined. Consequently, the exemption claim was sustained and the addition deleted. [Paras 3, 10, 11]

Exemption under section 10(37) allowed; compensation not chargeable to capital gains under section 45(5).

Relevance of date of transfer/acquisition for applicability of exemption - compulsory acquisition and its character not altered by subsequent settlement on compensation - Whether the date of transfer for determining character of the transaction is the original acquisition/allotment (1947) or the date of final award/receipt of compensation (19.05.2014). - HELD THAT: - The Tribunal agreed with the CIT(A) that the acquisition must be viewed from the time the land was compulsorily taken/allotted (dating to the events beginning 1947) and not be converted into a voluntary sale merely because compensation was finally fixed and paid in 2014. Reliance was placed on the principle, as explained in Balakrishnan , that completion of acquisition procedure renders the acquisition compulsory and subsequent settlement on quantum does not change its character. Therefore the character and timing relevant for section 10(37) are those of the acquisition process and prior use, not the date of payment of compensation alone. [Paras 3, 12]

Date of acquisition/transfer for character determination is the time of compulsory acquisition/allotment, and not the later date of payment; consequent applicability of section 10(37) is not defeated by payment date.

Capital gains taxation under section 45(5) and year of taxability - exemption under section 10(37) of the Income tax Act - Whether the Assessing Officer was justified in taxing the compensation under section 45(5) because the land lay within municipal limits and the compensation was received in FY 2014 15. - HELD THAT: - The Tribunal found the AO's reliance on municipal limits alone to be insufficient to deny exemption. The AO had not addressed the assessee's claim under section 10(37) and in the remand report merely reiterated the assessment position. Given the undisputed material showing agricultural use and compulsory acquisition, and that compensation was paid after the prescribed date, the AO's invocation of section 45(5) was unsustainable. The Tribunal emphasised that applicability of section 10(37) must be examined notwithstanding urban proximity, and that year of receipt does not by itself convert the transaction into taxable capital gains where the acquisition was compulsory. [Paras 3, 9, 10, 13]

AO's charge under section 45(5) set aside; taxation in FY 2014 15 on that basis rejected because exemption under section 10(37) applies.

Final Conclusion: The Tribunal sustained the CIT(A)'s order granting exemption under section 10(37) for the compensation received on compulsory acquisition of the agricultural land, held that the character and timing of acquisition govern applicability of the exemption (not the later payment date), set aside the AO's charge under section 45(5), and dismissed the Revenue's appeal.

Assessment under Section 153A following search and seizure - validity and service of search warrant / Panchnama - requirement of incriminating material for additions in completed/unabated assessments - application of Section 68 - identity, creditworthiness and genuineness - onus of proof and scope of remand for verification

Assessment under Section 153A following search and seizure - validity and service of search warrant / Panchnama - Whether assessment under Section 153A was validly initiated against the assessee-company in view of the search warrant and Panchnama - HELD THAT: - The Tribunal examined the original search warrant produced by the Department and found the name of the assessee-company recorded therein. Although the Panchnama produced did not bear the company's name at certain items and signatures of one director were absent, the presence of the company's name in the executed warrant satisfied the jurisdictional requirement for initiation of proceedings under Section 153A. The objection that no search or Panchnama in the company's name had been made was therefore rejected. [Paras 9, 12]

Objection to initiation of assessment under Section 153A rejected; warrant found to contain the assessee's name and 153A proceedings held valid.

Requirement of incriminating material for additions in completed/unabated assessments - assessment under Section 153A following search and seizure - Whether additions in the completed/unabated assessment (AY 2014-15) could be sustained in the absence of incriminating material unearthed during the search - HELD THAT: - Applying precedents of higher courts, including the Supreme Court's recent clarification, the Tribunal held that where no incriminating material pertaining to the year under consideration is unearthed during the search and no assessment was pending (i.e., completed/unabated), the Assessing Officer cannot make additions in respect of that completed assessment merely on the basis of other material or directions of a third party. The Tribunal found that the Assessing Officer had made additions on the diktat of a third party (Investigation authority) despite initial reluctance and without any incriminating material for the year; accordingly, the addition(s) premised on such course were unsustainable. [Paras 24, 25, 26]

Additions founded on absence of incriminating material for the year were not sustainable; Ground No.5 accepted.

Application of Section 68 - identity, creditworthiness and genuineness - onus of proof - Whether the Assessing Officer rightly treated bank credit entries as unexplained under Section 68 when the assessee furnished ledger/accounts, confirmations, ITRs and other documentary evidence - HELD THAT: - The Tribunal analysed the documentary material placed on record by the assessee (ledger accounts, confirmations, bank statements, ITRs and related assessment orders of alleged lenders) and the conduct of the AO in remand proceedings. It found that the assessee had discharged its onus under Section 68 by furnishing evidence on identity and creditworthiness and the genuineness of transactions, which the AO neither properly examined nor rebutted in the assessment or remand report; further, several additions were made pursuant to directions from the Investigation wing despite the AO's earlier satisfaction. On merits, the Tribunal deleted the impugned additions where documentary evidence remained unrebutted and no proper enquiry (e.g., under sections 133(6)/131) was undertaken by authorities. [Paras 59, 69]

Addition(s) under Section 68 confirmed by AO were held unsustainable where assessee discharged onus and AO failed to rebut; deletion granted in respect of the disputed credits.

Application of Section 68 - identity, creditworthiness and genuineness - Correctness of specific additions confirmed by CIT(A) in respect of advances/credits from third parties - HELD THAT: - The Tribunal examined each challenged credit entry on the basis of documentary evidence submitted before the authorities below. It found that the assessee had provided confirmations, ledger accounts, bank statements, ITRs and, in some cases, matching assessment orders of the lenders showing acceptance by the same AO. The CIT(A) had either overlooked or not discussed these documents. On review, the Tribunal deleted the additions in respect of credits received from the identified parties, holding that the authorities had not properly applied the statutory test under Section 68 nor undertaken requisite enquiries. [Paras 52, 55, 57, 63, 64]

Additions in respect of the contested credit entries and related disallowances were deleted where documentary evidence was unrebutted and proper enquiries were not made.

Remand for verification - Whether remand proceedings were effective and whether AO addressed documentary evidence in remand report - HELD THAT: - The Tribunal noted that documents filed during appellate remand were transmitted to the AO, but the AO's remand report did not discuss or rebut the documentary evidence; instead, the AO reiterated the shell-company finding. The Tribunal treated the absence of any adverse findings on the documentary evidence in the remand report as significant and relied on that failure in concluding that additions were unjustified. [Paras 59, 69]

Remand did not result in any substantiated adverse findings by AO; lack of consideration of documentary evidence by AO supported deletion of additions.

Final Conclusion: For Assessment Year 2014-15 the Tribunal upheld initiation of proceedings under Section 153A (warrant contained assessee's name) but, applying settled law on incriminating material and proper exercise of duty by the AO, accepted the assessee's challenges: several additions and disallowances confirmed below were deleted because the Assessing Officer either lacked incriminating material for a completed assessment or failed to examine/rebut the extensive documentary evidence tendered under Section 68; the Department's cross-appeal on deletion of a substantial portion of credits was dismissed.

Limitation in exercise of review powers under Section 129A(2) of the Customs Act - Reasonable time for administrative action in absence of statutory period - Customs valuation - rejection of transaction value on account of imports of identical or similar goods - Meaning and application of 'identical' and 'similar' goods under the Customs Valuation Rules - Reassessment of assessable value by adjudicating authority upheld on factual materials and market survey - Imposition of penalties under the Customs Act where transaction value is discarded

Limitation in exercise of review powers under Section 129A(2) of the Customs Act - Reasonable time for administrative action in absence of statutory period - Validity of the Committee of Commissioners' review order dated 2nd November 2021 under Section 129A(2) as being time-barred - HELD THAT: - Section 129A(2) contains no prescribed time limit for the Committee of Commissioners to direct an appeal; where no statutory period is prescribed, the power must be exercised within a reasonable time. The Court took into account the exceptional circumstances of the COVID-19 pandemic and this Court's suo motu extensions of limitation. On the facts, the Committee's decision on 2nd November 2021 (and subsequent filing of appeal) was not unreasonably delayed and could not be held time-barred. [Paras 7]

The Committee's review order dated 2nd November 2021 is not time-barred and was validly exercised within a reasonable time in the circumstances.

Customs valuation - rejection of transaction value on account of imports of identical or similar goods - Meaning and application of 'identical' and 'similar' goods under the Customs Valuation Rules - Reassessment of assessable value by adjudicating authority upheld on factual materials and market survey - Imposition of penalties under the Customs Act where transaction value is discarded - Whether the CESTAT erred in restoring the adjudicating authority's rejection of the declared transaction value on the ground that identical/similar earlier imports established undervaluation, and whether penalties were correctly imposed - HELD THAT: - The Court applied settled principles that transaction value is the starting point but may be discarded if imports of identical or similar goods at higher prices exist and cogent reasons supported by material are given. The adjudicating authority and CESTAT compared the subject consignments with earlier imports and recorded detailed reasons, including a market survey and the importer's own statement acknowledging differences as minor (lower version). The products, apart from the description 'unpopular brand', were found to be identical/similar on the material placed before the authorities. Those factual findings - reached after examination of comparative features and market evidence - were sustained; accordingly the reassessed assessable value and the consequential penalties were not interfered with. [Paras 8, 9]

CESTAT did not err in restoring the order-in-original; the rejection of the declared transaction value and imposition of penalties are upheld.

Final Conclusion: The appeal is dismissed. The Committee's review was not time-barred in the pandemic period, and the factual findings upholding rejection of the declared transaction value (on account of identical/similar earlier imports) and the penalties imposed are sustained; no costs are awarded.

Confiscation of conveyance used in smuggling - redemption fine in lieu of confiscation - penalty under Section 112 for involvement in handling and transportation - vicarious liability of vehicle owner for acts of driver - requirement of corroborative evidence to connect owner to smuggling

Confiscation of conveyance used in smuggling - redemption fine in lieu of confiscation - penalty under Section 112 for involvement in handling and transportation - vicarious liability of vehicle owner for acts of driver - requirement of corroborative evidence to connect owner to smuggling - Whether the appellant, as owner of the vehicle used to transport seized imported goods, was liable to confiscation/redemption fine and penalty and, if so, whether the quantum of redemption fine and penalty should be sustained. - HELD THAT: - The Tribunal found that the Department had not led proper corroborative evidence demonstrating that the owner of the vehicle was directly or indirectly involved in the alleged smuggling activities, though the vehicle had been used to transport illegally imported goods without documentation. The adjudicating authority held the vehicle liable for confiscation and imposed a redemption fine and penalty; those findings were quoted (OIO). On appeal the Tribunal accepted that an owner cannot wholly disclaim responsibility when his vehicle is used for transportation without proper documents, but also noted absence of evidence implicating the appellant personally. Having regard to the factual matrix, the non-prosecution by other noticees, the lack of evidence linking the appellant to smuggling, and the appellant's financial condition, the Tribunal exercised its discretion to reduce the redemption fine and the penalty to moderate sums. The appeal was therefore partly allowed, leaving the adjudicatory finding of liability intact in principle but moderating the monetary consequences. [Paras 5, 12, 13]

Liability of the vehicle-owner upheld in principle but, for lack of corroborative evidence of personal involvement and considering his financial condition, redemption fine and penalty reduced to lower amounts; appeal partly allowed.

Final Conclusion: The appeal is partly allowed: while the vehicle was found liable as a conveyance used in transporting illegally imported goods, the Tribunal reduced the redemption fine and the penalty in view of the absence of corroborative evidence against the owner and his financial circumstances; consequential relief, if any, to follow as per law.

Remand for verification - veracity of Chartered Accountant's certificate - refund of SAD - set aside confirmed demand, interest and penalty - no mala fide - follow precedent

Remand for verification - veracity of Chartered Accountant's certificate - follow precedent - Remand of the matter to the adjudicating authority for verification of the Chartered Accountant's certificate and other relevant documents. - HELD THAT: - The Tribunal observed that an identical issue was recently decided, where it was held that, in the absence of proof of any ulterior motive on the part of the appellant and upon production of a fresh Chartered Accountant's certificate, the proper course is to remit the matter for verification. Applying the same ratio, and noting that the appellant has produced a fresh certificate, the Tribunal remanded the case to the adjudicating authority with the direction to check the authenticity of the Chartered Accountant's certificate and other relevant documents and to pass orders thereafter. [Paras 6, 7]

Matter remanded to the adjudicating authority to verify the certificate and related documents and to decide the refund claim afresh.

Refund of SAD - set aside confirmed demand, interest and penalty - no mala fide - Consequences if the verified certificate and documents are found to be in order. - HELD THAT: - The Tribunal directed that if, upon verification, the Chartered Accountant's certificate and other relevant documents are found to be in order, the adjudicating authority shall allow the refund claim. The Tribunal recorded that no mala fide on the part of the appellant in producing the earlier certificate has been proved. It further held that if the refund is held eligible, the existing confirmed demand against the appellant, together with interest and penalty, would be set aside. [Paras 7]

If verification establishes authenticity and entitlement, allow the refund and set aside the confirmed demand, interest and penalty.

Final Conclusion: Both appeals are disposed of by remand: the matters are directed to be examined afresh by the adjudicating authority to verify the Chartered Accountant's certificate and related documents, and if found in order, the refund shall be allowed and the confirmed demand with interest and penalty set aside.

Waiver of filing fee under Rule 4(3) of the Competition Appellate Tribunal (Form and Fee for filing Competition Applications) Rules, 2009 - discretion to waive fee to advance the cause of justice - party should not suffer for default or misconduct of his counsel - requirement of indigence or poor economic condition as basis for fee waiver - misrepresentation by agent/authorised representative

Waiver of filing fee under Rule 4(3) of the Competition Appellate Tribunal (Form and Fee for filing Competition Applications) Rules, 2009 - requirement of indigence or poor economic condition as basis for fee waiver - party should not suffer for default or misconduct of his counsel - Application for waiver of the court fee of Rs.3 lakhs for re-filing the Compensation Application was refused. - HELD THAT: - The Tribunal considered Rule 4(3) (referred to in the order as Rule 4(2) and reproduced) which permits the Tribunal to waive fee to advance the cause of justice in suitable cases, taking into account the economic condition or indigent circumstances of the applicant. The applicant's case that his former authorised representative had withdrawn the earlier Compensation Application without his instructions and that he was under a bona fide belief that the representative was a qualified advocate was examined against the statutory test for waiver. The Tribunal distinguished precedents relied upon by the applicant (Rafiq & Anr. and Sohanlalarya) on the ground that those decisions addressed situations of default or non-appearance by counsel resulting in dismissal, whereas in the present matter the representative had actively appeared and moved for withdrawal. Even assuming misrepresentation by the representative, the power to waive fees under the Rule is tied to the applicant's economic condition or indigence. On the materials and submissions, the Tribunal found no sufficient evidence of indigence or poor economic condition to justify exercise of the discretion to waive the statutory fee. Accordingly, the discretionary relief of waiving the refiling fee was not available to the applicant and the application was dismissed. [Paras 8, 9, 10, 11, 12]

I.A. No. 758 of 2023 for waiver of the court fees of Rs.3 lakhs for re-filing Compensation Application No.1 of 2023 is dismissed.

Final Conclusion: The Tribunal declined to waive the statutory filing fee for re-filing the Compensation Application because the discretionary power under the Rules to waive fee is primarily predicated on the applicant's indigence or poor economic condition, which was not demonstrated; precedents excusing parties for counsel's default were distinguished on the facts.

Discretion to permit rejoinder during hearing - Completion of pleadings before commencement of hearing - Costs as condition for taking additional pleadings on record - Prejudice to the opposing party - Appellate restraint in interfering with discretionary orders

Discretion to permit rejoinder during hearing - Completion of pleadings before commencement of hearing - Costs as condition for taking additional pleadings on record - Prejudice to the opposing party - Appellate restraint in interfering with discretionary orders - Validity of the Adjudicating Authority's order permitting the Financial Creditor's rejoinder to be taken on record during hearing subject to payment of costs, and whether such exercise of discretion warranted interference by this Tribunal. - HELD THAT: - The Tribunal noted that while pleadings are normally completed before commencement of arguments, there is no rule prohibiting the Adjudicating Authority from permitting a rejoinder to be taken on record during the course of hearing. The Adjudicating Authority had recorded that the rejoinder could not be filed earlier due to lapse of the earlier counsel and that the Financial Creditor changed counsel; it also found that the Corporate Debtor would not be prejudiced in arguing its plea of limitation. Having imposed a monetary condition (costs) as a safeguard, the exercise of discretion was held to be within the Adjudicating Authority's jurisdiction and not liable to interference in appeal. The Tribunal therefore declined to disturb the discretionary order, while directing that the Appellant be afforded an opportunity to address submissions in relation to the rejoinder. [Paras 4, 5]

The Adjudicating Authority's discretion to permit the rejoinder on record subject to costs is upheld; the appeal is dismissed and the Appellant shall be given opportunity to make submissions on the rejoinder.

Final Conclusion: Appeal dismissed; the Adjudicating Authority's order permitting the rejoinder to be taken on record subject to payment of costs is sustained, and the Appellant is granted opportunity to make submissions in respect of the rejoinder.

Summary order. Special Leave Petitions dismissed; delay condoned; petitioner permitted to apply for revival of the petitions in the event the acquittal in the predicate offence is overturned.

Exemption under Section 102 of the Finance Act, 1994 - refund of service tax paid where services rendered to a Government educational establishment - claim by sub-contractor who has borne the burden of tax - treatment of sub-contractor's services as services to the ultimate client - precedential construction of "governmental authority" in Shapoorji Pallonji (Supreme Court)

Exemption under Section 102 of the Finance Act, 1994 - treatment of sub-contractor's services as services to the ultimate client - Services rendered by the appellant as sub-contractor for construction of "ONGC Centre of Advanced Studies" at University of Lucknow are exempt under Section 102 and eligible for refund. - HELD THAT: - The Tribunal examined the nature of the work and records showing that the construction was for an educational establishment (University of Lucknow). The court held that the exemption under Section 102 applies irrespective of whether the service is provided directly by the main contractor or indirectly through a sub-contractor, because taxability must be determined with reference to the ultimate client to whom the construction pertains. The Tribunal rejected the view that billing to the main contractor converts the nature of the service into one rendered to the main contractor and not to the University; the work order demonstrates the connection to the University and thus the exemption applies. The Tribunal also observed that the CBEC Circular, though in a different context, supports the logic that sub-contractor services rendered through the main contractor should be treated as services to the client for exemption purposes. The conclusion on this issue is reached on the merits and led to allowing the refund claim. [Paras 7]

The services rendered by the appellant as sub-contractor to the University of Lucknow are exempt under Section 102 and the appellant is entitled to refund of service tax paid.

Claim by sub-contractor who has borne the burden of tax - refund of service tax paid where services rendered to a Government educational establishment - precedential construction of "governmental authority" in Shapoorji Pallonji (Supreme Court) - A sub-contractor who has borne the burden of service tax may claim refund even if the main contractor has not claimed refund; the Tribunal follows the Supreme Court's construction in Shapoorji Pallonji. - HELD THAT: - The Tribunal found the refund application was time barred neither under Section 102 nor procedurally, the application having been filed within the period prescribed. It held that refund provisions do not mandate that only the main contractor may claim refund; any person who has borne the burden of the tax can claim it. The Tribunal expressly relied on the Supreme Court's recent interpretation in the Shapoorji Pallonji judgments regarding the scope of exemption and the construction of "governmental authority", treating those decisions as directly applicable and controlling. Following that precedent, the Tribunal set aside the lower authorities' denial and allowed the appellant's claim with consequential relief. [Paras 8, 9]

The appellant, having borne the tax in respect of exempt services to the University, is entitled to refund; the Tribunal follows the Supreme Court's ruling and allows the appeal.

Final Conclusion: Impugned order of the Commissioner (Appeals) is set aside; the appeal is allowed and the appellant is granted refund relief as per law, following the Tribunal's reasoning and the Supreme Court precedent in Shapoorji Pallonji.

Centralized registration - Utilisation of Cenvat credit of a non SEZ unit for discharge of SEZ unit's service tax liability - Requirement of centralized billing or centralized accounting system - Show cause notice as the foundation of adjudication / travelling beyond the SCN - Scope of exemption notification for SEZ units

Centralized registration - Utilisation of Cenvat credit of a non SEZ unit for discharge of SEZ unit's service tax liability - Scope of exemption notification for SEZ units - Validity of utilizing CENVAT credit of the non SEZ unit to discharge service tax liability of the SEZ unit when both units are covered under a centralized registration - HELD THAT: - The Tribunal held that neither the Exemption Notification applicable to SEZ units nor the CENVAT Credit Rules prohibit an SEZ unit from having its service tax liability discharged by utilisation of CENVAT credit availed by a non SEZ unit of the same assessee where both units are under a centralized registration. Rule 3 of the Credit Rules and the Exemption Notification do not mandate payment in cash by GAR 7 or impose a bar on such utilisation. The Tribunal relied on settled precedents recognising that units under centralized registration may utilise accumulated CENVAT credit for discharge of liability even if a particular unit would not independently be eligible to avail the credit. The adjudicating authorities did not dispute the legal submissions on eligibility but based the demand on the alleged invalidity of centralized registration. Accordingly, the legal entitlement to utilise the credit under centralized registration was upheld and the demand could not be sustained on the ground that the SEZ unit had utilised credit of the non SEZ unit. [Paras 10, 11, 12, 13]

Appellant entitled to discharge SEZ unit's service tax liability by utilising CENVAT credit of the non SEZ unit under centralized registration; no statutory bar in the Exemption Notification or Credit Rules to such utilisation.

Requirement of centralized billing or centralized accounting system - Show cause notice as the foundation of adjudication / travelling beyond the SCN - Legality of the demand founded on the adjudicating authority's finding that centralized registration was invalid - specifically whether the authorities could travel beyond the scope of the SCN by impugning centralized registration based on different invoice series - HELD THAT: - The Tribunal found that the adjudicating authority and the Commissioner (Appeals) travelled beyond the scope of the show cause notice by raising and upholding the claim that the assessee did not maintain a centralized billing or accounting system merely because different invoice serial numbering was used for SEZ and non SEZ units. Rule 4(2)(iii) requires a centralized billing or accounting system for centralized registration but does not prescribe identical invoice series for all units. The Trade Notice relating to centralized registrations likewise requires a write up demonstrating centralized systems and does not mandate uniform invoice codes. The Tribunal relied on Supreme Court authority that a show cause notice is the foundation of adjudication and the department cannot invoke grounds not mentioned therein. Since the demand was sustained on a basis beyond the SCN, the impugned orders could not be sustained. [Paras 13, 14, 15, 16]

Impugned order set aside because the authorities impermissibly travelled beyond the show cause notice in challenging centralized registration on the invoice series ground; conclusion on lack of centralized billing/accounting was without statutory basis.

Final Conclusion: Impugned Order in Original and the Commissioner (Appeals) order are set aside; appeal allowed and consequential relief granted, the confirmed demand is quashed as based on impermissible travel beyond the show cause notice and on an erroneous interpretation of requirements for centralized registration.

Cenvat credit for service tax paid under reverse charge mechanism - Refund of tax paid under reverse charge where payment made on audit insistence - Applicability of Rule 9(1)(bb) of Cenvat Credit Rules, 2004 - Suppression of facts as a condition for denial of credit under Rule 9(1)(bb) - Payment under Section 73(4A) / conclusion of liability and its effect on fraud/collusion/suppression allegations - Interest on delayed refund under Section 11BB of the Central Excise Act, 1944

Cenvat credit for service tax paid under reverse charge mechanism - Refund of tax paid under reverse charge where payment made on audit insistence - Whether the appellant was entitled to Cenvat credit and consequential refund for service tax paid on ocean freight (reverse charge) for the period January, 2017 to June, 2017. - HELD THAT: - The Tribunal found that the appellant had paid service tax on ocean freight only upon insistence of the audit party, in a context where the liability to levy service tax on ocean freight was debatable and subject to litigation, and the appellant paid the tax along with interest. The lower authorities denied credit and refund invoking Rule 9(1)(bb) on the basis of alleged suppression of facts. Applying precedent where identical facts were considered, the Tribunal held that payment made under reverse charge mechanism in such circumstances does not fall within the mischief of Rule 9(1)(bb). The Tribunal relied on prior decisions addressing belated payment under reverse charge and the distinction between payments fitting within the specific evidentiary provisions for reverse charge and the denial provisions of Rule 9(1)(bb). Consequently, the appellant was held entitled to Cenvat credit and the consequential refund of the service tax paid on ocean freight. [Paras 4, 5]

Appellant entitled to Cenvat credit and consequential refund of service tax paid on ocean freight for January, 2017 to June, 2017.

Applicability of Rule 9(1)(bb) of Cenvat Credit Rules, 2004 - Suppression of facts as a condition for denial of credit under Rule 9(1)(bb) - Whether denial of credit and refund under Rule 9(1)(bb) could be sustained on the ground of alleged suppression of facts in the absence of adjudication for suppression/demand proceedings. - HELD THAT: - The Tribunal observed that no show cause notice invoking the extended period (or alleging suppression) had been issued to the appellant, and that allegations of suppression of fact, unless adjudicated in a demand case, remain conjectural. Reliance was placed on earlier Tribunal decisions to the effect that Rule 9(1)(bb) operates only where the additional tax is recoverable from the provider on account of fraud, collusion, wilful misstatement or suppression of facts. Where payment is made under reverse charge or pursuant to audit insistence and there is no adjudication establishing suppression, Rule 9(1)(bb) is not properly invoked to deny credit/refund. [Paras 4]

Denial of credit/refund under Rule 9(1)(bb) could not be sustained in the absence of adjudicated suppression of facts; Rule 9(1)(bb) was not applicable to the facts of the case.

Interest on delayed refund under Section 11BB of the Central Excise Act, 1944 - Whether the appellant was entitled to interest on the delayed refund under Section 11BB of the Central Excise Act, 1944. - HELD THAT: - The Tribunal held that because the refund was delayed by the litigation, the appellant would be entitled to interest on the refund amount in terms of Section 11BB of the Central Excise Act, 1944. The Tribunal applied the principle laid down by the Apex Court (Ranbaxy Laboratories Vs. Union of India ) that interest on delayed refunds is payable from three months after filing of the refund claim until sanction of the refund. [Paras 5]

Appellant entitled to interest on the refund under Section 11BB from three months after filing the refund claim until the date of sanction.

Final Conclusion: The impugned order denying Cenvat credit and refund for service tax paid on ocean freight (January, 2017 to June, 2017) was set aside; the appellant is entitled to Cenvat credit and refund with interest under Section 11BB of the Central Excise Act, 1944, and the appeal is allowed with consequential relief.

Export of Service - Condition under Rule 3(2)(b) of Export of Service Rules, 2005 - Agency commission as contractual obligation payable by foreign principal - Receipt in Indian rupees not determinative where contract fixes commission in foreign currency - Limitation - time barred show cause notice

Export of Service - Condition under Rule 3(2)(b) of Export of Service Rules, 2005 - Receipt in Indian rupees not determinative where contract fixes commission in foreign currency - Agency commission as contractual obligation payable by foreign principal - Whether the agency services rendered to the overseas exporter constitute Export of Service where the commission was fixed in US$ in the contract but paid in Indian rupees by the Indian buyer on direction of the foreign principal - HELD THAT: - The Tribunal found on the facts that the appellant acted as agent of the overseas exporter and the contract with the overseas exporter and Indian Railways fixed the agency commission in US$ with an exchange rate specified, while the Indian Railways paid the commission in Indian rupees only pursuant to the Chinese company's direction. A harmonious reading of the contract shows the contract price payable to the Chinese company was net of commission and the Indian Railways was separately directed to pay the commission to the agent, so that the net economic burden on the buyer included both the seller's price and the separately stipulated commission. On these findings the Tribunal applied the reasoning of the Rajasthan High Court in Commr. of C. Ex., Jaipur-I v. National Engineering Industries Ltd., where receipt in Indian rupees did not defeat export character where the service was rendered for earning foreign exchange and the commission formed part of the foreign-currency transaction. The Tribunal therefore held that Rule 3(2)(b) was satisfied notwithstanding payment in rupees because the contractual arrangement manifested receipt in foreign currency terms and payment by the buyer occurred only on instruction of the foreign principal; accordingly the services qualify as Export of Service and the demand confirmed by lower authorities was set aside on merits. [Paras 7, 8, 9, 10, 11]

Appeal allowed on merits; agency commission treated as export of service despite rupee payment.

Limitation - time barred show cause notice - Whether the Show Cause Notice dated 17/4/2012 (received 21/4/2012) for the period 2009-10 was barred by limitation - HELD THAT: - The Tribunal noted that all commission receipts were reflected in the appellant's Profit & Loss Account and Balance Sheet and the Department had issued the Show Cause Notice on the basis of those publicly available figures. On that basis and having found no concealment of income, the Tribunal concluded that the Show Cause Notice issued and received in April 2012 for the period 2009-10 was time-barred. [Paras 4, 12]

Demand set aside as barred by limitation.

Final Conclusion: The appellant's services as agent qualified as Export of Service despite receipt in Indian rupees because the commission was contractually fixed in US$ and paid on direction of the foreign principal; appeal allowed on merits and additionally allowed on limitation grounds for the period 2009-10, with consequential relief as per law.

Business exhibition service - mandap keeper service - supply of tangible goods service - transport of goods by road service - legal services - service tax on actual electricity reimbursement - penalty for deliberate attempt to evade tax

Business exhibition service - Classification of the appellant's activities as taxable 'business exhibition service'. - HELD THAT: - The Tribunal found that the Original Adjudicating Authority did not give substantive grounds nor effectively rebut the appellant's submissions to justify classifying the appellant's activities as 'business exhibition service'. Reliance on the Tribunal's prior decision in Karnataka Exhibition Authority v. CC, CE & ST, Mysore, which involved substantially identical activities and held that mere leasing or renting of stalls does not constitute 'business exhibition service', was accepted. Applying that reasoning to the present facts, the Tribunal held the demand under the category 'business exhibition service' unsustainable and set it aside. [Paras 10]

Demand under 'business exhibition service' set aside.

Service tax on actual electricity reimbursement - Liability to service tax on electricity charges collected from stall holders and remitted to the electricity department. - HELD THAT: - The Tribunal observed that electricity charges were collected on an actual basis and paid to the electricity department. Such reimbursements cannot constitute taxable service consideration. Accordingly, the demand insofar as it arose from electricity charges collected and passed through was held not sustainable and was set aside. [Paras 11]

Demand in respect of electricity charges set aside.

Mandap keeper service - Classification and demand in respect of services rendered in provision of Autonagar sheds (function halls) as 'mandap keeper service'. - HELD THAT: - While the Tribunal disallowed the demand under 'business exhibition service', it noted that the appellant had accepted demands relating to services other than business exhibition. The Adjudicating Authority's classification of the provision of function halls and related maintenance/electricity charges as 'mandap keeper service' was upheld insofar as the appellant had not disputed those heads. [Paras 11, 13]

Demand in respect of 'mandap keeper service' upheld.

Supply of tangible goods service - transport of goods by road service - legal services - Liability and classification of amounts as 'supply of tangible goods service', 'transport of goods by road service' and 'legal services' for the period April 2009 to March 2013. - HELD THAT: - The Adjudicating Authority had classified certain receipts under the respective service heads. The appellant filed an affidavit indicating tax payment under these heads (except 'business exhibition service') and did not contest them. The Tribunal therefore sustained the demands for these services as confirmed by the lower authority and reflected in the impugned order. [Paras 5, 13]

Demands in respect of 'supply of tangible goods service', 'transport of goods by road service' and 'legal services' upheld; appeal allowed only in part.

Penalty for deliberate attempt to evade tax - Validity of penalties and fine imposed under the relevant provisions for alleged deliberate evasion of service tax. - HELD THAT: - On the facts and in the absence of substantive grounds to establish any deliberate attempt to evade service tax, the Tribunal exercised its jurisdiction to set aside penalties imposed under Sec. 76 and Sec. 77 and the fine under Sec. 70. The Tribunal treated the absence of culpable intent as decisive for rescinding the punitive measures. [Paras 12]

Penalties under Sec. 76, Sec. 77 and fine under Sec. 70 set aside.

Final Conclusion: Appeal No. ST/828/2012: Part demand set aside and appeal allowed partly (business exhibition demand and electricity charges quashed; mandap keeper demand upheld). Appeal No. ST/30092/2016: Demand under 'business exhibition service' set aside while demands for 'mandap keeper service', 'supply of tangible goods service', 'transport of goods by road service' and 'legal services' are upheld; appeals allowed in part; penalties and fine set aside.

Substantial question of law - appeal to the High Court under Section 35G - determination of any question having relation to the rate of duty of excise - value of goods for purposes of assessment - withdrawal of SSI exemption - treatment of multiple undertakings as one undertaking

Appeal to the High Court under Section 35G - substantial question of law - determination of any question having relation to the rate of duty of excise - value of goods for purposes of assessment - withdrawal of SSI exemption - treatment of multiple undertakings as one undertaking - Maintainability of the appeal under Section 35G of the Central Excise Act, 1944 where SSI exemption has been granted and may be withdrawn, or where multiple undertakings may be treated as one undertaking affecting valuation/levy. - HELD THAT: - The Court examined Section 35G(1) which permits appeals to the High Court only if the case involves a substantial question of law, excluding orders "relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment". The Bench held that withdrawal of SSI exemption would render excise duty leviable and engage determination of the rate/chargeability and valuation for assessment; similarly, treating three undertakings as a single undertaking would require combined valuation for assessment. These consequences place the controversy squarely within the statutory exception under Clause (1) of Section 35G, thereby ousting the High Court's jurisdiction. The Court referred to earlier decisions including Commissioner of Central Excise, Jaipur vs. Electro-Mechanical Engineering Corporation & Ors. to note that appeals raising such questions are not maintainable before the High Court. Having concluded that the dispute pertains to determination of duty/valuation, the appeal was dismissed as not maintainable and the ancillary stay application disposed of. [Paras 13, 14, 16, 17]

The appeal is not maintainable before the High Court under Section 35G(1) because the dispute concerns determination of rate of duty or value of goods for assessment; appeal dismissed as not maintainable and stay application disposed.

Final Conclusion: The High Court dismissed the appeal as not maintainable under Section 35G(1) of the Central Excise Act, 1944 because the controversy involves determination of duty/valuation (withdrawal of SSI exemption and aggregation of undertakings), and disposed of the stay application.

Reversal of Cenvat credit under Rule 4(5)(a) of the Cenvat Credit Rules, 2004 - Job work - distinction between raw or partially processed inputs and manufacturer produced intermediate/finished goods - Non attraction of Rule 4(5)(a) where intermediate/finished goods (manufactured by the principal) are sent for job work - Applicability of Central Excise Tariff duty where manufactured intermediate/finished goods are sent for job work

Reversal of Cenvat credit under Rule 4(5)(a) of the Cenvat Credit Rules, 2004 - Job work - distinction between raw or partially processed inputs and manufacturer produced intermediate/finished goods - Applicability of Central Excise Tariff duty where manufactured intermediate/finished goods are sent for job work - Whether the appellant was required to reverse Cenvat credit under Rule 4(5)(a) of CCR for goods sent to job work during 2012-13 and 2013-14. - HELD THAT: - The Tribunal held that Rule 4(5)(a) applies only when raw material or partially processed inputs are sent out for job work or further processing. Where the manufacturer itself has converted raw material into intermediate or finished goods and it is these manufactured intermediate/finished goods (here, forged slabs) that are subsequently sent out for job work, Rule 4(5)(a) is not attracted. In such circumstances the correct recourse, if any, is application of duty as per the Central Excise Tariff to the manufactured goods, and not reversal of Cenvat credit under Rule 4(5)(a). The Tribunal accepted the factual position that the appellant produced intermediate goods before sending them for job work and concluded that the lower authorities erred in applying Rule 4(5)(a). The Tribunal therefore set aside the demand founded on reversal under that rule and allowed the appeal on merits. The Tribunal did not decide the separate question of limitation, leaving that ground open. [Paras 11, 12]

Impugned order set aside; appeal allowed on merits and appellant entitled to consequential benefits; the limitation ground left open.

Final Conclusion: The Tribunal ruled that Rule 4(5)(a) CCR is not attracted where the manufacturer converts raw material into intermediate/finished goods before sending them for job work; the demand for reversal of Cenvat credit under that Rule was set aside and the appeal allowed, with consequential benefits, while the limitation issue remains open.

Cenvat credit - Input Service Distributor (ISD) - Manner of distribution of Cenvat credit by input service distributor under Rule 7 of the Cenvat Credit Rules, 2004 - Validity of ISD invoices as documents for availing Cenvat credit under Rule 9 of the Cenvat Credit Rules, 2004 - Recoverability of credit from recipient unit where ISD has not been held to have availed inadmissible credit

Cenvat credit - Input Service Distributor (ISD) - Manner of distribution of Cenvat credit by input service distributor under Rule 7 of the Cenvat Credit Rules, 2004 - Validity of ISD invoices as documents for availing Cenvat credit under Rule 9 of the Cenvat Credit Rules, 2004 - Entitlement of the appellant to take Cenvat credit on input services distributed by the Head Office registered as ISD - HELD THAT: - The Tribunal examined whether invoices issued by the Head Office, registered as an Input Service Distributor, constituted valid documents for the appellant to avail Cenvat credit. Relying on the definition and scheme of the Cenvat Credit Rules and earlier Tribunal and High Court decisions, the Court held that Rule 7 prescribes only two restrictions on distribution (not exceeding service tax paid and not distributing credit attributable to services used exclusively for manufacturing exempted goods or providing exempted services) and that there is no requirement of a one-to-one correlation between the place of use of the service and the unit receiving the credit. In the absence of any finding that the ISD itself had availed inadmissible credit or breached the conditions of Rule 7, invoices issued by the ISD are proper documents under Rule 9 and the recipient manufacturing units are entitled to the distributed credit. The Tribunal distinguished precedents cited by the Revenue on their facts where ISD distribution rules were violated or units were exempted and followed authorities holding distribution lawful where the ISD had validly availed credit. [Paras 6, 7, 10, 11]

Appellant entitled to the Cenvat credit on input services distributed by the Head Office ISD; impugned orders denying credit set aside.

Recoverability of credit from recipient unit where ISD has not been held to have availed inadmissible credit - Validity of ISD invoices as documents for availing Cenvat credit under Rule 9 of the Cenvat Credit Rules, 2004 - Whether the Revenue can recover Cenvat credit from the appellant where the ISD has not been found to have availed inadmissible credit - HELD THAT: - The Tribunal held that where the head office registered as ISD has availed and distributed credit and there is no adjudication or finding that the ISD itself has taken inadmissible credit, the Revenue cannot recover the credit from recipient units. The reasoning draws on the statutory scheme that permits distribution by ISD subject to specified limitations and the absence of any investigation or finding against the ISD in this case. Decisions relied upon by the Revenue were found to be distinguishable on facts where ISD distribution was improper or units were exempted. [Paras 9, 12]

Revenue not entitled to recover the distributed Cenvat credit from the appellant in the absence of a finding that the ISD availed inadmissible credit; demand set aside.

Final Conclusion: Appeals allowed; impugned orders denying Cenvat credit on ISD-distributed input services for the period 2011-12 to 2017-18 (Upto June, 2017) are set aside and the distributed credit is held admissible, with consequential relief.

Ex-parte ad-interim injunction - Triple Test for grant of interlocutory injunction - appellate restraint in substituting discretion in appeals against interlocutory injunctions (Wander principle) - compliance with Order XXXIX Rule 3/3A (notice and prompt disposal) - appeal under Order XLIII Rule 1(r)

Ex-parte ad-interim injunction - Triple Test for grant of interlocutory injunction - appellate restraint in substituting discretion in appeals against interlocutory injunctions (Wander principle) - appeal under Order XLIII Rule 1(r) - Whether the appellate court should interfere with the ex-parte ad interim injunction granted by the learned ADJ. - HELD THAT: - The High Court applied the settled principle that an appellate court will not normally substitute its discretion for that of the court of first instance in appeals against interlocutory injunctions unless the discretion was exercised arbitrarily, capriciously or perversely. The learned ADJ had considered the material on record, recorded that he had 'gone through the record as available on date', and found the Article to be, on the available material, ex facie defamatory and that the Triple Test for grant of interim relief was satisfied. The High Court held that the exercise of discretion by the ADJ was a plausible one and not perverse; the appellate court therefore declined to re assess the material or substitute its own view and dismissed the appeal. The Court expressly left open all rights on merits for determination by the ADJ at the hearing of the interim application and reiterated that the appeal lies under Order XLIII Rule 1(r). [Paras 33, 34, 36, 39, 41]

Appeal dismissed; no interference with the ex parte ad interim injunction as the ADJ's exercise of discretion was not shown to be arbitrary or perverse, and merits remain open.

Compliance with Order XXXIX Rule 3/3A (notice and prompt disposal) - ex-parte ad-interim injunction - Whether the learned ADJ complied with the requirements of Order XXXIX Rule 3/3A when passing the ex parte ad interim injunction and fixing further procedure. - HELD THAT: - The High Court examined the impugned order as a whole and noted that the ADJ had fixed the next date of hearing for 26.03.2024, thereby demonstrating awareness of the statutory requirement for prompt disposal and for recording reasons where the normal protective procedure is bypassed. The Court found that the ADJ had applied his mind to the material before him and had set a return date for hearing within the statutory framework; accordingly there was no ground of procedural non compliance warranting interference. The Court also observed that the appellants had available remedies before the ADJ (filing reply or seeking modification under Order XXXIX Rule 4) and had prematurely rushed to the High Court. [Paras 32, 37, 38, 39]

The ADJ complied with the procedural safeguards of Order XXXIX Rule 3/3A by applying his mind and fixing an early date for disposal; no interference on procedural grounds.

Final Conclusion: The appeal against the ex parte ad interim injunction is dismissed. The High Court found that the learned ADJ had considered the record, applied the Triple Test for interlocutory relief, complied with the procedural requirements for prompt hearing, and exercised discretion in a manner not shown to be arbitrary or perverse; the merits remain open for determination by the ADJ and parties are free to seek earlier hearing or pursue available remedies before the trial court.

Waiver of non essential tender condition - material compliance of eligibility condition - arbitrariness and mala fides in tender process - entitlement of lowest bidder to contract award

Waiver of non essential tender condition - material compliance of eligibility condition - Whether condition no.11 requiring GST registration and certificate was an essential eligibility condition and whether the Tendering Authority validly waived it when declaring the petitioner technically qualified despite non submission of GST returns/clearance. - HELD THAT: - The Court found that condition no.11 required bidders to possess GST registration and submit a certificate of GST payment up to 2022-2023, but the Technical Evaluation Committee, after scrutiny, declared the petitioner and at least one other bidder qualified despite non submission of the GST returns/certificate. The waiver of condition no.11 was deliberate and rational: the subject services fell within the Government notification exempting certain pure services supplied to government/local authorities from GST, rendering insistence on GST particulars ancillary and of little or no significance to the core eligibility. The Court relied on the settled principle that a tendering authority may decline to insist on strict literal compliance with an ancillary condition and may waive conditions of little or no significance, and held that the authority had thoughtfully chosen not to enforce condition no.11 during technical evaluation. The finding emphasises that there was no allegation of falsification by the petitioner; rather, non compliance (cancellation of GST registration) was known to the authority when it declared the petitioner qualified. [Paras 9, 10, 11]

Condition no.11 was treated as waived by the Tendering Authority for valid reasons; the petitioner was properly declared technically qualified despite not having the GST returns/clearance.

Arbitrariness and mala fides in tender process - entitlement of lowest bidder to contract award - Whether the subsequent disqualification of the petitioner after he emerged as the lowest bidder (L 1), and the invitation for negotiations with L 1, L 2 and L 3, was arbitrary or tainted with mala fides and therefore liable to be quashed. - HELD THAT: - The Court observed that after financial bids were opened and the petitioner was found L 1, the authority issued a communication inviting the three lowest bidders for negotiations instead of issuing the work order to L 1. Shortly thereafter, a show cause notice and final order disqualifying the petitioner were issued on the ground of non compliance with condition no.11 which had earlier been waived. The sequence - waiver at technical stage, invitation for negotiations post financial opening, petitioner's objection, and then issuance of a show cause and disqualification - led the Court to conclude that the action was arbitrary and tainted with mala fide intent to accommodate other bidders. Given the earlier deliberate waiver and absence of charge of falsification, the subsequent reliance on the same condition to disqualify the petitioner could not be justified. [Paras 8, 12, 13]

The disqualification order passed after the petitioner emerged as L 1 was arbitrary and mala fide; the communication inviting negotiations and the subsequent disqualification are quashed and set aside.

Final Conclusion: The writ petition is partly allowed: the communications inviting negotiations and the orders disqualifying the petitioner are quashed; the petitioner is declared qualified and entitled to participate further in the tender process and to be treated as the Lowest Bidder (L 1); writ disposed of with no costs.