TaxTMI Updates e-Newsletter
Mar 24,2023

Cancellation or suspension of registration - Grounds for cancellation under Section 29(2) of the GST Act - Opportunity of being heard before cancellation - Revocation of cancellation of registration - Cancellation on account of a firm being 'bogus' or non-existent - Recovery proceedings under Section 74 of the CGST Act

Cancellation or suspension of registration - Grounds for cancellation under Section 29(2) of the GST Act - Revocation of cancellation of registration - Cancellation on account of a firm being 'bogus' or non-existent - Validity of the order cancelling registration and of the order rejecting the application for revocation where cancellation was grounded on the firm being non-existent/bogus and on alleged wrongful availment of ITC. - HELD THAT: - The Court held that cancellation of registration, once granted, can be lawfully effected only on the grounds enumerated in sub section (2) of Section 29 and that being a 'bogus' firm or non availability of business at the surveyed premises, without reliance on any specific clause of Section 29(2), does not constitute a valid ground for cancellation. The impugned rejection of the revocation application was also faulted because the department treated non existence/allegations of wrongful ITC as a standalone ground for cancelling registration, contrary to the statutory scheme. The Court relied on and followed the reasoning in Apparent Marketing Private Limited (and referred to DRS Wood Products Lucknow ) that emphasises cancellation is permissible only in terms of the conditions prescribed in Section 29(2). In view of these principles and the department's own initiation of recovery proceedings under Section 74, the orders rejecting revocation and dismissing the appeal were held to be a wrong exercise of power and were set aside.

The orders dated 17.05.2021 and 14.09.2021 canceling registration and rejecting the revocation appeal are set aside; the writ petition is allowed on this ground.

Recovery proceedings under Section 74 of the CGST Act - Whether initiation or continuation of recovery/prosecution proceedings under Section 74 affects the department's entitlement to cancel registration in the manner done. - HELD THAT: - The Court observed that the department itself has initiated proceedings under Section 74 for recovery of allegedly wrongly availed ITC. While setting aside the cancellation and appeal orders as indicated above, the Court clarified that the respondents remain at liberty to pursue and conclude any proceedings already initiated under Section 74 in accordance with law and the stand taken in the counter affidavit. The Court did not adjudicate the merits of the Section 74 proceedings but left them open for lawful conclusion by the department.

Respondents are permitted to conclude any proceedings pending under Section 74 in accordance with law; no final adjudication on those proceedings was made by the Court.

Final Conclusion: The impugned orders cancelling registration and rejecting revocation were set aside because cancellation must conform to the grounds specified in Section 29(2); the writ petition is allowed. The department is, however, at liberty to proceed with and conclude any recovery proceedings under Section 74 in accordance with law.

Cancellation of GST registration - opportunity of hearing - condonation of delay in filing appeal - absence of GST Tribunal - remission for reconsideration by primary authority

Cancellation of GST registration - opportunity of hearing - condonation of delay in filing appeal - absence of GST Tribunal - Writ petition challenging cancellation of GST registration and rejection of appeal on account of delay was maintainable in view of absence of constituted GST Tribunal. - HELD THAT: - The Court noted that the petitioner's GST registration was cancelled by the 4th respondent on the ground of non-filing of returns for six months and that the appeal filed against the cancellation was rejected by the appellate authority solely on the ground that it was filed beyond the condonable period under Section 107. As the GST Tribunal has not been constituted under Section 109, the petitioner would have no further statutory forum to pursue his remedy. The Court relied on the decision of the Division Bench of the Telangana High Court in W.P.No.27071 of 2022 , which, in analogous circumstances, remitted the matter for reconsideration by the primary authority so as not to leave the assessee remediless. Applying that reasoning, the Court held that issuance of the writ was justified and that the challenge to cancellation could be entertained and required remand for fresh consideration by the primary authority rather than dismissal on procedural limitation grounds alone.

Writ petition allowed on merits to the extent that the matter is remitted to the 4th respondent for reconsideration in accordance with law.

Remission for reconsideration by primary authority - verification of returns - affording personal hearing - Remand to the primary authority to verify returns submitted by the petitioner, afford personal hearing, and pass appropriate orders. - HELD THAT: - The Court directed that the 4th respondent shall, after verifying the returns already submitted by the petitioner (July, 2021 to December, 2021) and after affording an opportunity of personal hearing, pass an appropriate order in accordance with the governing law and rules. The Court observed that upon any revival of registration the petitioner would be liable to file returns for the subsequent period (from July, 2022 till date) and pay the due tax. The remand is to be completed expeditiously, with a timeline of two weeks from receipt of the order.

Matter remitted to the 4th respondent to verify returns, afford personal hearing and pass a fresh order in accordance with law within two weeks.

Final Conclusion: The writ petition is allowed; the cancellation order is not sustained without fresh consideration. The matter is remitted to the 4th respondent to verify the returns submitted, afford personal hearing and pass appropriate orders in accordance with law within two weeks; pending interlocutory applications closed; no costs.

Provisional attachment of bank accounts under Section 83 of the Central Goods and Services Tax Act, 2017 - Objection and personal hearing under Rule 159(5) of the Central Goods and Services Tax Rules, 2017 - Judicial review under Article 226 of the Constitution - Separability of interim administrative observations from pending assessment proceedings

Provisional attachment of bank accounts under Section 83 of the Central Goods and Services Tax Act, 2017 - Objection and personal hearing under Rule 159(5) of the Central Goods and Services Tax Rules, 2017 - Validity of the provisional attachment notices and the relief sought by the petitioner against provisional attachment of bank accounts. - HELD THAT: - The petition under Article 226 challenged notices dated 14.02.2023 which provisionally attached the petitioner's bank accounts. The Court directed the respondent to consider the petitioner's objection under Rule 159(5) and afford personal hearing. The Commissioner thereafter passed an order on 15.03.2023 releasing the petitioner's bank accounts from provisional attachment. The Court recorded that, by release of the accounts, the petitioner's grievance regarding provisional attachment stands redressed and disposed of the writ petition accordingly. [Paras 3, 5, 6]

Order releasing the bank accounts from provisional attachment upheld as redress and the writ petition disposed to that extent.

Separability of interim administrative observations from pending assessment proceedings - Judicial review under Article 226 of the Constitution - Effect of observations recorded by the Commissioner while adjudicating the objection to provisional attachment on subsequent assessment proceedings. - HELD THAT: - The Court noted that certain observations appear in the Commissioner's order of 15.03.2023 made in the context of considering the petitioner's objection to provisional attachment. It clarified that such observations, being part of the exercise under Rule 159(5) and directed at the provisional attachment issue, cannot be allowed to influence or pre-determine any assessment proceedings. Any assessment, if initiated, must be conducted in accordance with law and unaffected by the interim observations made while deciding the objection. [Paras 7, 8]

Observations in the order on the objection shall not influence or pre-judge the merits of any assessment proceedings; assessments, if any, to proceed in accordance with law.

Final Conclusion: The Commissioner's order dated 15.03.2023 releasing the petitioner's bank accounts from provisional attachment resolves the petitioner's grievance; incidental observations in that order will not prejudice or determine any future assessment proceedings, and the writ petition is disposed accordingly.

Perishable goods - release of seized goods - seizure under section 67 of the GST Act - notification under sub section (8) of section 67 - applicability of section 67(8) as distinct from section 67(6) - deposit under section 74(5) not substituting statutory requirement for perishable goods

Perishable goods - notification under sub section (8) of section 67 - seizure under section 67 of the GST Act - Seized goods consisting of tobacco fall within the class of perishable goods and their release is governed by sub section (8) of section 67 of the GST Act as covered by the notifications dated 13 June 2018 (Central) and 12 June 2018 (State). - HELD THAT: - The Court accepted the departmental notification issued under sub section (8) of section 67 which treats taxable goods falling within Chapters 1 to 24 of the Customs Tariff as perishable; tobacco is included within that classification. The seizure in question pertains to goods that are within the definition of tobacco, and hence the goods are to be treated as perishable for the purposes of release. Whether the authorities actually sold the goods under Rule 141(2) within the stipulated period is not determinative of the characterisation; non sale does not convert goods prescribed as perishable by the notifications into non perishable goods.

Goods seized (tobacco) are perishable and release is to be dealt with under the procedure applicable to perishable goods under section 67(8) and the relevant notifications.

Deposit under section 74(5) not substituting statutory requirement for perishable goods - release of seized goods - A deposit made under section 74(5) of the GST Act does not satisfy the statutory requirement for release of goods treated as perishable under section 67(8); non compliance with the specific requirements for perishable goods disentitles the petitioner to release. - HELD THAT: - The Court noted the petitioner's contention that a deposit under section 74(5) had been made but accepted the State's submission that such deposit is insufficient for release where the goods are governed by section 67(8). The petitioner had not complied with the statutory procedure for release of perishable goods; accordingly no direction for release was issued. The Court, however, permitted the petitioner to comply with the statutory requirements applicable to perishable goods and directed that if the petitioner deposits the requisite amount and fulfils the conditions prescribed by law, the department shall deal with the claim expeditiously and in accordance with law.

Deposit under section 74(5) does not entitle release of perishable goods under section 67(8); petitioner may seek release only upon complying with the statutory requirements for perishable goods, after which the department shall act promptly.

Final Conclusion: The petition was dismissed insofar as it sought direction for release of the seized tobacco goods because they are perishable and governed by section 67(8) and the notifications; the petitioner remains at liberty to comply with the statutory requirements for release of perishable goods, upon which the department must consider the claim expeditiously.

Cancellation of registration - Non-speaking order - Vagueness of show cause notice - Extraneous material not furnished to the person affected - Arbitrariness and violation of Article 14 - Denial of freedom of trade or business under Article 19 - Remand for fresh hearing and consideration of filed returns

Cancellation of registration - Non-speaking order - Arbitrariness and violation of Article 14 - Denial of freedom of trade or business under Article 19 - Impugned orders cancelling registration, rejecting revocation and dismissing appeal are vitiated by being non-speaking and arbitrary and thus violate Article 14 (and affect Article 19) and must be set aside. - HELD THAT: - The Court held that the cancellation order and subsequent orders suffer from the vice of being non-speaking and arbitrary. The petitioner's case falls within the legal principle applied in M/s Chandra Sain (referred to by the Court) and the impugned orders amount to a reckless exercise of power denying rights protected under Article 19. For these reasons the orders cannot stand. [Paras 8, 9, 10]

Impugned orders dated 16.07.2021, 06.10.2021 and 07.12.2021 are set aside.

Vagueness of show cause notice - Extraneous material not furnished to the person affected - Remand for fresh hearing and consideration of filed returns - Show cause notice and reliance on undisclosed/extraneous information rendered the decision-making process unfair; matter is to be reconsidered after hearing and taking into account the petitioner's ITRs. - HELD THAT: - The Court observed the form of the show cause notice was vague and unintelligible on its face, preventing a meaningful response. The authority relied upon information from a third person that was neither part of the notice nor supplied to the petitioner, which vitiates the adjudicatory process. Consequently the respondents are directed to rehear the matter and to take into account the ITR returns filed by the petitioner before passing a fresh order. [Paras 4, 5, 6, 11]

Respondents to pass a fresh order after hearing the petitioner and considering the ITRs, preferably within four weeks from production of certified copy of this order.

Final Conclusion: Writ petition allowed; impugned cancellation, rejection of revocation and appellate orders set aside and matter remitted for fresh adjudication after hearing and consideration of the petitioner's returns within the specified timeframe.

Stay of recovery on deposit of portion of disputed tax pending statutory appeal - deprivation of statutory remedy due to non constitution of appellate tribunal - limitation of judicially granted interim relief and requirement to file appeal once tribunal is constituted - exercise of power under section 172 to remove difficulty where tribunal not constituted

Stay of recovery on deposit of portion of disputed tax pending statutory appeal - deprivation of statutory remedy due to non constitution of appellate tribunal - Petitioner entitled to statutory benefit of stay under Sub Section (9) of Section 112 of the B.G.S.T. Act upon deposit of a specified portion of the disputed tax owing to non constitution of the Tribunal. - HELD THAT: - The Court applied the principle that where the State has itself not constituted the appellate Tribunal, a taxpayer cannot be deprived of the statutory stay available on deposit as contemplated by the statute. Following the approach adopted in C.W.J.C. No. 1920 of 2023 (Angel Engicon), the petitioner was directed to make a deposit equal to 20 percent of the remaining disputed tax in addition to amounts previously deposited under Sub Section (6) of Section 107; upon such deposit the statutory benefit of stay under Sub Section (9) of Section 112 would be extended and recovery proceedings in respect of the balance amount would be stayed. The Court recognised the limited and conditional nature of this relief as a measure to balance equities where the State's failure to constitute the Tribunal has precluded the statutory appellate remedy.

Stay of recovery extended on deposit of 20% of the remaining disputed tax (in addition to amounts already deposited), and any recovery/steps taken shall be deemed stayed.

Limitation of judicially granted interim relief and requirement to file appeal once tribunal is constituted - exercise of power under section 172 to remove difficulty where tribunal not constituted - Judicially granted interim stay is time limited and conditional upon the petitioner filing the statutory appeal before the Tribunal once it is constituted; failure to file the appeal within the period specified upon constitution will permit the authorities to proceed. - HELD THAT: - The Court emphasised that the grant of stay in view of the non constitution of the Tribunal is not open ended. The petitioner was granted liberty to file an appeal under Section 112 of the B.G.S.T. Act when the Tribunal is constituted and its President or State President assumes office, observing statutory requirements and any period specified. If the petitioner elects not to file the appeal within the stipulated period after constitution of the Tribunal, the respondent authorities are entitled to resume proceedings in accordance with law. The State's notification under Section 172 acknowledging non constitution was noted, but the interim relief was confined to permit the equitable remedy pending constitution and functioning of the Tribunal.

Petitioner must file the statutory appeal once the Tribunal is constituted; interim stay ceases if no appeal is filed within the period to be specified after constitution.

Final Conclusion: Writ petition disposed of by extending the limited stay of recovery on the conditions and in the terms directed in C.W.J.C. No. 1920 of 2023: petitioner to deposit 20% of the remaining disputed tax (in addition to earlier deposit) to obtain stay pending constitution of the Tribunal, with liberty to file appeal once the Tribunal is constituted and with respondents at liberty to proceed if no appeal is filed within the specified period.

Stay of recovery on deposit of part amount pending appeal - effect of non-constitution of the Appellate Tribunal on statutory remedy - equitable interim relief by way of conditional deposit - obligation to file appeal once Tribunal is constituted

Effect of non-constitution of the Appellate Tribunal on statutory remedy - stay of recovery on deposit of part amount pending appeal - Whether the petitioner is entitled to the statutory benefit of stay of recovery despite non-constitution of the Tribunal and on what conditions. - HELD THAT: - The Court recognised that the petitioner is deprived of the statutory appellate remedy under Section 112 read with Sub-sections (8) and (9) due to non-constitution of the Tribunal by the State. Observing the respondents' own acknowledgement and the earlier order in Angel Engicon Private Limited, the Court granted equitable interim relief by extending the statutory benefit of stay. The Court directed that if the petitioner makes a deposit equal to 20% of the remaining disputed tax (in addition to any earlier deposit made under Sub-section (6) of Section 107), the recovery of the balance amount and any steps taken for its recovery shall be deemed stayed. The relief is conditional and premised on the respondents' failure to constitute the Tribunal, and is not open-ended; it is granted to preserve the petitioner's statutory remedy until the Tribunal is constituted.

Petitioner entitled to stay of recovery on deposit of 20% of the remaining disputed tax (over earlier deposits), pending availability of appellate remedy because the Tribunal is not constituted.

Obligation to file appeal once Tribunal is constituted - equitable interim relief by way of conditional deposit - Whether the petitioner must file the statutory appeal when the Tribunal is constituted and consequences of not doing so. - HELD THAT: - The Court made clear that the interim stay granted on account of non-constitution of the Tribunal is subject to the petitioner availing the statutory remedy once the Tribunal becomes functional. The petitioner is required to file the appeal under Section 112 observing statutory requirements after constitution of the Tribunal and entry into office of the President or State President. If the petitioner chooses not to file such appeal within the period specified upon constitution, the respondent authorities are free to proceed in accordance with law. Thus, the stay is protective and contingent upon later prosecution of the appeal.

Petitioner must file the appeal before the Tribunal when constituted; failure to do so will permit authorities to resume proceedings.

Final Conclusion: Writ petition disposed of by granting the petitioner conditional interim relief identical to that in Angel Engicon Private Limited: stay of recovery on deposit of 20% of the remaining disputed tax (in addition to any earlier deposit), with the petitioner required to file the statutory appeal once the Tribunal is constituted; failing which the authorities may proceed in law.

Stay of recovery on deposit pending appeal - non-constitution of appellate Tribunal - statutory stay under Section 112(8) and (9) of the B.G.S.T. Act - statutory remedy of appeal - conditional equitable relief by deposit - obligation to file appeal upon constitution of Tribunal

Non-constitution of appellate Tribunal - statutory remedy of appeal - Petitioner deprived of the statutory remedy of appeal because the Appellate Tribunal under Section 112 of the B.G.S.T. Act was not constituted. - HELD THAT: - The Court recorded that the Tribunal has not been constituted and, as a result, the petitioner was prevented from availing the appeal remedy and the attendant statutory protections under Section 112(8) and (9) of the B.G.S.T. Act. The State authorities themselves acknowledged the non-constitution and issued a removal-of-difficulties notification recognizing the commencement of the limitation period only after the President or State President enters office. The writ petition was disposed of on that factual and legal footing to address the procedural prejudice caused by the absence of a functioning Tribunal.

Acknowledged non-constitution of the Tribunal as the reason for deprivation of appellate remedy; petitioner granted relief in consequence.

Stay of recovery on deposit pending appeal - conditional equitable relief by deposit - statutory stay under Section 112(8) and (9) of the B.G.S.T. Act - Court extended the statutory benefit of stay of recovery subject to a specific deposit condition while the Tribunal remains unconstituted. - HELD THAT: - Applying the principle that a litigant should not be prejudiced by the State's failure to constitute the appellate forum, the Court held that if the petitioner deposits an amount equal to 20% of the remaining tax in dispute (in addition to amounts already deposited under Section 107(6) of the B.G.S.T. Act), the petitioner shall be entitled to the stay of recovery under Section 112(9). The Court qualified this relief as not open-ended and imposed the deposit as a balancing equitable condition to protect the revenue while preventing denial of statutory protection due to administrative inaction.

Statutory stay of recovery extended on the condition of depositing 20% of the balance in dispute (plus prior deposits); the stay is conditional and not open-ended.

Obligation to file appeal upon constitution of Tribunal - statutory remedy of appeal - Petitioner must file the appeal within the period to be specified once the Tribunal is constituted; failure to do so permits respondents to resume recovery. - HELD THAT: - To balance equities, the Court directed that the petitioner shall present/file the appeal under Section 112 of the B.G.S.T. Act once the Tribunal is constituted and the President or State President assumes office, observing statutory requirements and any time period specified upon constitution. The Court further held that if the petitioner elects not to file the appeal within the specified period after constitution, the respondent authorities would be at liberty to proceed in accordance with law and resume recovery or other steps.

Liberty granted to file appeal when Tribunal is constituted; failure to file within the period to be specified will entitle respondents to proceed further.

Final Conclusion: Writ petition disposed of by extending a conditional stay of recovery-subject to deposit of 20% of the disputed balance in addition to prior deposits-on account of non-constitution of the Appellate Tribunal; petitioner must file the statutory appeal when the Tribunal is constituted or respondents may resume proceedings if no appeal is filed within the period to be specified.

Cancellation of registration - revocation of cancellation of registration - condition precedent of deposit of tax, interest and penalty for revocation - time-bound administrative direction for adjudication - duty of department to restore technical access on GST portal - verification of returns with opportunity of hearing

Revocation of cancellation of registration - time-bound administrative direction for adjudication - Petitioner permitted to file application for revocation of the cancellation of registration within a specified time and such application to be entertained. - HELD THAT: - The Court, relying on the petitioner's representation and precedent, directed that notwithstanding the impugned order of cancellation, the petitioner shall be permitted to file an application for revocation of the cancellation of registration provided it is filed not later than 3rd April, 2023. The order contemplates that the application will be entertained by the authority and an appropriate order passed thereon in accordance with law within a further period of thirty days, subject to fulfillment of conditions stated separately. The direction operates as a time bound administrative instruction to the tax authority to consider the revocation application on the merits and conclude the process within the specified timeline. [Paras 2]

Application for revocation may be filed by petitioner by 3rd April, 2023 and will be entertained and decided within thirty days.

Condition precedent of deposit of tax, interest and penalty for revocation - Revocation will be entertained only if the petitioner makes payment of tax, interest, penalty, fine and fees as may be payable. - HELD THAT: - The Court made admissibility of the revocation application subject to the petitioner making payment of tax, interest, penalty, fine, fees and other amounts as may be payable. This condition is imposed as a statutory compliance prerequisite to consideration of revocation and the authority is directed to entertain and decide the application in accordance with law upon such compliance. The authority retains jurisdiction to verify compliance and apply the statutory scheme in deciding the application. [Paras 2]

Revocation application will be entertained only upon payment of the tax, interest, penalty and other dues as may be payable.

Duty of department to restore technical access on GST portal - verification of returns with opportunity of hearing - On revocation, the department must take steps to enable the petitioner to file returns on the GST Web Portal and may verify the veracity of returns after affording reasonable opportunity of hearing. - HELD THAT: - The Court directed that after revocation of registration the petitioner shall be permitted to file returns and that the opposite parties must instruct the GST Network or other agency to make necessary changes to the Web Portal so the petitioner can file returns without technical glitch. The Department is expressly permitted to verify the veracity of claims made in the returns and to take appropriate action thereafter, provided a reasonable opportunity of hearing is afforded to the petitioner. Thus the direction balances administrative facilitation of technical access with the Department's power to verify and adjudicate returns following procedural fairness. [Paras 2]

Department to restore portal access for filing of returns after revocation and may verify returns with reasonable opportunity of hearing to the petitioner.

Time-bound administrative direction for adjudication - Opposite parties directed to complete the exercise of enabling revocation and portal facilitation within ninety days of receipt of the judgment. - HELD THAT: - The Court imposed a definitive timeline on the opposite parties, directing completion of the stated exercise within ninety days from receipt of a copy of the judgment. This direction operationalises the earlier time bound mandate to consider and decide the revocation application and to effect necessary technical changes, ensuring administrative action is taken within a fixed period. [Paras 2, 3]

Opposite parties shall complete the exercise within ninety days from receipt of this judgment.

Final Conclusion: Writ petition disposed by directing that the petitioner may file an application for revocation of cancellation of registration by 3rd April, 2023; revocation shall be entertained upon payment of tax, interest, penalty and other dues and decided within thirty days; on revocation the department must restore GST portal access to enable filing of returns while retaining power to verify returns after affording reasonable hearing; the opposite parties shall complete the exercise within ninety days of receipt of the judgment.

Statutory stay of recovery under Section 112(9) of the B.G.S.T. Act - effect of non-constitution of the Appellate Tribunal on availability of statutory remedy - security deposit to obtain interim protection - 20 percent of remaining disputed tax in addition to deposit under Section 107(6) - obligation to file appeal once Tribunal is constituted and consequence of non-filing

Statutory stay of recovery under Section 112(9) of the B.G.S.T. Act - effect of non-constitution of the Appellate Tribunal on availability of statutory remedy - security deposit to obtain interim protection - 20 percent of remaining disputed tax in addition to deposit under Section 107(6) - Petitioner entitled to interim stay of recovery despite non-constitution of the Appellate Tribunal, subject to specified deposit condition. - HELD THAT: - The Court recognized that non-constitution of the Tribunal has deprived the petitioner of the statutory appellate remedy and of the benefit of stay envisaged by the statute. To prevent the petitioner suffering that deprivation caused by the State, the Court directed that if the petitioner deposits an amount equal to twenty percent of the remaining disputed tax (over and above any earlier deposit made under Section 107(6) of the B.G.S.T. Act), the petitioner shall be granted the statutory benefit of stay under Section 112(9). The Court framed this relief as conditional and limited: deposit secures interim protection from recovery and any steps for recovery shall be deemed stayed while that protection subsists.

Interim stay of recovery granted on deposit of 20 percent of the remaining disputed tax in addition to prior deposit under Section 107(6); recovery proceedings deemed stayed while the condition subsists.

Obligation to file appeal once Tribunal is constituted and consequence of non-filing - limited duration of judicial relief granted due to administrative non-constitution of forum - The interim protection is time-limited and conditional upon the petitioner filing the statutory appeal once the Tribunal is constituted; failure to file will permit respondents to proceed. - HELD THAT: - The Court balanced equities by making the stay contingent on the petitioner filing the appeal under Section 112 of the B.G.S.T. Act after the Tribunal is constituted and its President or State President enters office. The relief was not open-ended: the petitioner must present/file the appeal observing statutory requirements once the appellate forum becomes functional. If the petitioner elects not to avail the appellate remedy within any period to be specified after constitution of the Tribunal, the respondent authorities regain liberty to proceed in accordance with law.

Stay is temporary; petitioner must file the appeal before the Tribunal when constituted, failing which respondents may resume proceedings.

Final Conclusion: Writ petition disposed of by granting conditional interim protection: deposit of 20% of the remaining disputed tax (in addition to prior deposit under Section 107(6)) attracts stay under Section 112(9) until the Appellate Tribunal is constituted, subject to the petitioner filing the statutory appeal when the Tribunal becomes functional; if the petitioner does not file the appeal within the period to be specified, respondents may proceed in accordance with law.

Non-constitution of the Appellate Tribunal and deprivation of statutory remedy - stay of recovery on deposit under Section 112(8) and (9) of the Bihar GST Act - deposit of a percentage of disputed tax as condition for interim stay - liberty to file appeal upon constitution of the Tribunal

Non-constitution of the Appellate Tribunal and deprivation of statutory remedy - stay of recovery on deposit under Section 112(8) and (9) of the Bihar GST Act - deposit of a percentage of disputed tax as condition for interim stay - Whether the petitioner, prevented from preferring an appeal due to non-constitution of the Tribunal, is entitled to the statutory benefit of stay of recovery upon making a specified deposit. - HELD THAT: - The Court recorded that the petitioner is unable to avail the statutory remedy of appeal under Section 112 because the Appellate Tribunal has not been constituted. Noting the respondents' acknowledgment and their notification under Section 172 treating limitation as deferred until constitution, the Court followed the principle applied in Angel Engicon Private Limited v. State of Bihar (C.W.J.C No. 1920 of 2023) and granted identical relief. The Court directed that if the petitioner deposits an amount equal to 20% of the remaining disputed tax (in addition to any amount earlier deposited under Section 107(6)), the petitioner shall be granted the statutory stay under Section 112(9) despite non-constitution of the Tribunal, and recovery proceedings shall be deemed stayed. The Court emphasised that this interim benefit is conditional and not open-ended: the petitioner must file the appeal under Section 112 once the Tribunal is constituted and the President or State President assumes office, observing statutory requirements. If the petitioner elects not to file the appeal within any period specified after constitution, the respondent authorities are at liberty to proceed in accordance with law.

Petitioner granted conditional interim stay of recovery on deposit of 20% of the remaining disputed tax (plus earlier deposit), with liberty to file appeal once the Tribunal is constituted; failure to file will permit authorities to proceed.

Liberty to file appeal upon constitution of the Tribunal - Whether the petitioner must be required to file the appeal after the Tribunal is constituted and the consequences of not filing. - HELD THAT: - The Court held that the interim stay granted for reasons of non-constitution is subject to the petitioner presenting and filing the appeal under Section 112 after the Tribunal is constituted and the President or State President enters office. The Court clarified that the stay was granted because the respondents themselves failed to constitute the Tribunal and that, to balance equities, the petitioner must pursue the statutory appellate remedy when available. The Court further held that if the petitioner does not avail the appellate remedy within the period that may be specified upon constitution, the respondent authorities would be free to resume action in accordance with law.

Petitioner must file the appeal upon constitution of the Tribunal; if he does not, respondents may proceed in accordance with law.

Final Conclusion: Writ petition disposed of by granting petitioner conditional interim relief identical to that in C.W.J.C. No. 1920 of 2023: upon deposit of 20% of the remaining disputed tax (in addition to earlier deposit) recovery is stayed; petitioner given liberty to file appeal when the Appellate Tribunal is constituted, failing which authorities may proceed legally.

Condonation of delay - onus to explain delay by sufficient and plausible cause - admission of additional grounds of appeal - maintainability of appeal where no grievance remains from lower authority - Tribunal's power to admit additional grounds only where they can be adjudicated on existing record - retraction or revision of return where assessee seeks to withdraw declared income

Condonation of delay - onus to explain delay by sufficient and plausible cause - Whether delay of 156 days in filing the appeal should be condoned. - HELD THAT: - The Tribunal held that the explanation given - advice by tax consultant/advocate arising in another appeal - did not constitute a sufficient and plausible cause to justify the 156 days' delay. Reliance was placed on the settled principle that the onus is on the appellant to demonstrate adequate cause for delay. The reason given in the affidavit was also found factually imprecise and unrelated to the present appeal, and therefore implausible. Accordingly, condonation of delay was declined. [Paras 11]

Application for condonation of delay is dismissed.

Admission of additional grounds of appeal - Tribunal's power to admit additional grounds only where they can be adjudicated on existing record - maintainability of appeal where no grievance remains from lower authority - Whether the assessee's new/additional grounds (grounds No.1 to 4) should be admitted and the matter restored to the file of the AO for adjudication. - HELD THAT: - The Tribunal found that the only grievance before the CIT(A) had been the addition of a specified amount which was allowed, leaving no unresolved grievance from the appellate order. The assessee sought to raise grounds that were neither discernible from the assessment order nor agitated before the CIT(A), and sought restoration for fresh examination which, by the assessee's own prayer, required verification beyond the existing record. The Tribunal applied the principle that additional grounds may be admitted only if they can be decided on the material already on record; where restoration for fresh enquiry is sought, admission is inappropriate. Further, the Tribunal observed that the assessee could not, by way of additional grounds, seek to retract declared income without following statutory procedures for retraction/revision of return. Consequently, the additional grounds were not admitted. [Paras 12, 13, 14]

Application to admit new/additional grounds No.1 to 4 and to restore the matter to the file of the AO is dismissed.

Maintainability of appeal - Whether the appeal before the Tribunal is maintainable. - HELD THAT: - Having refused condonation of delay and declined to admit the additional grounds, the Tribunal concluded that there remained no viable grievance to be adjudicated before it arising from the CIT(A)'s order. In view of the absence of any subsisting challenge from the assessee to the CIT(A) order, and the failure to justify delay, the appeal was held to be not maintainable and was dismissed in limine. [Paras 8, 15, 16]

The appeal is not maintainable and is dismissed in limine.

Final Conclusion: The application for condonation of delay and for admission of additional grounds is dismissed; no additional grievance survived the CIT(A) order and, consequently, the assessee's appeal for AY 2013-14 is held not maintainable and is dismissed in limine.

Exemption u/s 11 - activity for charitable purpose in terms of Section 2(15) -Tribunal holding that assessee carried on activity for charitable purpose in terms of Section 2(15) and directing Commissioner of Income Tax to grant registration under Section 12-AA - HC [2009 (6) TMI 982 - UTTARAKHAND HIGH COURT] held that expression “charitable purpose” charity is soul of the expression. Mere trade and commerce in education cannot be said to be a charitable purpose - HELD THAT:- Appellant states that the present appeal has rendered infructuous as the appellant-National Institute of Aeronautical Engineering Educational Society, was subsequently granted benefit under Section 10 (23C) of the Income Tax Act, 1961.

Further, notices which were issued under Section 148 of the aforesaid Act for reopening were consequently dropped. In view of the statement made, the present appeal is dismissed as infructuous.

In view of the statement made, the present appeal is dismissed as infructuous.

Scope of revisionary jurisdiction under Section 263(1) and Explanation 2 - set off of derivative loss against business income - requirement of personal hearing and consideration of documents before exercise of revisional power - remand for fresh consideration

Scope of revisionary jurisdiction under Section 263(1) and Explanation 2 - requirement of personal hearing and consideration of documents before exercise of revisional power - Whether the Principal Commissioner of Income Tax validly exercised revisional jurisdiction under Section 263 in respect of the assessment for AY 2017-18. - HELD THAT: - The Tribunal allowed the assessee's appeal solely on the ground that documentary records placed before the Tribunal showed that the Assessing Officer had considered the issue and was satisfied with the assessee's reply, and therefore the PCIT could not assume jurisdiction under Section 263. The High Court observed that the documents relied upon by the Tribunal were not placed before the PCIT because the assessee did not attend the personal hearings granted by the PCIT. In these circumstances the Court found that the PCIT had not had the opportunity to consider those records before exercising revisional power. The Tribunal did not record a specific finding on the correctness of the assessee's contention regarding the permissibility of setting off derivative loss, and the High Court concluded that the matter requires fresh consideration by the PCIT after the records are placed and after hearing the assessee.

The orders of the Tribunal and the PCIT are set aside and the matter is remanded to the PCIT for fresh consideration, with directions that the assessee appear for personal hearing and place the documents before the PCIT, who shall then decide in accordance with law.

Set off of derivative loss against business income - Whether derivative loss is barred from being set off against business income in the facts of this case. - HELD THAT: - The Tribunal recorded the assessee's submission that there is no bar under the Income Tax Act to set off derivative loss against business income but did not adjudicate the correctness of that submission. The High Court noted the absence of any specific finding by the Tribunal on that legal question and expressly left the substantial question of law open. Given that the PCIT did not consider the documents (because they were not placed before him) and that the Tribunal did not decide the legal contention, the High Court remanded the issue for fresh consideration rather than deciding it on the merits.

The question whether derivative loss can be set off against business income is left open and is to be considered afresh by the PCIT on receipt of the documents and after hearing the assessee.

Final Conclusion: The appeal is allowed; the orders of the Tribunal and the PCIT dated 26th March, 2022 are set aside and the matter is remanded to the PCIT for fresh consideration after the assessee places the documents before him and is heard; the substantial questions of law are left open.

Writ jurisdiction under Article 226 - stay of demand - notice under Section 148 of the Income-Tax Act - appeal under Section 246 of the Income-Tax Act - consent order

Notice under Section 148 of the Income-Tax Act - assessment under Section 143(3) r/w. Section 147 - appeal under Section 246 of the Income-Tax Act - Challenge to the validity of the notice under Section 148 and the consequent reassessment/assessment order - HELD THAT: - The Court declined to entertain the challenge to the legality and validity of the notice issued under Section 148 and the reassessment order passed under Section 143(3) read with Section 147, because those contentions form the subject matter of a pending substantive appeal before the competent appellate authority. The petitioner's objections regarding absence of reasons and alleged infirmities in the reassessment are matters properly ventilated and decided in the appeal; it would be inappropriate for the High Court in writ jurisdiction to adjudicate those merits while the appeal is pending. The petitioner is relegated to pursue those contentions in the appeal in light of the authorities cited to the Court. [Paras 9]

Challenge to the notice and reassessment not decided on merits by this Court and to be raised in the pending appeal.

Stay of demand - consent order - writ jurisdiction under Article 226 - Validity of the order dated 28.1.2022 granting stay of demand subject to deposit of 20% and instalments - HELD THAT: - The Court examined the proceedings before the Principal CIT and the order-sheet which recorded that the petitioner's authorised representatives appeared, argued for stay and that the order was passed on consent, the order-sheet bearing signatures of the petitioner's representatives. In those circumstances the exercise of discretion by the authority to grant stay subject to deposit of 20% with facility of instalments was not arbitrary or amenable to interference under Article 226. As the impugned order was invited by the petitioner's representatives and recorded as consent, no relief could be granted in the writ petition. The Court nonetheless permitted the petitioner to seek extension of time for deposit and directed the respondents to consider any such application in accordance with law. [Paras 10, 11]

The challenge to the stay order is dismissed; the impugned stay, having been passed on consent and subject to deposits, will not be interfered with; petitioner given liberty to apply for extension of time.

Final Conclusion: The writ petition is dismissed. The High Court declined to adjudicate the merits of the reassessment and notice under Section 148, leaving those issues to be raised in the pending appeal; the impugned stay order dated 28.1.2022 (granting stay subject to deposit of 20% with instalments) is not disturbed as it was recorded to have been passed on consent. Petitioner may apply to respondents for extension of time to deposit, which shall be considered in accordance with law.

Reopening of assessment - reason to believe - subjective satisfaction of the Assessing Officer - reassessment proceedings initiated at the instance of the audit party - audit objection as information - allowability of Corporate Social Responsibility expenses under Section 37(1) explanation (2)

Reopening of assessment - reason to believe - subjective satisfaction of the Assessing Officer - reassessment proceedings initiated at the instance of the audit party - Validity of the notice dated 21.03.2021 under Section 148 (read with Section 147) and the order dated 25.10.2021 insofar as the Assessing Officer reopened assessment for A.Y.2017-18. - HELD THAT: - The Court examined the material placed on record, including internal audit communications and the Assessing Officer's contemporaneous responses. The record shows that the audit party raised an objection alleging wrongful allowance of CSR expenses and requested remedial action. The Assessing Officer examined the objection, recorded detailed reasons expressing that the audit objection was not acceptable, and concluded that the CSR expenses were incurred wholly and exclusively for business purposes and hence allowable. Notwithstanding this, the reopening notice was issued. Applying settled principles that reassessment under Section 147 can be initiated only when the Assessing Officer himself has a reason to believe that income has escaped assessment and that the Assessing Officer cannot simply act at the behest of the audit party, the Court found that there was no independent application of mind or subjective satisfaction by the Assessing Officer in the present case. The reopening proceeded despite the Assessing Officer's own recorded dissent and absence of material establishing his belief that income had escaped assessment. On that basis the Court held the reopening to be a colourable exercise of jurisdiction and unsustainable.

Notice dated 21.03.2021 and order dated 25.10.2021 quashed and set aside as the Assessing Officer lacked subjective satisfaction and acted at the instance of the audit party.

Audit objection as information - reassessment proceedings initiated at the instance of the audit party - allowability of Corporate Social Responsibility expenses under Section 37(1) explanation (2) - Whether the audit party's objection regarding disallowance of CSR expenses constituted valid information justifying reopening, or whether the objection amounted to an opinion on law which could not substitute the Assessing Officer's independent belief. - HELD THAT: - The Court distinguished between factual errors pointed out by audit (which can constitute information for reopening) and audit opinions on questions of law. The audit objection in this case involved both a legal interpretation and a challenge to allowability of CSR expenses. The Assessing Officer, after scrutiny, recorded that the CSR expenses were voluntary but connected with business expediency and thus allowable under the business-expenditure test in Section 37(1). The audit's contrary view was therefore an opinion which the Assessing Officer expressly found unacceptable. Because the reopening proceeded despite the Assessing Officer's rejection of the audit view and without demonstrable independent reasons forming his own belief that income had escaped assessment, the audit objection could not serve as a substitute for the Assessing Officer's subjective satisfaction. Consequently, the reliance on the audit objection alone did not validate the reopening.

The audit party's objection could not, in the circumstances, operate as sufficient information to reopen the assessment; reopening based solely on the audit opinion was held invalid.

Final Conclusion: The writ petition is allowed. The notice dated 21.03.2021 under Section 148 and the order dated 25.10.2021 are quashed and set aside because the reassessment was initiated without the Assessing Officer's independent subjective satisfaction and effectively at the instance of the audit party.

Right to personal hearing under Section 144B of the Income-tax Act, 1961 - validity of assessment order under Section 143(3) read with Section 144B - setting aside assessment and consequential notices - remand for fresh adjudication after hearing - notice of demand under Section 156 of the Income-tax Act - penalty and addition notices under Section 271AAC(1) and Section 270A - opportunity to file written submissions before fresh adjudication

Right to personal hearing under Section 144B of the Income-tax Act, 1961 - validity of assessment order under Section 143(3) read with Section 144B - setting aside assessment and consequential notices - Assessment order and consequential notices framed without granting the personal hearing sought by the taxpayer were invalid and could not be sustained. - HELD THAT: - The petitioner had, in reply to the show cause notice, sought a personal hearing which is mandated by the provisions identified in Section 144B (vii) and (viii). The Assessing Officer framed the assessment under Section 143(3) without granting that personal hearing to the petitioner's authorised representative. The Court found that in the absence of the required personal hearing the impugned assessment order and the notices consequential thereto cannot stand and thus must be set aside. This conclusion is founded on the procedural requirement of affording the opportunity of personal hearing prior to finalisation of assessment where such hearing has been validly requested. [Paras 5, 8, 9]

Impugned assessment order dated 26.09.2022 and the notices issued on the same date under Sections 156, 271AAC(1) and 270A are set aside for failure to grant the statutory personal hearing.

Remand for fresh adjudication after hearing - opportunity to file written submissions before fresh adjudication - notice of demand under Section 156 of the Income-tax Act - penalty and addition notices under Section 271AAC(1) and Section 270A - Matter remitted to the Assessing Officer to pass a fresh order after according personal hearing and permitting the taxpayer to file written submissions. - HELD THAT: - The Court directed that the Assessing Officer shall intimate date and time for the personal hearing to the petitioner's authorised representative and shall grant the petitioner at least two weeks to file written submissions concerning the transaction involving the subject property before proceeding further. The remand contemplates fresh consideration of the matter on merits following the hearing and receipt of submissions; the earlier order and notices having been set aside, the AO is entitled to pass a fresh order in accordance with law after compliance with these directions. [Paras 9, 10]

The matter is remitted to the Assessing Officer for fresh adjudication after affording personal hearing and allowing at least two weeks for filing written submissions; the AO to intimate date and time for hearing.

Final Conclusion: Writ petition disposed of by setting aside the assessment order dated 26.09.2022 and the consequential notices for failure to grant the statutory personal hearing; matter remitted to the Assessing Officer to decide afresh after according personal hearing and permitting the petitioner to file written submissions, with the interim application closed.

Ex parte disposal and denial of opportunity to be heard - reopening assessment on the basis of information under section 147 - remand for fresh adjudication by the appellate authority - principle of natural justice

Ex parte disposal and denial of opportunity to be heard - principle of natural justice - remand for fresh adjudication by the appellate authority - Whether the order of the Commissioner of Income Tax (Appeals) dismissing the appeal in ex parte proceedings without granting fair opportunity to the assessee warranted restoration to the file for fresh adjudication. - HELD THAT: - The Tribunal found that the Ld. CIT(A) had dismissed the appeal after recording that the assessee failed to avail opportunities and had not filed materials, resulting in an ex parte order. Applying the principle of natural justice, the Tribunal concluded that the assessee should be given one more opportunity to contest the additions made in reassessment proceedings (which arose from reopening under information indicating a sale of land). The Tribunal therefore restored the appeal to the file of the Ld. CIT(A) for fresh decision on merits and directed the Ld. CIT(A) to provide reasonable opportunity to the assessee. The Tribunal treated the matter in the lead appeal as restored and applied the same view to the companion appeal for consistency. [Paras 4, 5, 7]

Appeal restored to the file of the Ld. CIT(A) for fresh adjudication after granting reasonable opportunity to the assessee; companion appeal directed to be treated similarly.

Reopening assessment on the basis of information under section 147 - remand for fresh adjudication by the appellate authority - Whether the assessments and additions made in reassessment proceedings were finally adjudicated by the Tribunal or required fresh consideration by the CIT(A). - HELD THAT: - The Tribunal noted that the assessing officer re-opened the assessment under section 147 on information that the assessee had sold land and had not declared capital gains; additions were made and confirmed by the Ld. CIT(A) in ex parte proceedings. Because the appeal was restored to the Ld. CIT(A) for a fresh decision after affording opportunity, the merits of the reassessment additions were not finally decided by the Tribunal and must be re-examined by the Ld. CIT(A) in the remanded proceedings. [Paras 4, 7]

Additions and reassessment issues are remanded to the Ld. CIT(A) for fresh consideration; no final adjudication by the Tribunal on merits.

Final Conclusion: Both appeals (including the companion appeal) are restored to the file of the Commissioner of Income Tax (Appeals) for fresh adjudication after affording the assessee reasonable opportunity to be heard; the Tribunal allowed the appeals for statistical purposes and directed consistent treatment of the companion appeal.

Allowability of foreign exchange loss - mercantile system of accounting - treatment of foreign currency transactions under Accounting Standard-11 and ICDS VI - Section 43AA read with Section 145(2) - treatment of reinstatement of foreign currency liabilities - powers and duties of the Dispute Resolution Panel under Section 144C - remand for fresh consideration - principle of audi alteram partem / natural justice

Powers and duties of the Dispute Resolution Panel under Section 144C - principle of audi alteram partem / natural justice - remand for fresh consideration - Whether the Dispute Resolution Panel and Assessing Officer properly considered the assessee's submissions and exercised their powers before sustaining the disallowance - HELD THAT: - The Tribunal found that the Assessing Officer's draft order does not reflect consideration of the submissions dated 22.03.2021 and 02.04.2021 and that the DRP also failed to examine the material on record and give a conclusive finding on merits. The Tribunal emphasised that proceedings before the DRP are a continuation of assessment proceedings under Section 144C and that the DRP is expected to exercise its powers to examine merits on the basis of the record. Brushing aside the assessee's submissions without marshalling the available evidence and stressing only on particular missing information was held to be an error. For these reasons the Tribunal held that the DRP erred in not exercising its exhaustive powers under Section 144C and in not deciding the objections on merits. [Paras 16, 19, 20]

The orders of the Tax Authorities below are set aside to the extent they sustained the disallowance without properly considering the assessee's submissions; matter remanded for fresh consideration.

Allowability of foreign exchange loss - mercantile system of accounting - treatment of foreign currency transactions under Accounting Standard-11 and ICDS VI - Section 43AA read with Section 145(2) - treatment of reinstatement of foreign currency liabilities - remand for fresh consideration - Whether the foreign exchange loss claimed by the assessee is allowable and whether the disallowance should be sustained on the record before the AO - HELD THAT: - The Tribunal noted authoritative guidance (as summarised from higher court decisions) on factors relevant to the deductibility of foreign exchange fluctuations where mercantile accounting is followed - including consistency of accounting treatment, compliance with recognised accounting standards, and fair application of the method in respect of gains and losses. Applying this approach, the Tribunal did not itself decide the allowability on merits but concluded that the issue could not be finally determined without the Assessing Officer properly considering the submissions and annexures already on record. Consequently, the Tribunal directed that the Assessing Officer shall take into consideration the submissions dated 22.03.2021 and 02.04.2021 with enclosures, and pass a fresh draft assessment order; the AO may call for further information if necessary. [Paras 21, 22]

Issue remanded to the Assessing Officer for fresh consideration of the foreign exchange loss claim on merits after taking into account the assessee's submissions and documents.

Final Conclusion: The impugned orders sustaining the disallowance are set aside; the appeal is allowed for statistical purposes and the matter is remanded to the Assessing Officer to consider the assessee's submissions dated 22.03.2021 and 02.04.2021 (with annexures) and pass a fresh draft assessment order, the AO being free to call for further information if required.

Unexplained cash credits under section 68 - burden to prove identity, creditworthiness and genuineness - remand for fresh decision after providing reasonable opportunity - evidence of creditor recorded on oath - effect of agreement to sell permitting transfer to nominee

Remand for fresh decision after providing reasonable opportunity - unexplained cash credits under section 68 - Whether amounts received from Mr. Bahl Singh and Mr. Maan Singh should be adjudicated afresh by the Assessing Officer after affording the assessee an opportunity to produce the creditors and their records. - HELD THAT: - The Tribunal recorded that both lenders did not appear before the Assessing Officer in response to summons and that the remand report records reasons for non-appearance. Counsel for the assessee and Revenue agreed before the Tribunal that the issues relating to these two creditors could be set aside and restored to the file of the Assessing Officer for fresh decision, and that the assessee would, if required, produce the creditors. In these specific facts the Tribunal found it appropriate to set aside the additions relating to these two lenders and to restore the matters to the AO for fresh adjudication in accordance with law after providing reasonable opportunities to the assessee and, if necessary, requiring production of the creditors.

Issues relating to the amounts received from Mr. Bahl Singh and Mr. Maan Singh are set aside and restored to the file of the Assessing Officer for fresh decision after affording reasonable opportunity to the assessee.

Evidence of creditor recorded on oath - burden to prove identity, creditworthiness and genuineness - effect of agreement to sell permitting transfer to nominee - unexplained cash credits under section 68 - Whether the addition in respect of the amount received from Mr. Devi Singh Rawat is sustainable as unexplained cash credit under section 68. - HELD THAT: - The Tribunal noted that Mr. Devi Singh Rawat appeared before the Assessing Officer, gave evidence on oath, and answered questions about the transaction, the broker and source of funds. The Assessing Officer adduced no material to controvert that testimony nor asked for further evidence after recording the statement. The Agreement to Sell showed the vendor's obligation to execute the sale deed in favour of the vendee or its nominee, which explained why transfer was to the nominee. On this record the Tribunal found that the assessee had satisfactorily explained the transaction and the creditor's testimony was uncontradicted; Revenue therefore failed to establish the addition under section 68.

The addition in respect of the transaction with Mr. Devi Singh Rawat is deleted.

Final Conclusion: The appeal is partly allowed: the addition in respect of the transaction with Mr. Devi Singh Rawat is deleted; the matters relating to the other two creditors are remitted to the Assessing Officer for fresh decision after affording reasonable opportunity.

Condonation of delay - sufficient cause for delay - exercise of discretion under Section 5 of the Limitation Act - dismissal of appeal as time-barred - ex parte adjudication

Condonation of delay - sufficient cause for delay - exercise of discretion under Section 5 of the Limitation Act - ex parte adjudication - dismissal of appeal as time-barred - Application for condonation of 121 days' delay in filing the appeal was refused and the appeal was dismissed as time-barred. - HELD THAT: - The assessee sought condonation of 121 days' delay, attributing it to its Chartered Accountant. The Tribunal examined the explanation and record and found no corroborative evidence that the CA admitted fault or that the delay was beyond the assessee's control; the CA's resignation occurred long after the period in question and no affidavit or specific handing over date was produced. Despite multiple notices and numerous listed hearing dates, the assessee failed to appear or prosecute the appeal, resulting in ex parte proceedings. Applying the principles in the authorities cited, the Tribunal held that while a pragmatic approach is required in considering "sufficient cause," in cases of inordinate delay caused by apparent negligence or inaction the discretion to condone delay must be exercised cautiously. On the facts, the delay was inordinate and attributable to the assessee's neglect, and there was no satisfactory explanation to cover the entire period of delay. Consequently, condonation was declined and the appeal was dismissed as time barred; the Tribunal also noted that the assessee had not controverted the findings of the lower authorities before it. [Paras 8, 12, 14, 15]

Condonation refused; appeal dismissed as time barred and dismissed.

Final Conclusion: The Tribunal declined to condone the 121 day delay after finding the explanation unsatisfactory and the delay attributable to the assessee's negligence; accordingly the appeal in respect of AY 2012-13 was dismissed as time barred following ex parte disposal.

Unexplained expenditure - treatment of withdrawals made after the event as source for past event expenses - burden of proof for source of expenditure - acceptance of bank withdrawals and cash book as evidence of source and utilisation - section 69C

Unexplained expenditure - section 69C - acceptance of bank withdrawals and cash book as evidence - burden of proof for source of expenditure - Deletion of addition of Rs. 7,48,900 treated as unexplained expenditure under section 69C. - HELD THAT: - The assessment was reopened on information alleging much larger marriage expenses; the AO accepted that the actual expense was Rs. 27,82,500 and accepted contributions by relatives and withdrawals from bank accounts up to the date of marriage to the extent of Rs. 13,51,100, treating the remaining Rs. 7,48,900 as unexplained because it related to withdrawals after the marriage. The assessee produced bank statements and a cash book showing total withdrawals of Rs. 22,84,900 (and opening cash) from March to August 2014 and explained that certain payments are customarily made after the marriage. The AO and the CIT(A) did not doubt the availability of funds or the withdrawals themselves, but disallowed the post-event withdrawals without stating any reason why post-marriage withdrawals could not have been applied to outstanding marriage liabilities. The Tribunal held that the assessee discharged the burden of explaining the expenditure and its source by producing contemporaneous bank statements and a cash book, and by showing that total cash available (including opening balance) covered the claimed marriage expenditure. In absence of any specific finding doubting the genuineness of the withdrawals or the cash book, and given that payments for marriage-related liabilities can be and were made after the event, the addition was arbitrary and unsustainable. [Paras 10, 11]

Addition of Rs. 7,48,900 as unexplained expenditure deleted and the appeal allowed.

Final Conclusion: The Tribunal found that the assessee satisfactorily explained the source and utilisation of the contested payments by bank withdrawals and cash book entries and, therefore, set aside the addition of Rs. 7,48,900 made under section 69C; the appeal is allowed.

Revisionary jurisdiction under section 263 - erroneous and prejudicial to the interests of the revenue - Explanation 2 to section 263 - plausible or possible view of the Assessing Officer - application of mind - rule of consistency

Revisionary jurisdiction under section 263 - erroneous and prejudicial to the interests of the revenue - Explanation 2 to section 263 - Validity of the Principal Commissioner's exercise of jurisdiction under section 263 in setting aside the assessment order dated 25.11.2019. - HELD THAT: - The Tribunal examined whether the PCIT had validly recorded satisfaction that the AO's order was both erroneous and prejudicial to revenue. The PCIT set aside the assessment because the AO had allowed deduction under section 80P(2)(d) on interest from co-operative banks. The Tribunal held that the PCIT did not point to any specific failure of inquiry or verification by the AO, nor any apparent lack of application of mind; instead the AO had selected the case under CASS, issued queries, examined bank statements and submissions and recorded a categorical finding accepting the return after scrutiny. Where the AO adopts a legally tenable view after necessary enquiries, the conditions in Explanation 2 (clauses (a) and (b)) for deeming an order erroneous are not satisfied. In those circumstances the PCIT's action amounted to substitution of opinion and was not justified under section 263. The Tribunal therefore vacated the revision order. [Paras 8, 9, 10, 11, 12]

Impugned revision order under section 263 is quashed; the PCIT's exercise of revisional jurisdiction is held invalid.

Plausible or possible view of the Assessing Officer - application of mind - rule of consistency - Whether the Assessing Officer had applied his mind and taken a permissible view in allowing deduction under section 80P(2)(d). - HELD THAT: - The Tribunal found that the AO had specifically selected the case for limited scrutiny (deduction under Chapter VIA), issued notices under sections 143(2) and 142(1), called for documents and examined bank statements and submissions. The assessment order records that the issue was examined and the returned income accepted. Given these enquiries and the existence of prior favorable decisions (including the assessee's own earlier ITAT orders) the AO's allowance represented a plausible view. Absent a showing that the AO failed to make inquiries or to inquire into the claim, the AO's conclusion could not be treated as erroneous for the purpose of section 263. The PCIT therefore could not legitimately substitute his view for that of the AO. [Paras 3, 8, 9, 10, 11]

The AO is held to have applied his mind and taken a legally tenable view; therefore the assessment is not erroneous for purposes of section 263.

Erroneous and prejudicial to the interests of the revenue - rule of consistency - Adjudication on the substantive correctness of allowing deduction under section 80P(2)(d) for interest received from co-operative banks. - HELD THAT: - The Tribunal explicitly refrained from deciding the merits of the claim under section 80P(2)(d). While the PCIT's order relied upon authorities treating co-operative banks as distinct from co-operative societies, the AO followed prior favorable decisions and the rule of consistency. The Tribunal stated that it has vacated the revision order because section 263 was not invokable on the facts and made no adjudication on whether interest from co-operative banks is allowable under section 80P(2)(d); that question remains open and was not decided by the Tribunal in this appeal. [Paras 12]

Merits of the deduction under section 80P(2)(d) not decided; matter left open for adjudication if and when properly before the assessing authority or in a different proceeding.

Final Conclusion: The appeal is allowed: the order passed by the Principal Commissioner under section 263 setting aside the assessment dated 25.11.2019 is vacated on the ground that the Assessing Officer had applied his mind and taken a plausible view after necessary enquiries; the Tribunal did not adjudicate the substantive correctness of the section 80P(2)(d) deduction, leaving that question undecided.

Deemed sale consideration - Section 50C(2) - reference to District Valuation Officer (DVO) - comparative sale deeds / comparable evidence - denovo assessment - opportunity of being heard - limited scrutiny / CASS

Section 50C(2) - reference to District Valuation Officer (DVO) - comparative sale deeds / comparable evidence - Whether the dispute over stamp duty valuation (deemed sale consideration) required reference to the DVO under Section 50C(2) and verification of comparable sale deeds - HELD THAT: - The Tribunal found that the assessee specifically challenged the stamp duty value adopted for levy of stamp duty and placed on record two contemporaneous sale deeds from the vicinity to show a lower market value. Both the Assessing Officer and the Commissioner (Appeals) did not refer the matter to the District Valuation Officer despite the assessee disputing the stamp duty valuation. Given that the assessee contested the value adopted by government authorities, Section 50C(2) becomes operative and the appropriateness of the stamp duty valuation and the comparables requires verification by the DVO. The Tribunal therefore directed that the matter be considered afresh with reference to the DVO so that fair market value can be properly ascertained in accordance with law. [Paras 6]

Matter remanded to the Assessing Officer for de novo consideration and referral to the DVO under Section 50C(2) for verification of the stamp duty valuation and the comparables.

Denovo assessment - opportunity of being heard - limited scrutiny / CASS - Whether the assessment and appellate orders should be set aside and the matter restored to the file of the AO for fresh adjudication after giving the assessee an opportunity of being heard - HELD THAT: - The Tribunal noted that the case was selected under limited scrutiny (CASS) to examine capital gains on sale of property and that material filed by the assessee (sale deeds, bank statements, computations) was not given due consideration by the authorities below. In the interest of justice and fair play, and since the correctness of the stamp duty valuation was disputed, the Tribunal set aside the orders of the authorities below and restored the matter to the Assessing Officer for de novo assessment on merits. The Tribunal expressly clarified that it did not express any view on the merits of the additions and directed that the assessee be given an opportunity of being heard during the fresh proceedings. [Paras 6, 7]

Orders of the authorities below set aside; appeal allowed for statistical purposes and matter remitted to the AO for de novo assessment after affording the assessee an opportunity of being heard.

Final Conclusion: The Tribunal set aside the orders of the Assessing Officer and the Commissioner (Appeals) and restored the matter to the file of the AO for de novo assessment for AY 2017-18, directing referral to the DVO under Section 50C(2) to verify the stamp duty valuation and comparables, and ordering that the assessee be afforded an opportunity of being heard; no observation was made on the merits of the addition.

Interest under section 28 of the Land Acquisition Act forms part of enhanced compensation - interest in the nature of compensation not taxable as 'income from other sources' - year of receipt taxability under the scheme of section 45(5) - distinction between interest under section 28 and section 34 of the Land Acquisition Act

Interest under section 28 of the Land Acquisition Act forms part of enhanced compensation - interest in the nature of compensation not taxable as 'income from other sources' - year of receipt taxability under the scheme of section 45(5) - Whether amounts received by the assessee as interest under section 28 of the Land Acquisition Act constitute enhanced compensation (and thus form part of compensation) or are taxable as interest under the head 'income from other sources'. - HELD THAT: - The Tribunal upheld the CIT(A)'s finding that interest paid under section 28 is an accretion to enhanced compensation and not 'interest' in the ordinary sense taxable as income from other sources. The conclusion follows the Supreme Court's reasoning on the scheme of section 45(5) that enhanced compensation (including amounts payable under section 28) is to be treated as compensation assessable in the year of receipt, and that such amounts are part of the compensation determined with reference to value as on the date of notification. The Tribunal noted consistent decisions of coordinate benches and higher courts applying the same principle and, on that basis, found no infirmity in deleting the addition made by the Assessing Officer who had treated the receipt as taxable interest.

Interest received under section 28 of the Land Acquisition Act is part of enhanced compensation and not taxable as income from other sources; the addition made by the AO is deleted.

Final Conclusion: Following the view that interest under section 28 is part of enhanced compensation, the Tribunal dismissed the Revenue's appeal and held the Assessing Officer's addition to be erroneous; the assessee's cross-objection, being supportive of the CIT(A)'s order, was dismissed as infructuous.

Notice under section 143(2) and requirement of application of mind - Validity of assessment framed under section 143(3) where notice under section 143(2) issued without examining the return - Quashing of assessment for non compliance with mandatory notice requirement - Doctrine that notice irregularity vitiates subsequent proceedings - Director of Income Tax vs Society for Worldwide Interbank Financial Telecommunications

Notice under section 143(2) and requirement of application of mind - Validity of assessment framed under section 143(3) where notice under section 143(2) issued without examining the return - Quashing of assessment for non compliance with mandatory notice requirement - Validity of the assessment where the Assessing Officer issued a notice under section 143(2) on the same date as, and without having examined, the return filed in response to a section 148 notice - HELD THAT: - The Tribunal found on the record that the second notice under section 143(2) was issued on 26.10.2015 when the assessee had filed the return in response to the notice under section 148 by acknowledgement dated 26.10.2015 and that the AO did not have the original or a copy of the return when issuing the 143(2) notice. The Tribunal applied the settled legal proposition that the phrase in section 143(2) ('if he considers it necessary or expedient') presupposes an active application of mind by the AO before issuance of the notice. Relying on the coordinate bench precedent and the decision of the Jurisdictional High Court in Director of Income Tax vs Society for Worldwide Interbank Financial Telecommunications , the Tribunal held that issuing the 143(2) notice without examining the return and without application of mind vitiates the jurisdictional basis for framing the assessment under section 143(3). Consequently, the assessment proceedings (and the order of the AO and the CIT(A)) were quashed. The Tribunal further observed that, having allowed the additional legal grounds on this short legal point, the remaining grounds became infructuous and were not adjudicated.

The assessment framed under section 143(3) is quashed as the notice under section 143(2) was issued without application of mind and without the AO having the return; the orders of the AO and the CIT(A) are set aside.

Final Conclusion: The appeal is allowed: the assessment for AY 2014-15 is quashed for want of a valid notice under section 143(2), and the orders of the Assessing Officer and the CIT(A) are set aside; other grounds rendered infructuous.

Rejection of declared transaction value and re-determination under Customs Valuation Rules - use of London Metal Exchange (LME) price as benchmark for valuation - comparison with contemporaneous imports / NIDB data / proforma invoice for valuation - identical or similar goods comparison - description and classification of imported goods - manufacturer's certificate and laboratory test report as evidence of composition - confiscation and release on redemption fine - penalty under Section 112(a) of the Customs Act

Description and classification of imported goods - manufacturer's certificate and laboratory test report as evidence of composition - The imported goods were correctly described and classified as Enamelled Aluminium Wire and there was no mis-declaration by the importer. - HELD THAT: - The Tribunal accepted the chemical test reports of the Customs Laboratory and Sriram Institute for Industrial Research and the manufacturers' certificates stating that the goods were manufactured out of aluminium scrap. On that basis the Department's contention that the goods were Enamelled Copper Clad Aluminium Wires was rejected. The Tribunal held that the Department did not contest the veracity of the manufacturers' certificates or the test reports and therefore the allegation of mis-declaration in description or classification was without merit. [Paras 4]

Allegation of mis-declaration in description/classification is not sustained; the goods are Enamelled Aluminium Wire.

Rejection of declared transaction value and re-determination under Customs Valuation Rules - use of London Metal Exchange (LME) price as benchmark for valuation - comparison with contemporaneous imports / NIDB data / proforma invoice for valuation - identical or similar goods comparison - The Commissioner's rejection of the declared transaction value and redetermination of value based on NIDB/proforma invoice data and LME prices was unsustainable. - HELD THAT: - The Tribunal found that the comparisons relied upon by the Commissioner (NIDB data, proforma invoice and contemporaneous import entries) related to products differing in description, quality and quantity (eg. Braiding Wire of Aluminium Alloy or Aluminium Magnesium Alloy Wire) and therefore could not be treated as identical or similar goods for valuation. Further, manufacturers certified that the imported Enamelled Aluminium Wire was made of scrap, not virgin metal, so valuing the goods by reference to LME (prime aluminium) prices was inappropriate. Proforma invoices and non-matching NIDB entries were held to be an unreliable basis for enhancement of value. Applying these considerations and following the cited authority, the Tribunal quashed the re-determination based on LME and NIDB comparisons. [Paras 4, 5]

Re-determination of value by reference to LME price and non-identical NIDB/proforma comparisons is quashed; declared transaction value cannot be rejected on that basis.

Confiscation and release on redemption fine - penalty under Section 112(a) of the Customs Act - The orders of confiscation, release on redemption fine and imposition of penalties based on the flawed re-determination and alleged mis-declaration were not sustainable and were set aside. - HELD THAT: - Since the Tribunal concluded that there was no mis-declaration and that the valuation enhancement was unsupportable, the consequential actions - confiscation of the consignments, their provisional release on payment of redemption fine, and the personal penalties imposed under Section 112(a) - lacked a valid foundation. The Tribunal therefore allowed the appeals and set aside the impugned orders, granting consequential relief as appropriate. [Paras 2, 4, 6]

Confiscation, redemption-fine release and penalties imposed are set aside as unsustainable.

Final Conclusion: The Tribunal allowed the appeals, set aside the Commissioner's orders which had rejected the declared transaction value and re-determined value by reference to LME/NIDB/proforma comparisons, and quashed the consequential confiscation, redemption fines and penalties, holding the declared description and valuation to be acceptable in view of laboratory reports and manufacturers' certificates.

Exemption notification - additional duty of customs (CVD) - no CENVAT credit condition - duty paid on inputs condition - strict interpretation of exemption notifications - National Treatment

Exemption notification - additional duty of customs (CVD) - no CENVAT credit condition - duty paid on inputs condition - strict interpretation of exemption notifications - Whether imported goods are entitled to exemption under Notification No. 30/2004-CE as amended by Notification No. 34/2015-CE and Explanation by 37/2015-CE for the purpose of additional duty of customs (CVD). - HELD THAT: - The notification initially exempted specified textile goods provided that no CENVAT credit was taken on inputs. By Notification No. 34/2015 an additional condition was introduced that the goods must be manufactured from inputs on which appropriate excise duty (which may include nil rate by the Explanation) has been paid and no CENVAT credit claimed by the manufacturer. For imported goods it is not possible for the foreign manufacturer to have availed CENVAT credit, so the negative condition (no CENVAT credit) is satisfied; however, it is equally impossible, in ordinary circumstances, for central excise duty to have been paid on inputs used in manufacture abroad, and there is no assertion or evidence that such duty was paid. The Explanation merely clarifies that where duty is chargeable at nil or concessional rates, payment at such rates suffices; it does not convert non-payment (because extraterritorial manufacture occurred) into payment. Interpreting the notification to dispense with the positive condition for imported goods would place imports in a more favourable position than domestically manufactured goods and would conflict with the established principle of national treatment. Notifications granting exemption must be given a literal construction and claimants must satisfy all stated conditions. Reliance on pre-amendment authorities (including SRF Ltd.) is inapplicable to the post-amendment regime because the additional positive condition did not exist earlier. Coordinate tribunal decisions favoring importers were considered but, following the reasoning of the Madras High Court in Prashray Overseas and related decisions, the tribunal held that both conditions must be satisfied and, absent proof that duty was paid on inputs, imported goods cannot claim the exemption for CVD after the amendment.

Benefit of Notification No. 30/2004-CE as amended by Notification No. 34/2015-CE and Explanation 37/2015-CE is not available to the imported goods for exemption from additional duty of customs (CVD) because the condition that excise duty has been paid on inputs is not fulfilled.

Final Conclusion: The appeals are dismissed; the impugned orders denying the benefit of Notification No. 30/2004-CE as amended by Notification No. 34/2015-CE and Explanation 37/2015-CE in respect of CVD on the imported goods are upheld.

Suspension of customs broker licence-validity and timeliness of preventive action - Power to suspend pending inquiry under Customs Broker Licensing Regulations, 2018 - Post-decisional hearing and confirmation of suspension - Pre-decisional bias-impartiality in administrative inquiry - Requirement of prima facie satisfaction before preventive suspension

Suspension of customs broker licence-validity and timeliness of preventive action - Requirement of prima facie satisfaction before preventive suspension - Whether the suspension of the appellant's customs broker licence (issued on 14.10.2022) was unduly delayed or otherwise unlawful on the ground that the alleged irregularity dated 26.06.2021 did not warrant immediate preventive action. - HELD THAT: - The Tribunal found that a mere suspicion arising on 26.06.2021 was not by itself a sufficient ground for immediate suspension; a sufficient enquiry and investigation leading to a prima facie case was required before exercising the preventive power. The Commissioner, Air Cargo, New Delhi completed investigation and issued a show cause notice on 14.09.2022 which was received by the licensing authority on 03.10.2022; the licensing authority suspended the licence on 14.10.2022 and afforded post-decisional hearing before confirming suspension on 07.11.2022. On these facts the Tribunal held there was no inordinate delay or error in issuing or confirming the suspension, and the timing was consistent with the need to act after an enquiry disclosed sufficient grounds to examine suspension. [Paras 7]

No delay or illegality in issuing or confirming the suspension; suspension upheld.

Pre-decisional bias-impartiality in administrative inquiry - Post-decisional hearing and confirmation of suspension - Whether the Commissioner had pre-decided the merits of alleged violations and thus vitiated the enquiry and subsequent proceedings by expressing findings on merits at the suspension/confirmation stage. - HELD THAT: - The Tribunal observed that the appellant itself raised substantive defences on the merits before the Commissioner (denying contravention of specified regulations, contesting any obligation to physically verify exporter address, contesting valuation findings, and asserting non-inculpatory statements). The Commissioner was therefore obliged to examine and record findings on those defences when considering confirmation of suspension. The Tribunal held that the Commissioner's dealing with those submissions did not amount to impermissible pre-determination; recording findings in response to the appellant's merits-based defence was proper and did not vitiate the enquiry. [Paras 8, 10]

No pre-decisional bias; findings on merits at confirmation stage were in response to the appellant's own submissions and do not vitiate the process.

Power to suspend pending inquiry under Customs Broker Licensing Regulations, 2018 - Post-decisional hearing and confirmation of suspension - Disposition of the pending show cause notice proposing revocation of licence (SCN dated 29.11.2022) and whether the Tribunal should revoke the suspension at this stage. - HELD THAT: - The Tribunal noted that after confirmation of suspension the Commissioner issued an SCN dated 29.11.2022 proposing revocation; the appellant replied and the enquiry officer submitted a report, but the final revocation decision remained pending. The Tribunal declined to revoke the suspension, observing that the matter requires final adjudication by the licensing authority. The Tribunal directed the Commissioner to decide the pending SCN as soon as possible, preferably within one month of receipt of the Tribunal's order, to enable timely recourse to remedies. The Tribunal expressly disclaimed any adjudication on the merits. [Paras 5, 10, 11]

Suspension not revoked; Commissioner directed to decide the revocation SCN promptly (preferably within one month).

Final Conclusion: The appeal is dismissed and the order confirming suspension of the customs broker licence is upheld; the Tribunal directs the licensing authority to decide the pending show cause notice proposing revocation at the earliest, preferably within one month, and has not decided the merits of the underlying allegations.

Revocation of customs broker licence - duty of vigilance of customs broker - liability for misuse of CHA licence - obligations under Customs Broker Licensing Regulations - Regulation 10(d) CBLR - advising clients and reporting non-compliance - Facility Notice as administrative guidance versus statutory force - reliance on EDI alerts and system limitations - penalty and forfeiture for negligence

Revocation of customs broker licence - penalty and forfeiture for negligence - Validity of the impugned order revoking the appellant's Customs Broker licence, forfeiting the security deposit and imposing penalty where the Shipping Bill was not filed by the appellant and was fraudulently filed by a third party in the appellant's name. - HELD THAT: - The Tribunal found on the admitted facts that the appellant did not file the Shipping Bill, had no contractual relationship with the exporter whose name appeared on the Shipping Bill, and was unaware that any Shipping Bill was filed in its name. The Additional Commissioner's conclusion rested on a finding of negligence in not monitoring Shipping Bills purportedly filed in the appellant's name and on non-compliance with a Facility Notice, but the material shows the Shipping Bill was fraudulently filed at the service centre using forged documents and not by online login by the appellant. The Tribunal held that it is unsustainable to treat the appellant as having advised a non-client or as having failed to advise when the foundational premises (appellant's knowledge of the filing and client relationship) are absent. Viewing the matter in entirety, the revocation, forfeiture and penalty imposed could not be sustained on the record and the impugned order was set aside. [Paras 12]

Impugned order revoking licence, forfeiting security and imposing penalty set aside; appeal allowed.

Regulation 10(d) CBLR - advising clients and reporting non-compliance - Facility Notice as administrative guidance versus statutory force - Whether contravention of an instruction in a Facility Notice automatically constitutes breach of the Regulations and supports action under Regulation 17. - HELD THAT: - The Tribunal recorded that Facility Notices are intended to facilitate processes at a Customs formation and do not, by themselves, acquire the force of statute. A conclusion that a Regulation has been violated cannot rest solely on non-observance of an administrative Facility Notice; the specific contravention of the Regulation must be established. On the facts, treating non-compliance with the Facility Notice as sufficient to infer breach of Regulation 10(d) was not justified where the appellant neither knew of nor took any conduct that could reasonably be termed advising or failing to advise a client who did not exist in relation to the Shipping Bill in question. [Paras 10]

Non-compliance with Facility Notice did not, ipso facto, establish violation of Regulation 10(d) sufficient to uphold revocation or penalty.

Duty of vigilance of customs broker - reliance on EDI alerts and system limitations - Whether the appellant could be held negligent for failing to detect a Shipping Bill fraudulently filed in its name when the EDI/system did not alert brokers for filings made through the service centre. - HELD THAT: - The Tribunal noted the operational reality that Shipping Bills filed at a service centre were processed without triggering the online alerts that accrue when a broker files after logging in. Given that the Shipping Bill here was fraudulently filed at the service centre using forged identification, and the system then in place did not notify the appellant, it was not reasonable to impute to the appellant a duty to monitor filings at remote customs formations where it mainly operated, or to detect misuse of its name created by fraudulent documents. The existence of the system loophole materially undermined the contention that the appellant was negligent in the requisite sense to justify punitive action. [Paras 11]

Appellant cannot be held negligent for failing to detect a service-centre filing that the system did not notify; such system limitation defeats the finding of culpable negligence.

Final Conclusion: The Tribunal concluded that the revocation of the Customs Broker licence, forfeiture of security and penalty imposed on the appellant could not be sustained because the appellant neither filed nor was aware of the Shipping Bill, non-compliance with a Facility Notice does not automatically equate to breach of the Regulations, and systemic limitations in EDI/service-centre filings precluded a finding of culpable negligence; the impugned order was set aside and the appeal allowed.

Penalty under Section 112(a) of Customs Act - Penalty under Section 114AA of Customs Act - Mens rea and knowledge requirement for imposition of penal liability - Liability of employee acting on employer's instructions - Mis-declaration and import of prohibited goods constituting smuggling - Reduction and mitigation of penalty on facts

Penalty under Section 114AA of Customs Act - Mens rea and knowledge requirement for imposition of penal liability - Whether penalty under Section 114AA was rightly imposed on the appellant - HELD THAT: - The Tribunal found that the appellant acted largely at the instructions of his employer and did not knowingly use forged documents or submit incorrect information with knowledge of import of restricted goods. Although the appellant had some suspicious circumstances against his employer's conduct (such as being instructed to assume a different name), there was no evidence that he intentionally furnished false information or wilfully participated in the mis-declaration of goods. On these findings the Tribunal concluded that imposition of penalty under Section 114AA, which penalises use of false or incorrect material, was not justified and set aside that penalty. [Paras 13]

Penalty under Section 114AA set aside.

Penalty under Section 112(a) of Customs Act - Liability of employee acting on employer's instructions - Reduction and mitigation of penalty on facts - Whether penalty under Section 112(a) was rightly imposed on the appellant and if so in what quantum - HELD THAT: - The Tribunal accepted that the appellant assisted his employer by arranging use of another party's IEC and received payment for doing so, thereby participating in the scheme to facilitate the imports. However, the appellant did not knowingly import restricted goods nor was there proof that he had mens rea to smuggle fire crackers. Balancing the appellant's subordinate role, absence of proven knowledge of the restricted import, but recognising his participation in arranging the IEC and receipt of payment, the Tribunal reduced the penalty imposed under Section 112(a) to a mitigated amount as appropriate in the circumstances. [Paras 13, 14]

Penalty under Section 112(a) reduced to Rs. 1 lakh.

Final Conclusion: Appeal allowed in part: penalty under Section 114AA set aside; penalty under Section 112(a) reduced to Rs. 1 lakh; impugned order modified accordingly.

Appointment of Liquidator - Locus to challenge appointment - Committee of Creditors' commercial wisdom and resolution - Adjudicating Authority's power to appoint Liquidator - Liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016 - Prima-facie case for interference - Delay and futility in interfering with orders in time bound IBC proceedings

Appointment of Liquidator - Locus to challenge appointment - Committee of Creditors' commercial wisdom and resolution - Adjudicating Authority's power to appoint Liquidator - Prima-facie case for interference - Delay and futility in interfering with orders in time bound IBC proceedings - Validity of the appointment of the Respondent as Liquidator and whether the Appellant has made out a prima-facie case to interfere with the Adjudicating Authority's order appointing the Liquidator. - HELD THAT: - The Tribunal found that the Appellant, an association of shareholders, has not demonstrated any illegality, irrationality or lack of jurisdiction in the Adjudicating Authority's appointment of the Respondent as Liquidator. The CoC had passed a resolution in its fourth meeting appointing the Respondent, and the Tribunal treated that resolution as an exercise of the CoC's commercial wisdom, entitling the Adjudicating Authority to repose confidence in the nominated person. There were no allegations of misconduct against the Respondent nor any contrary challenge by the Resolution Professional. Reliance was placed on this Tribunal's earlier view that the Adjudicating Authority is within its jurisdiction to engage another person as Resolution Professional or Liquidator where warranted, including appointments made from the Board's list. Having regard to the substantial delay (over two and a half years) since the impugned order, the Tribunal regarded interference as a futile exercise in the context of the IBC's time bound regime. For these reasons the Appellant failed to establish a prima-facie case warranting interference with the appointment order. [Paras 11, 12, 13, 14]

The Appellant has not made out a prima-facie case to interfere with the Adjudicating Authority's appointment of the Respondent as Liquidator; the appeal is dismissed.

Final Conclusion: The appeal challenging the appointment of the Liquidator is dismissed for want of a prima-facie case and in view of the CoC's resolution, the Adjudicating Authority's jurisdiction to appoint the Liquidator, and the delay rendering interference futile; no order as to costs.

Applicability of SVLDR Scheme to disputes arising under Chapter V of the Finance Act, 1994 - Interpretation of "enactments specified in Section 122" - VCES as part and parcel of the Finance Act, 1994 - SVLDR coverage of interest and penalty - Entitlement to make declaration under SVLDR despite payment of principal tax

Applicability of SVLDR Scheme to disputes arising under Chapter V of the Finance Act, 1994 - Interpretation of "enactments specified in Section 122" - VCES as part and parcel of the Finance Act, 1994 - Rejection of SVLDRS-1 application on the ground that VCES 2013 is not an enactment specified in Section 122 and therefore outside the scope of the SVLDR Scheme - HELD THAT: - The Court held that the petitioner's liability and the show cause notice arise under the Finance Act, 1994, an enactment expressly listed in Section 122 of the SVLDR Scheme. Reliance on decisions holding that VCES proceedings adopt provisions of the Finance Act, 1994 was examined and it was accepted that VCES is part and parcel of the Finance Act, 1994 for purposes of invoking the provisions of the Finance Act insofar as VCES proceedings adopt those provisions. Consequently, the Designated Committee's conclusion that VCES 2013 is not covered by Section 122 and therefore outside the SVLDR Scheme was erroneous. The rejection on that ground could not be sustained. [Paras 35, 38]

The finding that VCES 2013 is not within the enactments specified in Section 122 was set aside and the rejection on that basis quashed.

SVLDR coverage of interest and penalty - Entitlement to make declaration under SVLDR despite payment of principal tax - Whether payment of the principal service tax by the petitioner precluded declaration under SVLDR in respect of interest demanded - HELD THAT: - The Court observed that the SVLDR Scheme expressly covers not only tax but also interest and penalty and that a show cause notice for interest arose under the Finance Act, 1994. The fact that the principal tax amounts had been paid to the Revenue did not disentitle the petitioner from making a declaration under the SVLDR Scheme in respect of interest. The Designated Authority ought to have considered receipt of the principal amounts while considering the SVLDR application and could not reject the application merely because the principal duty stood paid. [Paras 36, 38]

The Designated Authority's view that no arrears existed because principal tax had been paid was held to be incorrect; entitlement to seek settlement under SVLDR in relation to interest/penalty was affirmed.

Designated Committee's power to reject applications - SVLDR Scheme - fresh consideration and discharge certificate - Whether the Designated Authority's order rejecting the SVLDRS-1 application required reconsideration - HELD THAT: - In view of the erroneous legal conclusions on coverage of VCES and the mistaken approach to payment of principal tax, the Court quashed the rejection dated 6 February 2020 and directed the Designated Authority to reconsider the petitioner's SVLDRS-1 application afresh. The reconsideration was to be undertaken in the light of the Court's findings regarding applicability of the Finance Act, 1994 and the Scheme's coverage of interest and penalty, with a direction to issue an appropriate order or discharge certificate as may follow from that fresh consideration. [Paras 39]

Order rejecting the application quashed; matter remitted to the Designated Authority for fresh consideration within four weeks.

Final Conclusion: The Designated Committee's rejection dated 6 February 2020 of the petitioner's SVLDRS-1 application is quashed and set aside. The Designated Authority is directed to consider the application afresh in light of the Finance Act, 1994 being within Section 122 and the Scheme's coverage of interest and penalty, and to pass an appropriate order or issue a discharge certificate within four weeks. Writ petition allowed; parties to bear their own costs.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - declaration under the scheme - treatment of declaration as properly instituted - software lacuna in electronic filing portal - quash and remit for fresh consideration - examination of declaration on merits

Declaration under the scheme - software lacuna in electronic filing portal - treatment of declaration as properly instituted - Validity of rejection of the petitioner's SVLDRS-1 declaration on the ground that the wrong Commissionerate was shown/selected on the portal and consequent entitlement to have the declaration considered on merits. - HELD THAT: - The Court accepted the petitioner's uncontroverted assertion that, upon entering the petitioner's registration number, the portal automatically populated the Commissionerate as Thane (as per the petitioner's updated registration) and did not permit selection or amendment to Navi Mumbai Commissionerate where the Order in Original and pending appeal originated. The respondents did not controvert this factual premise in the reply and did not show that an option to change the Commissionerate was available. In the context of a statutory scheme intended to facilitate settlement of legacy disputes and to enable taxpayers to bring matters for settlement, the Court held that requiring the taxpayer to re-register or otherwise undergo additional procedural burdens because of the portal's functioning would be contrary to the scheme's purpose and would amount to needless harassment. Consequently, the Court found that the impugned rejection, which was founded on the Commissionerate shown on the portal, could not stand where the petitioner was prevented by the portal's functioning from selecting the appropriate Commissionerate. [Paras 8, 10]

The rejection of the SVLDRS-1 declaration on the stated ground was quashed and set aside; the petitioner is entitled to have its declaration treated as properly instituted and examined on merits.

Quash and remit for fresh consideration - examination of declaration on merits - Relief to be afforded and the course of further proceedings after quashing the rejection. - HELD THAT: - Having quashed the rejection for the reasons recorded, the Court directed that the respondents treat the petitioner's SVLDRS-1 application as having been properly instituted and decide it on its merits in accordance with law and the provisions of the scheme. The Court expressly refrained from expressing any view on the merits of the petitioner's entitlement under the scheme, limiting the order to treating the declaration as maintainable and remitting the matter for consideration. A time limit of eight weeks from the date of the order was imposed for the decision on merits. [Paras 11, 12]

Respondents to treat the declaration as properly instituted, decide the application on merits in accordance with the scheme within eight weeks; no adjudication on merits by this Court.

Final Conclusion: The petition succeeds. The rejection of the SVLDRS-1 declaration is quashed and set aside because the electronic filing portal automatically tied the petitioner's registration to a different Commissionerate without permitting amendment; the respondents are directed to treat the declaration as properly instituted and to decide it on merits in accordance with the scheme within eight weeks, the Court making no comment on the substantive merits.

Jayanti Foods five-factor test for MRP-based valuation - MRP-based valuation under Section 4(A) of the Central Excise Act - Requirement to declare retail price on package - Legal Metrology (Packaged Commodities) Rules, 2011 - exemption for institutional consumers - Intermediary purchase versus final consumer

Jayanti Foods five-factor test for MRP-based valuation - MRP-based valuation under Section 4(A) of the Central Excise Act - Legal Metrology (Packaged Commodities) Rules, 2011 - exemption for institutional consumers - Requirement to declare retail price on package - Intermediary purchase versus final consumer - Whether the goods sold by the respondent qualified for MRP-based valuation and exemption under Section 4(A) of the Central Excise Act - HELD THAT: - The Court applied the five-factor test laid down in the Jayanti Foods decision and held that mere notification of goods is not sufficient to attract Section 4(A). To qualify, goods must be excisable, sold in package, there must be a legal requirement to declare retail price on the package under the Legal Metrology enactment or rules, the Central Government must have specified such goods by notification, and valuation must follow the declared retail price less abatement. The Legal Metrology (Packaged Commodities) Rules, 2011, by Rule 3(b), exempts sales to institutional consumers; the purchasers here were military and paramilitary institutions buying in bulk and functioning as intermediaries who later distribute to end-users. Because the purchasers are institutional/intermediary buyers, the statutory mandate to declare retail price on the package does not apply, and the transaction cannot be treated as a retail sale under the law. Consequently, mere affixation of MRP (even if present) does not satisfy the statutory requirement in point (iii) of Jayanti Foods unless the affixation is mandated by law. The Tribunal erred by considering only the notification and failing to apply the other Jayanti Foods conditions; therefore the CESTAT's allowance of Section 4(A) benefits was set aside and the respondent was directed to pay the differential duty. [Paras 13, 15, 16, 18, 19]

The goods sold to the military and paramilitary institutions do not qualify for MRP-based valuation and exemption under Section 4(A) because the Legal Metrology rules' exemption for institutional consumers and the requirement of a legal mandate to declare retail price on the package are not satisfied; the CESTAT order was set aside and the respondent directed to pay the differential duty.

Final Conclusion: Appeals allowed; CESTAT's order granting Section 4(A) benefit set aside and respondent directed to pay the differential amount; no order as to costs.

Validity of Rule 8(3A) of Central Excise Rules, 2002 - Utilisation of CENVAT credit for payment of excise duty - Confiscation and penalty under Rule 25(1) of Central Excise Rules, 2002 - Binding effect of High Court decisions pending admission of appeals before the Supreme Court

Validity of Rule 8(3A) of Central Excise Rules, 2002 - Utilisation of CENVAT credit for payment of excise duty - Confiscation and penalty under Rule 25(1) of Central Excise Rules, 2002 - Whether the demand, interest, confiscation and penalty predicated on non-payment of duty in cash under Rule 8(3A) are sustainable where the assessee had paid the duty (in part) by utilising CENVAT credit and later deposited the balance with delay. - HELD THAT: - The Tribunal examined the vires and application of Rule 8(3A) in light of several High Court decisions which have struck down Rule 8(3A) as unconstitutional and noted that appeals against those High Court judgments have been admitted before the Hon'ble Supreme Court. Having regard to the consistent line of High Court decisions treating Rule 8(3A) as ultra vires and the absence of any contrary High Court authority, the Tribunal followed those precedents. Applying that ratio to the facts-where the appellant had maintained statutory records, utilised CENVAT credit towards part payment and deposited the balance (with delay)-the demand founded on Rule 8(3A) was held to be unsustainable. Consequential reliefs flowing from the unsustainable demand, namely interest, confiscation and penalty imposed under Rule 25(1), were also set aside. The Tribunal therefore exercised its jurisdiction to follow the prevailing High Court rulings rather than sustain the demand under the impugned rule. [Paras 5, 6]

Appeal allowed; impugned demand, interest, confiscation and penalty set aside; consequential relief granted.

Final Conclusion: The Tribunal allowed the appeal, set aside the adjudicating authority's demand, interest, confiscation and penalty as unsustainable in view of High Court precedents on Rule 8(3A), and granted consequential relief.

Permissible utilisation of CENVAT Credit for payment of duty on waste and scrap generated during manufacture of capital goods - Entitlement to refund of duty paid from PLA on final product where CENVAT Credit was utilised earlier for payment of duty on other manufactured goods - Scope and application of Notification No.33/99-CE (refund of duty) in mixed production units

Permissible utilisation of CENVAT Credit for payment of duty on waste and scrap generated during manufacture of capital goods - Payment of duty on waste and scrap generated during fabrication of plant and machinery by utilising the CENVAT Credit account was permissible. - HELD THAT: - The Tribunal found that the appellant manufactured both cement (final product) and capital goods in the same factory and that waste and scrap generated during fabrication of capital goods constituted a product manufactured within the factory. The Department did not dispute that duty was in fact paid on the scrap but objected only to the mode of payment (use of CENVAT Credit). The Tribunal held that utilising CENVAT Credit to discharge duty on such waste and scrap was in order, since the scrap was a manufactured product of the factory and payment from the CENVAT account for duty on that manufactured scrap was permissible under the scheme governing CENVAT utilization. [Paras 8]

Payment of duty on scrap by utilising the CENVAT Credit account was valid.

Entitlement to refund of duty paid from PLA on final product where CENVAT Credit was utilised earlier for payment of duty on other manufactured goods - Scope and application of Notification No.33/99-CE (refund of duty) in mixed production units - Refund claimed and sanctioned under Notification No.33/99-CE in respect of duty paid from PLA on cement was correctly allowed despite prior utilisation of CENVAT Credit for duty on scrap. - HELD THAT: - The Tribunal examined the sequence of utilisation of credits and payments: the appellant utilised CENVAT Credit for duty on scrap and thereafter used the balance CENVAT Credit and PLA for duty on cement. The refund claimed related only to duty paid from PLA on cement. Applying the terms of Notification No.33/99-CE, the Tribunal held that the refund of duty paid from PLA on the final product was permissible. The Department's contention that CENVAT Credit should have been entirely exhausted against duty on cement before any PLA payment did not prevail; the factual position showed legitimate utilisation of CENVAT Credit for duty on scrap and consequent PLA payment for cement, entitling the appellant to the sanctioned refund. [Paras 8, 9]

Refund of duty paid through PLA on cement under Notification No.33/99-CE was correctly claimed and sanctioned.

Final Conclusion: The Tribunal allowed the appeal: utilisation of CENVAT Credit to pay duty on scrap generated during manufacture of capital goods was valid, and the refund of duty paid from PLA on cement under Notification No.33/99-CE was rightly granted; appeal disposed with consequential relief.

Exemption under Notification No. 4/2006-CE - nil-rate exemption for matches subject to processes not ordinarily carried on with the aid of power - interpretation of the word "ordinarily" in exemption condition - burden of proof on the assessee to show processes are not ordinarily carried on with the aid of power - entitlement to exemption determined with reference to the goods and the processes and not the identity of the manufacturer - prevention of artificial splitting of manufacturing processes to claim exemption - focus on processes (not manufacture per se) as the center of gravity for exemption

Exemption under Notification No. 4/2006-CE - nil-rate exemption for matches subject to processes not ordinarily carried on with the aid of power - interpretation of the word "ordinarily" in exemption condition - burden of proof on the assessee to show processes are not ordinarily carried on with the aid of power - entitlement to exemption determined with reference to the goods and the processes and not the identity of the manufacturer - Whether the appellants are entitled to nil-rate exemption under Notification No. 4/2006-CE for matches where specified processes are not carried out with the aid of power. - HELD THAT: - The Tribunal applied the settled construction that the exemption is tied to the goods and the processes "in or in relation to the manufacture" and that the use of the word "ordinarily" in the notification requires an assessee to prove that the specified processes are not ordinarily carried on with the aid of power. The condition therefore has a generalized application to the goods whenever manufactured and is not confined to the particular facts of a given manufacturer's operations. Consequently, it is not enough for an assessee to show that power was not used in its specific instance; the assessee must discharge the heavier burden of demonstrating that the listed processes are not ordinarily carried out with power. The Tribunal further held that entitlement to exemption is determined with reference to the goods and the processes rather than the identity of the manufacturer or the fact that duty was paid on an intermediate/semifinished item; payment of duty earlier does not make a later claim for exemption available. The notification's conditions must be applied to the goods it covers, and allowing exemption where the ordinary course of manufacture for the goods involves the use of power would defeat the notification's object, which includes preventing artificial splitting of processes to obtain exemption. [Paras 8, 9]

The appellants are not eligible for the benefit of Notification No. 4/2006-CE; the impugned orders confirming demand and penalties are sustained and the appeals are dismissed.

Final Conclusion: Applying the Tribunal's earlier reasoning, the appeals are dismissed; the claim to nil-rate exemption under Notification No. 4/2006-CE is denied since the appellants failed to establish that the specified processes are not ordinarily carried on with the aid of power.

Availability of cenvat credit where service tax paid after the return period - reverse charge mechanism and timing of payment for credit admissibility - Circular No. 207/5/2017-ST and its limited applicability to payments made by 05/06 July or before filing return - revision of return or refund under Section 142(3) of CGST Act, 2017 - penalty under Section 78 and requirement of mala fide/intention to evade

Availability of cenvat credit where service tax paid after the return period - reverse charge mechanism and timing of payment for credit admissibility - Circular No. 207/5/2017-ST and its limited applicability to payments made by 05/06 July or before filing return - revision of return or refund under Section 142(3) of CGST Act, 2017 - Appellant's availment and utilisation of cenvat credit of service tax paid on 13.07.2017 against duty for June, 2017 was not legally correct. - HELD THAT: - The Tribunal found no dispute that the service tax was in respect of services received in June, 2017 but was paid on 13.07.2017 and the ST-3 return for period ending 30.06.2017 was filed on 10.07.2017. As the payment was made after filing the return, it could not lawfully be shown in the return already filed. The Board Circular cited applies only to cases where payment was made by 05/06 July or at least before filing the return; it does not validate payments made after filing of the return without subsequent corrective steps. The correct course for the appellant was to either file a revised return incorporating the cenvat credit or to claim refund under Section 142(3) of the CGST Act, 2017 if permissible. In absence of having revised the return or sought refund, the adjustment of duty by utilising the credit paid on 13.07.2017 was not permissible and the demand of cenvat credit was sustained, while the appellant was granted liberty to pursue revision of return or refund as alternatives. [Paras 4]

Demand of cenvat credit sustained; appellant may file a revised return or claim refund under Section 142(3) of CGST Act, 2017 if permissible.

Penalty under Section 78 and requirement of mala fide/intention to evade - Penalty imposed under Section 78 was set aside. - HELD THAT: - The Tribunal observed that the appellant had in fact discharged the service tax and there was no intention to evade duty. The utilisation of credit, though incorrect in procedure, resulted in a revenue-neutral position because the appellant was otherwise entitled to the amount and had paid the tax. In absence of mala fide or an intention to evade duty, imposition of penalty under Section 78 was not justified. [Paras 4]

Penalty under Section 78 is set aside for lack of intention to evade duty.

Final Conclusion: The appeal is partly allowed: the demand for wrongly availed cenvat credit is upheld, but the penalty under Section 78 is quashed; appellant given liberty to file a revised return or seek refund under Section 142(3) of the CGST Act, 2017 if legally permissible.

Fee versus tax distinction - quid pro quo - cess as duty of excise versus cess as fee - earmarking and Consolidated Fund distinction - Cenvat credit admissibility - applicability of Central Excise provisions to cess with modifications - Rule 3 of Cenvat Credit Rules, 2004 - proviso excluding Cenvat credit for clean energy cess

Cenvat credit admissibility - cess as duty of excise versus cess as fee - fee versus tax distinction - Rule 3 of Cenvat Credit Rules, 2004 - proviso excluding Cenvat credit for clean energy cess - Entitlement of the assessee to Cenvat credit on Clean Energy Cess levied under Section 83 of the Finance Act, 2010. - HELD THAT: - The Tribunal examined the statutory character and practical features of the Clean Energy Cess under Section 83. Although the cess is described as a duty of excise and Central Excise Act provisions can be made applicable, the Tribunal applied settled law distinguishing tax, cess and fee, emphasising the element of quid pro quo and earmarking. The cess, while credited to the Consolidated Fund, was imposed for financing specific clean energy initiatives and not for general public purposes and was to be utilised for specified purposes by the Union; therefore it partakes the character of a fee rather than a tax. Reliance was placed on precedents explaining that a levy constitutes a fee where there is a reasonable relationship between the levy and services/benefits intended for a specified purpose or class. Rule 3 CCR, 2004 applies only where the payment is a duty of excise; further, the Notification proviso specifically precludes utilisation of Cenvat credit for payment of the Clean Energy Cess. Applying these principles, the Tribunal held that the Clean Energy Cess is not eligible for Cenvat credit and that the earlier Tribunal decision on the identical issue is binding and dispositive. [Paras 6, 7, 8, 9, 10]

The appellant is not entitled to Cenvat credit on the Clean Energy Cess; the appeal is dismissed.

Final Conclusion: Following the Tribunal's earlier decision on the identical issue, the clean energy cess was held to be in the nature of a fee and not admissible as Cenvat credit; the appeal is dismissed.

Duty liability upon rescission of exemption notification - interest liability on excise duty - penalty under Rule 25 of Central Excise Rules, 2002 - bonafide belief as defence to excise liability - limitation for demand of excise duty

Interest liability on excise duty - duty liability upon rescission of exemption notification - limitation for demand of excise duty - bonafide belief as defence to excise liability - Whether the demand of interest on excise duty confirmed against the appellant is liable to be set aside. - HELD THAT: - The Tribunal noted that the exemption notification relied upon by the appellant had been rescinded and, accordingly, the appellant became liable to excise duty for the period in dispute. The demand was raised within the normal period and therefore was not time-barred. Although the appellant, a Central Government undertaking, asserted a bonafide belief in the continuance of the exemption and communicated that belief to the Department, the Tribunal held that payment of the duty was nonetheless due once the exemption ceased to apply and that liability to interest follows the duty liability. The fact that the duty was paid during pendency of adjudication and that the appellant is a government entity did not furnish a legal ground to negate the statutory interest demand. The Tribunal therefore found no reason to interfere with the demand of interest. [Paras 9]

Demand of interest confirmed by the adjudicating authority is upheld.

Penalty under Rule 25 of Central Excise Rules, 2002 - bonafide belief as defence to excise liability - Whether the penalty of Rs.10,000/- imposed on the appellant under Rule 25 is liable to be set aside. - HELD THAT: - The Tribunal observed that the adjudicating authority, having considered the facts including the appellant's status as a Central Government undertaking and the asserted bonafide belief in the applicability of the exemption, imposed a modest penalty of Rs.10,000/-. The Tribunal found no illegality or perversity in the penalty imposed and declined to interfere with the adjudicating authority's exercise of discretion. The absence of any penalty under Section 11AC was also noted but did not affect the Tribunal's conclusion that the imposed penalty was sustainable. [Paras 9]

Penalty of Rs.10,000/- imposed under Rule 25 is sustained.

Final Conclusion: The appeal is dismissed; the demand of interest and the penalty imposed are upheld.

Refund under Notification No.52/2011 ST - entitlement to refund for export related services - classification of services at recipient's end not open to challenge by revenue - Technical Testing and Analysis service - Customs House Agent's service

Refund under Notification No.52/2011 ST - classification of services at recipient's end not open to challenge by revenue - entitlement to refund for export related services - Appellant entitled to refund of service tax paid on specified services (documentation charges and agency fees, draft survey charges, bunker survey charges, sampling and analysis charges) used for export of excisable goods under Notification No.52/2011 ST. - HELD THAT: - The Tribunal found no dispute that the services in question were used for export of goods. The sole contention by Revenue related to classification of the services; however, it is settled that Revenue cannot reclassify services at the recipient's end to deny refund. The Tribunal relied on its earlier decision in the appellant's own case dated 12.02.2013, which held that where service providers had discharged service tax under heads such as Technical Testing and Analysis and Customs House Agent's services, the Revenue's attempt to treat those supplies as falling outside the notification was unsustainable. Applying that principle, the present refund claim could not be rejected on the ground of classification by the revenue authority.

Appeals allowed and refund sanctioned with consequential relief.

Final Conclusion: The Tribunal allowed the appeals, holding that the appellant is entitled to refund under Notification No.52/2011 ST for the specified services used in export and that the Revenue cannot deny refund by reclassifying services at the recipient's end; consequential relief granted.

Manufacture - emergence of a new commercial commodity - processing/tinting of goods - definition of "manufacture" under the U.P. Trade Tax Act, 1948 - role of expert evidence in ascertaining commercial identity of product

Manufacture - emergence of a new commercial commodity - processing/tinting of goods - role of expert evidence in ascertaining commercial identity of product - Mixing a base paint with colourant by a tinting process does not amount to 'manufacture' under the Act when the result is not a new commercial commodity but remains paint of a different shade. - HELD THAT: - The Court applied the statutory definition of 'manufacture' in the U.P. Trade Tax Act, 1948 and the established principle that a process constitutes manufacture only if it results in the emergence of a new and different commercial article, not merely a variation or finishing of an existing product. Reliance was placed on precedents which hold that ordinary processing or variation does not amount to manufacture unless a new commercial commodity is produced. The expert report of Harcourt Butler Technical University, Kanpur, which observed that the base paint retains its basic ingredients and characteristics and that tinting does not bring a new or different product into existence, was treated as material on the factual question of commercial identity. Applying these legal principles to the facts, the Court concluded that the tinting process produced paint of a different shade but did not produce a new commercial commodity; both the base paint and the colourant were separately taxable and the resultant tinted paint remained 'paint' in common parlance rather than a distinct article of manufacture. The Court therefore found no error in the High Court's conclusion and distinguished earlier authority where the process produced a genuinely new commodity. [Paras 6, 7, 8, 9, 10]

The High Court's view that the tinting/mixing process did not constitute 'manufacture' was correct; the process did not produce a new commercial commodity and the appeals are dismissed.

Final Conclusion: The appeals are dismissed; the tinting/mixing of base paint with colourant does not amount to 'manufacture' under the U.P. Trade Tax Act, 1948 as it does not produce a new commercial commodity, and there shall be no order as to costs.

Re-assessment under Section 22(1) of the VAT Act - deemed assessment under Section 21(2) of the VAT Act - date of order of assessment as condition precedent for reassessment - penalty under Section 22(2) of the VAT Act linked to reassessment - acknowledgement of electronic return not an order of assessment

Re-assessment under Section 22(1) of the VAT Act - deemed assessment under Section 21(2) of the VAT Act - date of order of assessment as condition precedent for reassessment - Validity of invoking reassessment under Section 22(1) in absence of a prior formal assessment order and where only a deemed assessment under Section 21(2) exists - HELD THAT: - The Division Bench's reasoning, adopted by this Court, holds that the power to proceed under Section 22(1) can be invoked only where there is an existing order of assessment in writing from which the five year limitation can be reckoned. The word 'order of assessment' denotes a formal adjudication after taking into account returns, statutory compliances and material on record; a deemed assessment under Section 21(2) does not substitute for such an order. Consequently, where no assessment order under Section 21(7) has been passed and only a deemed assessment has arisen, proceedings under Section 22(1) are jurisdictionally impermissible and any reassessment purportedly made thereunder is without authority of law. [Paras 4, 5, 6]

Reassessment under Section 22(1) cannot be initiated in the absence of a prior assessment order; reassessment based solely on a deemed assessment under Section 21(2) is invalid.

Penalty under Section 22(2) of the VAT Act linked to reassessment - Sustainability of penalty imposed under Section 22(2) when the reassessment on which it is predicated is held to be invalid - HELD THAT: - Section 22(2) authorises imposition of penalty where the omission leading to assessment or reassessment under Section 22(1) is attributable to the dealer. The Division Bench and this Court held that if the reassessment itself is void for want of jurisdiction (because no prior assessment order existed), the consequential penalty imposed under Section 22(2) cannot stand. The invalidity of the reassessment removes the legal foundation for the penalty. [Paras 4, 6]

Penalty imposed under Section 22(2) is unsustainable where the reassessment under Section 22(1) is void for want of jurisdiction.

Acknowledgement of electronic return not an order of assessment - Whether the acknowledgement of submission of an electronic return (and related procedural acknowledgements) can be treated as the 'date of order of assessment' for purposes of invoking Section 22 - HELD THAT: - Relying on the Division Bench's interpretation of the VAT Rules, the Court accepted that procedural acknowledgements (including acknowledgement of electronic return and filing formalities under Rule 20) cannot be equated with or construed to constitute a formal order of assessment. An acknowledgement of filing does not amount to an adjudicatory order from which the limitation for reassessment under Section 22 can be computed or which can satisfy the condition precedent of an existing assessment order. [Paras 4, 5]

Acknowledgement of electronic return or its submission is not an 'order of assessment' and cannot support initiation of reassessment under Section 22.

Final Conclusion: Writ petition allowed; impugned Tribunal orders affirming the reassessment and consequential orders set aside/quashed in view of the absence of a prior assessment order and the resulting jurisdictional infirmity of reassessment and penalty.

Industrial policy exemption from sales tax - benefit of revival/relief undertaking - reasoned administrative order - diversion of company funds - judicial review under Article 226 - scope of writ court as supervisory and not appellate

Industrial policy exemption from sales tax - reasoned administrative order - judicial review under Article 226 - diversion of company funds - Validity and legality of the Government order dated 20.09.2013 refusing further sales tax exemption and closing the petitioner's grievances. - HELD THAT: - The Court examined the earlier direction by the Division Bench to pass a final reasoned order and found that the Department complied by considering relevant factors before passing the impugned order. The Department recorded that the petitioner had already availed benefits under the Industrial Policy, 1986, including sales tax exemption for five years and various subsidies, and also noted documentary minutes indicating diversion of funds by the petitioner to other companies. The Court held that entitlement to sales tax exemption beyond the policy period is not an indefeasible right and that the administrative decision addressing the claimed benefits and the financial conduct of the company involved relevant considerations. The High Court emphasised the limited scope of judicial review under Article 226, observing that it does not function as an appellate forum to reappraise merits but supervises the decision-making process; since the impugned order contains cogent and acceptable reasons and addressed germane factors (including prior availing of benefits and diversion of funds), there was no ground for interference. The petitioner's contentions of hardship, law-and-order difficulties and transport costs did not negate the administrative findings and were insufficient to establish a right to extended exemption; moreover, the Court noted availability of prime raw material in the area as a factor undermining claimed hardship. Having applied these considerations, the Court concluded that the administrative decision was sustainable. [Paras 19, 20, 21, 22, 23]

The impugned order dated 20.09.2013 is valid and sustainable; no interference under Article 226 is warranted and the writ petition is dismissed.

Final Conclusion: The writ petition is dismissed; the Government order dated 20.09.2013 refusing further sales tax exemption and closing the petitioner's grievances is upheld. No order as to costs.

Construction of Section 19(2)(ii) vis a vis Section 19(9) of the TNVAT Act - Input tax credit on inputs used in manufacturing or processing - Manufacturing/invisible loss not constituting 'damaged' or 'destroyed' under Section 19(9) - Validity and effect of departmental circulars on quasi judicial assessment - Assessing officer's duty to verify genuineness and quantify manufacturing loss - Harmonious construction to avoid conflict between statutory provisions

Construction of Section 19(2)(ii) vis a vis Section 19(9) of the TNVAT Act - Input tax credit on inputs used in manufacturing or processing - Manufacturing/invisible loss not constituting 'damaged' or 'destroyed' under Section 19(9) - Whether manufacturing/invisible loss inherent to the production process falls outside Section 19(9) and is entitled to input tax credit under Section 19(2)(ii). - HELD THAT: - Section 19(2)(ii) grants input tax credit where goods qualify as inputs and are used in manufacturing or processing in the State. The expressions in Section 19(9) - notably "damaged" and "destroyed" - denote events antithetical to "use in manufacture" and refer to losses external to or interrupting the manufacturing stream (e.g., destruction before use, damage in transit, theft). Manufacturing or "invisible" loss that is inevitable, inherent or consumed in the course of the manufacturing process is part of the input "used in manufacture" and cannot be equated to being "damaged" or "destroyed" so as to attract Section 19(9). Authorities and precedents (including tests of indispensability, quantitative requirement and commercial/technical inexpediency) support treating inherent manufacturing loss as part of raw materials/inputs for entitlement to credit. Reading Section 19(9) to deny credit for such inevitable loss would create a direct conflict with Section 19(2)(ii), produce arbitrary discrimination between manufacturers and frustrate the object of the provision; therefore a harmonious construction must be adopted giving effect to both provisions without nullifying the grant under Section 19(2)(ii). [Paras 12, 13, 14, 15]

Manufacturing/invisible loss inherent to the production process does not attract Section 19(9) and is covered by Section 19(2)(ii), entitling the dealer to input tax credit subject to verification of genuineness.

Validity and effect of departmental circulars on quasi judicial assessment - Validity of departmental circulars on quasi judicial assessment - Whether the Circular dated 20.10.2011 (Circular No.22/2011) requires judicial scrutiny and whether it is binding on assessing officers in relation to manufacturing/invisible loss. - HELD THAT: - Although the Circular was described by respondents as non statutory/guideline, the Court observed that an opinion expressed from the highest executive office can unduly influence and effectively bind subordinate assessing officers carrying out quasi judicial functions; therefore the correctness of such circulars cannot be ignored merely because they are non statutory. However, the Court did not determine the circular's validity in isolation; it held that insofar as the Circular is contrary to the legal position declared by the Court on manufacturing/invisible loss, it is set aside. The Circular may still operate as guidance consistent with law, but cannot be applied to deny credit for inherent manufacturing loss. [Paras 9, 10, 16]

The Circular is subject to judicial scrutiny and is set aside insofar as it directs reversal of input tax credit for manufacturing/invisible loss contrary to the law declared by this Court.

Assessing officer's duty to verify genuineness and quantify manufacturing loss - Harmonious construction to avoid conflict between statutory provisions - Procedural consequences: whether assessing authorities may adopt uniform percentages, and what further action is permitted following the Court's legal conclusions. - HELD THAT: - The Court held that assessing authorities are not justified in mechanically adopting uniform percentages (eg., 4% or 5%) to reverse input tax credit for alleged manufacturing/invisible loss. While inherent manufacturing loss is entitled to credit, the assessing authority retains the power and duty to verify the genuineness of the dealer's claim and to ascertain the quantum of loss by appropriate fact finding. Notices and assessments premised on the contrary are set aside, but authorities are permitted to issue show cause notices and redo assessments in accordance with the law declared, after affording dealers reasonable opportunity of hearing and quantifying loss based on records or accounts rather than blanket percentages. [Paras 3, 4, 16]

Uniform adhoc percentages for reversal are unjustified; assessing officers must verify and quantify loss through proper proceedings and may reassess consistent with the Court's legal ruling after affording opportunity to the dealer.

Final Conclusion: The Court held that inputs which are inevitably consumed or lost in the manufacturing process (manufacturing/invisible loss) fall within the scope of "use in manufacturing or processing" under Section 19(2)(ii) and do not attract Section 19(9); the impugned departmental Circular is set aside insofar as contrary to this law; assessment orders and notices based on blanket reversal of credit for such loss are quashed to the extent indicated, while assessing authorities may reissue show cause notices and recompute entitlement after admissible verification and hearing.

Maintainability of writ petition in presence of alternative remedy - alternative statutory remedy before appellate authority under Section 31 of the Andhra Pradesh VAT Act, 2005 - application of explanation to clause (d) of sub-section (9) of Section 4 of the Andhra Pradesh VAT Act, 2005 - pre-deposit dispensation where prior deposit made - interim prohibition on coercive action pending statutory appeal

Maintainability of writ petition in presence of alternative remedy - alternative statutory remedy before appellate authority under Section 31 of the Andhra Pradesh VAT Act, 2005 - Whether the writ petitions are maintainable in view of an alternative remedy under Section 31 of the Act - HELD THAT: - The Court recorded that Section 31 provides a statutory appeal to the prescribed authority against orders passed by authorities other than certain senior officers. The impugned assessment and penalty orders could be agitated under that statutory remedy. The Assessing Officer had discussed applicability of Section 4 and the explanation to Clause (d) of sub Section (9) in the impugned order. In view of the availability of the alternative statutory remedy, and since the petitioner had not availed that remedy before instituting the writs, the High Court declined to go into the merits and de merits of the assessment and penalty in these writ proceedings and disposed of the petitions with directions enabling the petitioner to pursue the statutory appeal. [Paras 9, 10, 11, 12]

Writ petitions are not to be entertained on merits in presence of the alternative remedy under Section 31; petitions disposed permitting statutory appeal.

Pre-deposit dispensation where prior deposit made - interim prohibition on coercive action pending statutory appeal - Reliefs to be granted while permitting filing of statutory appeal and treatment of pre-deposit and coercive measures - HELD THAT: - The Court, while disposing the writs, granted the petitioner two weeks to file the statutory appeals against the impugned orders and dispensed with the condition of pre deposit in view of the earlier deposit of a sum in earlier litigation. The Court directed that if appeals are filed within the stipulated time they shall be considered and disposed of expeditiously and in accordance with law, preferably within four weeks. Until disposal of the appeals no coercive steps shall be taken against the petitioner. All contentions were left open for consideration in the appeal. [Paras 13, 14]

Petitioner permitted two weeks to file statutory appeals; pre deposit dispensed with on account of prior deposit; stay on coercive action until disposal of appeals; appellate authorities to decide expeditiously.

Final Conclusion: Writ petitions challenging the assessment and penalty for 2014-15 and 2015-16 were disposed of on the ground of available statutory remedy under Section 31; petitioner granted two weeks to file statutory appeals, pre-deposit dispensed with in view of prior deposit, and coercive action stayed until the appeals are disposed of expeditiously with all contentions left open.

Existence of arbitrable disputes - forum shopping and doctrine of election - notice of invocation under Section 21 of the Arbitration and Conciliation Act, 1996 - appointment of arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 - interim attachment/maintenance of funds under Section 9 of the Arbitration and Conciliation Act, 1996

Existence of arbitrable disputes - There exist arbitrable disputes between the parties in respect of the amounts claimed by the petitioner. - HELD THAT: - The Court examined the respondent's consistent denial of liability and the record of disputes raised in replies and other proceedings. A mere filing before the NCLT asserting a determined debt does not convert the claim into an admitted liability where the counter-party persistently disputes the amounts. Applying the settled principle that IBC cannot be invoked where real disputes exist, and having regard to the pleadings and contrary stance of the respondent, the Court concluded that genuine disputes as to liability and amount are subsisting and are referable to arbitration under the contract. [Paras 26, 27, 28, 29, 51]

Objection that there are no arbitrable disputes is rejected; disputes are referable to arbitration.

Forum shopping and doctrine of election - The petitioner's resort to multiple fora did not constitute impermissible forum shopping that would bar appointment of an arbitrator. - HELD THAT: - The Court noted that different proceedings involved claims arising at different times and that interest components and amounts varied accordingly. The availability of distinct remedies with different scopes meant that invoking one forum did not oust others. Authorities on doctrine of election and functional tests for forum shopping were considered, and on the facts the Court found no functional similarity or subterfuge such as to amount to forum shopping or to preclude arbitration. [Paras 30, 31, 32, 33, 34]

Allegation of forum shopping is not tenable; it does not preclude reference to arbitration.

Notice of invocation under Section 21 of the Arbitration and Conciliation Act, 1996 - The requirement of a notice invoking arbitration under Section 21 was satisfied on the facts, and in any event the parties' subsequent conduct amounted to compliance. - HELD THAT: - The Court examined the Demand Notice, the respondent's detailed reply disputing the claim, and subsequent proceedings including an order under Section 9 in which the respondent agreed to refer disputes to arbitration. The purpose of Section 21 is to put the counter-party on notice of intention to invoke arbitration; that purpose was fulfilled by the Demand Notice and the reply. Further, prior court proceedings and the respondent's express willingness to refer disputes to arbitration rendered the objection to technical non-compliance immaterial. Decisions recognizing that filing under Section 11 or subsequent conduct may cure non-service of a prior notice were applied. [Paras 45, 46, 47, 48, 49]

Objection based on non-service or technical non-compliance with Section 21 is rejected; Section 21 requirement is treated as satisfied.

Appointment of arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 - interim attachment/maintenance of funds under Section 9 of the Arbitration and Conciliation Act, 1996 - An independent sole arbitrator is appointed and the respondent is directed to maintain a specified balance pending arbitration. - HELD THAT: - Having found that disputes are arbitrable and that notice/consent requirements are met, the Court exercised its power under Section 11 to appoint Ms. R. Kiran Nath, District & Sessions Judge (Retd.) as sole arbitrator, subject to disclosures and eligibility under Section 12. The Court fixed that the arbitrator's fees shall follow Schedule IV or by consent. Separately, in the Section 9 proceeding the respondent had agreed to maintain a balance corresponding to the Demand Notice; the Court directed the respondent to maintain that balance in its account until adjudication, while permitting either party to move the arbitrator for modification. [Paras 54, 55, 56, 57, 58]

Section 11 petition allowed by appointing the arbitrator; Section 9 petition allowed insofar as respondent directed to maintain the specified balance until adjudication.

Final Conclusion: The Court held that genuine arbitrable disputes exist and that objections of forum shopping and defective invocation notice do not preclude arbitration; Ms. R. Kiran Nath is appointed sole arbitrator (subject to statutory disclosure and eligibility) and the respondent is directed to maintain the balance agreed in earlier proceedings pending adjudication of the disputes.