TaxTMI Updates e-Newsletter
Mar 20,2023

Cancellation of GST registration - non-speaking order - denial of hearing / audi alteram partem - reliance on precedent for uniform relief - delay in filing appeal and doctrine of merger - judicial review under Article 14 - remand for fresh consideration

Cancellation of GST registration - non-speaking order - denial of hearing / audi alteram partem - judicial review under Article 14 - reliance on precedent for uniform relief - Validity of the order cancelling the petitioner's GST registration where cancellation was recorded to be for non-submission of reply and the order was non-speaking. - HELD THAT: - The Court found that the cancellation order was non-speaking and self-contradictory, recording both submission and non-submission of a reply; petitioner was not heard before cancellation. Following earlier decisions (including the judgment in Writ Tax No.145 of 2022 and the reasoning in M/s Chandrasen), an order of cancellation passed without adequate reasons and prima facie without application of mind fails scrutiny under Article 14. The Court held that non-submission of a reply by itself cannot constitute a legally sustainable ground for cancellation where the order does not assign reasoned application of mind and the affected party was not heard, and therefore the petitioner is entitled to the same relief granted in the cited precedent.

The cancellation order dated 30.07.2022 and the appellate order dated 12.01.2023 are set aside and the petitioner is entitled to the benefit of the cited precedent.

Delay in filing appeal and doctrine of merger - remand for fresh consideration - Whether the matter should be remitted for fresh consideration and hearing despite the appellate dismissal on ground of delay. - HELD THAT: - Although the appeal was dismissed as time-barred, the Court accepted the petitioner's contention that he had not been heard and invoked the precedent which administered uniform relief where cancellations were non-speaking. The Court exercised remedial equity by permitting the petitioner to tender his reply and directed that, upon his appearance with the reply and certified copy of the order and precedent within three weeks, the respondents must proceed to pass a fresh order in accordance with law. The remand is for fresh consideration and adjudication after hearing and application of mind; the merits of cancellation are not finally adjudicated but are to be reconsidered afresh.

Matter remitted to respondents to pass a fresh order in accordance with law after the petitioner files his reply and appears within three weeks; appellate dismissal for delay does not preclude this fresh consideration.

Final Conclusion: The writ petition is allowed: the cancellation order and the appellate order are set aside; the petitioner may appear within three weeks with reply and certified copies, and the respondents shall thereupon pass a fresh, reasoned order after hearing in accordance with law.

Violation of principles of natural justice - ex parte order - absence of reasons / non-speaking order - quashing and remand for fresh adjudication - opportunity of hearing - speaking order - interim relief by deposit as condition for prosecution of appeal - stay of coercive action - de-freezing of bank accounts - adjudication under Section 73(9) of BGST Act, 2017

Violation of principles of natural justice - ex parte order - absence of reasons / non-speaking order - adjudication under Section 73(9) of BGST Act, 2017 - Impugned orders passed by the Assistant Commissioner dated 08.03.2020 (and the summary in GST DRC 07 dated 07.03.2020) and the appellate order dated 05.09.2022 are quashed on grounds of infirmity of law. - HELD THAT: - The Court found that the orders were ex parte and recorded a breach of the principles of natural justice because the petitioner was not afforded sufficient time or a fair opportunity to represent its case. Further, the orders did not furnish ascertainable reasons explaining how the amount due was determined, and the authorities failed to address the attendant facts and legal issues. For these defects the impugned orders are legally unsustainable and have been set aside.

Impugned orders quashed.

Quashing and remand for fresh adjudication - opportunity of hearing - speaking order - Matter remitted to the Assessing Authority for fresh adjudication on merits with directions to comply with principles of natural justice and to pass a speaking order. - HELD THAT: - The Court directed that the Assessing Authority shall decide the matter afresh on merits after affording the petitioner adequate opportunity to place on record all essential documents and submissions. The Authority is required to pass a reasoned, speaking order and may consider proceedings by digital mode; all issues of fact and law remain open for adjudication. The Court expressly refrained from expressing any opinion on the merits.

Remand for fresh, merit-based adjudication with directions to afford hearing and to pass a speaking order.

Interim relief by deposit as condition for prosecution of appeal - de-freezing of bank accounts - stay of coercive action - Interim relief granted: directions regarding deposit, de-freezing of bank accounts and prohibition of coercive measures during pendency. - HELD THAT: - The Court recorded that ten per cent of the total demand had been deposited as a precondition for hearing of the appeal; it directed the petitioner to deposit an additional ten per cent within four weeks if not already done. The deposit is to be without prejudice to the parties' rights and refundable if found excessive. The Court ordered immediate de-freezing/de-attaching of the petitioner's bank account(s), if attached in respect of the disputed proceedings, and restrained the respondents from taking coercive action during pendency.

Interim directions issued for deposit, de-freezing of accounts and stay of coercive action.

Final Conclusion: Impugned orders were quashed for breach of natural justice and absence of reasons; the matter is remitted to the Assessing Authority to decide afresh on merits after affording full opportunity and to pass a speaking order. Interim directions include prescribed deposits, de-freezing of bank accounts (if attached) and a prohibition on coercive steps during pendency.

Violation of principles of natural justice - ex parte order - quashing of administrative order for being non-speaking - remand for fresh adjudication - interim protection from coercive steps - deposit as condition for interim relief - direction to pass speaking order after hearing

Violation of principles of natural justice - ex parte order - quashing of administrative order for being non-speaking - Impugned ex parte order dated 09.01.2021 set aside on grounds of denial of adequate opportunity of hearing and absence of reasons decipherable from the record. - HELD THAT: - The Court formed an opinion that the order was passed ex parte and failed to afford sufficient time to the petitioner to represent its case, thereby violating the principles of natural justice. Further, the order did not assign reasons sufficient to show how the amount was determined and the authority did not adjudicate the matter on the attending facts and circumstances. For these reasons the ex parte order was found to be legally unsustainable and was quashed and set aside. [Paras 7, 8]

Impugned order dated 09.01.2021 and its summary in Form GST DRC-07 quashed and set aside.

Remand for fresh adjudication - direction to pass speaking order after hearing - opportunity to place on record documents - Matter remitted to the Assessing Authority for fresh decision on merits after affording adequate opportunity and recording reasons in a speaking order. - HELD THAT: - The Court directed that the Assessing Authority shall decide the case afresh on merits after complying with principles of natural justice. The reassessment is to include an opportunity of hearing to the parties, allowance to place essential documents and materials on record, and the passing of a speaking order assigning reasons. The Assessing Authority was directed to conduct proceedings expeditiously, preferably within two months from the date of appearance of the petitioner. [Paras 8]

Proceedings remitted to Assessing Authority to decide afresh on merits after hearing and for passing a speaking order.

Interim protection from coercive steps - deposit as condition for interim relief - de-freezing/de-attachment of bank account - Interim relief granted subject to conditions: petitioner to deposit twenty per cent of demand, bank accounts to be de-frozen if attached, and no coercive action during pendency. - HELD THAT: - By mutual arrangement and undertaking, the Court conditioned its relief on the petitioner depositing twenty per cent of the amount of demand within four weeks; such deposit is without prejudice to parties' rights and refundable if found excessive. The Court directed immediate de-freezing/de-attaching of the petitioner's bank accounts, if attached in relation to the proceedings, and restrained coercive action against the petitioner during the pendency of the remanded proceedings. [Paras 8]

Interim protection granted on stated conditions: deposit of twenty per cent, de-freezing of bank accounts if attached, and prohibition of coercive steps during pendency.

Final Conclusion: Writ petition disposed by quashing the impugned ex parte order dated 09.01.2021; matter remitted to the Assessing Authority for fresh adjudication after affording adequate hearing and passing a speaking order; interim protection granted subject to the petitioner's deposit of twenty per cent of the demand and other specified conditions; court reserved all issues on merits.

Classification of goods by HSN/CTH under GST using General Rules of Interpretation - principle of "suitable for use solely or principally" (principal use) for classification of vehicle parts - exclusion of textile articles from Chapter 39 by Section XI notes - distinction between polymers in primary forms and finished articles for tariff classification - parts and accessories of motor vehicles (heading 8708) as a residual heading for vehicle-specific accessories

Distinction between polymers in primary forms and finished articles for tariff classification - classification under CTH 3904 (polymers of vinyl chloride in primary forms) - Whether the PVC floor mats fall within CTH 3904 as polymers of vinyl chloride in primary forms - HELD THAT: - The Authority examined the composition and manufacturing process and found the applicant's goods are finished floor mats composed of laminated PVC leather, PU foam, XLPE foam, thread and adhesive with an affixed heel pad, rather than polymers in primary form. Chapter entries 3901-3914 relate to polymers in primary forms and articles commence from heading 3915 onwards. Therefore the product does not meet the description of CTH 3904 which covers poly(vinyl chloride) in primary forms or mixtures 'not mixed with any other substances' as envisaged by that heading. [Paras 16, 18, 19]

CTH 3904 does not apply to the finished PVC floor mats supplied by the applicant.

Exclusion of textile articles from Chapter 39 by Section XI notes - classification under CTH 3918 (floor coverings of plastics) - Whether the PVC floor mats are classifiable under CTH 3918 as 'floor coverings of plastics' or are excluded by textile provisions - HELD THAT: - The Authority considered Chapter 39 notes and Section XI notes. Note 1(h) to Section XI excludes from Section XI woven/knitted/non-woven fabrics impregnated, covered or laminated with plastics. The applicant's product, being an admixture of plastic materials and not an article whose exposed surface is textile, is not covered by Section XI. While CTH 3918 covers plastic floor coverings, the Authority analysed the competing descriptions and HSN notes and concluded that the vehicle-specific, tailor-made nature and composition point away from classification under 3918 in favour of classification as a vehicle part/accessory under heading 8708. Reliance on earlier AAAR/AAR decisions classifying similar goods under 3918 was not found legally tenable on these facts. [Paras 21, 22, 23, 26]

CTH 3918 is not the appropriate classification for the applicant's PVC floor mats.

Parts and accessories of motor vehicles (heading 8708) as a residual heading for vehicle-specific accessories - principle of "suitable for use solely or principally" (principal use) for classification of vehicle parts - Whether the PVC floor mats are classifiable under CTH 8708 as parts or accessories of motor vehicles and the applicable GST rate - HELD THAT: - The Authority applied the HSN explanatory note to heading 87.08 which requires that parts and accessories be identifiable as suitable for use solely or principally with vehicles of headings 87.01-87.05 and not be excluded by Section XVII notes. The floor mats are tailor-made for four-wheel motor vehicles and are principally for such use. The product is not covered by the exclusions in Note 2 to Section XVII (parts of general use) and Note 3 preserves classification by principal use where overlap exists. The explanatory text to 87.08 expressly lists floor mats (other than of textile material or unhardened vulcanised rubber) as parts/accessories. On this basis the Authority concluded the product falls within heading 8708. [Paras 24, 25, 29]

The PVC floor mats are classifiable under CTH 8708 as parts and accessories of motor vehicles; GST rate 28% (14% CGST + 14% SGST).

Final Conclusion: The Authority rules that the PVC floor mats manufactured and supplied for use in cars are not classifiable under CTH 3904 or CTH 3918 but are classifiable under CTH 8708 as parts and accessories of motor vehicles; the applicable GST rate is 28% (14% CGST and 14% SGST).

Reverse charge mechanism - Classification as unmanufactured tobacco (CTH 2401) - Definition of manufacture - emergence of a new product having distinct name, character and use - Applicability of compensation cess on unmanufactured tobacco bearing a brand name - Tax rate for job work services on goods belonging to another registered person

Reverse charge mechanism - Supply of tobacco leaves by agriculturist - Liability to pay GST under reverse charge when purchasing tobacco leaves/bhukko from an agriculturist. - HELD THAT: - Notification No. 4/2017-Central Tax (Rate) specifies that intra state supply of tobacco leaves falling under tariff item 2401 by an agriculturist to any registered person is subject to central tax on reverse charge basis by the recipient. "Agriculturist" for this purpose is the statutory definition under the CGST Act. Applying the notification to the facts, purchase of tobacco leaves/bhukko from an agriculturist attracts GST on reverse charge, and the recipient (applicant) must pay GST accordingly. The classification of tobacco leaves under Schedule I (Sr. No. 109) at the notified rate supports the applicable rate. [Paras 18]

Purchase of tobacco leaves/bhukko from an agriculturist is liable to GST on reverse charge at 5% (2.5% CGST + 2.5% SGST).

Classification as unmanufactured tobacco (CTH 2401) - Forward charge supply of unprocessed tobacco leaves - Rate of tax where the applicant trades procured raw tobacco leaves/bhukko without undertaking further processing. - HELD THAT: - Notification No. 1/2017-Central Tax (Rate), Schedule I (Sr. No. 109) notifies tobacco leaves under CTH 2401 at 2.5% CGST (5% total). Where the applicant merely trades the procured leaves/bhukko "as such" without any further process, such supply remains classified under the notified entry and is taxable on forward charge basis at the notified rate. The conclusion follows from the factual condition that no further processing is carried out. [Paras 19]

Trading/sale of procured tobacco leaves/bhukko on as is basis is taxable on forward charge at 5% (2.5% CGST + 2.5% SGST).

Definition of manufacture - emergence of a new product having distinct name, character and use - Classification as unmanufactured tobacco (CTH 2401) - Applicability of compensation cess on unmanufactured tobacco bearing a brand name - Whether coating unmanufactured tobacco leaves with natural edible gum amounts to manufacture and the applicable GST rate and compensation cess on supply of coated leaves. - HELD THAT: - Section 2(72) of the CGST Act defines 'manufacture' as processing that results in emergence of a new product with distinct name, character and use. The applicant's coating process (cleaning, grading, manual coating with natural edible gum and drying) does not, on the facts presented, produce a new product with a distinct name, character and use. HSN note for chapter 24 expressly covers unmanufactured tobacco including leaves that are "cased" or treated to preserve flavour or prevent mould. Applying those notes and the statutory test, the coated leaves remain classifiable under CTH 2401 as unmanufactured tobacco. Accordingly, Notification No. 1/2017-Central Tax (Rate), Schedule IV (Sr. No. 13) prescribes a tax rate of 14% CGST + 14% SGST (28% total) for the relevant entry. Further, Notification No. 1/2017-Compensation Cess (Rate) applies where the unmanufactured tobacco bears a "brand name"; printing/mentioning the applicant's name on gunny bags to identify lots falls within the definition of "brand name" for the cess notification, and the specified compensation cess (Sr. No. 5) therefore becomes applicable. [Paras 20, 23, 24]

Coated unmanufactured tobacco leaves remain classifiable under CTH 2401 and are taxable at 28% (14% CGST + 14% SGST); where the coated tobacco is supplied with identification/brand on gunny bags, compensation cess as notified (Sr. No. 5) also applies.

Tax rate for job work services on goods belonging to another registered person - Job work - treatment or processing under section 2(68) - Rate of GST applicable to job work (coating) performed by the applicant on tobacco leaves supplied by other registered persons. - HELD THAT: - Circular No. 126/45/2019 clarifies that entry (id) in Notification No. 11/2017-C.T. (Rate) pertains to job work services as defined in section 2(68) - treatment or processing undertaken by one registered person on goods belonging to another registered person. Notification No. 20/2019-C.T. (Rate) prescribes the rate for job work other than specified exceptions at 6% CGST + 6% SGST (12% total). The coating activity undertaken as job work on goods supplied by other registered persons falls within this entry and is therefore taxable at the prescribed job work rate. [Paras 26]

Job work service of coating tobacco leaves supplied by other registered persons is taxable at 12% (6% CGST + 6% SGST).

Final Conclusion: The Authority rules that (i) purchases of tobacco leaves/bhukko from agriculturists attract GST on reverse charge at 5% (2.5% CGST + 2.5% SGST); (ii) trading of unprocessed procured leaves/bhukko without further processing is taxable on forward charge at 5%; (iii) coating with natural edible gum does not amount to manufacture and coated leaves remain classifiable under CTH 2401, taxable at 28% (14% CGST + 14% SGST), and if supplied with brand/identifying name on packaging the applicable compensation cess under the notification also applies; and (iv) coating performed as job work on goods belonging to other registered persons is taxable at 12% (6% CGST + 6% SGST).

Prior approval under Section 153D - Approval not to be mechanical - application of mind - CBDT Circular and Manual of Office Procedure binding on department - Requirement of mentioning approval in assessment order - Rules of natural justice in administrative orders entailing civil consequences

Prior approval under Section 153D - Approval not to be mechanical; application of mind - CBDT Circular and Manual of Office Procedure binding on department - Requirement of mentioning approval in assessment order - Rules of natural justice in administrative orders entailing civil consequences - HELD THAT: - The Court held that Section 153D requires prior approval of a superior officer before an assessing officer below the rank of Joint Commissioner can pass assessment/reassessment orders consequent to a search. The approval is not a mere administrative formality and must reflect application of mind; mechanical or rubber stamped approvals vitiate the consequent assessment orders. The CBDT Circular dated 12 March 2008 and the Manual of Office Procedure (para 9, Ch.3, Vol.II (Technical)) furnish binding guidelines for the procedure to be followed, including timely submission of draft orders, written approval and mention of approval in the body of the assessment order. Where the approval letter contains no indication that the approving authority perused or applied his mind to the draft orders and the assessment orders themselves are silent about such approval, the minimum requirement is not satisfied. Precedents cited establish that supervisory approvals which entail civil consequences must conform with principles of natural justice and cannot be mere formalities; hence such defective approvals can invalidate the assessments. Applying these principles to the record, the Additional Commissioner's communication of approval comprised only a bare grant without any note or indication of consideration, and the assessment orders did not record the approval; consequently the approvals were held to be mechanical and the assessment orders vitiated. [Paras 22, 23, 24, 25, 26]

The approval under Section 153D was granted mechanically without application of mind, thereby vitiating the assessment orders passed under Sections 153A/153B; the ITAT's setting aside of the assessment orders is upheld.

Final Conclusion: The appeals by the Revenue are dismissed; the Court affirms that prior approval under Section 153D must reflect application of mind, and where such approval is merely mechanical the assessment orders consequent to search are vitiated.

Transfer of assessment file under Section 127 - Right to personal hearing - Right to know basis of administrative action / disclosure of materials - Judicial review of administrative transfer - Maintenance of status quo pending reconsideration

Transfer of assessment file under Section 127 - Right to know basis of administrative action / disclosure of materials - Right to personal hearing - Impugned order transferring the petitioner's Income Tax file was passed without supplying the materials forming the basis for transfer and without affording a personal hearing. - HELD THAT: - The Court found on the record and on parties' submissions that neither the materials relied on for transferring the petitioner's file nor an opportunity of personal hearing were supplied to the petitioner, although a show-cause notice to file objections had been issued. Reliance was placed on the Division Bench decision in Nouvelle Advisory Services Private Limited (supra). In view of this absence of disclosure and of an effective personal hearing, the Court directed the respondent authority to furnish the relevant documents that indicate the basis for transfer, to permit the petitioner to file further objections if such material is supplied, and to afford a personal hearing within eight weeks from communication of the order. The Court further directed that if, after the personal hearing, the petitioner satisfies the authority, the transfer order shall be revoked.

Respondent to supply materials, permit fresh objections and afford personal hearing within eight weeks; if petitioner satisfies authority the transfer shall be revoked.

Maintenance of status quo pending reconsideration - Judicial review of administrative transfer - Whether any further proceedings consequent to the transfer order should be allowed to proceed pending reconsideration after providing materials and personal hearing. - HELD THAT: - The Court ordered that until a fresh decision is taken following the personal hearing directed above, the respondent authority shall maintain status quo with regard to any further proceedings. This interim direction preserves the position of the parties while the authority reconsiders the transfer after complying with disclosure and hearing requirements.

Status quo to be maintained pending fresh decision after disclosure and personal hearing.

Final Conclusion: Writ petition disposed directing respondent to furnish the basis for transfer, allow filing of further objections and afford personal hearing within eight weeks; respondent to revoke transfer if petitioner satisfies authority; status quo to be maintained pending fresh decision.

Validity of notices issued under Section 148 and Section 148A of the Income tax Act - Reassessment proceedings and scope of Section 148A(d) - Right to file supplementary replies and production of bank certificates, bank statements and assessment records - Remand for fresh consideration by Assessing Officer

Validity of notices issued under Section 148 and Section 148A of the Income tax Act - Reassessment proceedings and scope of Section 148A(d) - Orders dated 9th April, 2022 passed under Section 148A(d) for Assessment Years 2018-19 and 2015-16 were set aside and the notices under Section 148 were set aside; the matter was directed to be re examined after supplementary replies and documents are filed. - HELD THAT: - The Court found that the petitioner should be permitted to place before the Assessing Officer the bank certificates, income tax returns, bank statements and the assessment orders in the name of the sole proprietorship which the petitioner contends account for the transactions referred to in the notices. In view of the petitioner having not annexed the bank certificates earlier to the replies to the Section 148A(b) notices, the Court set aside the impugned orders and notices and directed the petitioner to file supplementary replies with all relevant documents within two weeks. The Assessing Officer was directed to pass fresh orders under Section 148A(d) within four weeks thereafter. The rights and contentions of parties were left open for determination by the Assessing Officer after receipt of the documents. [Paras 6, 7]

Impugned orders dated 9th April, 2022 and the notices under Section 148 were set aside; petitioner to file supplementary replies with supporting documents within two weeks and AO to pass fresh orders under Section 148A(d) within four weeks; parties' rights left open.

Right to file supplementary replies and production of bank certificates, bank statements and assessment records - Remand for fresh consideration by Assessing Officer - The contention that the notices were issued in the name of a dissolved partnership (Railton Electronics) and that the business was carried on subsequently as a sole proprietorship was not finally adjudicated but remanded for verification by the Assessing Officer after submission of documents. - HELD THAT: - Petitioner asserted that M/s Railton Electronics was dissolved on 01.04.2013, that the partnership bank account was closed on 19.07.2013 and that the business thereafter continued as a sole proprietorship with returns and scrutiny assessment in the sole proprietor's name. The Court observed that the bank certificates relied upon were not annexed to the earlier replies and therefore permitted the petitioner to file supplementary replies with the said certificates and other relevant documents. The question of whether the notices were liable to be quashed for having been issued in the name of a non existent partnership was left open for the Assessing Officer to examine afresh on receipt of the documents, and hence remitted for fresh consideration rather than decided on merits. [Paras 2, 3, 4, 6]

The jurisdictional objection regarding issuance of notices in the name of a dissolved partnership was remitted to the Assessing Officer for verification after the petitioner files the prescribed supplementary documents; merits not finally decided.

Final Conclusion: Writ petition disposed of by setting aside the impugned orders and notices, directing the petitioner to file supplementary replies with supporting bank certificates, returns, bank statements and assessment orders within two weeks, and directing the Assessing Officer to pass fresh orders under Section 148A(d) within four weeks; parties' substantive rights and contentions reserved for fresh adjudication.

Permanent Establishment - fixed place PE - dependent agent PE - attribution of profits to a PE - associated enterprise - arm's length principle - burden of proof on Revenue

Permanent Establishment - fixed place PE - dependent agent PE - associated enterprise - burden of proof on Revenue - Existence of Permanent Establishment of the assessee in India - HELD THAT: - The Tribunal held that the question whether the assessee had a PE in India was already adjudicated by the ITAT in the assessee's own case for subsequent assessment years and, in the absence of any change in material facts or law, the same conclusion applies. The contracts between the assessee and DHR Holding India Pvt. Ltd. (Sales Commission Agreement, Distribution Agreement and Marketing Support Services Agreement) were examined and found to delineate a principal-to-principal distribution relationship and independent-contractor marketing/support services; none of the agreements conferred authority on DHR India to conclude contracts on behalf of the assessee. The factual material relied upon by the AO (notably statements of two employees of an Indian customer) was neither confronted nor subjected to cross-examination, and therefore could not be safely used to establish agency or habitual contract-concluding authority. Applying the legal principle that the burden to prove existence of a PE rests on the Revenue, the Tribunal concluded that no fixed place PE or dependent/agency PE under the India-Singapore Treaty was established on the record. [Paras 22, 23, 24, 26, 27]

No Permanent Establishment in India; findings of fixed place PE and dependent/agency PE are not borne out by the record and are rejected.

Attribution of profits to a PE - arm's length principle - Validity of attribution of profits to the alleged PE - HELD THAT: - Having held that the assessee does not have a PE in India, the Tribunal treated the attribution exercise as unnecessary and concluded that additions made by the Revenue by attributing profits to an alleged PE cannot be sustained. The Tribunal further observed (by reference to the earlier ITAT reasoning) that, alternatively, even if a PE were to be presumed, where transactions between the overseas enterprise and the Indian associated enterprise are at arm's length there would be no basis for additional attribution; however, the decision was concluded on the primary finding of absence of PE. [Paras 27, 30]

Additions by way of attribution of profits to an alleged PE deleted; attribution not sustainable on the record.

Final Conclusion: Appeals allowed: the Tribunal upheld the view that the assessee had no Permanent Establishment in India for the assessment years in dispute and set aside the additions made by attributing profits to an alleged PE; stay petitions dismissed as infructuous.

Test of identity, creditworthiness and genuineness under section 68 - treatment of share capital and share premium as unexplained cash credit - estimation of commission as accommodation entry expense under section 69C - accommodation entry - hearing and adjudication in absence of the assessee on the basis of available record

Test of identity, creditworthiness and genuineness under section 68 - treatment of share capital and share premium as unexplained cash credit - accommodation entry - Addition of share capital and share premium amounting to Rs.85,10,50,000/- was rightly made under section 68. - HELD THAT: - The Tribunal upheld the concurrent findings of the Assessing Officer and the Commissioner (Appeals) that the assessee failed to discharge the onus to prove identity, creditworthiness and genuineness of the amounts recorded as share capital and share premium. The lower authorities noted absence of corroborative independent evidence for the claimed transaction in F.Y. 2007-08 (no Form 2 filed, no independent confirmations from alleged primary subscribers, no bank statements, delayed ROC filings, inability to produce directors or subscribers, and common directors with the major shareholder), and found the documents on record to be self-serving and unreliable. On this factual matrix the authorities concluded that the entries were indicative of accommodation entries and not genuine consideration credited earlier, and therefore the amount was correctly treated as unexplained credit under section 68. The Tribunal, after hearing the Revenue and observing that the assessee had not placed any material before it to show infirmity in the findings, found no reason to interfere.

Addition under section 68 confirmed; grounds of appeal in respect of this addition dismissed.

Estimation of commission as accommodation entry expense under section 69C - accommodation entry - Addition made under section 69C in respect of commission paid on the accommodation entry was justified and rightly upheld. - HELD THAT: - Having held that the receipt of share money was not genuine and amounted to accommodation entries, the Assessing Officer estimated that a commission (2%) would have been payable in connection with such accommodation entries and made an addition under section 69C. The Commissioner (Appeals) found the paperwork to be a cover up and accepted the AO's estimation as reasonable in the circumstances. The Tribunal, noting absence of any evidence from the assessee to rebut the AO/CIT(A) findings, found no basis to interfere with the estimation and confirmation of addition under section 69C.

Addition under section 69C confirmed; related ground of appeal dismissed.

Hearing and adjudication in absence of the assessee on the basis of available record - hearing in absence for non-prosecution - Tribunal proceeded to adjudicate and dispose of the appeal on merits despite non-appearance of the assessee and returned notices, treating the absence and failure to prosecute as justification to decide the appeal on available material. - HELD THAT: - The Tribunal recorded that the assessee, though having filed the appeal, did not appear on multiple hearing dates, did not file applications for adjournment, and notices sent were returned undelivered. The Tribunal observed that filing an appeal requires actively pursuing it and placing supporting evidence; in absence of cooperation the Tribunal was entitled to proceed on the basis of material on record and submissions of the Revenue. Having heard the Revenue and considered the record, the Tribunal found no reason to keep the matter pending and disposed of the appeal.

Tribunal adjudicated the appeal on the basis of record and submissions of Revenue in the absence of the assessee and dismissed the appeal.

Final Conclusion: The Tribunal dismissed the assessee's appeal. The additions under section 68 (share capital and share premium treated as unexplained/accommodation entries) and under section 69C (estimated commission) were confirmed, and the appeal was disposed of on the available record after hearing the Revenue in the absence of the assessee.

Revision under section 263 - unexplained credit / section 68 - taxation of surrendered income and section 115BBE - proposed revision by Assessing Officer and jurisdictional limit - prospectivity of statutory amendment

Revision under section 263 - proposed revision by Assessing Officer and jurisdictional limit - Whether the PCIT validly assumed jurisdiction under section 263 based on a proposal by the Assessing Officer. - HELD THAT: - The Tribunal held that initiation of revision proceedings by the CIT on the basis of a proposal/recommendation from the Assessing Officer is legally impermissible and results in a jurisdictional defect. A power vested exclusively in the CIT to revise an assessment cannot be usurped by the AO by forwarding a proposal; if the AO considers the assessment wanting, statutory remedies such as reassessment under section 147 or rectification under section 154 are available to him. Because the PCIT's exercise of power under section 263 was triggered by the AO's proposal, the revision suffered from jurisdictional infirmity and had to be quashed on that ground without entering into merits. [Paras 13, 14, 15]

PCIT's assumption of jurisdiction under section 263 on the basis of AO's proposal is vitiated by jurisdictional defect and is quashed.

Unexplained credit / section 68 - taxation of surrendered income and section 115BBE - prospectivity of statutory amendment - Whether the surrendered amount of Rs.10 crores constituted unexplained credit attracting sections 68/115BBE and whether the amended higher rate under section 115BBE (as applied by PCIT) properly applied. - HELD THAT: - The Tribunal found on the record that the surrender arose during survey to cover discrepancies noted in books and was offered and reflected as business income in the return and assessed by the AO after verification; there was no finding of unexplained credit, unexplained investment or unexplained expenditure attracting the specified sections. Further, the claim that tax at the higher rate under amended section 115BBE should apply was a debatable question because the amendment increasing the rate to 60% was not in force on the date of the survey; hence such contestable legal questions could not form the basis for invoking section 263. In view of the factual finding that the amount was surrendered to cover business discrepancies and was accepted and assessed as business income, and given the debatable nature of the amendment's applicability, the PCIT's conclusion that the assessment was erroneous and prejudicial was unsustainable. [Paras 11, 12, 17, 18, 20]

Surrendered amount did not amount to unexplained credit attracting sections 68/115BBE; applicability of the amended rate was a debatable question and could not justify revision under section 263.

Revision under section 263 - Whether the PCIT's order under section 263 should be set aside and the AO's assessment restored. - HELD THAT: - Having held that the PCIT's assumption of jurisdiction was flawed and that the contention on applicability of section 115BBE was debatable and unsupported by record, the Tribunal concluded that the revision order must be set aside. On the cumulative facts and law, the assessment framed by the Assessing Officer under section 143(3) stood as legally sustainable and was restored. [Paras 21, 22]

PCIT's order is set aside and the AO's assessment order dated 11.06.2019 is restored.

Final Conclusion: The appeal is allowed: the revision order framed by the PCIT under section 263 is quashed for jurisdictional defect and on merits, and the assessment order dated 11.06.2019 under section 143(3) is restored for AY 2017-18.

Penalty under section 271(1)(c) - Notice under section 274 - Concealment of particulars of income - Furnishing inaccurate particulars of income - Validity of penalty notice - Non-application of mind

Penalty under section 271(1)(c) - Notice under section 274 - Concealment of particulars of income - Furnishing inaccurate particulars of income - Validity of penalty notice - Non-application of mind - Notice under section 274 read with section 271(1)(c) that does not specify whether proceedings are for concealment of particulars of income or for furnishing inaccurate particulars is invalid and penalty imposed thereunder is not leviable. - HELD THAT: - The Tribunal examined whether the AO's notice under section 274 read with section 271(1)(c) was sufficient when it failed to indicate which limb of section 271(1)(c) - concealment of particulars of income or furnishing inaccurate particulars of income - was invoked. The Court observed that the two limbs carry different meanings and it is imperative that the AO specify the relevant limb so as to inform the assessee of the exact charge and enable an appropriate response. Reliance was placed on earlier judicial decisions including M/s. SSA's Emerald Meadows , the Division Bench decision in Manjunatha Cotton & Ginning Factory , and the decision in M/s. Sahara India Life Insurance Company Ltd. , which held that a proforma notice not suitably marked indicates non-application of mind and renders the notice bad in law. Applying that principle to the facts, the Tribunal concluded that the notice in the present case was issued in a stereotyped manner without applying mind; consequently the notice was invalid and the penalty levied thereunder could not be sustained. Having decided the legal issue in favour of the assessee, the Tribunal did not adjudicate the merits of the original additions as that inquiry would be rendered academic. [Paras 7, 8]

Penalty levied under section 271(1)(c) pursuant to the impugned notice is deleted; appeal allowed.

Final Conclusion: The penalty imposed under section 271(1)(c) for assessment year 2011-12 was set aside because the notice under section 274 read with section 271(1)(c) failed to specify which limb of the provision was invoked, indicating non-application of mind; the appeal is allowed.

Transfer pricing adjustment - cost allocation / allocation keys for intra-group services - arm's length price determination and benchmarking obligations - rendition of services and benefit test for intra-group charges - maintainability of appeal under CBDT monetary limit

Maintainability of appeal under CBDT monetary limit - Revenue's appeal dismissed as not maintainable because the tax effect fell below the revised monetary limit prescribed by CBDT circulars. - HELD THAT: - The Tribunal examined the Revenue's submission that the transfer pricing adjustment under challenge amounted to Rs.9,97,195 and noted that the tax effect was below the revised Rs.50 lakh monetary threshold set out in CBDT Circular No.17/2019 read with earlier circulars. The Revenue did not produce material to controvert the assessee's contention that none of the exceptions in the referred circulars applied. In these circumstances the Tribunal held that the appeal was covered by the monetary limit and therefore not maintainable, while giving the Revenue liberty to seek recall if it is later shown that an exception applies. [Paras 3, 5, 6]

Revenue's appeal dismissed as not maintainable under the CBDT monetary limit; liberty to seek recall if exceptions later apply.

Cost allocation / allocation keys for intra-group services - rendition of services and benefit test for intra-group charges - arm's length price determination and benchmarking obligations - Transfer pricing adjustments in respect of cost allocation charges for Central & Regional Support Services and Business Support Services deleted. - HELD THAT: - The Tribunal found that HSBC London had rendered specified central and regional support and business support services under an intercompany services agreement and that allocation of internal operational costs used appropriate allocation keys (headcount, time spent, etc.) with a documented 5% markup (and no markup where third party costs were passed through). The assessee produced the agreement, sample invoices showing cost breakdowns and allocation keys, transfer pricing documentation and other supporting annexures demonstrating rendition of services and benefit received. The TPO had applied the CUP method but recorded no benchmarking and treated ALP as nil. Applying OECD guidance permitting use of allocation/apportionment methods where appropriate and following coordinate Tribunal authority (including the assessee's own earlier Tribunal decision), the Tribunal held that once services and appropriate allocation methodology were substantiated, there was no basis to sustain the TPO/AO adjustment and directed deletion of the additions. [Paras 12, 16]

TP adjustments relating to Central & Regional Support Services and Business Support Services deleted; grounds no.2 and 4 allowed.

Cost allocation on actual usage for IT services - arm's length price determination and benchmarking obligations - rendition of services and benefit test for intra-group charges - Transfer pricing adjustment in respect of cost allocation charges for Software Development and other IT services deleted. - HELD THAT: - The Tribunal noted that HSBC Hong Kong provided technology and support services under an agreement charging on actual usage metrics (e.g., normalized CPU seconds, per GB per month) and the assessee furnished the agreement, sample invoices and working sheets showing allocation of IT costs. The TPO again adopted CUP without conducting a benchmarking search and treated ALP as nil. Relying on precedent (including the assessee's earlier Tribunal decision and applicable OECD guidance) the Tribunal held that the assessee had discharged its onus of proving rendition of services and that a cost to cost allocation based on usage was an acceptable method; the ad hoc determination by the TPO was not sustainable. The Tribunal therefore directed deletion of the adjustment. [Paras 18, 23]

TP adjustment relating to Software Development and other IT services deleted; ground no.3 allowed.

Rendition of services and benefit test for intra-group charges - arm's length price determination - Transfer pricing adjustment in respect of fees paid for Investment Advisory Services deleted. - HELD THAT: - The Tribunal examined the services provided by Sinopia Asset Management (Asia Pacific) Ltd (SAML) for portfolio management and found that the assessee produced detailed documentary evidence-sample invoices, investment advice, market reviews, portfolio summaries and performance data-demonstrating that advisory services were rendered and that the assessee derived benefit (including measured portfolio gains). The TPO had held no rendition and quantified no benefit, determining ALP as nil. The Tribunal concluded that the assessee had satisfactorily substantiated rendition and benefit and that there was no basis to uphold the adjustment, and accordingly directed deletion. [Paras 24, 29]

TP adjustment relating to Investment Advisory Services deleted; ground no.5 allowed.

General transfer pricing additions - General ground need not be separately adjudicated in view of the findings on specific transfer pricing issues. - HELD THAT: - Ground No.1 being general was disposed of by the Tribunal's specific findings allowing the assessee's grounds dealing with each challenged international transaction. [Paras 30]

General ground dismissed as unnecessary in view of specific allowances; assessee's appeal allowed.

Final Conclusion: Revenue's appeal dismissed as not maintainable under the CBDT monetary limit. On merits, the Tribunal allowed the assessee's appeal and deleted the transfer pricing adjustments in respect of central & regional support services, business support services, software development and other IT services, and investment advisory services, resulting in allowance of the assessee's appeal for A.Y. 2008-09.

Seized loose papers as evidence - addition based on on-money entries - section 153C jurisdiction - requirement of assessment-year specific satisfaction - need for corroborative evidence and examination of purchasers - maintainability of revenue appeal - CBDT Circular No.17/2019 threshold

Seized loose papers as evidence - addition based on on-money entries - section 153C jurisdiction - requirement of assessment-year specific satisfaction - need for corroborative evidence and examination of purchasers - Validity of addition made in assessee AOP's hands on basis of handwritten/seized loose papers and consequential exercise of jurisdiction under section 153C. - HELD THAT: - The Tribunal found as an admitted fact that the impugned seized documents did not contain the name of the assessee AOP and that the Assessing Officer had not specified the assessment year nor linked incriminating evidence to the relevant year. The AO had not examined purchasers or produced corroborative evidence to establish that the AOP received cash over and above sale consideration; the seized material consisted largely of rough workings and scribbles. In these circumstances the Tribunal held that revenue failed to establish that the AOP had received on-money beyond recorded sale consideration and that the CIT(A)'s estimation of profit at 12.5% on the AO's addition was unsustainable. Following authorities and the principle that additions cannot be based on dumb/loose papers, the Tribunal concluded that the additions against the AOP ought to be deleted. [Paras 6]

Additions in the hands of the assessee AOP based on seized handwritten/loose papers and the section 153C exercise are deleted; grounds raised by the assessee are allowed.

Maintainability of revenue appeal - CBDT Circular No.17/2019 threshold - Maintainability of the revenue appeal filed in I.T.A. No.176/Viz/2022 in view of threshold prescribed by CBDT Circular No.17/2019. - HELD THAT: - The revenue filed the appeal relying on an authorisation based on an erroneously reported tax effect exceeding the threshold. The Tribunal found that the tax effect had been inadvertently overstated and the correct tax effect was below the threshold in CBDT Circular No.17/2019. Since the appeal was filed on that incorrect basis and the case did not fall within exceptions noted in the relevant CBDT Circular, the appeal was not maintainable. [Paras 7, 8]

Revenue's appeal in I.T.A. No.176/Viz/2022 is dismissed as not maintainable.

Cross appeal dismissed - Disposal of revenue's cross-appeal against the CIT(A)'s estimation of profit at 12.5%. - HELD THAT: - Having allowed the assessee's appeals (I.T.A. Nos.218-220/Viz/2022) and held that the additions were not sustainable, the Tribunal observed that the revenue's cross-appeal challenging the CIT(A)'s estimation stood overtaken by the Tribunal's primary findings. Accordingly, there was no merit in the cross-appeal. [Paras 9, 10]

Cross-appeal filed by the revenue is dismissed.

Final Conclusion: The Tribunal deleted the additions made against the assessee AOP for A.Y.2018-19 to 2020-21 as unsustainable on the seized material; the revenue's appeal in I.T.A. No.176/Viz/2022 was dismissed as not maintainable under the CBDT threshold, and the cross-appeal was dismissed.

Treatment of unexplained cash deposits as income under income from other sources - validity of notice issued under section 143(2) after revised/belated return and effect of transfer of assessment file - import of Indian currency from Nepal in higher denomination notes and applicability of FEMA (Export and Import of Currency) Regulations, 2000 - explanation of cheque transfers from joint account as source justification - telescoping of receipts and transfers and requirement of linking specific bank accounts - deductibility of interest on secured overdraft treated as running account - treatment of undisclosed interest income as income from other sources (no set-off against interest expenditure) - admission of additional evidence by CIT(A) and power to direct further enquiry under section 250(4)

Import of Indian currency from Nepal in higher denomination notes and applicability of FEMA (Export and Import of Currency) Regulations, 2000 - treatment of unexplained cash deposits as income under income from other sources - Whether cash deposits in high denomination Indian currency brought from Nepal and deposited in assessee's Indian bank accounts, without satisfactory explanation or evidence of lawful conversion, can be treated as unexplained income and offered to tax as income from other sources. - HELD THAT: - The Tribunal applied the FEMA (Export and Import of Currency) Regulations, 2000 which prohibit bringing into India from Nepal Indian currency notes of denominations above Rs.100 and noted bank vouchers showing deposits in higher denomination notes. The Assessing Officer treated such unexplained cash deposits as income from other sources. The CIT(A) had deleted the addition on the ground of taxation in Nepal, but the Tribunal observed that taxation in Nepal does not countermand the import restriction under FEMA nor substitutes for contemporaneous evidence of lawful conversion at the border. In absence of valid evidence substantiating conversion or lawful source consistent with FEMA, the cash deposits remained unexplained and rightly added to the assessee's income. The Tribunal applied this view to both appellants for the relevant assessment years, holding the Assessing Officer's additions sustainable. [Paras 9, 26, 41, 53]

Assessing Officer's additions treating the specified cash deposits as income from other sources are upheld and the deletions by the CIT(A) on this point are set aside.

Explanation of cheque transfers from joint account as source justification - Whether cheque deposits into the assessee's accounts that are shown to be transfers from the assessee's own account, joint account with spouse, or spouse's account are to be treated as unexplained/unaccounted income. - HELD THAT: - The assessee produced bank statements and transfer particulars before the Tribunal showing that the cheque deposits were transfers from either the assessee's own account, a joint account with the spouse, or the spouse's account, and in one instance receipts of loan repayment. The Tribunal found these sources satisfactorily explained the origin of the cheque credits and accepted the CIT(A)'s determination that the amounts were not unexplained. The Tribunal further noted that where the documentary bank evidence demonstrates internal transfers or legitimate receipts, no addition is warranted. [Paras 11, 45]

The deletions made by the CIT(A) in respect of the cheque deposits are sustained; the Assessing Officer's additions on this issue are dismissed.

Telescoping of receipts and transfers and requirement of linking specific bank accounts - Whether the assessee is entitled to telescoping credit for amounts collected on behalf of the foreign medical college and transferred abroad when the assessee failed to link the cash deposits of salary and the collection account distinctly. - HELD THAT: - The Tribunal examined the receipts collected on behalf of the Medical College and the amounts remitted abroad. The assessee could not provide bank-account level evidence to link the specific cash deposits (including the salary cash deposits claimed to be brought from Nepal) to the bank account maintained for collections on behalf of the college. In absence of such substantiation and reconciliatory evidence, the difference between receipts and remittances was treated as unexplained income. The Tribunal declined to grant telescoping benefit where the assessee failed to demonstrate the necessary account linkage or to produce corroborative proof. [Paras 13, 42]

The Assessing Officer's addition of the unreconciled difference is upheld and the CIT(A)'s deletion on telescoping grounds is set aside.

Validity of notice issued under section 143(2) after revised/belated return and effect of transfer of assessment file - Whether the notice under section 143(2) issued on 26/7/2016 was invalid because the original return was belated (filed 16/11/2014) and because the file was transferred between AO offices without issuance of a fresh notice. - HELD THAT: - The Tribunal construed section 143(2) as permitting scrutiny of any return furnished under section 139 or in response to a notice under section 142(1). The assessee had filed a revised/modified return on 24/1/2016 and participated in the assessment proceedings. The Tribunal accepted the departmental screen-sheet showing complete scrutiny selection and held that issuance of notice within the statutory timeframe following the effective return was valid. The earlier authority relied on by the assessee was held distinguishable because that case involved transfer from a non-jurisdictional AO without fresh notice; by contrast, the transfer here was to DCIT (International Taxation) by reason of non-resident status and the assessee did not object during proceedings. Accordingly the legal ground attacking notice validity was dismissed. [Paras 20, 21]

The notice issued under section 143(2) was valid; the scrutiny assessment is not vitiated on the grounds urged and the cross-objection on this point is dismissed.

Deductibility of interest on secured overdraft treated as running account - Whether interest charged on a secured overdraft (SOD) account, where credits to the running account are periodically adjusted against overdraft interest, is disallowable as unaccounted expenditure. - HELD THAT: - The Tribunal accepted the assessee's case that the SOD functioned as a running account: credits appearing in the account were routinely set off against overdraft interest and the bank entries reflected such adjustments. The CIT(A) found no evidence from the AO to show the interest was paid out of undisclosed income and treated absence of entries in the books of account as a formal, not substantive, defect. The Tribunal found this reasoning sustainable and held that the CIT(A) correctly allowed the claim. [Paras 28, 29, 54]

The CIT(A)'s allowance of interest on SOD as explained is upheld; the Revenue's additions on this ground are dismissed.

Treatment of undisclosed interest income as income from other sources (no set-off against interest expenditure) - Whether undisclosed interest credited to the assessee's savings bank account, not declared in the return, can be set off against claimed interest expenditure or must be treated as income from other sources. - HELD THAT: - The Tribunal noted the assessee had undeclared interest receipts from the savings bank. The CIT(A) erred by treating that interest income as set-off against interest expenditure, effectively granting double benefit. The Tribunal held that undisclosed interest receipts are income from other sources and cannot be neutralised by allowing the claimed interest expenditure without proper tax treatment; therefore the Assessing Officer's treatment of such interest as income was correct. [Paras 30, 31]

The Assessing Officer's treatment of the undisclosed interest as income from other sources is upheld and the CIT(A)'s set-off is set aside.

Admission of additional evidence by CIT(A) and power to direct further enquiry under section 250(4) - Whether the CIT(A) erred in admitting additional evidence (bank particulars) without remanding the matter to the AO under Rule 46A or failing to provide the AO an opportunity to examine the materials. - HELD THAT: - The Tribunal recognised CIT(A)'s powers under section 250(4) to direct further enquiry and request a remand report. It examined the nature of the additional evidence-bank transfers demonstrating that cheque credits originated from the assessee's own, joint, or husband's accounts-and concluded that those documents did not necessitate further factual enquiry by the AO. Given that the documentary evidence itself established the source, the CIT(A) was justified in admitting and acting upon it without remand; no prejudice to the Revenue was shown. [Paras 46]

The CIT(A)'s admission and reliance on the additional bank evidence is upheld; no remand was required in the circumstances.

Final Conclusion: The Tribunal partly allowed the Revenue appeals and dismissed the assessees' cross objections in substance: additions treating specified unexplained cash deposits (brought from Nepal in higher denomination notes) as income were upheld; additions relating to cheque deposits from joint or explained sources were deleted; the claim for telescoping was rejected for lack of account linkage; the notice under section 143(2) was held valid; interest on SOD was sustained as allowable where it operated as a running account; undisclosed bank interest was held taxable as income from other sources; and the CIT(A)'s admission of additional bank evidence was sustained without remand.

Condonation of delay - allowance of depreciation by charitable trusts - claim of exemption under section 11 and its effect on depreciation - remand for factual verification

Condonation of delay - Delay in filing the appeal was condoned and the appeal admitted for hearing. - HELD THAT: - The Tribunal considered the petition for condonation of 178 days' delay and the explanation that the Ld. CIT(A)'s order was dated 25.08.2021 and appeal was filed on 23.11.2022. The Tribunal took into account the extensions granted by the Hon'ble Supreme Court in SMW(A) No.3 of 2020 during the COVID-19 pandemic and the medical records placed on file relating to the Trust President's treatment. Finding the delay neither intentional nor deliberate, the Tribunal exercised discretion to condone the delay and admit the appeal. [Paras 1]

Delay of 178 days condoned; appeal admitted for hearing.

Allowance of depreciation by charitable trusts - claim of exemption under section 11 and its effect on depreciation - remand for factual verification - Whether depreciation claimed by the assessee is allowable or whether it is barred because exemption was claimed under section 11; matter remanded to the Assessing Officer for verification. - HELD THAT: - The Tribunal noted the assessing authority disallowed depreciation while processing the return under section 143(1) and the CPC rejected the section 154 rectification. The assessee's case was that no exemption was claimed on the cost of purchase of the asset and therefore depreciation should be allowed. The Revenue relied on the post-2014 amendment position that depreciation cannot be allowed where exemption under section 11 is claimed. Because the factual question whether the assessee had claimed exemption on the cost of the asset was not addressed in the assessment order, the Tribunal remitted the matter to the Assessing Officer to examine this specific factual issue. The AO was directed to afford the assessee an opportunity of being heard and, if it is found that no exemption on asset cost was claimed, to allow depreciation accordingly. [Paras 8]

Matter remitted to the AO to verify whether exemption on cost of asset was claimed; if not claimed, depreciation to be allowed after giving the assessee an opportunity of hearing.

Final Conclusion: The delay in filing the appeal is condoned and the appeal is admitted; the question of allowance of depreciation is remitted to the Assessing Officer for factual verification and hearing; appeal allowed for statistical purposes.

Condonation of delay for filing appeal due to COVID-19 restrictions - addition under section 68 - unexplained share capital - proof of identity, genuineness and creditworthiness of share applicants - explanation of source and source of source of funds for share subscription - reliance on contemporaneous bank statements, audited accounts and share sale agreement to rebut section 68

Condonation of delay for filing appeal due to COVID-19 restrictions - Extension and condonation of limitation for filing the appeal - HELD THAT: - The Tribunal examined the record and the affidavit explaining delay, noted the exclusion of the period 15.03.2020 to 28.02.2022 for limitation calculation as per the cited Supreme Court reasoning, and found that the assessee's delay of 155 days fell within the excluded period. In view of the justification given and the applicable exclusion, the Tribunal condoned the delay and admitted the appeal for adjudication on merits. [Paras 2]

Delay condoned and appeal admitted

Addition under section 68 - unexplained share capital - proof of identity, genuineness and creditworthiness of share applicants - explanation of source and source of source of funds for share subscription - reliance on contemporaneous bank statements, audited accounts and share sale agreement to rebut section 68 - Validity of deletion by CIT(A) of addition made u/s 68 in respect of share capital and share premium - HELD THAT: - The Tribunal considered the material placed before the CIT(A) - share applications, bank statements of the two subscribing group companies, PANs, audited financial statements, Form 2/ROC records, and the share sale agreement evidencing sale of Shivalaya Ispat & Power Pvt. Ltd. to Real Ispat & Power Ltd. The CIT(A) had found that the assessee purchased a flat and financed it by issuing shares to Wholetime Commotrade and Volgina Finvest; those companies in turn received sale consideration from Real Ispat pursuant to the share sale agreement and used those funds (traced through banking channels and corroborated by audited accounts and ROC filings) to subscribe to the assessee's shares. The Tribunal found these facts unrebutted by the Revenue, accepted that identity, genuineness and creditworthiness of the share applicants were satisfactorily proved and that the source and source of source of funds were adequately explained. On these findings the Tribunal held that the provisions of section 68 were not attracted and declined to interfere with the CIT(A)'s deletion of the addition. [Paras 9, 10, 11]

Deletion of addition of Rs. 1,65,00,000/- u/s 68 upheld and Revenue's appeal dismissed

Final Conclusion: The Tribunal condoned the delay in filing the appeal on account of COVID 19 exclusion and on merits dismissed the Revenue's appeal by upholding the CIT(A)'s deletion of the addition under section 68, finding that the assessee had satisfactorily proved the identity, genuineness and creditworthiness of the share applicants and had traced the source and source of source of funds through bank records, audited accounts and the share sale agreement.

Unexplained cash credit - Admission of additional evidence under Rule 46A - Reopening of assessment - Penalty under Section 271(1)(c) - Remand for fresh consideration

Unexplained cash credit - Admission of additional evidence under Rule 46A - Reopening of assessment - Remand for fresh consideration - Addition of Rs.29,91,500/- as unexplained cash credit was not finally sustained and the matter was restored to the Assessing Officer for fresh adjudication after admission of additional evidence. - HELD THAT: - The Assessing Officer reopened the assessment on the basis of information about cash deposits and added the aggregate deposits as unexplained cash credit when no explanation was furnished at assessment. Before the first appellate authority the assessee produced bank statements, ledger entries, confirmations of the depositors, identity documents and an affidavit and sought admission of this material under Rule 46A. The CIT(A) recorded the assessee's submissions but did not rule on admission of the additional evidence nor verify the factual claim that deposits in Surat were withdrawn in Bihar as asserted. The Tribunal held that, having not been considered or verified, the additional evidence should be admitted. In view of the newly produced material and the absence of any verification by the lower authorities, the Tribunal restored the matter to the Assessing Officer to consider all evidence afresh, to verify withdrawals and other facts with the banker, and to pass a fresh order in accordance with law. [Paras 9, 10, 11]

Grounds of appeal allowed for statistical purpose; appeal restored to the file of the Assessing Officer for fresh decision after admitting the additional evidence.

Penalty under Section 271(1)(c) - Remand for fresh consideration - Penalty levied under Section 271(1)(c) was set aside pending fresh adjudication consequential to restoration of the quantum issue. - HELD THAT: - Because the quantum assessment has been restored to the Assessing Officer for fresh consideration on the basis of admitted additional evidence, the Tribunal held that the penalty order could not be allowed to survive in its present form. The Assessing Officer was given liberty to consider and, if warranted, impose penalty afresh in accordance with law after the reassessment and any requisite verification. [Paras 12]

Grounds of appeal allowed; penalty order set aside subject to the Assessing Officer's liberty to pass a fresh penalty order in accordance with law.

Final Conclusion: The Tribunal admitted the additional evidence and restored the quantum matter relating to unexplained cash deposits for AY 2008-09 to the Assessing Officer for fresh adjudication; the penalty under Section 271(1)(c) was set aside as unsustainable in the circumstances but the Assessing Officer may decide the question of penalty afresh after reassessment.

Section 68 - onus of proof under Section 68 - genuineness of sale of shares - identity and creditworthiness of purchasers - addition cannot be made on suspicion - investments acquired in preceding year and subsequent sale

Section 68 - onus of proof under Section 68 - genuineness of sale of shares - identity and creditworthiness of purchasers - addition cannot be made on suspicion - investments acquired in preceding year and subsequent sale - Validity of the addition made under Section 68 in respect of sale proceeds of unquoted shares shown as sundry creditors and whether the assessee discharged the onus to prove identity, creditworthiness and genuineness of the transactions - HELD THAT: - The Tribunal examined the material placed on record and the approach of the lower authorities. It was not disputed that the assessee held investments in equity shares in the preceding year and sold part of those investments during the year; copies of sale bills, confirmations and purchasers' records were on the file. The assessee furnished identity documents, bank statements, audited accounts, ITR acknowledgements, PANs, sale invoices and direct confirmations from the purchaser companies. The Assessing Officer had doubts about creditworthiness in some cases on the basis of low opening bank balances and some purchasers did not personally appear, but the Assessing Officer did not produce contrary evidence to rebut the documents and confirmations filed by the assessee. Applying the settled principle that Section 68 is not attracted where shares shown as investments in earlier years are sold and corresponding documentary evidence and confirmations are produced, and where additions are founded on suspicion without contrary proof, the Tribunal found the CIT(A)'s factual finding - that the assessee had satisfactorily explained the source and genuineness of the receipts - to be tenable. Reliance was placed on precedents where similar facts led to deletion of additions, and the Tribunal observed that an addition based merely on information from investigation wings or on surmises cannot be sustained when the assessee produces best possible evidence and the revenue fails to displace it. Having regard to the totality of facts and consistent judicial authority, the Tribunal declined to interfere with the deletion made by the CIT(A). [Paras 9, 11, 13]

The addition made under Section 68 was rightly deleted by the CIT(A); the assessee discharged the onus and the revenue's appeal is dismissed.

Final Conclusion: Following the documentary evidence, confirmations from purchaser companies and consistent precedents holding that Section 68 is not attracted where earlier-year investments are sold and proper evidentiary material is produced, the Tribunal upholds the CIT(A)'s deletion of the addition and dismisses the revenue's appeal for AY 2014-15.

Rejection of books of account - addition based on seized material and confessional statements - requirement of corroborative and circumstantial evidence to sustain admissions/confessions - estimation of undisclosed sales and application of gross profit rate

Rejection of books of account - addition based on seized material and confessional statements - requirement of corroborative and circumstantial evidence to sustain admissions/confessions - Validity of additions made by the Assessing Officer by rejecting the assessee's books and estimating undisclosed sales and gross profit on the basis of seized diary pages and statements recorded by Central Excise authorities in respect of A.Y. 2008-09 and A.Y. 2009-10. - HELD THAT: - The Tribunal examined whether the Assessing Officer was justified in rejecting the assessee's books and determining undisclosed sales of 30015.124 MT (A.Y. 2008-09) and applying a gross profit rate to make additions. The Assessing Officer relied primarily on seized diary pages and confessional/oral statements of two employees recorded by Central Excise authorities. The Tribunal and the CIT(A) found that those oral statements and seized entries, without independent corroborative or circumstantial material, could not be the sole basis for estimating undisclosed production and sales. Material contradictions and absence of corroboration were noted: the assessee's declared production and sales were consistent with the installed capacity for the relevant period (7000 MT p.a., later enhanced to 48000 MT w.e.f. 06.09.2008), electricity consumption levels did not support the alleged higher production, books were written up to 24.03.2009 with no discrepancies in stock or cash at the time of search, and the excise authorities had not issued any conclusive show-cause or finalized findings of clandestine removal. The employees' later statements recorded during remand proceedings explained that entries related to loading/unloading and internal movement and described circumstances in which earlier statements were given. Given the lack of independent evidence (transport documents, receipts, confirmations from buyers, unexplained cash flows or excess electricity consumption) to corroborate the alleged clandestine sales, reliance solely on seized pages and confessions was held insufficient to reject the books and sustain the additions. Applying settled principle that confessional statements require corroboration before being made the sole basis for taxation, the Tribunal concurred with the CIT(A) that the Assessing Officer's estimation was not justified and deletions were warranted. [Paras 8, 9]

Additions on account of gross profit on alleged unaccounted sales for A.Y. 2008-09 and A.Y. 2009-10 deleted; Assessing Officer not justified in rejecting books or estimating sales solely on seized material and employee statements.

Final Conclusion: The Revenue's appeals are dismissed; the additions made by the Assessing Officer on the basis of seized material and confessional statements, and the rejection of the assessee's books, were not sustained for A.Y. 2008-09 and A.Y. 2009-10.

Parts and components of wind operated electricity generator - eligibility for exemption under Notification No.6/2006-C.E. (List 5, Sl.84) - treatment of tower as a part of WOEG - precedential effect of the Hon'ble Supreme Court decision in CCE Nagpur v. Hyundai Unitech - scope of departmental classification vis-a -vis exemption entitlement

Parts and components of wind operated electricity generator - eligibility for exemption under Notification No.6/2006-C.E. (List 5, Sl.84) - treatment of tower as a part of WOEG - precedential effect of the Hon'ble Supreme Court decision in CCE Nagpur v. Hyundai Unitech - Imported tubular towers used in assembly of wind operated electricity generators are parts of the WOEG and eligible for exemption under Notification No.6/2006-C.E. (Sl. No.84, List 5). - HELD THAT: - The Tribunal applied the binding decision of the Hon'ble Supreme Court in CCE Nagpur v. Hyundai Unitech and contemporaneous Tribunal authorities which hold that towers and ancillary items integral to the operation and assembly of wind operated electricity generators constitute parts or components of the generator for the purpose of notifications granting exemption to WOEG and its parts. The Board's Circular (No.1008/15/2015-CX) and the Larger Bench reasoning in Rakhok Enterprises corroborate that towers which support nacelle and rotor are components of WOEG and therefore within the exemption scope. The Tribunal rejected reliance on earlier decisions concerning different notifications and time-periods where parts were not covered, observing those facts were inapposite. The Tribunal expressly declined to adjudicate the classification under customs tariff headings, confining its decision to entitlement to exemption under Notification No.6/2006-C.E. [Paras 12, 13]

Denial of exemption set aside; appellant entitled to exemption under Notification No.6/2006-C.E.; appeal allowed with consequential relief.

Final Conclusion: The appeal is allowed: the imported tubular towers, being parts of wind operated electricity generators, are eligible for exemption under Notification No.6/2006-C.E.; classification under tariff headings was not considered by the Tribunal.

Requirement of speaking order under Section 17(5) of the Customs Act, 1962 - assessment under Section 17(2) of the Customs Act, 1962 - effect of payment of duty on acceptance of assessment - remand for fresh decision by proper officer

Requirement of speaking order under Section 17(5) of the Customs Act, 1962 - effect of payment of duty on acceptance of assessment - remand for fresh decision by proper officer - Whether the Commissioner (Appeals) was justified in rejecting the appeals for want of payment under protest or provisional assessment and in refusing remand instead of directing the proper officer to pass a speaking order under Section 17(5) of the Customs Act, 1962. - HELD THAT: - The Tribunal examined the statutory scheme governing assessment under section 17. While an importer may claim exemption in the bill of entry, the proper officer is tasked with examination and assessment under section 17(2). Section 17(5) requires the proper officer to pass a speaking order within fifteen days where the assessment is contrary to the importer's claim and there is no written acceptance by the importer. The Commissioner (Appeals) concluded that clearance of goods on payment of duty amounted to acceptance, but he did not examine whether there was any written acceptance as contemplated by section 17(5). In the absence of written consent, and given that the appellant had preferred an appeal, the proper course was to remit the matter to the original authority to issue the speaking order mandated by section 17(5) rather than sustain the assessment on the ground that duty had been cleared. The Tribunal therefore set aside the impugned appellate orders and remanded the matters for compliance with section 17(5). [Paras 5, 6]

Impugned orders set aside; matters remanded to the original authority to pass a speaking order in terms of Section 17(5) of the Customs Act, 1962.

Final Conclusion: Appeals allowed in part by setting aside the Commissioner (Appeals) orders and remitting the matters to the proper officer for passage of a speaking order under Section 17(5) of the Customs Act, 1962; no decision made on merits of assessment.

Exemption from Special Additional Duty (SAD) under Notification No.51/1996 - refund under Section 27 of the Customs Act and requirement to challenge assessment/self-assessment - self-assessment constitutes an assessment and is appealable - scope of refund provisions does not permit reassessment while processing refund

Exemption from Special Additional Duty (SAD) under Notification No.51/1996 - Eligibility for exemption from payment of SAD under Notification No.51/1996 for imports made during June, 2011 to August, 2011 was not adjudicated on merits. - HELD THAT: - The Tribunal noted the contention that Notification No.51/1996 exempts the "whole of the additional duty leviable thereon under Section 3 of the CTA" and relied on the assessee's earlier Tribunal decision holding the notification exempts additional duty. However, in view of the subsequent pronouncement of the Hon'ble Supreme Court clarifying that refund claims under Section 27 cannot be entertained unless the order of assessment or self-assessment is modified through appropriate proceedings, the Tribunal expressly declined to decide the substantive question of eligibility for SAD exemption and observed there was no need to decide that issue. The Tribunal therefore did not adjudicate the exemption question on merits in this appeal. [Paras 5, 6]

Substantive eligibility for SAD exemption under Notification No.51/1996 was not decided and remains unadjudicated in this appeal.

Refund under Section 27 of the Customs Act and requirement to challenge assessment/self-assessment - self-assessment constitutes an assessment and is appealable - scope of refund provisions does not permit reassessment while processing refund - Whether excess duties paid are refundable without challenging the self-assessment or assessment of the bills of entry. - HELD THAT: - Relying on the Hon'ble Supreme Court's decision that self-assessment is an assessment and that refund proceedings under Section 27 cannot be used to re-open or modify an assessment, the Tribunal held that a refund claim cannot be entertained unless the order of assessment or self-assessment has been modified through appropriate provisions (for example under Section 128 or reassessment provisions). The Tribunal found on facts that the appellants had not challenged or got the bills of entry amended or the self-assessment modified. Consequently, in law the refund sanctioning authority was correct in rejecting the refund claims as premature and not maintainable. [Paras 6, 7]

Refund claims are not maintainable in the absence of challenge/modification of the assessment or self-assessment; the rejection of the refund is upheld.

Final Conclusion: The appeal is dismissed; the order rejecting the refund claims is upheld because the appellants did not challenge or have modified the assessment/self-assessment on the bills of entry, and therefore refund under Section 27 cannot be granted.

Classification of imported machinery versus parts - entitlement to substantive benefit despite procedural non-compliance - Public Notice No.91/87 - part shipment procedure - onus on department to indicate alternative classification when denying claimed classification

Classification of imported machinery versus parts - onus on department to indicate alternative classification when denying claimed classification - Whether the goods imported in two Bills of Entry together qualify as seed processing machinery classifiable under CTH 8437 and whether the Revenue, having denied that classification, specified the correct alternate classification. - HELD THAT: - The Tribunal accepted the Commissioner (Appeals) finding that the proforma invoice and import invoices show the consignments together constituted two seed processing lines and that, on the description available, the complete machinery would fall under CTH 84371000 while components imported separately could at least be classifiable as parts under CTH 84379090, both attracting nil CVD. The Tribunal noted that the Department, although denying the assessee's classification under CTH 8437, neither in the show cause notice nor in the Order in Original pointed out what the correct classification would be if 8437 were not applicable. That absence of any specific alternative classification was treated as a material lacuna in the Revenue's case. Applying these findings, the Tribunal found no reason to interfere with the Commissioner (Appeals) conclusion that the consignments, taken together, were properly treated as seed processing machinery as declared by the respondent. [Paras 6, 8]

Assessee's classification of the imported consignments as seed processing machinery under CTH 8437 sustained; Revenue failed to specify an alternative correct classification when denying 8437.

Entitlement to substantive benefit despite procedural non-compliance - Public Notice No.91/87 - part shipment procedure - Whether failure to follow the procedural requirements of Public Notice No.91/87 for part shipments disentitles the respondent from the substantive concessional classification and duty benefit claimed. - HELD THAT: - The Tribunal concurred with the Commissioner (Appeals) that established authorities support not denying substantive benefits for mere procedural lapses. The facts (consecutive bills of entry on the same date, matching proforma and invoice values, and that the two bills together formed the complete supply) supported the conclusion that the consignments arrived in one lot and were cleared together; probable reasons such as multiple IGM numbers explained filing of two bills. Given that the goods together constituted the complete machinery and that the procedural non compliance did not change the substantive character of the import, the Tribunal held that the assessee should not be deprived of the concessional classification solely for not following the Public Notice procedure. [Paras 7, 8]

Procedural lapse under PN No.91/87 did not disentitle the respondent from the substantive benefit of classification; benefit granted.

Final Conclusion: The Commissioner (Appeals) order setting aside the adjudicating authority and allowing classification as seed processing machinery was upheld; Revenue's appeal dismissed.

Refund of Special Additional Duty (SAD) - exemption under Notification No.102/2007-Cus. - condition 2(b) - endorsement on commercial invoice that credit of SAD is not admissible - trader-importer having discharged VAT/ST liability on subsequent sale - benefit of exemption notwithstanding absence of required invoice endorsement - reliance on Larger Bench decision in Chowgule & Company Pvt. Ltd.

Refund of Special Additional Duty (SAD) - condition 2(b) - endorsement on commercial invoice that credit of SAD is not admissible - trader-importer having discharged VAT/ST liability on subsequent sale - benefit of exemption notwithstanding absence of required invoice endorsement - reliance on Larger Bench decision in Chowgule & Company Pvt. Ltd. - Appellant entitled to refund of SAD despite non-compliance with the endorsement requirement in para 2(b) of Notification No.102/2007-Cus. - HELD THAT: - The Tribunal examined whether a trader-importer who paid SAD at import and discharged VAT/ST liability on subsequent sale can claim refund under Notification No.102/2007-Cus. notwithstanding omission of the specific endorsement required by para 2(b) on commercial invoices. The Larger Bench in Chowgule & Company Pvt. Ltd. held that a trader-importer in such factual matrix is entitled to the exemption even if commercial invoices do not bear the endorsement that credit of the additional duty is not admissible, subject to satisfaction of the other conditions of the notification. The Tribunal has consistently followed that ratio in subsequent decisions. Applying that binding precedent to the facts - namely that the appellant is a trader-importer and paid VAT while selling the imported goods, and that some invoices either lacked the endorsement or bore only handwritten notes - the Tribunal found the departmental rejection unsustainable. The conclusion rests on application of the Larger Bench ratio that non-compliance with para 2(b) does not defeat entitlement where the trader-importer has discharged the indirect tax liability and other conditions are met.

Rejection of part of the refund is set aside and the appellant is held eligible for refund; appeal allowed with consequential relief.

Final Conclusion: The Tribunal allowed the appeal, set aside the impugned order, and directed refund of the SAD to the appellant in accordance with the Larger Bench principle, with consequential relief if any.

Status quo - interim order - withdrawal of withdrawal pursis - continuum of a company petition

Status quo - interim order - continuum of a company petition - Validity of the NCLT order dated 17.01.2022 directing maintenance of status-quo in respect of immovable property of the respondent company. - HELD THAT: - The Tribunal noted that its earlier decision in Company Appeal (AT) No. 99 of 2021 set aside the NCLT order dated 03.03.2021 which had allowed the withdrawal of withdrawal pursis in C.P. No. 100 of 2018. As a consequence, the continuance of C.P. No. 100 of 2018 was suspended pending fresh consideration of the withdrawal issue by the NCLT. In that factual and legal position, the Tribunal held that passing an interim order to maintain status-quo in C.P. No. 100 of 2018 was not appropriate. The Tribunal also observed that the impugned NCLT order itself made the status-quo direction subject to the decision in Company Appeal (AT) No. 99 of 2021. Having regard to the suspension of the petition's continuum and the pendency of the appellate decision, the Tribunal concluded that the interim order dated 17.01.2022 could not stand. [Paras 12, 13, 14]

Order dated 17.01.2022 of the NCLT directing maintenance of status-quo is set aside.

Final Conclusion: The Company Appeal (AT) No. 29 of 2022 is allowed; the NCLT order dated 17.01.2022 is set aside and the matter restored for fresh consideration consistent with the Tribunal's observations. No order as to costs.

Misuse of the name of a statutory body - misleading stakeholders - disciplinary action against an insolvency professional - suspension of registration of an insolvency professional - direction to remove a corporate/LLP name from MCA records as condition precedent to taking new assignments - exercise of powers under section 220(2) of the Code

Misuse of the name of a statutory body - misleading stakeholders - disciplinary action against an insolvency professional - The Disciplinary Committee's finding that the petitioner, by incorporating a firm using the name 'IBBI', misled stakeholders and violated the conduct expected of an insolvency professional was upheld. - HELD THAT: - The Court accepted the disciplinary conclusion that the use of the name 'IBBI' in the private firm was impermissible and likely to mislead trade, industry and stakeholders engaged in insolvency processes. The High Court observed that the petitioner could not lawfully appropriate the Board's name for a private entity and that such conduct justified disciplinary proceedings under the regulatory framework governing insolvency professionals. Having considered the Disciplinary Committee's findings and the submissions of the Board, the Court found no reason to interfere with that conclusion. [Paras 7, 8]

The Disciplinary Committee's finding of misconduct in using the name 'IBBI' and misleading stakeholders is not disturbed.

Suspension of registration of an insolvency professional - direction to remove a corporate/LLP name from MCA records as condition precedent to taking new assignments - exercise of powers under section 220(2) of the Code - The Court refused to interfere with the specific directions of the Disciplinary Committee - bar on taking new assignments until the offending name was removed from MCA records and a three-month suspension of registration - noting that the MCA had struck off the firm name and the suspension period had expired. - HELD THAT: - The Court noted that the Registrar of Companies/MCA had already struck the impugned firm name from the Register of Companies, thereby satisfying the condition attached to the bar on taking new assignments. The three-month suspension ordered by the Disciplinary Committee had also lapsed. In light of these developments and the Board's submissions, the High Court found no basis to set aside or modify the directions issued by the Disciplinary Committee and declined to intervene in the exercise of disciplinary powers under the Code. [Paras 7, 8, 9]

The directions of the Disciplinary Committee, including the bar until removal of the firm name from MCA records and the period of suspension, are left intact and the petition is dismissed.

Final Conclusion: The writ petition challenging the Disciplinary Committee's order imposing disciplinary directions for misuse of the Board's name and suspending the petitioner is dismissed; the High Court declines to interfere with the Committee's findings or directions, observing that the offending firm name has been struck off by the MCA and the ordered suspension has expired.

Fraudulent initiation of CIRP - setting aside admission under section 7 - section 65 IBC - penalty for fraudulent initiation - piercing the corporate veil - related parties in Committee of Creditors - invalid constitution of CoC - failure of Resolution Professional to verify proof of debts - quashing of approved resolution plan

Fraudulent initiation of CIRP - setting aside admission under section 7 - Admission of the section 7 application by Nandakini and initiation of CIRP against Hirakud Industrial Works Ltd. - HELD THAT: - The Tribunal examined the section 7 Form 1 and accompanying material and found absence of any loan agreement, absence of banker's book entries or corroborative documents from the alleged financial creditor, and only bald demand letters and admissions by the corporate debtor. The Adjudicating Authority had directed production of proof of debts (order dated 28.2.2020) which was not placed before the tribunal but only emailed to the Registry; the hearing and admission occurred with unexplained expedition when auction proceedings for workers' dues were imminent. On the cumulative facts the Tribunal concluded that the section 7 petition was filed and admitted in collusion with the corporate debtor to stall payment to workmen and thereby amounted to a fraudulent initiation of CIRP. [Paras 66, 70, 71, 72, 97]

The admission order under section 7 is set aside; the CIRP abates and the corporate debtor is freed from moratorium.

Related parties in Committee of Creditors - invalid constitution of CoC - piercing the corporate veil - Validity of the composition of the Committee of Creditors and effect of inclusion of related/connected parties. - HELD THAT: - On examination of public domain material and charts placed before the Tribunal, multiple CoC members shared common directors, cross shareholdings, common addresses and were shown to be under the influence of the holding/controlling group (Adishwar Nivesh/Indo Wagon). The Tribunal applied the concept of 'persons acting in concert' and the principles permitting piercing of the corporate veil where necessary to expose control and concerted action. Several CoC members therefore fell within the definition of related parties and the RP had constituted the CoC on unverified claims in breach of Regulation 12(3). Because the foundation of the CIRP was fraudulent and the CoC was tainted by related parties exercising control, decisions of that CoC could not be sustained. [Paras 85, 90, 99, 101, 112]

The constitution of the CoC with participation and voting by related/connected parties is vitiated and contributes to invalidating the CIRP.

Failure of Resolution Professional to verify proof of debts - piercing the corporate veil - Conduct of the Resolution Professional in verification of claims and in discharge of statutory duties during CIRP. - HELD THAT: - The RP was directed by the Adjudicating Authority to place proof of debts before it but failed to do so and instead relied on submissions by sending documents to the Registry. The RP also did not meaningfully inquire into allegations of fraud, collusion or related party links despite material on record and did not advise workers to file claims or properly verify creditors' claims as mandated by the Code and CIRP Regulations. The RP even signed an affidavit in the name of a prospective resolution applicant, reflecting dereliction and casual approach. Given these acts and omissions, the Tribunal found grounds for IBBI to investigate the RP's conduct for possible collusion and dereliction. [Paras 102, 103, 104, 105, 106]

The Tribunal directs IBBI to investigate the erstwhile RP's conduct and records that his omissions/commissions were irregular; the matter is referred to IBBI for enquiry.

Quashing of approved resolution plan - section 65 IBC - penalty for fraudulent initiation - Validity of the resolution plan approved by the CoC and the Adjudicating Authority and consequent restitution and penalties. - HELD THAT: - Because the admission of CIRP and the constitution of the CoC were found to be fraudulent and void, the Tribunal held that subsequent actions flowing from that foundation, including the CoC approval and the Adjudicating Authority's sanction of the resolution plan, could not survive. The Tribunal therefore quashed the approval of the resolution plan, ordered restitution of amounts paid under the plan to the Successful Resolution Applicant, directed reversal of any alienations or third party rights created under the plan, and imposed penalties under section 65 on the financial creditor and the corporate debtor for fraudulent initiation. [Paras 97, 112, 114, 116]

The approval of the resolution plan is quashed; payments made under the plan are to be reverted and penalties under section 65 are imposed on Nandakini and the corporate debtor.

Final Conclusion: The Tribunal set aside the section 7 admission, held the CIRP to be fraudulently initiated and the CoC constitution tainted by related/connected parties after piercing the corporate veil where necessary; the approved resolution plan was quashed, restitution directed, penalties under section 65 imposed on the financial creditor and corporate debtor, and IBBI was directed to investigate the conduct of the erstwhile RP. The CIRP accordingly stands abated and the workers' union is free to pursue its remedies for recovery of dues.

Sick or infirm - proviso to section 45(1) PMLA - life threatening ailment - treatment unavailable in jail hospitals - purposive interpretation - medical board opinion - infirmity - requiring attendant for daily activities - twin conditions of section 45(1) - triple test under Section 437/439 CrPC

Sick or infirm - proviso to section 45(1) PMLA - life threatening ailment - treatment unavailable in jail hospitals - purposive interpretation - Legal threshold for being 'sick or infirm' under the proviso to section 45(1) PMLA. - HELD THAT: - The Court held that the proviso to section 45(1) PMLA is a lenient, welfare oriented exception which must be given a purposive reading. The sickness or infirmity contemplated must be of such a nature that it is life threatening and requires specialized medical assistance which cannot be provided in prison hospitals. While no rigid formula is laid down, the guiding principle is that the ailment must be sufficiently grave or require specialised treatment not available in penitentiary medical facilities. Precedents interpreting analogous provisos (e.g., section 437 CrPC) and legislative materials (Statement of Objects and Reasons; Finance Bill; LCI Report) support this test. The Court also emphasised that medical boards' expert opinions are to be given primacy, as courts are not medical experts. [Paras 24, 25, 30, 31]

The proviso applies where the sickness/infirmity is life threatening and cannot be adequately treated in jail; courts must adopt a purposive approach and defer to medical expertise.

Medical board opinion - stable and treatable in jail - Whether the applicant is 'sick' within the meaning of the proviso to section 45(1) PMLA. - HELD THAT: - The Court examined the applicant's medical records and the reports of the prison medical officers and the Board of Doctors. The medical board (physician, neurologist, psychiatrist and surgeon) opined that the applicant is currently stable on treatment and can be managed in the Tihar Jail Hospital, with elective cholecystectomy possible after PAC and fitness. The trial court cannot supplant expert medical opinion. Applying the life threatening/test not treatable in jail yardstick, the Court found that the applicant's ailments, though multiple, are not of the kind that render him 'sick' for the purposes of the proviso. [Paras 34, 35, 37, 38, 43]

The applicant is not 'sick' under the proviso to section 45(1) PMLA because his conditions are stable and can be treated in the jail hospital.

Infirmity - requiring attendant for daily activities - frequent seizures and behavioural disorder - Whether the applicant is 'infirm' within the meaning of the proviso to section 45(1) PMLA. - HELD THAT: - The Court analysed medical records showing increased frequency of seizures, abnormal behavioural episodes, need for attendant for timely administration of medicines, MRI findings of age related cerebral atrophy with ischemic changes, and deterioration in January 2023 with multiple referrals to emergency care. Infirmity was construed not merely as old age but as a disability incapacitating the person from performing ordinary day to day activities. The factual matrix - need for an attendant, frequent seizures and behavioural disorder in a senile stage - satisfied the Court that the applicant is 'infirm'. The Court distinguished earlier authorities where infirmity or life threatening illness was absent. [Paras 51, 52, 53, 55, 56]

The applicant is 'infirm' within the proviso to section 45(1) PMLA due to frequent seizures, behavioural disorder and need for an attendant for quotidian activities.

Twin conditions of section 45(1) - triple test under Section 437/439 CrPC - bail on medical grounds - Consequences of falling within the proviso and whether bail should be granted in this case. - HELD THAT: - The Court held that once an accused falls within the proviso (being sick or infirm), he need not satisfy the twin conditions under section 45(1) PMLA (public prosecutor given opportunity; court satisfied of reasonable grounds for belief in not guilt and no likelihood of reoffending). However, the accused must satisfy the triple test under Sections 437/439 CrPC - not being a flight risk, not likely to influence witnesses, and not likely to tamper with evidence. Considering the facts (over 18 months in custody; investigation complete; no chargesheet yet; prior interim bail without misuse), and that the applicant is infirm, the Court found the triple test satisfied and granted bail subject to specified conditions (personal bond with surety, reporting, surrender of passport, restrictions on communication with witnesses, etc.). The Court clarified these observations do not reflect on the merits of the underlying allegations. [Paras 57, 58, 59, 60, 61]

Although exempted from the twin conditions of section 45(1) by virtue of being 'infirm', the applicant must satisfy the triple test under Sections 437/439 CrPC; the Court found the test met and granted bail on conditions.

Final Conclusion: The Court held that the proviso to section 45(1) PMLA requires life threatening sickness or infirmity necessitating treatment not available in jail; the applicant was not 'sick' but was held to be 'infirm' (frequent seizures, behavioural disorder and need for attendant). Being within the proviso, he was exempted from the twin conditions of section 45(1) but had to satisfy the triple test under Sections 437/439 CrPC, which the Court found satisfied; bail was accordingly granted subject to conditions.

Discharge under Section 227 CrPC - Prima facie case and framing of charge - Sifting and weighing evidence at discharge stage - Presumption and burden under Section 24 PMLA - Revisional jurisdiction under Section 397 CrPC and quashing of charge - Special statute presumption in PMLA

Discharge under Section 227 CrPC - Prima facie case and framing of charge - Sifting and weighing evidence at discharge stage - Presumption and burden under Section 24 PMLA - Validity of the trial court's order rejecting the applicant's discharge application under Section 227 CrPC in a PMLA prosecution - HELD THAT: - The High Court applied settled principles on discharge and framing of charge, as extracted in the judgment, and examined whether the trial court committed any illegality in refusing discharge. The court noted that at the stage of Section 227 the material placed by the prosecution must be taken at face value for the limited purpose of ascertaining whether there is ground for presuming that the accused has committed the offence; the court may sift and weigh evidence for that limited purpose but must not conduct a mini-trial. The judgment records that the trial court evaluated the charge-sheet and accompanying documents and found prima facie material of involvement in Hawala transfers, including indications of transfers into accounts of the applicant's wife and children abroad and other corroborative documentary material. The trial court also applied the statutory shifting of burden under Section 24 of the PMLA and held that the accused had not discharged that burden at the prima facie stage. Having considered these findings and the settled tests for interference under Section 397/482 CrPC (that quashing of charge at this advanced stage is exceptional and limited to cases of patent absurdity, no evidence or perversity), the High Court concluded there was no illegality, irregularity or perversity in the trial court's order declining discharge. The High Court therefore refused to quash the impugned order and dismissed the revision, directing expeditious completion of trial. [Paras 9, 10, 11]

Revision dismissed; impugned order rejecting discharge under Section 227 CrPC upheld and trial directed to conclude within six months.

Final Conclusion: The High Court dismissed the revision, holding that the trial court had rightly declined to discharge the applicant under Section 227 CrPC on the available prima facie material (including the prosecution's documentary case and the statutory burden under Section 24 PMLA); the impugned order is not vitiated by illegality or perversity and the trial is directed to be completed within six months.

Confiscation of property under Section 8(7) of PMLA - release of attached property under Section 8(8) of PMLA - reverse burden of proof under Section 24 of PMLA - presumption of innocence on death of accused vis-a -vis special statutory scheme - liability of corporate office bearers and attribution under Section 70 of PMLA - jurisdiction of Special Court to adjudicate claims after confirmation/ confiscation

Confiscation of property under Section 8(7) of PMLA - presumption of innocence on death of accused vis-a -vis special statutory scheme - Whether the Special Court can order confiscation under Section 8(7) of PMLA notwithstanding the death of the accused and whether death operates as acquittal for purposes of releasing attached property. - HELD THAT: - The Court held that Section 8(7) expressly empowers the Special Court to pass appropriate orders regarding confiscation or release where trial cannot be conducted or concluded on account of the death of the accused. The statutory scheme of PMLA, including the policy objective to preserve proceeds of crime and prevent dissipation to heirs, displaces the submission that death must be treated as equivalent to acquittal and thereby mandate release of attached property. The statutory provision for confiscation in the event of death is a deliberate departure from the general criminal-law consequence contended for by the petitioner and therefore the presumption of innocence on death does not automatically entitle release where the special statutory regime governs. [Paras 21, 22, 23, 24, 25]

Section 8(7) authorises confiscation despite the accused's death; death does not ipso facto operate as acquittal for release under the PMLA scheme.

Reverse burden of proof under Section 24 of PMLA - release of attached property under Section 8(8) of PMLA - Whether the petitioner (claimant/third party) discharged the burden to rebut the statutory presumption and thereby establish entitlement to release under Sections 8(7)/8(8). - HELD THAT: - The Court applied the statutory presumption in Section 24 and the guidance that once the foundational facts of proceeds of crime and the link to the person are established by the prosecution, the presumption is attracted and can be rebutted only by evidence within the personal knowledge of the person. On the material before the Special Court, investigation found that proceeds of crime were credited to the firm's account and subsequently layered. The petitioner, a third party and purported Managing Director, failed to demonstrate legitimate source or satisfactorily discharge the reverse burden. Consequently the Special Court correctly declined release under Sections 8(7)/8(8) as the claimant did not satisfy the statutory requirement of rebuttal and good faith entitling restoration. [Paras 25, 26, 29, 30, 31]

The petitioner did not rebut the statutory presumption under Section 24 and therefore was not entitled to release of the attached/confiscated property under Sections 8(7)/8(8).

Liability of corporate office bearers and attribution under Section 70 of PMLA - Whether acts and proceeds attributable to the principal accused could be treated as attributable to the corporate/former partnership entities and their office bearers for purposes of confiscation. - HELD THAT: - The Court observed that the principal accused occupied multiple roles - managing partner, attorney holder and director of the later incorporated company - and that the corporate avatar was in substance an instrumentality connected with the accused. By reference to Section 70, where a contravention is committed by a company, persons in charge and responsible are deemed guilty; applying that principle, the trial court was entitled to treat the conduct and proceeds as attributable to the corporate entity and its controlling person. This attribution supported continuation of deprivation measures against property representing value of proceeds of crime. [Paras 31, 32]

The conduct and proceeds were properly attributable to the company and its controlling person under Section 70, supporting confiscation measures.

Jurisdiction of Special Court to adjudicate claims after confirmation/ confiscation - Whether pendency of an appeal under Section 26 ousts the Special Court from adjudicating a claim for release where confiscation/order confirming attachment has been passed. - HELD THAT: - Relying on precedent and the statutory scheme, the Court accepted that jurisdiction to entertain objections to attachment may be coordinate between appellate authority and the Special Court to an extent, but where the order confirming attachment has attained finality, or confiscation has been ordered or trial has commenced, claims of parties asserting bonafide interest must be adjudicated by the Special Court. Given that the adjudicating authority had confirmed provisional attachment and confiscation proceedings were concluded below, the Special Court was the appropriate forum to enquire into the claimant's plea of legitimate interest and good faith. [Paras 28, 33]

The Special Court is the proper forum to adjudicate claims for release once attachment confirmation/confiscation or trial commencement has occurred; pendency of an appeal does not preclude the Special Court from deciding such claims.

Confiscation of alternate property in lieu of untraceable proceeds - Whether confiscation of alternate property (i.e., property in lieu of untraceable proceeds) was permissible and justified on the materials in this case. - HELD THAT: - The Court noted the investigation's findings that the actual crime proceeds could not be traced but that alternate property of equivalent value had been provisionally attached and subsequently confiscated after confirmation. Given the finding of embezzlement, crediting and layering of proceeds into the firm's accounts, and the failure of the claimant to rebut the presumption, confiscation of the alternate property fell within the remedial objects of the statute and was sustainable on the material before the Special Court. [Paras 26, 27, 30]

Confiscation of the alternate property in lieu of untraceable proceeds was permissible and was supported by the findings of investigation and the claimant's failure to rebut.

Final Conclusion: The criminal miscellaneous petition challenging the order allowing confiscation under Section 8(7) and refusing release under Section 8(8) is dismissed; the Special Court's order confirming attachment and directing confiscation is sustained as lawful on the statutory scheme, evidentiary findings and the claimant's failure to discharge the reverse burden under Section 24.

Grant of bail under PMLA balancing liberty and legislative rigour - right to speedy trial and prolonged pre-trial incarceration - likelihood of trial concluding within reasonable time as threshold for bail - applicability of precedents on prolonged custody (K.A. Najeeb; Ramchand Karunakaran) - expedition of trial and court's supervisory directions

Grant of bail under PMLA balancing liberty and legislative rigour - right to speedy trial and prolonged pre-trial incarceration - likelihood of trial concluding within reasonable time as threshold for bail - Whether the applicant should be released on bail in proceedings arising out of ECIR/06/PMLA/LKZO/2019 - HELD THAT: - The Court confined itself to the bail application and did not enter into merits of the prosecution case, directing the trial court to independently conclude trial with expedition. The applicant has been in judicial custody since 11.10.2018 and, for purposes of the present ECIR, more than three years and three months; overall judicial custody exceeds four years and four months, while maximum punishment for offences charged is seven years. Since charges were framed only on 26.04.2022 and, from 21.05.2022 to date only two of about 150 prosecution witnesses have been examined, the Court found no reasonable prospect of concluding the trial in the near future. Relying on the principle in K.A. Najeeb that constitutional courts may grant bail where trial cannot be completed within reasonable time and substantial part of sentence has been served, and on Ramchand Karunakaran (PMLA context), the Court held that the rigour of statutory bail restrictions under PMLA does not oust consideration of prolonged incarceration and unlikelihood of speedy trial. The Court noted the applicant had earlier availed interim bail from the Apex Court and had surrendered when it expired, without misuse of liberty. The Court declined to adjudicate disputed questions of recovery determined (or quantified) by forensic auditors, leaving such issues for trial. Considering (a) significant period of incarceration already suffered; (b) absence of prospect of expedition given the large number of witnesses and lack of cooperation in examination; and (c) conduct during prior interim bail, the Court concluded the statutory tests for bail under PMLA are satisfied and granted bail subject to conditions and strict directions to the trial court to fix short dates and to treat non-cooperation or deliberate adjournment as abuse of liberty. [Paras 24, 25, 28, 29, 30]

Bail allowed on furnishing specified personal bond and sureties, subject to enumerated conditions and directions to the trial court to expedite trial and deal strictly with any abuse of liberty.

Final Conclusion: Bail granted to the applicant in the proceedings arising out of ECIR/06/PMLA/LKZO/2019 on the ground that he has undergone a substantial period of pre-trial incarceration and there is no reasonable prospect of the trial concluding expeditiously; the trial court directed to proceed without unnecessary adjournments and to enforce conditions and consequences in case of misuse of bail.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - requirement of deposit within 30 days for availing SVLDRS benefit - effect of technical glitches on time barred online payments - no power to extend time where scheme contains no provision for extension - exercise of discretionary writ jurisdiction - reliance on binding precedent

Requirement of deposit within 30 days for availing SVLDRS benefit - effect of technical glitches on time barred online payments - no power to extend time where scheme contains no provision for extension - Petitioner's entitlement to avail benefit of the SVLDRS despite failure to deposit the amount within 30 days owing to alleged technical glitches. - HELD THAT: - The Court found that the petitioner applied online and Form SVLDRS 3 was generated requiring deposit within 30 days. The petitioner alleged technical glitches prevented online payment but did not plead specific glitches or place material on record demonstrating efforts to make payment within the stipulated period. The petitioner also did not apply for acceptance of payment by physical mode. The Court observed that where the scheme prescribes a time limit for deposit and contains no provision for extension, a petitioner who has not deposited the amount within the prescribed time is not entitled to further time. The Court further relied on the decision of the Division Bench of the Allahabad High Court in Yashi Construction Vs. Union of India & Ors. , and noted the SLP against that judgment was dismissed by the Supreme Court, treating that precedent as authoritative on the point. Having found no material to substantiate the claimed technical failure or any attempt to make payment within the period (including the extended period of the scheme), the Court declined to exercise discretionary writ jurisdiction to permit late deposit.

Petition dismissed; no relief to permit deposit after the 30 day period in the absence of proof of attempted payment or any provision to extend time under the scheme.

Final Conclusion: Writ petition dismissed for failure to show specific technical glitches or attempts to deposit within the prescribed period; petitioner not entitled to belatedly avail the SVLDRS where scheme contains no provision for extending the 30 day deposit requirement.

Cenvat credit on input services - Cross utilisation of Cenvat credit - Refund of Krishi Kalyan Cess - Time-limit for taking Cenvat credit (one year) - Transitional credit and refund under Section 142(9)(b) of the CGST Act - Application of Rule 2(l), Rule 3 and Rule 4 of the Cenvat Credit Rules, 2004

Refund of Krishi Kalyan Cess - Claim for refund of Krishi Kalyan Cess paid on input services was not allowable and was rejected. - HELD THAT: - The Tribunal rejected the appellant's claim for refund of the unutilised Krishi Kalyan Cess. It followed the decision in the larger bench in Gauri Plastic Culture Pvt Ltd., holding that a non utilised portion of Cenvat credit of such cess cannot be claimed as a cash refund. The Tribunal distinguished the decision relied upon by the appellant and treated the matter as settled against grant of refund of the cess component claimed.

Refund of Krishi Kalyan Cess claim denied.

Time-limit for taking Cenvat credit (one year) - Cenvat credit taken beyond the statutory one year period from invoice/bill of entry was rightly disallowed. - HELD THAT: - The Tribunal upheld the disallowance of amounts where the admitted facts showed credit was taken after more than 12 months from the date of the invoice or bill of entry. The adjudicatory finding that such delayed availment of credit is not permissible was accepted and the disallowance sustained.

Credits taken after one year from invoice/bill of entry are disallowed.

Cenvat credit on input services - Cross utilisation of Cenvat credit - Application of Rule 2(l), Rule 3 and Rule 4 of the Cenvat Credit Rules, 2004 - Balance Cenvat credit on input services (other than the KKC component and the time barred amounts) was admissible and, once taken, could be cross utilised and refunded as directed. - HELD THAT: - The Tribunal held that a manufacturer is entitled to Cenvat credit on input services used in manufacture of dutiable goods under Rule 2(l) of the Cenvat Credit Rules, 2004. It further held there is no prohibition on cross utilisation of Cenvat credit once properly taken, in view of Rules 3 and 4 of the Rules. Applying these principles to the admitted facts, the Tribunal allowed the appellant's claim in part and directed grant of the remaining refundable amount with interest within a specified period.

Balance refund claim allowed; cross utilisation of legitimately taken Cenvat credit permitted.

Final Conclusion: Appeal allowed in part. Refund of the Krishi Kalyan Cess claim rejected and credits taken beyond 12 months disallowed; remaining eligible Cenvat credit claim allowed and the adjudicating authority directed to grant the refund of the balance amount with interest within 60 days of service of the order.

Establishment in India under Explanation 4 to Section 65B(44) - reverse charge liability for service tax - refund of amounts paid under a mistake of law - limitation under Section 11B not applicable to payments not leviable as tax - unjust enrichment defence

Establishment in India under Explanation 4 to Section 65B(44) - reverse charge liability for service tax - Whether the appellant was required to discharge service tax on reverse charge for services rendered by the foreign contractors - HELD THAT: - The Tribunal found on the facts that the foreign service providers (NOMC and Haliburton) had set up establishments in India, obtained service tax registration and discharged service tax in India. Applying Explanation 4 to Section 65B(44), a person carrying on business through a branch or agency in a territory is to be treated as having an establishment there. The services were rendered through those Indian establishments and domestic inputs (labour) were used; therefore the contractors correctly discharged service tax. Consequently the appellant was not statutorily obliged to pay tax on reverse charge and the payments it made were under a mistake of law. [Paras 15, 16]

The appellant was not required to discharge service tax on reverse charge; payments were made under a mistake of law.

Refund of amounts paid under a mistake of law - limitation under Section 11B not applicable to payments not leviable as tax - Whether the refund claim by the appellant is barred by the limitation provided under Section 11B - HELD THAT: - The Tribunal reviewed precedent and held that where an amount was never payable as tax (i.e., paid under a mistake of law), the payment does not acquire the character of tax that Section 11B contemplates. Authorities including KVR Constructions and subsequent Tribunal and High Court decisions were applied to the present facts. Since the appellant's payments were not leviable and the Department could not have validly demanded them, the statutory limitation under Section 11B does not apply to bar the refund claim. [Paras 17, 31]

Section 11B limitation does not bar the appellant's refund claim because the amounts paid were not a tax payable by the appellant.

Unjust enrichment defence - Whether the bar of unjust enrichment precluded refund to the appellant - HELD THAT: - The Tribunal examined the appellant's accounting treatment and commercial arrangements. The appellant had not expensed out the service tax amounts but showed them as 'on hold' pending litigation, indicating the amounts were not passed on to buyers. Ministry of Petroleum circulars and the crude offtake agreements showed service tax was not part of the valuation mechanism and buyers were only liable for VAT or sales/pipeline charges. Applying the principle in State of Rajasthan v. Hindustan Copper, the Tribunal concluded there was no unjust enrichment. [Paras 32, 33]

Unjust enrichment does not apply; refund is not precluded on that ground.

Final Conclusion: The appeal is allowed: the appellant is entitled to refund of the service tax paid (made under mistake of law) with interest; the appellant was not liable to pay under reverse charge, the refund is not barred by Section 11B, and unjust enrichment does not preclude refund.

Intellectual Property Rights service - registration of intellectual property right under law for the time being in force - taxability of royalty/license fees - reverse charge mechanism for services from non residents

Intellectual Property Rights service - registration of intellectual property right under law for the time being in force - taxability of royalty/license fees - reverse charge mechanism for services from non residents - Whether royalty/licence fees paid to a foreign entity for use of trade marks and patents are taxable as IPR service under the Finance Act, 1994 when the rights are not registered in India - HELD THAT: - The Tribunal applied the statutory definition of "intellectual property right" and "taxable service" to conclude that IPR service for service tax purposes requires a right recognised under a law "for the time being in force" (i.e., under Indian law). It was an admitted fact that the trade mark and patent rights in question were not registered in India. Following this Tribunal's prior decision in Munjal Showa Ltd. and related authorities, the Tribunal held that unregistered foreign IPRs not recognised under Indian law do not fall within the taxable category of Intellectual Property Rights service; consequently, amounts paid as royalty/licence fees to the foreign grantor cannot be taxed in India under the reverse charge mechanism as IPR service. The Tribunal relied on the principle that the charging provision must apply with reference to the legal character of the right in India and rejected the Revenue's contention to the contrary.

The payments made as royalty/licence fees to the foreign entity are not taxable as IPR service under the Finance Act, 1994 since the relevant IPRs were not registered or recognised under Indian law; the demand is not sustainable.

Final Conclusion: The Revenue's appeal is dismissed; the impugned order upholding non taxability of the royalty/licence fees is affirmed and no service tax is payable on the sums in question.

Valuation of taxable service - inclusion of value of goods/materials supplied free by service recipient - gross amount charged - nexus between consideration and taxable service - abatement under Notification No. 1/2006-ST

Valuation of taxable service - inclusion of value of goods/materials supplied free by service recipient - gross amount charged - abatement under Notification No. 1/2006-ST - Whether value of materials supplied free of cost by the service recipient must be included in the taxable value for payment of service tax so as to deny the benefit of abatement. - HELD THAT: - The Tribunal applied the ratio of the Apex Court in Commissioner of Service Tax v. M/s. Bhayana Builders (P) Ltd., holding that valuation under Section 67 is confined to the "gross amount charged" by the service provider for the taxable service and requires a nexus between the amount charged and the service provided. The cost of materials supplied free by the service recipient is neither an amount charged by the service provider nor consideration for the taxable service and therefore does not form part of the gross amount charged. The Notifications prescribing abatement operate on a percentage of the gross amount "charged" and cannot be read to extend liability to items not charged by the service provider. On these grounds the departmental demand premised on including the value of free supplies for denying abatement was held unsustainable. [Paras 6]

Demand set aside and appeal allowed; benefit of abatement cannot be denied by including value of materials supplied free by the service recipient.

Final Conclusion: The Tribunal, following the decision in M/s. Bhayana Builders (supra), allowed the appeal, set aside the service tax demand premised on inclusion of free-supplied materials for valuation, and restored the appellant's entitlement to abatement with consequential relief if any.

Principle of unjust enrichment - reverse charge mechanism - burden of tax / passing on of tax - probative value of Chartered Accountant's certificate - verification of challans on remand - refund of service tax

Principle of unjust enrichment - reverse charge mechanism - burden of tax / passing on of tax - probative value of Chartered Accountant's certificate - refund of service tax - Whether the principle of unjust enrichment applied so as to deny the respondent's refund claim. - HELD THAT: - The Tribunal noted that service tax was paid by the respondent under the reverse charge mechanism, making it implausible that the tax burden was passed on to any other person. The respondent produced a certificate from its Chartered Accountant after examination of books, challans and returns for the relevant period certifying that the service tax was deposited, no CENVAT credit was taken, and the burden was borne by the company. The Adjudicating Authority gave no substantive reason to reject that certificate and the department led no evidence to contradict it. In these circumstances the Commissioner (Appeals) correctly found that the principle of unjust enrichment did not apply and that the refund claim was not barred on that ground. [Paras 8, 9, 10, 11, 12]

The finding that unjust enrichment is not applicable was upheld and the Commissioner (Appeals) was justified in relying on the Chartered Accountant's certificate, supporting the respondent's refund claim on merits.

Verification of challans on remand - refund of service tax - Whether the Commissioner (Appeals) was justified in remanding the matter to the Adjudicating Authority to verify the challans submitted by the respondent. - HELD THAT: - Although the respondent had submitted challans, those documents had not been examined by the Adjudicating Authority because the refund application had been rejected at the adjudication stage. The Commissioner (Appeals) therefore remanded the matter for the limited purpose of verification of the challans. The Tribunal held this limited remand to be appropriate and directed that the Adjudicating Authority, upon production of a copy of the present order, should verify the challans at an early date and preferably within two months. [Paras 13, 14]

Remand to the Adjudicating Authority for verification of the challans was appropriate and should be undertaken promptly, preferably within two months.

Final Conclusion: The departmental appeal is dismissed; the Commissioner (Appeals) correctly found that unjust enrichment did not bar the refund and rightly remanded the matter for verification of challans. The Adjudicating Authority is directed to verify the challans at an early date, preferably within two months; the respondent's cross-objections are dismissed.

Refund of CENVAT credit - Inapplicability of pre-GST CENVAT debit requirement after GST implementation - Section 142(3) of the Central Goods and Services Tax Act, 2017 - Improvident reliance on Board Notification No.27/2012 where statutory framework has changed - Finality of appellate order cannot defeat substantive entitlement where earlier procedural error diverted forum

Refund of CENVAT credit - Inapplicability of pre-GST CENVAT debit requirement after GST implementation - Improvident reliance on Board Notification No.27/2012 where statutory framework has changed - Whether the requirement in Notification No.27/2012 that a refund claim must be accompanied by a corresponding debit to the CENVAT credit account precludes refund of CENVAT credit for periods immediately preceding GST implementation. - HELD THAT: - The Court held that the condition embodied in Notification No.27/2012 cannot be applied where, by operation of law, the CENVAT credit account was disabled on the appointed day with the commencement of GST. The Notification's safeguard of a simultaneous debit presupposes an operational CENVAT credit account; that premise failed with the enactment of the Central Goods and Services Tax Act, 2017. Insistence on compliance with the Notification in such circumstances was held to be a patent error and not a ground to deny substantive entitlement to refund where the claimant is otherwise eligible. The Court noted prior decisions of this Court and the CESTAT recognising the impossibility of complying with that condition after GST became effective, and treated the Notification-based objection as an anterior procedural error which should not defeat the refund claim. [Paras 3, 4, 6, 7, 12]

The condition in Notification No.27/2012 requiring a corresponding debit to the CENVAT credit account is inapplicable after the CENVAT account was disabled by GST and cannot be used to deny refund of CENVAT credit for the stated periods.

Section 142(3) of the Central Goods and Services Tax Act, 2017 - Finality of appellate order cannot defeat substantive entitlement where earlier procedural error diverted forum - Whether the impugned order rejecting the refund on the ground that the first appellate order had attained finality was sustainable in law, having regard to the substantive entitlement under Section 142(3) and the antecedent procedural misdirection. - HELD THAT: - The Court observed that the substantive eligibility of the petitioner for refund was not questioned on merits and that Section 142(3) provides that claims for refund of amounts under the existing law filed before, on or after the appointed day shall be disposed of in accordance with the provisions of the existing law and any amount eventually accruing shall be paid in cash. Given that the initial denial arose from an incorrect application of Notification No.27/2012 and that time spent before the GST authorities was attributable to that wrong forum, the appellate authority's reliance on finality to deny refund was erroneous. The Court refused to permit the impugned order to be improved by arguments not contained in it, and concluded that the impugned order must be set aside to give effect to the petitioner's substantive entitlement. [Paras 10, 11, 13, 14, 15]

The impugned order premised on the finality of the first appellate order is legally untenable in view of the antecedent procedural error and Section 142(3); the impugned order was set aside and the petitioner entitled to refund in cash.

Final Conclusion: Writ petition allowed; impugned order set aside and petitioner entitled to refund of the CENVAT credit for April, May, June, 2017, to be paid in cash within six weeks from receipt of the order; no costs.

Inclusion of freight in assessable value - place of removal - transaction value and exclusion of transportation cost - application of provisions of the Sale of Goods Act to determine time of transfer of property - exclusion of freight charged separately shown in invoice

Inclusion of freight in assessable value - place of removal - exclusion of freight charged separately shown in invoice - Whether freight charged separately in sales invoices is includible in the assessable value of excisable goods where goods are cleared from the factory and delivered to the buyer's premises on FOR destination basis - HELD THAT: - The Tribunal found as an established fact that the appellant cleared goods from its factory and issued excise invoices at the time of removal from the factory gate and that freight was shown separately in those invoices. Applying the legal framework governing valuation-particularly the concept of transaction value and the rules excluding transportation cost from transaction value where freight is charged separately and shown in the invoice-the Tribunal held that the factory gate is the place of removal and that the buyer's premises cannot be treated as the place of removal merely because delivery obligation extended to the buyer's site. The Tribunal relied on the Supreme Court's decision in Ispat Industries Ltd. (as applied in Savita Oil Technologies Ltd.) which rejected treating buyer's premises as place of removal on similar facts, and distinguished cases where the terms and circumstances (including intention ascertained under the Sale of Goods Act) establish transfer of property at buyer's premises. On these findings the Tribunal concluded that freight charged separately for delivery beyond the place of removal is excluded from assessable value and, consequently, duty, interest and penalty premised on including such freight could not be sustained. [Paras 4]

Freight shown separately in the invoices is not includible in the assessable value where goods are removed from the factory gate; the demand of duty (and consequential interest and penalty) on such freight is set aside and the appeal is allowed.

Final Conclusion: The appeal is allowed: on the facts found the factory gate is the place of removal, separately charged freight for delivery beyond the place of removal is excluded from assessable value, and the impugned demand (with interest and penalty) is set aside.

Cost of production - inter-unit transfer for captive consumption - notional loading - application of Rule 8 of the Valuation Rules - CAS-4 issued by ICWAI - precedential value of regional CESTAT decisions

Cost of production - IDSC/ICNC debit note - IDSC/ICNC debit note raised by Bhadrachalam Unit is not to be treated as a component of cost of raw materials of the Chennai unit for valuation. - HELD THAT: - The Tribunal had earlier decided this issue in favour of the appellant. Applying the Larger Bench's legal conclusions on valuation and notional loading, the component represented by the IDSC/ICNC debit note cannot be treated as forming part of the cost of raw material for the recipient unit when determining cost of production for excise valuation purposes.

Answered in favour of the assessee; the debit note is not part of the cost of raw material for valuation.

Inter-unit transfer for captive consumption - notional loading - application of Rule 8 of the Valuation Rules - precedential value of regional CESTAT decisions - For inter-unit transfers for captive consumption, the cost of raw material in the hands of the receiving unit is the actual cost of production (100%), excluding the notional loading (15%/10%) mandated for remittance of excise duty under Rule 8. - HELD THAT: - The Larger Bench answered the reference by holding that where goods are transferred between units for captive consumption, the receiving unit's cost of raw material must be the actual cost of production and must exclude the notional loading incorporated for duty remittance under Rule 8. The Larger Bench held that the Chennai Division Bench decisions in Eveready Industries represent the correct legal position and overruled the contrary view taken by the Mumbai Division Bench in Tata Iron and Steel. This determinative legal principle was applied by the Tribunal to set aside the demand, interest and penalties in respect of this issue.

Answered in favour of the assessee; cost for valuation is 100% actual cost excluding notional loading, and contrary Mumbai decision is not followed.

Unabsorbed overheads - cost of production - Unabsorbed overheads due to idle capacity are not to be included in the cost of production for the receiving unit's valuation. - HELD THAT: - The Tribunal had earlier decided this issue in favour of the appellant. Consistent with the Larger Bench's approach distinguishing notional loadings and actual cost, unabsorbed overheads arising from idle capacity cannot be incorporated into the cost of production of the recipient unit for valuation under the relevant rules.

Answered in favour of the assessee; unabsorbed overheads due to idle capacity are excluded from cost of production.

Final Conclusion: The appeal is allowed. Issues Nos. 1, 2 and 3 are answered in favour of the assessee; the demand, interest and penalties in respect of these issues are set aside and the Tribunal's Interim Order No. 37/2014 dated 11.02.2014 is directed to be read as part of this Final Order.

Inclusion of canteen sales in gross taxable turnover - exclusion of tax-free and first point tax paid goods from turnover - taxable turnover - deemed sales as contemplated U/s. 2(g)(iv) of the Orissa Sales Tax Act - transfer of right to use goods - control and possession - remand for fresh consideration

Inclusion of canteen sales in gross taxable turnover - exclusion of tax-free and first point tax paid goods from turnover - taxable turnover - Whether canteen sales should be excluded from taxable turnover to the extent they comprise tax-free and first point tax paid goods - HELD THAT: - SAIL contended that canteen sales were subsidised, run on a no-profit basis for employees under the Factories Act and comprised tax-free and first point tax paid items which ought not be included in gross turnover. The Tribunal had held the entire canteen turnover taxable at 4% and declined to allow deductions for tax-free or exempted items on the ground that SAIL had not produced detailed accounts to substantiate such deductions. This Court found that the issue was raised and considered below and that SAIL failed to produce material showing the extent of tax-free or first point tax paid sales. Given SAIL's inability to produce relevant records even before this Court, remand to the Assessing Officer would be futile; the AO's estimation (70% cooked food at 4% and 30% other items at 12%) could not be impugned as arbitrary on the existing materials. Accordingly the Court affirmed the Tribunal's treatment on this point. [Paras 11]

Answered in favour of the Department and against the assessee; no remand on this issue.

Deemed sales as contemplated U/s. 2(g)(iv) of the Orissa Sales Tax Act - transfer of right to use goods - control and possession - remand for fresh consideration - Whether hire charges recovered for use of SAIL's machinery by contractors or other departments amount to deemed sale under the OST Act - HELD THAT: - Department treated hire charges as receipts from transfer of the right to use machinery and included them in gross turnover, relying on Krishna Chandra Behera and similar decisions. SAIL maintained that contractors and other departments used the machinery only within plant premises for SAIL's work, that SAIL retained ownership and effective control, and that the receipts therefore did not constitute price for transfer of the right to use. The Court observed that the complete contract and detailed terms were not placed before the authorities or the Tribunal; SAIL offered to produce the full contracts. The Court held that if the contracts establish that the hirers were restricted to use within the plant and SAIL retained control, the position would differ from Krishna Chandra Behera and align with authorities favourable to SAIL. In view of SAIL's offer to produce the complete contracts and since other questions were being remanded, the Court set aside the findings on these issues and remitted questions for fresh consideration by the Assessing Officer with directions to examine the complete contract and additional documents. [Paras 23, 24, 25]

Not answered on merits; findings of lower fora set aside and questions remanded to the Assessing Officer for fresh determination after examination of the complete contracts and documents.

Final Conclusion: Tax revision petitions disposed. Question (b) upheld for the Department and against SAIL; questions (d) and (e) set aside and remanded to the Assessing Officer for fresh adjudication on production and examination of the complete contracts and relevant documents, to be decided within the time directed by the Court.

Error apparent on the face of the record - power to rectify under Section 84 of the Tamil Nadu Value Added Tax Act, 2006 - non-consideration of submissions on record - rectification by appellate authority - remand for fresh consideration and personal hearing

Error apparent on the face of the record - non-consideration of submissions on record - power to rectify under Section 84 of the Tamil Nadu Value Added Tax Act, 2006 - Non-consideration by the appellate authority of the additional submission dated 23.01.2019, which was on its record, amounted to an error apparent on the face of the record rectifiable under Section 84 of the Act. - HELD THAT: - The appellate order dated 03.05.2019 omitted any consideration of the additional submission filed on 23.01.2019 though that submission was part of the appellate file. The court held that omission to consider material placed on the record is an error apparent on the face of the record. The power under Section 84 is available to assessing, appellate and revisional authorities to rectify such errors apparent on the face of the record. The appellate authority's subsequent rejection of the rectification request on the ground that there was no discussion in the order was contrary to law because the very non-consideration of the submission constituted a rectifiable error.

The appellate order's failure to consider the submission dated 23.01.2019 is an error apparent on the face of the record and the impugned orders are set aside.

Remand for fresh consideration and personal hearing - rectification by appellate authority - personal hearing - The proper remedy was to remit the matter to the appellate authority for reconsideration of the Section 84 rectification request after affording the petitioner a personal hearing. - HELD THAT: - The court directed that the petitioner shall appear before the appellate authority on the fixed date with supporting materials and that, without anticipating fresh notice, the appellate authority shall hear the petitioner and decide the Section 84 application. A specific time-bound direction was given that orders on the rectification application shall be passed within four weeks of the personal hearing fixed by the court. This directs a fresh adjudication of the rectification claim rather than determining the substantive rate issue at this stage.

Matter remitted to the appellate authority for personal hearing on the rectification application and for passing orders thereon within four weeks of that hearing.

Final Conclusion: Impugned appellate orders are set aside; the writ petitions are allowed and the matter is remitted to the appellate authority for reconsideration of the Section 84 rectification request after a personal hearing of the petitioner, with orders to be passed within four weeks of that hearing.

Opportunity of personal hearing - Adoption of gross profit for turnover computation - Independent application of mind by Assessing Officer - Use of Enforcement Wing reports - Revision of assessment under Section 27 of the Act - Gross profit computed under completed contract method (income-tax) vis-a -vis turnover computation for sales tax

Opportunity of personal hearing - Revision of assessment under Section 27 of the Act - Whether the Assessing Officer was obliged to grant a personal hearing before varying the turnover by adopting a different rate of gross profit. - HELD THAT: - Although Section 27 does not statutorily mandate a personal hearing in the manner of the proviso to Section 22(4), where the determination requires deliberation between the parties the Assessing Officer must afford an opportunity to the assessee to explain its stand. The adoption of a substantially higher rate of gross profit by the authority, without hearing the petitioner or permitting the petitioner to present submissions justifying the rate it applied, rendered the procedure unfair and the consequential finding (that no materials were provided by the petitioner) a direct outcome of the authority's failure to grant hearing. The Court concluded that in the facts of this case a personal hearing was expedient and its absence amounted to a serious and fatal infirmity in the impugned orders. [Paras 12, 13, 14, 15, 16]

Failure to grant a personal hearing was procedurally impermissible in the circumstances and vitiates the impugned orders.

Adoption of gross profit for turnover computation - Gross profit computed under completed contract method (income-tax) vis-a -vis turnover computation for sales tax - Independent application of mind by Assessing Officer - Use of Enforcement Wing reports - Whether the Assessing Officer could adopt the gross profit rate reported by the Enforcement Wing or the rate computed under the assessee's income-tax (completed contract) method, without independent application of mind and adequate consideration of the assessee's position. - HELD THAT: - The reports of the Enforcement Wing cannot be adopted mutatis mutandis; the Assessing Officer is expected to apply independent mind while considering those reports. The Commercial Taxes authority failed to appreciate that the assessee computed gross profit for income-tax purposes under the completed contract method, and simply adopted rates proposed by Enforcement Officers (and rates used in income-tax proceedings) without any independent reasoning or affording the assessee an opportunity to justify its trade practice. Such uncritical adoption, without independent evaluation and without hearing the assessee, is legally unsustainable. [Paras 3, 4, 5, 6, 17]

The assessing authority's unexamined adoption of the Enforcement Wing's or income-tax gross profit rates, without independent application of mind and without hearing the assessee, is improper and unsustainable.

Final Conclusion: The impugned assessment orders are quashed for failure to grant a personal hearing and for lack of independent application of mind in adopting gross profit rates; the writ petitions are allowed and connected petitions are closed, with no costs.

Regulatory exclusion of NBFCs registered under the Reserve Bank of India - Chapter III-B of the Reserve Bank of India Act as a complete code and supervisory domain - doctrine of eclipse as applied to State money-lenders legislation vis-a -vis central regulation - State competence under Entry 30 List II vis-a -vis central legislation and repugnancy

Regulatory exclusion of NBFCs registered under the Reserve Bank of India - Chapter III-B of the Reserve Bank of India Act as a complete code and supervisory domain - doctrine of eclipse as applied to State money-lenders legislation vis-a -vis central regulation - Applicability of the Andhra Pradesh and Telangana Micro Finance Institutions (Regulation of Money Lending) Acts, 2011 to NBFCs registered and regulated under the RBI Act - HELD THAT: - Having examined the State enactments and applying the law laid down by the Supreme Court in Nedumpalli Finance Company Limited, the Court found the State Acts to be pari materia with the Kerala and Gujarat enactments examined by the Supreme Court. The Supreme Court held that Chapter III-B of the RBI Act provides comprehensive supervision of NBFCs from registration to winding up and that Section 45-Q confers an overriding effect on Chapter III-B, causing the protective aspects of State money-lenders legislation to be subsumed. On that basis, while the High Court declined to declare the two State Acts unconstitutional, it followed Nedumpalli to hold that NBFCs registered under and regulated by the RBI are excluded from the operation of those State enactments; the State enactments therefore have no application insofar as they seek to regulate such NBFCs. [Paras 12, 13]

The Andhra Pradesh and Telangana Acts will have no application to NBFCs registered under the RBI Act and regulated by the RBI; the writ petitions are disposed accordingly.

Final Conclusion: Writ petitions dismissed insofar as a declaration of unconstitutionality was sought; following the Supreme Court's decision in Nedumpalli Finance Company Limited, NBFCs registered with and regulated by the RBI are excluded from the operation of the Andhra Pradesh and Telangana Micro Finance Institutions (Regulation of Money Lending) Acts, 2011; no order as to costs.