TaxTMI Updates e-Newsletter
Mar 30,2024

Penalty under Section 122(1A) for retaining benefit of fraudulent transactions - taxable person / registered person requirement for invocation of Section 122(1A) - requirement of personal retention of benefit to attract Section 122(1A) - offences by companies and liability under Section 137 - distinction between demand-cum-show-cause under Section 74 and penal prosecution under Chapter XIX - absence of vicarious liability of employees for corporate tax evasion - quashing of show cause notice for want of jurisdiction and non-application of mind

Penalty under Section 122(1A) for retaining benefit of fraudulent transactions - taxable person / registered person requirement for invocation of Section 122(1A) - requirement of personal retention of benefit to attract Section 122(1A) - Applicability of Section 122(1A) of the CGST Act to an individual employee and power-of-attorney holder - HELD THAT: - The Court held that Section 122(1A) applies to a person who retains the benefit of transactions covered by clauses (i), (ii), (vii) or (ix) of Section 122(1) and at whose instance such transactions are conducted, which necessarily contemplates a taxable or registered person within the meaning of the Act. An individual employee/power-of-attorney like the petitioner is not shown to be a taxable/registered person nor to have retained the benefit of the impugned transactions. In the absence of those jurisdictional ingredients-(i) status as a taxable/registered person and (ii) retention of benefit or transactions conducted at his instance-the provision cannot be lawfully invoked against the petitioner. The impugned show cause notice therefore lacked jurisdiction insofar as it sought to invoke Section 122(1A) against the petitioner and was vitiated by non-application of mind. [Paras 26, 27, 28, 29, 32]

Section 122(1A) does not apply to the petitioner; invocation of Section 122(1A) against him in the show cause notice is without jurisdiction and illegal.

Offences by companies and liability under Section 137 - distinction between demand-cum-show-cause under Section 74 and penal prosecution under Chapter XIX - absence of vicarious liability of employees for corporate tax evasion - Validity of invoking Section 137 (offences by companies) and proceeding under it by issuing a demand-cum-show-cause under Section 74 against the petitioner - HELD THAT: - Section 137 concerns criminal/penal liability where an offence is committed by a company and contemplates proceedings under the offences and penalties chapter; Section 74 is a provision for determination of tax and demands under Chapter XV. The Court found it impermissible to foist penal proceedings under Section 137 on the petitioner through a demand-cum-show-cause notice issued under Section 74. The show cause notice mixes distinct jurisdictions (demand/determination versus penal prosecution) and does not demonstrate that the petitioner was in charge of and responsible for the company's conduct in the manner required by Section 137. There is consequently no basis to attract Section 137 against the petitioner in the impugned notice. [Paras 30, 31, 32]

Invocation of Section 137 against the petitioner through the Section 74 demand-cum-show-cause notice is impermissible and without jurisdiction; Section 137 cannot be sustained against the petitioner on the notice's contents.

Quashing of show cause notice for want of jurisdiction and non-application of mind - absence of vicarious liability of employees for corporate tax evasion - Whether the impugned demand-cum-show-cause notice should be quashed as being arbitrary, disproportionate and issued without jurisdiction - HELD THAT: - The Court concluded that the show cause notice, insofar as it sought to impose a penalty equivalent to the companies' alleged tax evasion on the petitioner (an individual employee and power-of-attorney holder), was wholly without jurisdiction and an abuse of process. The demand was grossly disproportionate, based on allegations that the tax liability was that of the companies, and appeared calculated to intimidate an employee. The Court confined its observations to the petitioner's notice and did not express any view on other noticees. In view of the legal infirmities (absence of applicability of Section 122(1A) and Section 137), the show cause notice had to be quashed. [Paras 32, 33, 34, 35]

The impugned show cause notice issued to the petitioner is quashed and set aside for want of jurisdiction and non-application of mind; petition allowed.

Final Conclusion: The writ petitions succeed: the High Court quashed the demand-cum-show-cause notice dated 19.09.2023 insofar as it invoked Section 122(1A) and Section 137 against the individual petitioners, holding that those provisions do not apply to the petitioners on the material before the Court and that the notice was issued without jurisdiction, and granted relief by setting aside the notice.

Imposition of Goods and Services Tax on trade payables - scope of show cause notice - quashing of administrative order - remand for fresh consideration - condition of provisional deposit for remand - availment of Input Tax Credit - reverse charge mechanism - opportunity of personal hearing

Imposition of Goods and Services Tax on trade payables - availment of Input Tax Credit - Validity of treating the total trade payables, as reflected in the petitioner's financial statements, as taxable supplies and imposing GST thereon - HELD THAT: - The Court considered the petitioner's reply to the show cause notice, which explained that statutory conditions for availment of Input Tax Credit had been satisfied by payment within the prescribed period and by appropriate returns (Form GSTR 1 and GSTR 3B). In view of that response and the respondents' treatment of the entire trade payables figure from the financial statements as taxable supplies, the Court found the conclusion in the impugned order to be prima facie untenable. The Court did not finally decide the question on merits but recorded that a more detailed reconsideration was warranted in respect of the trade payables issue. [Paras 6]

Finding that imposition of GST on the total trade payables as taxable supplies is prima facie untenable; issue left open for fresh consideration (no final adjudication on merits)

Scope of show cause notice - quashing of administrative order - remand for fresh consideration - condition of provisional deposit for remand - opportunity of personal hearing - reverse charge mechanism - Whether the impugned order should be quashed and remitted for fresh adjudication and on what terms - HELD THAT: - The Court examined the contents of the show cause notice and the impugned order, and concluded that interference was warranted given the prima facie infirmity noted in relation to trade payables and other contested heads (including matters relating to inward supplies under reverse charge and ITC on import of services). Rather than adjudicating all issues on merits, the Court quashed the impugned order and directed the respondents to reconsider the matter afresh after providing the petitioner a reasonable opportunity, including a personal hearing. As a condition for remand, the petitioner was directed to remit 10% of the disputed tax demand pertaining to all heads except the trade payables head within two weeks of receiving the order. The respondents are to issue a fresh order after considering all the petitioner's contentions within two months of receipt of the deposit; all contentions were left open for consideration. [Paras 7, 8, 9]

Impugned order quashed and matter remitted for fresh consideration; remand conditioned on petitioner remitting 10% of disputed demand for all heads other than trade payables, with liberty to seek and be afforded a personal hearing and fresh order to follow within two months

Final Conclusion: The writ petition is allowed in part: the impugned order dated 31.12.2023 is quashed and the matter is remitted for fresh consideration after the petitioner deposits 10% of the disputed tax demand relating to all heads except trade payables; the respondents shall provide a reasonable opportunity including personal hearing and decide afresh within two months. No costs.

Input tax credit - documentary evidence for movement of goods - burden of proof - quashing of order - remand for fresh consideration - opportunity of personal hearing

Documentary evidence for movement of goods - input tax credit - burden of proof - The findings in the impugned order that the petitioner had not furnished documents to establish movement of goods and was not eligible for input tax credit were unsustainable in view of the petitioner's earlier reply and annexures. - HELD THAT: - The petitioner had filed a reply dated 07.05.2023 to the intimation of 04.05.2023, enclosing copies of invoice, weighment slips, e-way bills, ledger copies and payment details, and proof of uploading those documents. The impugned order records a conclusion that documents such as lorry receipts, trip sheet, toll payments and stock registers were not submitted and, relying on the burden of proof principle, held that eligibility for input tax credit was not established. Having regard to the materials already on record by way of the petitioner's reply and attachments, the Court found those conclusions unsustainable and not supported by the record. [Paras 5]

The impugned finding that documents were not furnished and that the petitioner failed to prove eligibility for input tax credit is unsustainable.

Remand for fresh consideration - opportunity of personal hearing - quashing of order - The impugned order was quashed and the matter remanded for reconsideration with directions to afford the petitioner an opportunity to file a reply and to be heard, and for the respondent to pass a fresh order within a stipulated time. - HELD THAT: - In view of the unsustainability of the conclusions and the existence of the petitioner's earlier reply and documents, the Court quashed the impugned order and remanded the matter. The petitioner was permitted to file a reply to the show cause notice dated 14.06.2023 within 15 days of receipt of this order, re annexing relevant documents. Upon receipt, the respondent is directed to provide a reasonable opportunity, including a personal hearing, and to pass a fresh order within two months from receipt of the petitioner's reply. [Paras 6]

Impugned order quashed; matter remanded for fresh consideration after affording the petitioner an opportunity to file documents and for personal hearing; fresh order to be passed within two months.

Final Conclusion: Writ petition disposed by quashing the impugned order and remanding the matter for fresh consideration; petitioner allowed to file/re file documents and to be given a personal hearing; fresh order to be passed within two months. No order as to costs.

Pre-deposit requirement under Section 112(8) of applicable GST enactments - stay of recovery upon compliance with pre-deposit - garnishee orders - statutory appeal to the appellate authority while Appellate Tribunal is non-functional - benefit of Section 112(9) of applicable GST statutes subject to conditions

Pre-deposit requirement under Section 112(8) of applicable GST enactments - stay of recovery upon compliance with pre-deposit - garnishee orders - Whether the petitioner had fulfilled the pre-deposit requirement and whether the garnishee orders could be stayed on compliance. - HELD THAT: - The Court examined the payments made against the two assessment orders and found that in respect of one assessment the tax liability had been discharged leaving only interest and penalty, whereas in respect of the other assessment there remained a shortfall to satisfy the statutory pre-deposit. The statute contemplates that if the prescribed percentage of the disputed tax demand is remitted, recovery or coercive action shall be stayed until disposal of the statutory appeal. Applying that principle, the Court directed the petitioner to remit the outstanding shortfall within a limited period and held that upon such remittance the garnishee orders would be raised and the petitioner permitted to operate its bank account.

Petitioner directed to deposit the outstanding pre-deposit within two days; upon receipt the garnishee orders shall be raised and bank account operation permitted.

Statutory appeal to the appellate authority while Appellate Tribunal is non-functional - benefit of Section 112(9) of applicable GST statutes subject to conditions - Timelines for filing statutory appeals and entitlement to statutory protections under Section 112(9) in the present circumstances. - HELD THAT: - Noting that the Appellate Tribunal is not functional, the Court allowed the petitioner to pursue the remedy of writ petitions but also required the petitioner to file the statutory appeals before the appellate authority within a specified period measured from the date when the President of the State Tribunal assumes office. The Court clarified that the petitioner would be entitled to the benefits under the statutory provision analogous to Section 112(9) only upon fulfilment of the conditions it imposed (including remittance of the outstanding pre-deposit).

Petitioner directed to file statutory appeals within three months from the date the President of the State Tribunal assumes office; benefit under Section 112(9) available subject to compliance with the conditions ordered.

Final Conclusion: Writ petitions disposed with directions to remit the outstanding pre-deposit within two days to secure lifting of the garnishee orders and to file statutory appeals within three months of the State Tribunal President assuming office; entitlement to the statutory protective provision subject to fulfilment of these conditions; no order as to costs.

Penalty under Section 129(1)(b) of the U.P. GST Act, 2017 (penalty at 100% of value) - release of detained goods against security equal to twice the amount of tax under Section 129(1)(a) of the U.P. GST Act, 2017 - bona fide owner - judicial modification of penalty

Penalty under Section 129(1)(b) of the U.P. GST Act, 2017 (penalty at 100% of value) - release of detained goods against security equal to twice the amount of tax under Section 129(1)(a) of the U.P. GST Act, 2017 - bona fide owner - judicial modification of penalty - Modification of the penalty imposed under Section 129(1) and entitlement of the petitioners as bona fide owners to release of goods on payment of security equal to twice the amount of tax. - HELD THAT: - The Court found the revenue's stand to be harsh and unreasonable and recorded that the petitioners are the bona fide owners of the goods. Noting that the goods were inspected in transit and that some time was lost in making representation to the detaining authority, the Court observed that no prejudice would be caused to the revenue if the petitioners' claim were considered at this stage, subject to the outcome of the appeal against the penalty order. The petitioners did not dispute levy of penalty but contested its quantum. In the exercise of its supervisory jurisdiction the Court reduced the quantum of penalty imposed and directed modification in terms of Section 129(1)(a) so as to permit release against security equal to twice the amount of tax as estimated by the revenue authorities. [Paras 6, 10, 11]

Penalty reduced and ordered to be modified to the rate contemplated by Section 129(1)(a) (security equal to twice the amount of tax) and goods may be released accordingly, subject to the outcome of the appeal.

Final Conclusion: Writ petition allowed in part: the penalty imposed is modified and reduced to the quantum corresponding to release on security equal to twice the amount of tax; the petitioners, being bona fide owners, are entitled to release of the goods on that basis, subject to appellate outcome.

Quashing and remand of adjudication order - Liability cannot be imposed solely for inaccuracy due to inadvertent reporting/laxity - Verification of Input Tax Credit reversal and documentary proof - Option to treat return of goods as supply under Circular No.72/46/2018 GST - Condition of interim deposit pending remand - Opportunity of personal hearing and fresh adjudication

Quashing and remand of adjudication order - Condition of interim deposit pending remand - Opportunity of personal hearing and fresh adjudication - Validity of the impugned adjudication order dated 21.12.2023 and appropriate remedy - HELD THAT: - The High Court found that the impugned order warranted interference and therefore quashed it, but remanded the matter for reconsideration by the assessing officer. The Court framed remand on terms: the petitioner was directed to remit a sum of Rs. 5 crore within three weeks as a condition for remand; once the amount is received, the assessing officer must afford the petitioner a reasonable opportunity, including personal hearing, and pass a fresh order within three months from receipt of the remitted amount. The remand is intended to safeguard revenue interest while enabling fresh adjudication on merits. [Paras 11, 12, 13]

Impugned order quashed and matter remanded for fresh adjudication on the stated conditions.

Liability cannot be imposed solely for inaccuracy due to inadvertent reporting/laxity - Verification of Input Tax Credit reversal and documentary proof - Sustainability of tax demand imposed primarily on the finding that the petitioner was 'lethargic' in maintaining accounts and in rectifying GSTR 3B errors - HELD THAT: - The Court observed that a substantial part of the tax demand (imposed on the basis that the petitioner was lax in rectifying inadvertent errors in GSTR 3B reporting) could not be sustained merely because of such laxity. It held that imposition of liability of the magnitude recorded, based solely on the assessing officer's characterization of the petitioner as 'lethargic', was not justified. The Court therefore excluded that portion from immediate enforcement for the purposes of remand and required a modest interim remittance to protect revenue pending fresh adjudication. The Court also noted the petitioner's contention that statutory rectification was available only after filing the annual return, and directed reassessment to take such contextual facts and available reconciliations into account. [Paras 7, 8, 11]

Demand based solely on asserted laxity in GSTR 3B reconciliation was held to be unsustainable as a complete basis for liability; matter remanded for fresh consideration.

Verification of Input Tax Credit reversal and documentary proof - Option to treat return of goods as supply under Circular No.72/46/2018 GST - Entitlement and verification of ITC reversal where defective goods were returned and the petitioner treated returns as supplies or reversed ITC - HELD THAT: - The Court recorded the petitioner's case that defective goods were returned to the supplier under invoices with taxes paid, and that alternatively a credit note and reversal of ITC could have been effected; reliance was placed on Circular No.72/46/2018 GST to show that treating returns as fresh supplies is an available option. The assessing officer rejected the contention and held that ITC reversal shown by the petitioner (notably an asserted reversal on 30.09.2018) was unsupported by documentary proof in the record. The Court directed that these contentions and the documentary evidence in support of the reversal be examined afresh by the assessing officer on remand, and that the tax demand be reconsidered in light of verifiable records and the taxpayer's options under the circular. [Paras 3, 9, 10, 11]

Issue of ITC reversal and permissibility of treating returned goods as supply remanded for verification of documentary evidence and fresh adjudication.

Final Conclusion: The High Court quashed the adjudication order dated 21.12.2023 concerning assessment period 2017-18 and remanded the matter for fresh adjudication. Remand is subject to the petitioner remitting Rs. 5 crore within three weeks; on receipt, the assessing officer must afford a personal hearing and pass a fresh order within three months, including reconsideration of GSTR 3B reconciliation issues and verification of ITC reversals (including the relevance of Circular No.72) on the basis of documentary evidence.

Interpretation of exemption notification - Services by way of renting of residential dwelling for use as residence - Hostel accommodation as residential dwelling - Burden of proof on assessee to claim exemption - Alternate remedy and futility doctrine - Taxability to be assessed from recipient's perspective

Alternate remedy and futility doctrine - Binding effect of higher authority's order - Maintainability of writ petitions despite existence of statutory appeal - HELD THAT: - The Court held that availability of a statutory appeal under the GST enactments does not preclude the exercise of writ jurisdiction where pursuing the alternate remedy would be a mere exercise in futility. That principle applies where a superior forum or a Division Bench of a High Court has already taken a binding view which subordinate/adjudicatory authorities refuse to follow. Relying on the reasoning in Filterco and subsequent High Court decisions, the Court found that because the Appellate Authority for Advance Ruling had failed to follow the earlier Division Bench decision of the Karnataka High Court, the petitioners were justified in approaching the High Court under Article 226 instead of being relegated to an appeal which would be unlikely to afford effective relief. [Paras 13, 16, 19]

Writ petitions are maintainable; alternate remedy by appeal is not an absolute bar where pursuit of that remedy would be futile in view of binding precedent and non-compliance by the authority.

Services by way of renting of residential dwelling for use as residence - Hostel accommodation as residential dwelling - Interpretation of exemption notification - Burden of proof on assessee to claim exemption - Taxability to be assessed from recipient's perspective - Whether services provided by the petitioners' ladies hostels fall within Entry No.12 of Notification No.12/2017 and are therefore exempt from GST - HELD THAT: - The Court analysed the expression 'residential dwelling' in the exemption notification in light of dictionary meanings, earlier judicial decisions (including Bandu Ravji Nikam and the Division Bench of the Karnataka High Court in Taghar Vasudeva Ambrish), and the CBIC educational guide. It held that 'residence' and 'dwelling' have their ordinary/poplular connotation and that a hostel used by students or working women for sleeping, eating and related residential activities constitutes a 'residential dwelling' for the purposes of the notification. The Court emphasised that the correct approach is to view taxability from the recipient's perspective - whether the end-use is residential - and not from the status or licensing of the service provider. Because the inmates (students and working women) were using the hostel premises as their residence and were not using the premises for any commercial activity, the conditions of Entry No.12 were satisfied. The Court also noted the assessee bears the burden to prove entitlement to exemption but found that the facts established met that burden. [Paras 49, 56, 64, 66]

Hostel services provided by the petitioners to student and working women qualify as 'services by way of renting of residential dwelling for use as residence' under Entry No.12 of Notification No.12/2017 and are exempt from GST; the impugned rulings denying exemption are set aside.

Final Conclusion: The writ petitions are allowed. The Court held the petitions maintainable despite the availability of statutory appeal and declared that the ladies hostel services furnished to students and working women fall within the exemption under Entry No.12 of Notification No.12/2017; the impugned orders of the State Appellate Authority for Advance Ruling are set aside.

Claim for refund of excess tax and time bar under Section 54 read with Section 49 - availability of input tax credit where IGST was claimed instead of CGST/SGST by bonafide mistake - competence of a writ court to enlarge or amend statutory time limits - precedential weight of another High Court's decision

Availability of input tax credit where IGST was claimed instead of CGST/SGST by bonafide mistake - claim for refund of excess tax and time bar under Section 54 read with Section 49 - Whether the petitioner can be permitted to retain or regularise input tax credit wrongly availed as IGST instead of CGST/SGST for the financial year 2017-18. - HELD THAT: - The petitioner, a registered dealer, filed returns for 2017-18 but claimed IGST instead of CGST/SGST. The statutory remedy for correcting such an error or obtaining refund of excess tax is by making an application within the period prescribed by law. Section 54 read with Section 49 provides for refund and prescribes a time limit of two years from the last date of filing returns for the relevant year. For FY 2017 18 the last date to apply was 23.04.2019. The petitioner did not make any application within the prescribed period or extended time. In these circumstances the claimed infirmity cannot be rectified in exercise of writ jurisdiction by prescribing a different time limit or permitting belated regularisation. Reliance on a decision of another High Court was noted, but the impugned order rests on the statutory time bar which the petitioner failed to meet. [Paras 3, 4]

The plea to allow or regularise the ITC wrongly claimed as IGST is rejected as time barred; no relief can be granted under writ jurisdiction.

Competence of a writ court to enlarge or amend statutory time limits - precedential weight of another High Court's decision - Whether this High Court can, in exercise of writ jurisdiction, extend or amend the statutory time limit for filing an application under the refund provisions and whether the Karnataka High Court decision relied upon is binding. - HELD THAT: - The Court held that it cannot, under the guise of exercising limited writ jurisdiction, alter or extend the time limits prescribed by statute for claiming refund or correcting tax returns. The statutory time limit applicable to the present case had expired and could not be reopened by the writ court. Further, the decision of the Karnataka High Court relied upon by the petitioner was distinguished on the ground that it did not apply or interpret the relevant statutory provisions and therefore does not constitute a binding precedent on this Court. [Paras 3, 4]

Writ jurisdiction cannot be used to enlarge statutory time limits; the Karnataka High Court judgment relied upon is not binding for the present proposition.

Final Conclusion: Writ petition dismissed: the claim to regularise/retain input tax credit wrongly availed as IGST for FY 2017 18 is time barred under the refund provisions and cannot be remedied by this Court; the earlier High Court decision relied upon does not bind this Court on the statutory point.

Breach of natural justice - maintainability of writ under Article 226 - quashing of summary order - opportunity of hearing before passing tax demand - remand for fresh consideration to the assessing authority - summary order under Rule 142(5) read with Section 73(9)

Maintainability of writ under Article 226 - breach of natural justice - Maintainability of the writ petition challenging the summary order and related proceedings - HELD THAT: - The Court rejected the respondents' objection as to maintainability and held that a writ under Article 226 is plenary and may be entertained where orders are passed in breach of natural justice or where the authority acts without jurisdiction. Reliance is placed on settled law that availability of statutory remedies does not automatically oust writ jurisdiction when there is breach of natural justice or lack of jurisdiction in the authority. The petition was therefore held maintainable for adjudication of the grievances raised by the petitioner. [Paras 5]

The writ petition is maintainable and the objection to maintainability is rejected.

Quashing of summary order - opportunity of hearing before passing tax demand - summary order under Rule 142(5) read with Section 73(9) - remand for fresh consideration to the assessing authority - Validity of the summary order in Form DRC-07 dated 09.04.2022 and the requirement to afford opportunity of hearing prior to passing the demand - HELD THAT: - On the materials produced by the petitioner, including email/OTP validation and documents evidencing payments and DRC-03, the Court observed a prima facie breach in the procedure adopted by the department, including notices sent to an earlier email address and apparent failure to afford an opportunity of hearing. The Court noted that the respondents did not controvert the petitioner's explanation regarding the discrepancies and the source documents which could have led to a response to the show-cause notice. In view of these facts and the overarching principle of audi alteram partem, the summary order dated 09.04.2022 was quashed and the matter was directed to be remitted to the State Tax Officer for passing an appropriate order after affording the petitioner an opportunity to file its reply and place relevant material. [Paras 3, 4, 6]

Summary order dated 09.04.2022 is quashed and the matter is remitted to the State Tax Officer to decide afresh after providing the petitioner an opportunity of hearing.

Interim relief in aid of writ jurisdiction - liberty to file show-cause reply - Interim reliefs ancillary to the remand - unfreezing of bank account and timetable for filing reply - HELD THAT: - The Court granted ancillary reliefs to preserve the petitioner's position while the matter is reconsidered. The petitioner was given liberty to file its show-cause reply by a specified date and the petitioner's bank account was ordered to be unfrozen forthwith upon receipt of a copy of the order, thereby preventing irreparable prejudice pending fresh adjudication by the tax authority. [Paras 7]

Petitioner permitted to file show-cause reply by 19th April 2024; bank account to be unfrozen forthwith on receipt of a copy of this order.

Final Conclusion: The writ petition is allowed in part: the summary demand order dated 09.04.2022 is quashed and the matter is remitted to the State Tax Officer for fresh decision after affording the petitioner an opportunity of hearing; the petitioner is granted liberty to file its reply by 19.04.2024 and the petitioner's bank account is ordered to be unfrozen forthwith.

Intimation under Section 74(5) of the CGST Act, 2017 - pre-adjudication notice in Form GST DRC-01A - reversal of ineligible input tax credit - opportunity to submit objections in Part B of Form GST DRC-01A - initiation of proceedings under Section 74(1) of the CGST Act, 2017 - procedural scheme under Rule 142(1A) and Rule 142(2A) of the CGST Rules

Intimation under Section 74(5) of the CGST Act, 2017 - pre-adjudication notice in Form GST DRC-01A - opportunity to submit objections in Part B of Form GST DRC-01A - Validity and legal effect of the intimation issued under Section 74(5) in Form GST DRC-01A and the procedural rights of the recipient - HELD THAT: - The Court held that the impugned communication is an intimation under Section 74(5) of the CGST Act, 2017 given in Part A of Form GST DRC-01A and is a pre-adjudication step under the statutory scheme. Under that scheme and Rule 142(1A)/(2A), the person so intimated is required either to make the payment/reverse the ineligible ITC along with applicable interest and penalty or to file submissions/objections in Part B of Form GST DRC-01A for consideration by the adjudicating authority. The Court declined to determine on writ the merits as to whether the transactions were bona fide or whether the selling dealer's conduct was causative of the alleged ineligible ITC, noting that such factual and adjudicatory determinations fall within the statutory proceedings contemplated after the intimation. The petitioner therefore must exercise the statutory options available in response to the intimation, and the adjudicating officer is to examine any objections filed before initiating proceedings under Section 74(1). [Paras 6, 7, 8]

The intimation in Form GST DRC-01A is a valid pre-adjudication notice under the statutory scheme; the petitioner must either deposit/reverse the communicated amount or file objections in Part B of Form GST DRC-01A for the adjudicating officer's consideration.

Initiation of proceedings under Section 74(1) of the CGST Act, 2017 - reversal of ineligible input tax credit - procedural scheme under Rule 142(1A) and Rule 142(2A) of the CGST Rules - Scope of further adjudication and factual determination following submission of objections and possible communication to the selling dealer - HELD THAT: - The Court remitted the factual and substantive determination to the adjudicating authority. Upon receipt of the petitioner's Part B submissions or evidence of payment/reversal, the adjudicating officer is to examine whether the objections are tenable on facts and law before initiating proceedings under Section 74(1). If necessary, the adjudicating officer may also issue appropriate intimation to the selling dealer so that the question whether the purchaser rightly availed eligible ITC or whether the selling dealer failed to deposit the tax can be investigated and decided in accordance with law. The Court expressly refrained from deciding the merits of bona fides or liability at this stage and directed the statutory process to be followed. [Paras 8]

The matter as to substantive liability and factual responsibility is to be considered and decided by the adjudicating officer after the petitioner files Part B submissions or effects payment/reversal; the Court has not adjudicated the merits and has left these issues for statutory proceedings.

Final Conclusion: Writ petition disposed directing the petitioner to either deposit/reverse the ineligible ITC with interest and penalty or to file objections in Part B of Form GST DRC-01A; upon such response the adjudicating officer shall examine the submissions and proceed in accordance with law, including issuing intimation to the selling dealer if required.

Principles of natural justice - quashing of assessment order - opportunity of personal hearing - submission of reply to show cause notice - payment on terms for relief - fresh assessment on remand - observance of administrative circular

Principles of natural justice - quashing of assessment order - submission of reply to show cause notice - The impugned assessment order was set aside for breach of principles of natural justice, subject to conditions - HELD THAT: - The petitioner had furnished, during the inspection under Section 67, a written reply addressing each of the fifteen discrepancies identified, including provision of an ageing report in respect of sundry creditors (discrepancy '11') and a trial balance to segregate Tamil Nadu turnover from other States. The assessing authority thereafter proceeded to issue an intimation, show cause notice and final assessment without giving effect to the petitioner's earlier inspection-stage replies and without granting the extension requested for filing a reply to the show cause notice. Although the Court noted that the petitioner ought to have responded to the show cause notice and availed the offered personal hearings, on the factual matrix it concluded that the assessment order ignored material replies furnished at inspection and therefore called for interference. For these reasons the order was quashed, but relief was made conditional on the petitioner complying with specified terms to enable fresh adjudication.

Impugned assessment order quashed subject to the petitioner remitting the specified sum and being permitted to submit reply within the stipulated period

Opportunity of personal hearing - payment on terms for relief - fresh assessment on remand - observance of administrative circular - Directions for fresh assessment and procedure to be followed on remand were issued - HELD THAT: - The Court directed that the petitioner remit the agreed sum within two weeks and be permitted to submit a reply to the show cause notice within the same period. Upon receipt and verification of the remitted amount, the assessing officer is required to afford the petitioner a reasonable opportunity, including a personal hearing, to present its case and then pass a fresh assessment order within two months of receiving the petitioner's reply. The assessing officer was also directed to follow the procedure set out in Circular No.12/2022 of the Commissioner of Commercial Taxes while undertaking the reassessment. The merits of the disputed claims were not decided; they are to be considered afresh by the assessing officer in accordance with the directions.

Assessment remitted for fresh consideration on the stated terms and within the prescribed timelines, with compliance with the cited administrative circular

Final Conclusion: Writ petition allowed by quashing the assessment order for breach of natural justice; relief granted on terms-payment by the petitioner, opportunity to file reply and personal hearing-and fresh assessment to be completed in two months in accordance with the Court's directions and the cited administrative circular.

Writ of Certiorari - Article 226 jurisdiction - Limitation bar and non-merger of orders - Revocation of GST cancellation - Remand for fresh consideration - Opportunity of hearing before adjudicatory authority

Article 226 jurisdiction - Limitation bar and non-merger of orders - High Court's power to entertain petition under Article 226 despite the appellate order dismissing the appeal as barred by limitation - HELD THAT: - The Court held that dismissal of an appeal as barred by limitation does not constitute an appeal on merits and therefore does not result in merger of the original order into the order-in-appeal. Consequently, the order of the original authority continues to subsist and remains amenable to challenge under Article 226 of the Constitution. The consequence that the appellate authority's summary dismissal on limitation grounds does not oust the High Court of its jurisdiction to examine the legality, validity and correctness of the original order was expressly accepted by the Court.

High Court not divested of jurisdiction under Article 226 by appellate dismissal on limitation grounds; the petition could be entertained.

Revocation of GST cancellation - Remand for fresh consideration - Opportunity of hearing before adjudicatory authority - Validity of the original order cancelling GST registration and the appropriate remedial course - HELD THAT: - On the facts pleaded by the petitioner (bona fide reasons, inoperative e-mail and inability to file returns) and the petitioner's undertaking to deposit outstanding tax with interest subject to availment of input tax credit, the Court exercised its discretionary writ jurisdiction. The impugned order-in-original cancelling GST registration was set aside and the matter was remitted to the original authority for fresh consideration of the petitioner's claim for revocation. The Court directed that the petitioner be permitted to file pleadings and documents, that the original authority shall provide sufficient and reasonable opportunity of hearing, and that the authority shall decide the claim within three months from the specified date after the petitioner appears and files material.

Impugned cancellation order set aside and case remitted for reconsideration with liberty to file documents and a three-month disposal mandate after petitioner appears.

Final Conclusion: The petition is allowed: the original order cancelling GST registration is set aside and remitted to the adjudicating authority for fresh consideration after allowing the petitioner to file pleadings and documents and after giving a reasonable opportunity of hearing; the High Court retained jurisdiction under Article 226 despite dismissal of the statutory appeal as barred by limitation.

Validity of IGST notifications imposing tax on ocean freight - Ultra vires delegated legislation - Composite supply and Section 8 principle - Reverse charge liability specification - Binding nature of GST Council recommendations

Validity of IGST notifications imposing tax on ocean freight - Ultra vires delegated legislation - Show cause notice issued under Notification No. 8/2017-Integrated Tax (Rate) dated 28.6.2017 was without jurisdiction as the Notification had been declared ultra vires and that declaration upheld by the Supreme Court. - HELD THAT: - The Court accepted the petitioner's challenge to the show cause notice on the ground that the notification invoked by the Designated Officer had already been judicially declared ultra vires. The High Court of Gujarat in Mohit Minerals held that no tax is leviable under the IGST Act on ocean freight for services provided by a person located in a non-taxable territory for transport by vessel up to the customs station of clearance, and declared Notification No. 8/2017 (and related entries) ultra vires. That conclusion was upheld by the Supreme Court, which reinforced that a separate levy on the 'service' aspect in such transactions would violate the principle of composite supply. Once the notification is struck down and its invalidity is affirmed by the Supreme Court, revenue authorities lack jurisdiction to issue demands based on that notification and to proceed under it. [Paras 2, 3, 6, 7]

Show cause notice quashed as issued without jurisdiction because it relied on a notification judicially declared ultra vires and affirmed by the Supreme Court.

Composite supply and Section 8 principle - Reverse charge liability specification - The ratio in Mohit Minerals applies to contracts involving CIF and FOB and the notification cannot be selectively applied to FOB contracts where it has been declared unconstitutional. - HELD THAT: - The respondent's contention that Mohit Minerals should be confined to CIF contracts was rejected. The Gujarat High Court's decision, as noted, involved both CIF and FOB contracts (paragraph 57 of that judgment) and the Supreme Court affirmed the core legal conclusions, including that separate taxation of the service element would offend the composite supply principle under Section 8. Where the impugned notification has been declared ultra vires and that view upheld, it cannot be applied in particular categories (such as FOB) by the State; doing so would amount to applying an illegal notification. The Court relied on the settled principle that authorities cannot act under a law or delegated legislation declared invalid (citing the mandate of Kusum Ingots & Alloys Ltd.) and therefore the show cause notice based on the impugned notification insofar as it sought to tax ocean freight on FOB imports was without jurisdiction. [Paras 3, 4, 8]

Mohit Minerals' ratio applies to both CIF and FOB transactions; the notification cannot be applied to FOB cases once struck down.

Validity of IGST notifications imposing tax on ocean freight - Petitioner who paid the tax under protest is entitled to refund with interest. - HELD THAT: - The Court noted that the petitioner has made payment under protest. Having set aside the show cause notice as being founded on an invalid notification, the petitioner is entitled to seek refund of the tax paid. The Court directed that, upon an application being placed before the proper officer, the amount paid shall be refunded with interest at the rate of 7% per annum within four weeks from the date a copy of the order is placed before the proper officer. [Paras 10]

Refund of tax paid under protest directed with interest at 7% per annum to be made within four weeks upon presentation of the order.

Final Conclusion: Writ petition allowed; impugned show cause notice quashed as it was founded on Notification No. 8/2017 which has been declared ultra vires and upheld by the Supreme Court, the Mohit Minerals ratio applies to both CIF and FOB contracts, and the petitioner is entitled to refund of tax paid under protest with interest at 7% within four weeks.

Input Tax Credit - quashing of order for non-application of mind - remand for fresh consideration - due diligence of recipient - natural justice - destination based nature of GST

Input Tax Credit - quashing of order for non-application of mind - remand for fresh consideration - destination based nature of GST - natural justice - The assessment order denying ITC was quashed and the matter remanded for fresh consideration because the assessing officer failed to apply his mind to available returns and documents showing tax payment. - HELD THAT: - The petitioner produced supplier invoices and the supplier's Forms GSTR-1 and GSTR-3B for August 2017 which, on comparison, prima facie demonstrate that an error in GSTR-1 was rectified in GSTR-3B and that the supplier had in fact paid the appropriate tax components. The assessing officer's operative finding recorded that the tax paid by the supplier had not reached the Tamil Nadu exchequer and therefore ITC could not be allowed; however, the materials on record indicate that the SGST component reached Tamil Nadu. In view of this, the court held that the assessing officer did not properly apply his mind to the documentary evidence and that the assessment could not be sustained. The court therefore quashed the impugned order and remanded the matter to the assessing officer to reconsider the claim for ITC after providing a reasonable opportunity to the petitioner, including personal hearing, and to pass a fresh assessment order taking into account the returns and invoices on record.

Impugned assessment order quashed; matter remanded to the assessing officer for fresh consideration of the ITC claim with opportunity of hearing.

Final Conclusion: The assessment order dated 22.12.2023 denying ITC is quashed and the matter is remanded to the assessing officer to reconsider the ITC claim (pertaining to August 2017) after affording the petitioner a reasonable opportunity, including personal hearing; the fresh assessment is to be completed within two months from receipt of this order.

Garnishee order - attachment of bank account - lapse of attachment after one year - rectification order - no further proceedings against Form GST DRC-01A - excess input tax credit (ITC)

Garnishee order - attachment of bank account - lapse of attachment after one year - rectification order - no further proceedings against Form GST DRC-01A - Direction to lift the garnishee order dated 20th July, 2022 and to lift the attachment on the appellant's bank account. - HELD THAT: - The Assistant Commissioner's order of 2nd December, 2023 records that the taxpayer's submissions were found satisfactory, notes the rectification order dated 26th July, 2022 and that all availed ITC for the period 01/04/2018 to 31/03/2019 was considered, and states that no further proceedings are required against Form GST DRC-01A issued on 4th October, 2023. In view of that factual finding, the garnishee order addressed to Indian Oil Corporation Limited dated 20th July, 2022 cannot subsist. Further, the attachment of the bank account must be lifted as it has lapsed after the expiry of one year. The Court applied the same principle as reflected in earlier decisions referenced in the judgment - Badal Shambhubhai Shah vs. Directorate General of Goods and Service Tax Intelligence and M/s. Futurist Innovation & Advertising vs. Union of India & Ors. - where attachments were directed to be lifted after lapse of the statutory period. Accordingly, the authority is directed to withdraw the garnishee communication to Indian Oil Corporation and to lift the bank account attachment by addressing the appellant's bankers. [Paras 3, 4]

Writ petition and appeal allowed; authority directed to lift the garnishee order dated 20th July, 2022 and to lift the bank account attachment within one week.

Final Conclusion: The writ petition and intra Court appeal are allowed: the competent authority must, within one week of receipt of the order, rescind the garnishee order addressed to Indian Oil Corporation Limited and withdraw the attachment on the appellant's bank account, having regard to the rectification and the finding that no further proceedings are required under Form GST DRC-01A.

Pronouncement of judgment in open court - mandamus to pass formal order - preclusive effect of a judicial pronouncement - acceptance of settlement and recording of terms - immunity from penalties and prosecution - credibility of official affidavit and case diary notings

Pronouncement of judgment in open court - preclusive effect of a judicial pronouncement - mandamus to pass formal order - Interim Board of Settlement directed to pass a formal order under section 245D(4) accepting the settlement as pronounced by the erstwhile Settlement Commission on 28.01.2021. - HELD THAT: - The Court found on the basis of the affidavit dated 28.03.2021 of the Vice President and Member of the erstwhile Settlement Commission that hearings concluded on 27/28.01.2021, the terms of settlement were pronounced in open court and the cases were declared "settled" with immunity from penalties and prosecutions. The respondent-department relied on office case-diary entries and declined to confirm conclusion of settlement; that contention was held to be contrary to the sworn affidavit of the Settlement Commission members. Applying the principle that a judgment pronounced in open court should not be reopened save in exceptional circumstances (as applied by the Court with reference to Vinod Kumar Singh vs. Banaras Hindu University ), the Court gave credence to the sworn confirmation by the Settlement Commission members and directed the Interim Board to reduce that pronouncement into a formal order under section 245D(4) in the same terms as pronounced on 28.01.2021 rather than re-hear the matter de novo. [Paras 13, 15, 22, 23]

Interim Board of Settlement must pass an order under section 245D(4) accepting the applications as "settled" in the terms pronounced by the Settlement Commission on 28.01.2021 and grant immunity from penalties and prosecutions.

Credibility of official affidavit and case diary notings - acceptance of settlement and recording of terms - The affidavit of the Vice President and Member of the erstwhile Settlement Commission was accepted over the department's reliance on case-diary notings, as the determinative record confirming that settlement was pronounced. - HELD THAT: - The Court examined competing factual assertions: the Settlement Commission members' sworn affidavit confirming conclusion and pronouncement of settlement, and respondent No.2's affidavit which relied on office case-diary notings that did not record conclusion. The Court held that the sworn confirmation by the Settlement Commission members is entitled to credence and is not displaced by the absence of corresponding entries in the transferred case records, and therefore the pronouncement in open court must be treated as effective for the purpose of directing the formal order to be passed. [Paras 15, 21, 22, 23]

Sworn affidavit of the erstwhile Settlement Commission members confirming pronouncement is accepted as the operative record of conclusion of settlement, notwithstanding absence of corroborative case-diary entries.

Final Conclusion: Writ petitions allowed to the extent that the Interim Board of Settlement is directed to pass formal orders under section 245D(4) accepting the settlement as pronounced on 28.01.2021 and to grant the attendant immunity from penalties and prosecution; petitions disposed accordingly.

Validity of proceedings under Section 153C in relation to seized material - Assessment abatement and revival in search-linked proceedings - Distinction between incriminating material found during search and other material for completed assessments - Compatibility of reassessment under Sections 147/148 with search provisions where no incriminating material is found - Temporal scope for issuing notices to an "other person" under the proviso to Section 153C

Validity of proceedings under Section 153C in relation to seized material - Distinction between incriminating material found during search and other material for completed assessments - Impugned assessment under Section 153C read with Section 143(3) for Assessment Year 2015-2016 is unsustainable insofar as it is based on seized material relating to financial years subsequent to the relevant previous year 2014-2015. - HELD THAT: - The Court examined the satisfaction note and the seized electronic data and found that the accounts data recovered from the "J-Pack" pendrives and related material pertained to financial years 2016-17 to 2020-21. There were no records or documents to show any incriminating transactions between the searched person and the petitioner for the previous year 2014-2015 (assessment year 2015-2016). In the absence of seized/incriminating material relating to the relevant previous year, invocation of Section 153C for assessment of AY 2015-2016 could not be sustained. The Court relied on the principle that where no incriminating material is unearthed for the relevant assessment year, the Assessing Officer cannot make additions in respect of completed or unabated assessments by relying on other material recovered during search. Applying these findings, the impugned order dated 31.03.2023 passed under Section 153C read with Section 143(3) for AY 2015-2016 was quashed. [Paras 17, 18, 19, 24, 40]

Impugned order under Section 153C read with Section 143(3) dated 31.03.2023 for Assessment Year 2015-2016 quashed for lack of incriminating material for the relevant previous year.

Assessment abatement and revival in search-linked proceedings - Compatibility of reassessment under Sections 147/148 with search provisions where no incriminating material is found - Temporal scope for issuing notices to an "other person" under the proviso to Section 153C - Reassessment proceedings initiated under Section 148 did not permanently abate by reason of the incorrectly proceeded Section 153C action and must be revived and completed in accordance with law and applicable timelines. - HELD THAT: - The Court held that although notices under Section 153C operate to bring the other person within the search-assessment scheme, the initiation of proceedings under Section 153C on 20.03.2022 (and the satisfaction note dated 19.03.2022) could not lawfully abate the earlier Section 148 proceedings where the Section 153C invocation was on incorrect footing for the relevant assessment year. Consequently, the reassessment initiated under Section 148 stands revived and is to be completed by the Assessing Officer in accordance with the legal principles laid down by the Supreme Court in Principal Commissioner of Income-tax, Central-3 vs. Abhisar Buildwell (P.) Ltd., namely that where no incriminating material is found for the relevant year, completed/unabated assessments cannot be augmented on account of other material; however, such assessments may be reopened under Sections 147/148 if statutory conditions are met. The Court directed completion of reassessment within timelines prescribed under Section 153B(2) (as applied) excluding the period between initiation of the Section 153C proceedings on 20.03.2022 and the date of receipt of the certified copy of this order. [Paras 33, 37, 41, 42, 43]

Proceedings under Section 148 are revived; Assessing Officer directed to complete the reassessment in accordance with law and within prescribed timelines, excluding the period during which Section 153C proceedings were pending.

Final Conclusion: The impugned order dated 31.03.2023 passed under Section 153C read with Section 143(3) for Assessment Year 2015-2016 is quashed for want of seized/incriminating material relating to the relevant previous year 2014-2015; however, the reassessment proceedings initiated under Section 148 stand revived and are directed to be completed by the Assessing Officer in accordance with the law and timelines indicated, excluding the period during which the Section 153C proceedings were pending.

Adhoc disallowance of expenses - books of account audited and not rejected - onus of proof for allowability of business expenditure - appellate verification and production of vouchers and ledgers - comparative consistency with preceding and succeeding assessment years - inadmissibility of universal percentage disallowance without specific infirmity - precedent that adhoc disallowance is unsustainable where books are not rejected

Adhoc disallowance of expenses - books of account audited and not rejected - appellate verification and production of vouchers and ledgers - comparative consistency with preceding and succeeding assessment years - precedent that adhoc disallowance is unsustainable where books are not rejected - Whether the adhoc disallowance of 10% of various expenses was sustainable where the assessee's books were audited and not rejected and the appellate authority had perused vouchers, ledgers and comparative year-to-year data - HELD THAT: - The Tribunal found as facts that the Assessing Officer made an adhoc disallowance of 10% of claimed expenses without rejecting the assessee's audited books of account and without pointing to any specific infirmity in the ledgers or vouchers. On appeal the CIT(A) examined the documents submitted at the appellate stage - including bills, vouchers, balance sheet, tax audit report, ledger copies and bank statements - and observed that (i) the assessee's turnover and voluminous records rendered online submission difficult, (ii) the books were audited under the statutory audit provisions and were not rejected by the AO, (iii) comparable expense ratios and trading results in preceding and succeeding assessment years supported the claimed deductions, and (iv) the AO had not made item-wise findings to justify a blanket percentage disallowance. Applying the legal principle, as articulated by the Supreme Court, that an adhoc disallowance is not sustainable where books of account are not rejected and no specific defects are shown, the Tribunal held that a universal 10% disallowance founded on surmise was unreasonable. The Tribunal therefore upheld the CIT(A)'s detailed appellate scrutiny and conclusion that the adhoc addition lacked basis. [Paras 5, 6, 7, 12]

The adhoc disallowance of Rs. 7,85,54,891 (10% of expenses) was deleted; the Revenue's appeal is dismissed and the CIT(A)'s order upholding the allowance of the expenses is affirmed.

Final Conclusion: Where audited books of account were not rejected and the appellate authority, after perusal of vouchers, ledgers and comparative year-to-year data, found no specific infirmity, a uniform adhoc disallowance of expenses by the AO was held unsustainable; the CIT(A)'s deletion of the 10% disallowance for AY 2017-18 was upheld and the Revenue's appeal dismissed.

Royalty - Business Profits - Permanent Establishment - Access to Database vs Right to Use Copyright - Binding Coordinate Bench Precedent - Remand for Verification

Royalty - Access to Database vs Right to Use Copyright - Business Profits - Permanent Establishment - Binding Coordinate Bench Precedent - Subscription receipts from CAS and PUBS divisions do not constitute royalty under Article 12(3) of the India-US DTAA or section 9(1)(vi) of the Act and are not taxable in India on that basis. - HELD THAT: - The Tribunal followed earlier coordinate bench decisions in the assessee's own appeals for earlier assessment years which held that subscribers were only granted access to view/search content and did not acquire copyright or any right to exploit the underlying copyright or database/software. The customers neither obtained ownership nor rights to reproduce, sub licence or commercially exploit the copyrighted content; the agreements retained copyright with the assessee and limited use to authorised viewing/searching, akin to purchase of a copyrighted article where the purchaser does not acquire the copyright. There being no transfer or grant of right to use copyright, such receipts do not qualify as royalty; in the absence of change in facts, the Tribunal applied the coordinate bench precedent and allowed the appeal on this issue.

Grounds 1 and 2 allowed; the additions treating CAS and PUBS subscription receipts as royalty are deleted.

Verification of Receipts - Remand for Fresh Consideration - The alleged discrepancy in total receipts (claimed receipt amount versus amount considered by the AO) is remanded to the assessing officer for verification. - HELD THAT: - The Tribunal observed a discrepancy between the amounts recorded by the AO and the amounts claimed by the assessee and directed the AO to verify the relevant supporting material and decide the matter afresh. The issue is not finally adjudicated on merits by the Tribunal but restored to the file of the AO for factual verification and determination.

Ground No. 3 allowed for statistical purposes and remitted to the AO for verification and fresh decision.

Interest under section 234A - Interest under section 234B - Remand for Verification - Levy of interest under sections 234A and 234B is remanded to the assessing officer for fresh decision after verification of relevant material. - HELD THAT: - The Tribunal did not decide the correctness of the interest levies on the merits. After hearing parties, it directed that both grounds relating to interest under sections 234A and 234B be restored to the AO to verify records and determine the applicability or computation of interest afresh; the Tribunal therefore allowed these grounds for statistical purposes only.

Grounds 4 and 5 remitted to the AO for verification and fresh decision.

Final Conclusion: Appeal allowed insofar as subscription receipts from CAS and PUBS are not taxable as royalty; the AO is directed to delete the royalty addition. Discrepancy in total receipts and the levies of interest under sections 234A and 234B are remitted to the assessing officer for verification and fresh decision.

Dividend Distribution Tax and applicability of DTAA - Treaty protection not extending to domestic taxes unless expressly provided - Interpretation of Article 10 of DTAA and MFN clause - Grant of TDS credit subject to verification by Assessing Officer - Principles of natural justice - opportunity of hearing

Principles of natural justice - opportunity of hearing - Claim that the assessee was not afforded a reasonable opportunity of hearing - HELD THAT: - The ground alleging denial of reasonable opportunity of hearing was not pressed by the assessee before the Tribunal. Having not been pursued, the contention was dismissed without further adjudication. [Paras 3]

Dismissed as not pressed.

Dividend Distribution Tax and applicability of DTAA - Treaty protection not extending to domestic taxes unless expressly provided - Interpretation of Article 10 of DTAA and MFN clause - Whether dividend distribution tax paid by the domestic company could be restricted under the India-Netherlands DTAA (or by MFN invocation of other DTAAs) and excess DDT refunded - HELD THAT: - The Tribunal applied the reasoning of the ITAT Mumbai Special Bench in DCIT v. Total Oil (Mumbai SB) that DDT imposed under section 115-O is a tax on the domestic company and not a tax in the hands of the shareholder, and therefore does not fall within the scope of DTAAs unless the treaty expressly extends treaty protection to the dividend distribution tax. Where contracting states have not specifically provided such extension in the treaty (or its protocol), the domestic company cannot claim treaty relief reducing the rate of DDT; similarly, invoking MFN treatment to import such a provision from other treaties is not permissible absent express treaty text. On the facts the India-Netherlands treaty did not extend treaty protection to DDT for the company paying dividend, and hence DDT at the statutory rate under section 115-O applied. [Paras 7]

Claim for refund of alleged excess DDT dismissed; DDT payable at rate specified under section 115-O.

Grant of TDS credit subject to verification by Assessing Officer - Allegation of short grant of TDS credit by the Assessing Officer - HELD THAT: - The assessee claimed a larger TDS credit in the return than was allowed in the assessment order. The Tribunal found that the claim requires verification of the details submitted by the assessee and therefore restored the matter to the file of the Assessing Officer for fresh decision after verification. [Paras 9]

Remanded to the Assessing Officer for fresh verification and decision.

Final Conclusion: The appeal was partly allowed: the contention of denial of hearing was dismissed as not pressed; the claim for refund of excess DDT under DTAA/MFN was rejected and DDT at the statutory rate upheld; the claim of short grant of TDS credit was remanded to the Assessing Officer for verification and fresh adjudication.

Deduction under section 10B - "derived by" versus "derived from" distinction - incidental income forming part of profits of an export undertaking - proportionate deduction under section 10B(4) - transfer pricing: arm's length price and benchmarking - application of CUP method using LIBOR/EURIBOR as benchmark for foreign currency loans - consistency of prior assessment/benchmarks

Deduction under section 10B - "derived by" versus "derived from" distinction - incidental income forming part of profits of an export undertaking - proportionate deduction under section 10B(4) - Miscellaneous/other income (scrap sales, tool development income, seating facility receipts and sundries written back) is eligible for deduction under section 10B for the EOU units. - HELD THAT: - The Tribunal examined the nature of the receipts and followed coordinate and higher judicial pronouncements holding that section 10B(1) and 10B(4) operate as a complete code for computation of profits of an eligible undertaking. The words "derived by an undertaking" in sections 10A/10B differ from "derived from" in Chapter VIA deductions and, accordingly, incidental incomes (including scrap sales, tool development and seating facility receipts and reversals of prior year sundries) that arise in the ordinary course of the export business form part of the profits of the undertaking. The Tribunal applied the proportionate computation under section 10B(4) (export turnover to total turnover) and directed recomputation of deduction accordingly, distinguishing decisions that interpreted "derived from" in the Chapter VIA context and relying on authoritative Karnataka High Court and Delhi High Court decisions and prior Tribunal precedent in the assessee's own case. [Paras 8, 9, 10, 11, 14]

Miscellaneous/other income comprising scrap sales, tool development income, seating facility receipts and sundries written back are part of the profits of the EOUs and are eligible for deduction under section 10B; AO directed to recompute deduction in terms of section 10B(4).

Transfer pricing: arm's length price and benchmarking - application of CUP method using LIBOR/EURIBOR as benchmark for foreign currency loans - consistency of prior assessment/benchmarks - The transfer pricing adjustment in respect of interest income on euro loan (addition of Rs. 8,09,277/-) was deleted and the assessee's benchmarking using EURIBOR/EURIBOR based comparables was accepted as arm's length. - HELD THAT: - The Tribunal observed that earlier assessment years for the same transaction had accepted the assessee's methodology and that coordinate Tribunal decisions (including Mumbai Bench decisions) support the adoption of inter bank rates (LIBOR/EURIBOR) as the appropriate benchmark for foreign currency lending rather than domestic PLR. The assessee used CUP method with third party comparables adjusted for tenor and currency and derived an arm's length rate based on six month EURIBOR plus spread; the Tribunal, following its own earlier orders in the assessee's case and related precedents, held the EURIBOR based rate to be at arm's length and deleted the TPO/AO addition, directing amendment of assessment. [Paras 15, 16, 17, 18]

Addition made by AO/TPO in respect of interest on loan to AE is deleted; assessee's EURIBOR based benchmarking accepted as at arm's length and assessment to be amended accordingly.

Consequential relief - Levy of interest under sections 234B, 234C and 234D is consequential upon the primary adjustments. - HELD THAT: - The Tribunal recorded that interest consequences flow from the primary assessment adjustments and therefore those interest demands are consequential; no separate adjudication on the merits of the interest provisions was undertaken beyond this consequential characterisation. [Paras 19]

Interest levied under sections 234B, 234C and 234D treated as consequential.

Penalty proceedings premature - Initiation of penalty proceedings under section 271(1)(c) was not adjudicated as they were premature. - HELD THAT: - The Tribunal noted that penalty proceedings were premature at the stage of the appeal and therefore refrained from adjudicating the penalty ground, leaving it unadjudicated for the appropriate forum to decide in due course. [Paras 20]

Penalty proceedings under section 271(1)(c) left unadjudicated as premature.

Final Conclusion: The appeal is allowed: the miscellaneous/other incomes of the EOUs are held eligible for deduction under section 10B and the AO is directed to recompute deduction under section 10B(4); the transfer pricing adjustment in respect of interest on the euro loan is deleted and the assessment is to be amended; interest consequences are consequential; penalty proceedings are left unadjudicated as premature; order allowed for statistical purposes.

Deduction under section 80IA(4) - Separate undertaking for each unit for computing 80IA(4) deduction - Deeming fiction in section 80IA(5) and notional carry forward of losses - Doctrine of consistency and binding effect of coordinate bench precedents

Deduction under section 80IA(4) - Doctrine of consistency and binding effect of coordinate bench precedents - Validity of CIT(A)'s deletion of addition and allowance of deduction under section 80IA(4) in respect of windmills and solar plant for A.Y. 2020-21. - HELD THAT: - The Tribunal observed that identical factual and legal questions had been adjudicated by a coordinate Bench of the Tribunal in the assessee's own case for earlier assessment years, where each windmill and the solar plant were held to be separate units for computing deduction under section 80IA(4). No contrary decision was placed on record by Revenue. In these circumstances, and in absence of any change in facts, the Tribunal applied the doctrine of consistency and the binding effect of the coordinate bench decisions in the assessee's own cases and upheld the view that each windmill and the solar plant constitute separate undertakings for computing 80IA(4) deduction. The Revenue's contention that the CIT(A) relied merely on earlier orders without examining merits was not accepted because the coordinate bench rulings on the same issue dispose of the matter. Accordingly the deletion of the AO's addition was sustained. [Paras 6, 7]

Assessee's claim of deduction under section 80IA(4) allowed by treating each windmill and the solar plant as separate undertakings; Revenue appeal dismissed on these grounds.

Separate undertaking for each unit for computing 80IA(4) deduction - Whether each windmill (and solar plant) must be treated as a separate undertaking for the purpose of computing deduction under section 80IA(4). - HELD THAT: - Considering prior Tribunal orders in the assessee's own case for A.Y. 2012-13, 2013-14 and 2014-15 which construed each windmill as a separate undertaking for section 80IA(4), and noting absence of any contrary binding decision, the Tribunal declined to deviate from that view. The Tribunal also accepted the assessee's exercise of option under section 80IA(2) to select initial assessment years for individual units, which supports treating units separately so that each unit gets ten years of deduction from its chosen initial assessment year. [Paras 6]

Each windmill and the solar power plant are separate undertakings for computing deduction under section 80IA(4); Revenue's appeal on this point dismissed.

Deeming fiction in section 80IA(5) and notional carry forward of losses - Whether notional brought forward losses and depreciation (which had earlier been set off against non eligible business income) must be notionally carried forward and deducted against profits of eligible business under section 80IA(5) for A.Y. 2020-21. - HELD THAT: - The Tribunal first found the Revenue's ground not maintainable because Revenue had not challenged the identical issue in appeals relating to earlier assessment years, leading to finality on that question; consequently Revenue could not reopen the contention for A.Y. 2020-21. Addressing the matter on merits, the Tribunal followed the view of the Delhi High Court (respectfully following the Madras High Court) that the deeming fiction in sub section (5) of section 80IA makes the eligible business the only source of income for the specified period but does not permit re opening or notional revival of losses or depreciation which had been actually set off against other business income in earlier years. The Tribunal held that losses already absorbed against other income cannot be notionally carried forward to defeat the assessee's exercise of option; therefore no notional set off was permissible and there was no bar to granting deduction where no actual unabsorbed losses remained for the eligible undertaking in the relevant year. [Paras 8, 9]

Revenue's ground relating to section 80IA(5) held not maintainable and, on merits, rejected; notional carry forward of losses already set off against other income is not permissible and does not defeat deduction under section 80IA(4).

Final Conclusion: The Revenue's appeal is dismissed. The Tribunal upheld the CIT(A)'s allowance of deduction under section 80IA(4) for A.Y. 2020-21 by treating each windmill and the solar plant as separate undertakings and rejected the Revenue's contention that notional prior losses must be carried forward under section 80IA(5).

Business income - Fee for Technical Services - Fee for Included Services - make available - permanent establishment - integrated business arrangement - apportionment of consideration

Fee for Technical Services - Fee for Included Services - business income - integrated business arrangement - make available - apportionment of consideration - Whether receipts from Centralized Services paid to the assessee are taxable in India as Fee for Technical Services or Fee for Included Services or are business income not taxable in absence of a permanent establishment - HELD THAT: - The Tribunal held that the centralized services fees are part of an integrated business arrangement whose predominant object is advertising, marketing, promotion and reservations for hotels worldwide and that ancillary supplies (designs, documents, systems, trademark use) were incidental to that main service. Relying on earlier coordinate-bench and High Court decisions in the assessee's group and the assessee's own earlier years, the Tribunal found that the determinative factors for treating the receipts as FIS/FTS do not apply: the services do not facilitate a standalone use of technical knowledge or constitute a royalty, the 'make available' condition fails for Article 12(4)(b), and Article 12(4)(a) is inapplicable because the payments are not ancillary and subsidiary to a royalty-like payment. The Tribunal rejected apportionment of the total contract consideration into a royalty/technical-service component as neither practicable nor permissible, observing that the agreements and the parties' conduct demonstrate the entire consideration was for marketing/publicity services. Given that the assessee did not have a permanent establishment in India, the Tribunal concluded that such business income is not taxable in India. The present appeal by the Revenue was dismissed as the issue was squarely covered by those binding precedents and the CIT(A)'s order was upheld. [Paras 6, 7, 8]

Receipts under the Centralized Services Agreement are business income and not FTS/FIS; in absence of a permanent establishment in India, such income is not taxable in India; Revenue's appeal dismissed.

Final Conclusion: Following binding decisions of the Tribunal and the Hon'ble Delhi High Court in the assessee's own cases and group precedents, the AT upheld the CIT(A)'s conclusion that the centralized services receipts are business income (not FTS/FIS) and, since the assessee has no PE in India, the receipts are not taxable; Revenue's appeal is dismissed.

Legislative competence - Pith and substance doctrine - In the course of import - Instrument (for stamp duty) - Delivery Order (DO) - Bill of Lading (BoL) exclusion - Bill of Entry (BoE) distinction - Article 286(1)(b) restriction - Entry 41 and Entry 83 of List I

Legislative competence - Entry 41 and Entry 83 of List I - Article 286(1)(b) restriction - Pith and substance doctrine - State of Maharashtra's competence to levy stamp duty on Delivery Orders (DOs) - HELD THAT: - Applying the doctrine of pith and substance, the court examined whether imposition of stamp duty on DOs intrudes upon Parliament's field (duties of customs and import/export across customs frontiers). The court analysed the purpose of the Maharashtra Stamp Act as a fiscal measure charging duty on specified instruments, and contrasted it with the Objects of the Customs Act (levy and collection of customs duties during the import process). Relying on authorities interpreting the phrase 'in the course of import', the court held that the import journey ends when goods cross the customs frontier and customs assessment/clearance is complete. The DO, as issued after payment of customs duty and extinguishment (or potential extinguishment) of the shipper's lien, arises after the customs taxing event and is not an integral part of the course of import. Accordingly, there is no impermissible encroachment on Entries 41 and 83 or breach of Article 286(1)(b); the State's levy on DOs falls within its legislative competence as per the pith and substance analysis. [Paras 21, 22, 30, 31, 41]

The State is competent to levy, impose and collect stamp duty on DOs; the levy is not ultra vires Articles 246(1), 286(1)(b) and 286(2) or Entries 41 and 83 of List I.

Instrument (for stamp duty) - Delivery Order (DO) - Bill of Lading (BoL) exclusion - Bill of Entry (BoE) distinction - Characterisation of a Delivery Order (DO) vis-a -vis exclusion of BoL/BoE and its liability to stamp duty - HELD THAT: - The court examined the statutory definition of 'instrument' in Section 2(l) of the Maharashtra Stamp Act and Article 29 of Schedule I which expressly charges stamp duty on a 'Delivery Order in respect of goods'. The DO creates an entitlement to delivery of goods to the person named or the holder and is not among the documents specifically excluded (such as Bill of Lading). The court distinguished BoE and BoL from a DO: a BoE is a document for customs assessment (not an instrument of delivery) and a BoL is a document of title but may be distinct in function; neither exclusion automatically sweeps DOs into their exclusions. The DO may be issued only after customs clearance and/or extinguishment of carrier's lien, and it creates or evidences the right to possession/delivery (distinct from title). The computation of stamp duty on the assessed value does not convert the levy into a tax on the import transaction; stamp duty is imposed on the instrument. [Paras 19, 21, 22, 33, 34]

A DO is an 'instrument' chargeable under Article 29; it is distinct from BoL and BoE and is not excluded from the definition of 'instrument' under the MSA.

Pith and substance doctrine - Reading down - Whether Article 29 of Schedule I (stamp on DO) must be read down to exclude DOs issued in respect of imported goods - HELD THAT: - The court considered whether a remedial reading down was necessary to reconcile Article 29 with other statutory provisions. Applying established principles governing reading down, the court found no statutory conflict: DOs are not extensions of BoL or BoE and the legislative fields do not clash. Since the provision is workable and does not impinge upon Union powers, the limited and exceptional doctrine of reading down was not warranted. [Paras 42]

Prayer to read down Article 29 to exclude DOs issued in respect of imported goods is untenable and rejected.

Refund claim - Deliverance of goods - Claim for refund of stamp duty paid on DOs - HELD THAT: - Having upheld the validity of the levy, the court held that the ancillary claim for refund of amounts paid as stamp duty (with interest) becomes redundant. No separate adjudication on refund was required once the primary levy was held intra vires. [Paras 43]

Refund claims are redundant in view of the declaration that the levy is valid; no refund ordered.

Final Conclusion: The writ petitions challenging levy of stamp duty by the State of Maharashtra on Delivery Orders are dismissed: the levy on DOs under Article 29 of the Maharashtra Stamp Act, 1958 is within the State's legislative competence, DOs are instruments chargeable to stamp duty and distinct from BoL/BoE, reading down is not warranted, and claims for refund are redundant. Rule discharged; no order as to costs; interim applications disposed.

Refund of excess duty - classification and reassessment of bill of entry - remand for speaking order - opportunity of personal hearing - direction to adjudicating authority to decide expeditiously

Remand for speaking order - opportunity of personal hearing - direction to adjudicating authority to decide expeditiously - Adjudicating authority to dispose of the remanded proceedings by passing a speaking order after affording personal hearing within a stipulated time - HELD THAT: - The petitioner challenged classification of certain imported items in Bill of Entry No. 5709318 dated 16.11.2019 and sought reassessment and a speaking order; an appellate order dated 31.10.2022 allowed the appeal and remanded the matter to the Assessing Authority to pass a speaking order after giving the petitioner personal hearing. The High Court recorded that adjudicating proceedings remain pending and, in view of the respondents' assurance, directed the adjudicating authority to conclude the remanded proceedings expeditiously by passing the required speaking order after affording an opportunity of personal hearing to the petitioner within six weeks from the date of the order. The Court did not adjudicate the merits of the refund claim or classification but confined its direction to the timely disposal of the remanded proceedings in accordance with the appellate direction. [Paras 5, 8]

Proceedings remanded by the appellate order are to be disposed of expeditiously by the adjudicating authority within six weeks, after giving the petitioner an opportunity of personal hearing and passing a speaking order.

Final Conclusion: Writ petition disposed directing the adjudicating authority to decide the remanded adjudication by passing a speaking order after personal hearing within six weeks; petitioner remains free to pursue further remedies permissible in law.

Liability to pay differential customs duty - Indemnity cum Guarantee Bond - penalty quantified as interest under contractual bond - validity of contractual obligation despite absence of statutory provision - requirement to execute bond under Rule 6(2)(b) of the Foreign Trade (Regulation) Rules, 1993 - Export Promotion Capital Goods Scheme

Indemnity cum Guarantee Bond - penalty quantified as interest under contractual bond - validity of contractual obligation despite absence of statutory provision - Validity of demand for an amount equal to 24% per annum under the Indemnity cum Guarantee Bond where no substantive statutory provision prescribes such interest - HELD THAT: - The Court found that the demand in question arises from an Indemnity cum Guarantee Bond executed by the appellant at the time of grant of licence. The relevant clause obliged the appellant, on default, to pay an amount equal to 24% interest per annum on the amount of duty saved. The Court held that this clause operates as a contractual penalty quantified at 24% and is not to be equated with a statutory interest demand by Customs. Reliance on precedents distinguishing demands based solely on statutory provisions was considered, but the Court accepted the principle applied in Rexnord Electronics and Controls Ltd. that a claim founded on a bond executed by the party is enforceable even if the Customs Act does not independently provide for such interest. Consequently, absence of an express statutory provision did not render the contractual obligation unenforceable where the bond itself created the liability. [Paras 15, 16, 17, 18, 19]

Demand for an amount equal to 24% per annum under the Indemnity cum Guarantee Bond is valid and enforceable as a contractual penalty

Penalty quantified as interest under contractual bond - liability to pay differential customs duty - Characterisation of the clause as a penalty rather than statutory interest and its consequence for the appellant's obligation to pay on failure to export - HELD THAT: - The Court analysed the clause wording and concluded it imposed an obligation to pay an amount equal to 24% interest per annum on the duty saved in the event of default. That formulation, the Court held, denotes a penal charge quantified at 24% of the duty saved and is not the same as statutory interest demanded by Customs. Having accepted that characterization, the appellant's contention that respondents are not entitled to charge any interest on the difference in customs duty was rejected. [Paras 16, 19]

The clause is a penal charge quantified at 24% and the appellant is liable to pay it on failure to fulfil export obligations

Requirement to execute bond under Rule 6(2)(b) of the Foreign Trade (Regulation) Rules, 1993 - Export Promotion Capital Goods Scheme - Whether execution of the bond was mandated by the Foreign Trade (Regulation) Rules, 1993 and whether that mandate supports enforceability of the bond condition - HELD THAT: - The Court referred to Rule 6(2)(b) of the Foreign Trade (Regulation) Rules, 1993 which contemplates that a licensing authority may require execution of a bond to secure compliance with licence conditions. The Court held that execution of the bond was in compliance with that Rule and that where a person claims fiscal benefits subject to conditions, the requirement to execute a bond and the attendant penal clause cannot be struck down merely because the sanction is not separately provided by another substantive statute. The contractual stipulation was thus upheld as a legitimate condition tied to the benefit conferred under the EXIM policy. [Paras 20, 21, 22]

Execution of the bond was mandated under Rule 6(2)(b) and supports enforceability of the penal clause

Final Conclusion: The writ appeal is dismissed. The Court upheld the enforceability of the Indemnity cum Guarantee Bond clause requiring payment equal to 24% per annum on the duty saved as a contractual penal obligation, and found execution of the bond authorised by Rule 6(2)(b) of the Foreign Trade (Regulation) Rules, 1993.

Release of imported goods on payment of penalty - redeemable seizure and redemption fine - confiscation of imported goods - compulsory registration under CRO, 2012 - compliance with Foreign Trade Policy conditions for redemption

Release of imported goods on payment of penalty - redeemable seizure and redemption fine - Whether the Civil Miscellaneous Appeal against the Tribunal's order should be entertained where the consignments have been released on payment of duties, fines and penalties - HELD THAT: - Both parties informed the Court that the impugned consignments were released pursuant to the Tribunal's order upon payment of duties and other dues. Counsel for both sides accepted that the factual consequence of release on payment has been effected. The Court noted that the same Bench had recently decided a batch of similar matters and recorded the Supreme Court's disposition in that batch, where goods already released on payment of penalty led to dismissal of Special Leave Petitions and Appeals while leaving questions of law open. Applying that position and the parties' common concession that the goods have been released on payment, the Court dismissed the present appeal without adjudicating the substantial questions of law raised, leaving those questions open for determination in appropriate proceedings.

Appeal dismissed as the consignments have been released on payment of duties and other dues; substantial questions of law kept open for adjudication in appropriate proceedings.

Compulsory registration under CRO, 2012 - compliance with Foreign Trade Policy conditions for redemption - confiscation of imported goods - Disposition of the substantial questions of law raised in the appeal - HELD THAT: - The Court expressly refrained from deciding the substantial questions of law framed in the appeal regarding applicability of CRO, 2012, and compliance with the Foreign Trade Policy for redemption. Relying on the prior batch decision and the Supreme Court's treatment of factually similar releases on payment, the Court left those legal questions open for consideration in appropriate proceedings rather than resolving them in the present appeal.

Substantial questions of law are not adjudicated and are kept open for adjudication in appropriate proceedings.

Final Conclusion: The Civil Miscellaneous Appeal is dismissed on the basis that the consignments have been released on payment of duties and other dues; the substantial questions of law raised are left open for determination in appropriate proceedings. No costs.

Duty drawback entitlement - realisation of export proceeds within prescribed period - Bank Realisation Certificate - opportunity of personal hearing - remand for fresh consideration

Bank Realisation Certificate - duty drawback entitlement - opportunity of personal hearing - remand for fresh consideration - Impugned order directing repayment of duty drawback set aside and matter remanded for fresh consideration on production of Bank Realisation Certificate - HELD THAT: - The petitioner, a 100% Export Oriented Unit, was granted duty drawback subject to realisation of export proceeds within the prescribed period. For a consignment in the year 2014 the authority concluded that export proceeds were not realised and, after issuing show cause notices and personal hearing opportunities which the authority records were not complied with, directed repayment of the duty drawback with interest. The petitioner contends that the Bank Realisation Certificate (BRC) showing realisation on 12.05.2014 is available (and visible on the Directorate General of Foreign Trade web portal) but was not produced during the proceedings. The respondents maintain that the petitioner ought to have produced the BRC at the relevant time. Rather than adjudicating the factual dispute on the papers, the Court granted the petitioner one more opportunity and remanded the matter to the respondents to consider the claim afresh. The petitioner is directed to appear before the respondents on the specified date with the BRC issued by the Directorate General of Foreign Trade, and the respondents are directed to decide the matter de novo after affording the petitioner an opportunity of hearing.

The impugned order is set aside and the matter is remanded for fresh consideration upon production of the Bank Realisation Certificate and after affording an opportunity of hearing to the petitioner.

Final Conclusion: Writ petition allowed; impugned order dated 24.08.2020 set aside and matter remitted to the respondents for fresh decision after the petitioner produces the Bank Realisation Certificate and is afforded an opportunity of hearing on 15.02.2024; no costs.

Redetermination of customs valuation - finality of assessment at time of import - admissibility of evidence from separate consignments - right to cross-examine expert/Chartered Engineer - confiscation and penalty consequent on reassessment - sequential application of Customs Valuation Rules

Redetermination of customs valuation - finality of assessment at time of import - sequential application of Customs Valuation Rules - Redetermination of the declared value of second hand machines which had been examined and enhanced at the time of import is not permissible under the Customs Valuation Rules, 2007 where the original assessment has attained finality and has not been challenged. - HELD THAT: - The Tribunal held that once the goods were cleared from the port after examination and enhancement of declared value, and those assessment orders had attained finality (not stayed, set aside or appealed), the Department was not entitled to subject the same machines to another examination and reassessment. CVR 2007 does not permit a second re determination in such circumstances and the Department failed to demonstrate any omission or commission by the original Chartered Engineer or proper officer that would justify revisiting the assessment. Consequently the re determination of value by the revenue was legally impermissible. [Paras 16, 18]

Redetermination of value already enhanced at import set aside; reassessment impermissible where assessment has attained finality.

Admissibility of evidence from separate consignments - Evidence or investigative material relating to imports of other machines/consignments cannot be used as a basis to confirm an offence or to enhance value in respect of the impugned machines. - HELD THAT: - The Tribunal found that the Department relied upon evidence gathered during investigation in respect of some other machine/consignment (including an insurance policy and documents pertaining to different imports) to justify redetermination in the present cases. The Tribunal held that evidence in one case cannot be the basis for confirming an offence or enhancing value in another, and such reliance defeats established legal principles. [Paras 16, 18]

Reliance on evidence from different consignments to enhance value in the present cases is impermissible and cannot sustain redetermination or confiscation.

Right to cross-examine expert/Chartered Engineer - natural justice - Failure to permit cross examination of the Chartered Engineer who issued the certificate at import violates principles of natural justice and vitiates the order based on the subsequent certificate. - HELD THAT: - The Tribunal observed that the investigating officers did not question the Chartered Engineer who issued the original certificate and the appellants were not allowed to cross examine the engineer relied upon after investigation. This denial of opportunity to test vital evidence amounted to a serious violation of natural justice, rendering the impugned order illegal and unjustified. [Paras 16, 18]

Order confirmed on the basis of the second Chartered Engineer certificate is invalid for violation of natural justice; cross examination should have been allowed.

Confiscation and penalty consequent on reassessment - Consequent confiscation, demand of differential duty and imposition of penalties on the importer and its directors are not sustainable in view of the invalid redetermination of value. - HELD THAT: - Because the Tribunal set aside the re determination of value and found no violation of the Customs Act by the importer, it concluded there was no basis for confiscation, differential duty, or penalties. The Department failed to establish requisite facts or misconduct to justify penal consequences against the appellant or its directors. [Paras 18]

Confiscation, differential duty demand and penalties set aside as unsustainable.

Final Conclusion: Impugned order set aside; appeals allowed - re determination of value, confiscation, duty demand and penalties quashed; appellants entitled to consequential relief in law.

Rejection of transaction value under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - requirement of contemporaneous corroborative evidence to enhance declared value - confiscation under Section 111(m) of the Customs Act, 1962 and option to redeem on payment of fine - penalty under Section 112A of the Customs Act, 1962 - inapplicability of estoppel in taxation matters

Rejection of transaction value under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - requirement of contemporaneous corroborative evidence to enhance declared value - inapplicability of estoppel in taxation matters - Declared transaction value could not be rejected and re-assessment at an enhanced value was unsustainable. - HELD THAT: - The Commissioner relied mainly on the fact that the invoice date post-dated the bill of lading and on a perceived deviation from LME prices to form a reasonable belief under Rule 12. The appellants produced the contract, e-mail correspondence and payment remittance and explained the trade practice of selecting LME quotation days, adding a contractual premium and, where applicable, a backwardation/roll-over cost. The Tribunal observed that except for the invoice date being later than the bill of lading, no affirmative reason or evidence was shown to establish any of the illustrative flaws in Rule 12 (such as manipulated documents or mis-declaration). The Revenue did not produce contemporaneous imports or other corroborative evidence to justify enhancement of value. Prior acceptance of loaded values in earlier clearances does not estop the authorities in taxation matters. In the absence of cogent contradictory evidence, the declared transaction value could not be rejected and reliance on standing instructions alone was insufficient to enhance value. [Paras 8, 9]

Rejection of the declared value and consequent re-assessment at an enhanced value was not justified and set aside.

Confiscation under Section 111(m) of the Customs Act, 1962 and option to redeem on payment of fine - penalty under Section 112A of the Customs Act, 1962 - Confiscation of the goods and imposition of penalty were not proper in the absence of a justified rejection of value. - HELD THAT: - The confiscation and penalty were consequential upon the finding that the declared value was liable for rejection. Having found that Revenue failed to establish grounds under Rule 12 to reject the transaction value, the Tribunal held that the consequential measures-confiscation with an option of redemption on payment of a fine and imposition of a penalty-could not stand. The Tribunal therefore quashed the confiscation, the fine option and the penalty as not proper or legal. [Paras 2, 8, 10]

Confiscation of the consignment and the penalty imposed were set aside.

Final Conclusion: The Tribunal allowed the appeal, set aside the re-assessment of value, the confiscation (and associated fine option) and the penalty, holding that the Revenue failed to adducesufficient corroborative evidence to reject the declared transaction value and that estoppel is not available to the Revenue in taxation matters.

Misdeclaration - undervaluation - customs valuation redetermination - reliance on evidence beyond the show cause notice - National Import Data Base (NIDB) reliance without disclosure - opportunity to cross-examine - admissibility and sufficiency of expert evidence - setting aside demand, interest, redemption fine and penalty

Misdeclaration - admissibility and sufficiency of expert evidence - opportunity to cross-examine - The departmental finding that the imported fabrics were misdeclared as 'Stock Lot Polyester Knitted Fabrics' was unsustainable - HELD THAT: - The department's conclusion of misdeclaration rested on a Textile Committee expert's report and his oral statement that the fabric showed brushing on one side. On cross-examination the expert admitted he did not know how brushing is carried out and that his conclusion as to higher value was an assumption based on extra work involved. Further, the showcause notice itself recorded that docks officers had reported the goods as 'Stock Lot of Polyester Knitted Fabrics'. Given the expert's lack of factual or scientific basis for the brushing conclusion and the docks officers' contrary entry, the adjudicating authority's finding of misdeclaration lacked factual foundation and was set aside. [Paras 10]

Finding of misdeclaration set aside.

Undervaluation - customs valuation redetermination - reliance on evidence beyond the show cause notice - National Import Data Base (NIDB) reliance without disclosure - opportunity to cross-examine - The enhancement of transaction value declared by the importers was invalid because the adjudicating authority relied on NIDB data not pleaded in the showcause notice and not furnished to the appellants - HELD THAT: - The showcause notice proposed enhancement on the basis of market enquiry and supplied the relevant market-enquiry material to the appellants, who cross-examined the traders in the de novo proceedings; none supported the department's case. Thereafter the authority rejected the traders' evidence and relied on NIDB data which had not been referred to in the SCN nor supplied to the appellants for examination. Reliance on material not disclosed in the SCN and not communicated to the appellants deprived them of a fair opportunity and amounts to travelling beyond the grounds set out in the SCN. For these reasons the redetermination of value using undisclosed NIDB data was without legal or factual basis and was set aside. [Paras 11]

Enhancement of value on the basis of undisclosed NIDB data set aside; declared value accepted.

Setting aside demand, interest, redemption fine and penalty - consequential relief - The consequential demand, interest, redemption fine and penalties could not be sustained in view of the setting aside of misdeclaration and enhancement of value - HELD THAT: - Because the foundational findings of misdeclaration and enhanced valuation were set aside for lack of factual basis and for reliance on undisclosed material, the consequent demand, interest, redemption fine and penalties founded upon those determinations lacked sustaining basis. The Tribunal accordingly quashed those monetary consequences and allowed the appeals with consequential relief, if any. [Paras 12, 13]

Demand, interest, redemption fine and penalties set aside; appeals allowed with consequential relief.

Final Conclusion: Impugned orders set aside; appeals allowed - findings of misdeclaration and enhanced valuation annulled for lack of factual basis and for reliance on undisclosed NIDB material, and consequent demand, interest, redemption fine and penalties quashed.

Binding effect of Board circulars/instructions on Departmental officers - non binding character of Board circulars/instructions on Courts and Tribunals - monetary threshold for departmental appeals before CESTAT - principles of natural justice in appeals - duty to pass speaking order after re assessment under Section 17 of the Customs Act - obligation of Commissioner (Appeals) to refer matter back where no order has been passed after re assessment (Section 128A(3)(b)(ii)) - aggregation/identification of multiple bills of entry for reckoning pecuniary jurisdiction and Rule 6A of CESTAT Procedure Rules, 1982

Binding effect of Board circulars/instructions on Departmental officers - non binding character of Board circulars/instructions on Courts and Tribunals - Whether CBIC instructions prescribing monetary limits are binding on the Tribunal and bar the Tribunal from admitting departmental appeals below the prescribed threshold. - HELD THAT: - The Tribunal held that circulars and instructions issued by the Board are binding on departmental officers and guide uniform administration, but they do not bind the Courts or Tribunals. While the executive's clarifications represent its understanding of statutory provisions, they cannot override or be enforced by judicial authorities where the interests of justice require otherwise. Consequently the CBIC instruction prescribing the monetary threshold is mandatory for the Department internally but is not an absolute bar on the Tribunal exercising its adjudicatory discretion in the interest of justice (see reasoning at para 5 and para 6). [Paras 5, 6]

CBIC instructions are binding on the Department but not binding on the Tribunal; the Tribunal may decline to enforce the monetary limit where justice so demands.

Aggregation/identification of multiple bills of entry for reckoning pecuniary jurisdiction and Rule 6A of CESTAT Procedure Rules, 1982 - monetary threshold for departmental appeals before CESTAT - Whether the departmental appeals arising out of multiple Bills of Entry relating to the same importer and same commodity must be treated separately for reckoning the monetary threshold or whether the Tribunal can treat them as a single matter and admit the appeals despite the CBIC threshold. - HELD THAT: - The Tribunal found that the 30 Bills of Entry related to one importer concerning the same commodity and arose from a common transaction chain. Rule 6A of the CESTAT Procedure Rules allows filing of one appeal against a single impugned order even if multiple original orders/orders in original are involved, and where an impugned order deals with more than one original order a single memorandum suffices. Considering these facts and Rule 6A, the bench exercised its discretion to not give effect to the CBIC monetary instruction in this appeal and to admit the departmental appeals for hearing on merits (see paras 7, 15 and 16). [Paras 7, 15, 16]

The Tribunal may, on the facts of the present case where multiple Bills of Entry arise from common transactions and a common impugned order exists, refuse to apply the CBIC monetary threshold and admit the departmental appeals for hearing.

Duty to pass speaking order after re assessment under Section 17 of the Customs Act - obligation of Commissioner (Appeals) to refer matter back where no order has been passed after re assessment (Section 128A(3)(b)(ii)) - principles of natural justice in appeals - Whether the Commissioner (Appeals) erred in setting aside the enhanced value (accepted by the importer) without remanding the matter to the proper officer where reassessment under Section 17 was effected without a speaking order. - HELD THAT: - The Tribunal examined Section 17 and Section 128A(3)(b)(ii) and concluded that where reassessment under Section 17 has occurred and no speaking order was recorded (noting the statutory exception where the importer gave written acceptance), the Commissioner (Appeals) is nonetheless obliged, in cases where no speaking order exists after reassessment, to refer the matter back to the adjudicating authority for fresh adjudication. The Commissioner (Appeals) in the present case accepted the self assessed value and set aside the reassessed enhancement without remanding the matter, thereby violating the statutory mandate and principles of natural justice by denying the Department an opportunity of being heard. The Tribunal observed prior instances where Commissioner (Appeals) had remanded similar unilateral enhancements and concluded that the impugned order could not attain finality (see paras 9-14). [Paras 9, 11, 12, 13, 14]

The Commissioner (Appeals) erred in not referring the matter back as required by Section 128A(3)(b)(ii) where reassessment under Section 17 had occurred without a speaking order; the impugned order is unsustainable for want of compliance with the statutory mandate and principles of natural justice.

Final Conclusion: The Tribunal held that CBIC monetary instructions bind the Department but do not bind the Tribunal; on the facts (multiple bills arising from a common transaction and a single impugned order) the Tribunal exercised its discretion to admit the departmental appeals notwithstanding the CBIC threshold, found that the Commissioner (Appeals) violated Section 128A(3)(b)(ii) by not remanding the reassessment to the proper officer and thereby denied the Department a fair opportunity, and directed that the departmental appeals be heard on merits (listed for final hearing).

Restriction on import of second-hand/used goods - licensing requirement for import prior to issuance of DGFT Notification dated 28.02.2013 - confiscation for import without requisite licence - reliance on Chartered Engineer's/Chartered Accountant's certificate for enhancement of declared value - enhancement of declared value not amounting to mis-declaration without corroborative evidence

Restriction on import of second-hand/used goods - licensing requirement for import prior to issuance of DGFT Notification dated 28.02.2013 - confiscation for import without requisite licence - Import of the specified second-hand Digital Multifunction Printers during 19.10.2012 to 22.01.2013 was not subject to a licensing restriction and therefore could not be confiscated for lack of licence. - HELD THAT: - The Tribunal held that the goods were imported between 19.10.2012 and 22.01.2013, i.e., prior to issuance of DGFT Notification No.35(RE-2012)/2009-2014 dated 28.02.2013. Reliance was placed on this Tribunal's earlier decision in Bhawani Enterprises, which followed the Madras High Court view that up to 28.02.2013 there was no restriction on import of the subject goods. Applying that precedent, the Tribunal concluded that no specific licence was required for the impugned imports and, accordingly, confiscation on the ground of import without licence was not sustainable. [Paras 5, 6, 7]

No licence was required for imports made from 19.10.2012 to 22.01.2013; therefore confiscation for lack of licence is not sustainable.

Reliance on Chartered Engineer's/Chartered Accountant's certificate for enhancement of declared value - enhancement of declared value not amounting to mis-declaration without corroborative evidence - Enhancement of the declared value based solely on a Chartered Engineer's certificate does not by itself establish mis-declaration and cannot sustain confiscation, redemption fine or penalty in absence of corroborative evidence. - HELD THAT: - The Tribunal noted that the value enhancement was based on the Chartered Engineer's inspection and certificate. It agreed with the view in Bhawani Enterprises that mere enhancement of value on the basis of such a certificate cannot be a ground for treating the declared value as mis-declared unless there is other corroborative material. Applying that principle to the facts, the Tribunal held that the Chartered Engineer's certificate alone was insufficient to justify confiscation or the imposition of redemption fines and penalties. [Paras 6, 8]

Value enhancement based only on the Chartered Engineer's certificate does not constitute mis-declaration; therefore confiscation, redemption fine and penalty are not sustainable.

Final Conclusion: Revenue's appeal dismissed: imports dated 19.10.2012 to 22.01.2013 did not require a licence and goods are not liable to confiscation; enhancement of value based solely on a Chartered Engineer's certificate does not justify confiscation, redemption fine or penalty in absence of corroborative evidence.

Forensic audit - Interim orders for regulating conduct of company affairs - Reasons in judicial orders - Inherent powers of the Tribunal to pass interim relief - Oppression and mismanagement - Inspection of books and statutory compliances - Bar on finalisation of audited accounts pending adjudication

Forensic audit - Interim orders for regulating conduct of company affairs - Inherent powers of the Tribunal to pass interim relief - Reasons in judicial orders - Inspection of books and statutory compliances - Bar on finalisation of audited accounts pending adjudication - Validity of the NCLT's interim direction for an independent forensic audit since inception and the restraint on finalising audited accounts, challenged as cryptic, non-speaking and passed without material on record - HELD THAT: - The Tribunal examined whether the impugned interim directions could be sustained despite the appellant not having filed the reply affidavit before the NCLT and the challenge that the order lacked reasons. The Tribunal held that where a petition before the Adjudicating Authority contains allegations of siphoning of funds, breach of agreements, questionable appointment of auditors, non-maintenance of books and other statutory non-compliances, the NCLT may exercise its powers under the Rules and its inherent jurisdiction to pass interim orders to regulate the company's affairs and to procure independent material that assists adjudication. Conducting a forensic audit is a procedural, fact-gathering measure which does not decide rights and liabilities but enables the Tribunal to appreciate contested factual and maintainability issues. The absence of a formal reply affidavit before the NCLT did not render the interim order unsustainable when the NCLT proceeded on the averments made in the petition and the matter had been reserved for order. The Tribunal further observed that the restraint on finalising the audited accounts for the relevant year was incidental to preserving the status quo and preventing prejudice pending final adjudication. While judicial orders should ordinarily record reasons, the Tribunal found no infirmity in the impugned order in the facts and circumstances, especially given the serious nature of the allegations and the need for an independent forensic report to enable effective adjudication. [Paras 10, 11, 12, 13]

The impugned interim order directing an independent forensic audit since inception and restraining finalisation of audited accounts is sustained and the appeal is dismissed.

Final Conclusion: The Tribunal upheld the NCLT's interim directions for a forensic audit and for barring finalisation of the audited accounts pending adjudication, finding exercise of interim powers justified by the allegations and the need for independent factual material; the appeal is dismissed and connected appeal disposed on the same reasoning.

Restoration of struck off company - just and equitable - not a shell company / no siphoning of funds - failure to file statutory annual returns and financial statements - nil revenue not a sole ground for striking off - safeguarding interests of company and stakeholders - conditional restoration subject to costs and compliances

Restoration of struck off company - just and equitable - safeguarding interests of company and stakeholders - Restoration of the appellant company's name to the Register of Companies was just and equitable. - HELD THAT: - The Tribunal examined the material placed on record, including auditor reports for the financial years 2016-17 to 2020-21 and earlier filings, and found that the company possessed substantial assets and ongoing proceedings (including income-tax proceedings) that warranted protection of stakeholders' interests. Relying on precedent and the statutory test under Section 252(3), the Tribunal held that where a company is not shown to be a shell and restoration would not prejudice the Registrar, restoration can be ordered as just and equitable. The Tribunal also noted that mere absence of revenue from operations is not by itself a conclusive ground for striking off. Having applied these principles to the appellant's material, the Tribunal concluded restoration was appropriate. [Paras 11, 13]

The name of the appellant company is restored to the Register of Companies.

Not a shell company / no siphoning of funds - nil revenue not a sole ground for striking off - The appellant was not shown to be a shell company engaging in siphoning of funds, and nil revenue alone could not justify non-restoration. - HELD THAT: - The Registrar did not contend that the company transferred funds to sister concerns, engaged in siphoning, or was a shell. Auditor reports demonstrated fixed and non-current assets, loans and advances, current assets and liabilities. On this basis, and consistent with Tribunal authorities, the absence of trading revenue did not preclude restoration where there was no evidence of dishonest or unlawful diversion of assets. [Paras 11]

Findings of the Registrar that the company should not be restored on the sole ground of nil revenue were rejected; absence of unlawful conduct was affirmed.

Failure to file statutory annual returns and financial statements - conditional restoration subject to costs and compliances - Restoration is subject to compliance with statutory filings and payment of costs. - HELD THAT: - Although the appellant attributed non-filing to a bonafide mistake by its chartered accountant and has filed independent auditor reports before the Tribunal, the Tribunal required the appellant to regularise statutory compliance as a condition of restoration. The appellant undertook to file outstanding annual returns and financial statements and to adhere to future compliance timelines. The Tribunal therefore imposed conditions including payment of costs and timely filing as terms precedent to restoration. [Paras 12, 13]

Restoration ordered subject to payment of costs and filing of all outstanding annual returns and balance sheets within stipulated timelines, and other compliances.

Final Conclusion: The Tribunal set aside the NCLT order and directed restoration of the appellant company's name to the Register of Companies as just and equitable, holding that the company was not a shell and that nil revenue alone did not preclude restoration; restoration was ordered subject to payment of costs and compliance with filing requirements.

Severability of composite scheme of amalgamation - independent effectiveness of parts of a scheme of amalgamation - effect of non-approval of a part of a scheme on remaining parts - discretion under Section 231(1)(b) to modify or partly sanction a compromise or arrangement - power of Tribunal to give directions for proper implementation of a scheme

Severability of composite scheme of amalgamation - effect of non-approval of a part of a scheme on remaining parts - Whether the Ld. NCLT erred in dismissing the second motion by failing to consider the severability clauses of the composite scheme and the consequence of non-approval of Parts B and C on Part D - HELD THAT: - The Tribunal observed that the impugned order did not discuss Clauses 1.2.2 and 23.1 of the composite scheme, which expressly provide that each Part (Parts B, C and D) is severable and that failure of sanction or approval for any Part does not, unless boards decide otherwise, affect validity or implementation of the other Parts. The scheme envisaged distinct and independent share-swap ratios and separate implementation for the respective Parts. Given the approvals secured for HT Mobile Solutions Limited and HT Media Limited and failure of approval for Digicontent and NMW, the appellants sought sanction only qua Part D. The NCLT's dismissal on the ground that other parties had rejected the overall composite proposal did not engage with the scheme's severability clauses or the legal consequence that Parts B and C would stand revoked while Part D could remain effective. The Tribunal therefore found that the NCLT's order was silent on the determinative contractual and scheme provisions and required reconsideration in light of those clauses and relevant approvals or non-objections by statutory authorities.

Impugned order set aside and the matter remitted to the Ld. NCLT, New Delhi to revisit the second motion applying Clauses 1.2.2 and 23.1 and to decide the petition in accordance with law after considering the Regional Director's observations within six weeks.

Discretion under Section 231(1)(b) to modify or partly sanction a compromise or arrangement - power of Tribunal to give directions for proper implementation of a scheme - Whether the Ld. NCLT was empowered to grant partial sanction of the scheme or to make modifications/directions necessary for proper implementation - HELD THAT: - The Tribunal noted that Section 231(1)(b) empowers the NCLT to give directions or make modifications in a compromise or arrangement as it considers necessary for proper implementation. Applying this principle, the Tribunal held that the NCLT possessed sufficient statutory power to consider and, if appropriate, partly sanction the scheme limited to Part D or to frame directions to effectuate the component of the scheme that was viable and approved. The Tribunal also observed that statutory authorities including the Regional Director, Official Liquidator and Income Tax department had not objected to partial acceptance, a circumstance relevant to exercise of the Tribunal's discretion on partial sanction.

NCLT is vested with jurisdiction and discretion to modify or partly sanction the scheme and to give directions for its proper implementation; exercise of that power must be undertaken on reconsideration.

Final Conclusion: The NCLT's order dated 23.02.2023 is set aside and the petition is remitted to the Ld. NCLT, New Delhi to reconsider the second motion in the light of the scheme's severability clauses and the Tribunal's power to partly sanction or modify the scheme, taking into account the Regional Director's observations and relevant statutory non-objections, and to dispose of the matter within six weeks.

Principle of natural justice - professional misconduct - service of show cause notice with documents - reliance on firm's reply and election of remedy - penalty and debarment under Section 132(4) of the Companies Act, 2013 - NFRA's investigatory and adjudicatory powers

Principle of natural justice - service of show cause notice with documents - reliance on firm's reply and election of remedy - Alleged violation of the principle of natural justice by NFRA for not furnishing documents appended as Annexure A with the show cause notice. - HELD THAT: - The Tribunal found that although the show cause notice referred to Annexure A, the Appellant had not contemporaneously requested the documents during the prescribed reply period and had, instead, expressly adopted and relied upon the detailed reply filed by the statutory audit firm. The Appellant sought and obtained time-extensions, and ultimately informed NFRA that the firm's reply dated 24.01.2023 should be considered as his own response to the show cause notice and that he had not separately submitted comments. Given this election to rely on the firm's reply-to which the firm had been served the documents-the Appellant could not later contend that lack of direct delivery of Annexure A to him amounted to a breach of natural justice. The Tribunal also noted that the Appellant did not seek a personal hearing. On these factual and procedural bases, NFRA's decision imposing penalty and debarment was not vitiated for denial of natural justice. [Paras 10, 11, 12]

Allegation of violation of natural justice is rejected; appeal dismissed.

Final Conclusion: The appeal challenging NFRA's order on grounds of non-supply of documents is dismissed: the Appellant had relied on the firm's reply and did not seek documents or a personal hearing, and therefore cannot contend a breach of the principle of natural justice.

Inherent power to correct clerical mistake or slip - accidental slip or omission - inherent jurisdiction under tribunal rules to rectify mistakes - limited scope of correction where error originates from parties' documents or prior orders

Inherent power to correct clerical mistake or slip - accidental slip or omission - inherent jurisdiction under tribunal rules to rectify mistakes - Whether this Tribunal should exercise its inherent jurisdiction to correct the project completion date in its earlier judgment from 03.12.2023 to 03.12.2024 - HELD THAT: - The Tribunal acknowledged the broad principle, as discussed in Niyamat Ali Molla vs. Sonargon Housing Cooperative Society Ltd. , that a court has inherent power to correct clerical mistakes or errors arising from accidental slips or omissions, and that such power is preserved in the tribunal's procedural rules. However, the exercise of that power is confined to occasions where the impugned order itself contains a mistake or slip. The impugned judgment recorded the date 03.12.2023 because that was the date noted by the Adjudicating Authority in the order against which the appeal was filed. The subsequent certificate issued by RERA stating 03.12.2024 does not convert the Tribunal's factual recital of the Adjudicating Authority's finding into a mistake in the Tribunal's order. Applying the established test, the Tribunal found no demonstrable accidental slip or omission in its order that required correction; the date in the Tribunal's order accurately reflected the material before it. Consequently, the inherent power could not be invoked to alter the recorded date. [Paras 5]

Application to modify the project completion date in the Tribunal's judgment is rejected for want of any error or slip in the order.

Final Conclusion: The application under the Tribunal's inherent jurisdiction to correct the project completion date is refused because the Tribunal's order correctly reflected the date noted by the Adjudicating Authority and no accidental slip or omission in the Tribunal's judgment was shown.

Closure of CIRP on settlement - one time settlement (OTS) and its effect on insolvency proceedings - setting aside admission and consequential orders - liberty of financial creditor to revive proceedings upon breach of settlement - deposit of settlement amount with court/registry and handing over to creditor - termination of proceedings against personal guarantors

Closure of CIRP on settlement - one time settlement (OTS) and its effect on insolvency proceedings - setting aside admission and consequential orders - Settlement agreement taken on record and insolvency proceedings closed, with impugned admission and related orders set aside. - HELD THAT: - The Tribunal recorded that the appellants placed the Settlement Agreement and the Bank's OTS approval on record and that the appellant had deposited the amount as directed earlier. Considering the settlement terms and the parties' concurrence, the Tribunal held that the CIRP against the Corporate Debtor and Corporate Guarantors, and proceedings under Section 95 against the Personal Guarantors, should be closed. Consequentially, the orders impugned in the appeals were set aside and the Corporate Debtor, Corporate Guarantors and Personal Guarantors were freed from CIRP in view of the settlement being accepted and the deposit made as ordered. [Paras 4, 6]

Settlement taken on record; CIRP closed and impugned orders set aside; Corporate Debtor, Corporate Guarantors and Personal Guarantors freed from CIRP.

Liberty of financial creditor to revive proceedings upon breach of settlement - one time settlement (OTS) and its effect on insolvency proceedings - Liberty reserved to the Bank to revive insolvency proceedings in accordance with the settlement terms if payments are not made as per the Settlement Agreement. - HELD THAT: - Although the CIRP was closed on account of the settlement, the Tribunal noted the Bank's submission that payments under the OTS had not yet been made and recorded the Bank's entitlement under Clause 9 of the Settlement Agreement to revive proceedings if the settlement terms are not complied with. The Tribunal therefore preserved the Bank's right to apply for revival of proceedings in accordance with the settlement provisions. [Paras 5, 6]

Liberty reserved to the Bank to revive proceedings in accordance with the Settlement Agreement if occasion arises.

Deposit of settlement amount with court/registry and handing over to creditor - termination of proceedings against personal guarantors - Directions regarding deposits: amounts deposited pursuant to earlier order to be handed over to the Bank as per settlement; payments required to IRP to be completed. - HELD THAT: - Pursuant to the Tribunal's earlier order, the appellants had deposited the directed amount with the Registry. The Tribunal directed that the amount deposited under the earlier order shall now be handed over to the Bank of India in accordance with the Settlement Terms and that the Registry shall transfer the amount along with accrued interest directly in favour of the Bank. The Tribunal also recorded payments already made to the IRP in respect of personal guarantor appeals and directed remaining amounts, if any as ordered earlier, to be paid within the stipulated period. [Paras 7, 8, 9]

Registry to hand over deposited amount with accrued interest to Bank as per settlement; required payments to IRP to be made as directed.

Final Conclusion: The Tribunal took the Settlement Agreement on record, closed the CIRP and set aside the impugned orders, directed the Registry to transfer deposited funds to the Bank as per the settlement and preserved the Bank's liberty to revive proceedings in accordance with the settlement terms in case of non-compliance.

Default - restructuring of loan accounts - moratorium on principal v. interest - classification as Non-Performing Asset (NPA) - admission of Section 7 application - RBI Prudential Norms on asset classification

Default - admission of Section 7 application - Validity of admission of the Section 7 application on the ground of default by the Corporate Debtor - HELD THAT: - The Tribunal found that the amount of debt was undisputed and that the Corporate Debtor had admitted default in its own correspondence seeking further restructuring (letter dated 19.10.2020). Documentary evidence including restructuring sanction letters, supplemental loan agreements and bank statements established that interest and/or instalments were not paid as required, and that the accounts had been classified as NPA at relevant points. In view of these records and the Corporate Debtor's admissions, there was a clear default entitling the Financial Creditor to file under Section 7 of the Code. The Adjudicating Authority's admission of the application was therefore upheld. [Paras 42, 43, 44, 57, 58]

Admission of the Section 7 application was valid as there was established default by the Corporate Debtor.

Restructuring of loan accounts - moratorium on principal v. interest - classification as Non-Performing Asset (NPA) - RBI Prudential Norms on asset classification - Whether the restructuring sanction letter granted a moratorium that prevented classification as NPA prior to the dates relied upon by the Financial Creditor - HELD THAT: - The Tribunal examined the restructuring sanction letter dated 30.03.2019, supplemental agreements and the bank's MSME restructuring policy. It concluded that the moratorium applied only to principal instalments (FITL/WCTL moratoria for specified periods) and did not suspend obligation to pay interest, as the sanction letter expressly stated that "interest will be served on monthly basis as and when applied". Bank statements showed sporadic interest payments by the Corporate Debtor during the alleged moratorium, undermining the Appellant's contention of a blanket moratorium on interest. Further, under RBI Prudential Norms, overdue interest outstanding for specified periods triggers NPA classification; the accounts had been classified as NPA in accordance with those norms and the bank's policy. Accordingly, the Tribunal rejected the plea that restructuring precluded NPA classification as of the dates relied upon by the Financial Creditor. [Paras 45, 46, 51, 52, 55]

The restructuring moratorium did not cover interest; classification as NPA was permissible and correctly applied by the Financial Creditor.

Default - classification as Non-Performing Asset (NPA) - Whether inconsistencies in dates of default pleaded by the Financial Creditor vitiated the Section 7 admission - HELD THAT: - The Tribunal reviewed the sequence of account classifications (including earlier NPAs, regularisations on part payments, SMA classification and the supplemental affidavit clarifying chronology) and found that while various dates featured in the record, the overall chronology showed recurring defaults and ultimate classification as NPA on 30.09.2019. The fact that accounts had been earlier regularised after payments did not negate subsequent defaults. The Tribunal held that the differing dates did not render the admitted application infirm, since the bank had sufficiently set out the history of defaults and consequent asset classifications in accordance with prudential norms and its supplemental affidavit. [Paras 49, 50, 54]

Variations in dates of default did not undermine the Financial Creditor's case; they did not vitiate admission under Section 7.

Final Conclusion: The Tribunal concluded that the Corporate Debtor had defaulted in repayment obligations, the restructuring moratorium did not extend to interest payments, the accounts were validly classified as NPA under RBI norms, and the Adjudicating Authority rightly admitted the Section 7 application; the appeal is dismissed.

Extinguishment of claim upon approval of resolution plan - effect of Committee of Creditors approval vis-a -vis Adjudicating Authority approval - condonation of delay in submission of claim Form-CA - claims submitted after the last date for submission of claims - concession by successful resolution applicant

Condonation of delay in submission of claim Form-CA - claims submitted after the last date for submission of claims - Whether the impugned order refusing to condone the delay of 544 days in submission of the claim in Form-CA and rejecting the claim should be set aside - HELD THAT: - The Tribunal examined the appellant's application seeking condonation of delay in submitting his claim in Form-CA which was filed after the last date for submission. Although competing judicial authority was discussed by the parties, the Tribunal did not decide the merits of the delay or the entitlement to be admitted as a financial creditor on those merits. During hearing the partner of the Successful Resolution Applicant expressly conceded that he had no objection to the appellant's claim being entertained and the delay being condoned. The Tribunal treated that concession as dispositive and, without engaging the substantive controversy, allowed the appeal on that basis. Consequently the impugned order dismissing the application was set aside and the Resolution Professional was directed to include the appellant's claim and submit the updated claim to the Adjudicating Authority. The Court therefore resolved the immediate relief sought by the appellant by relying on the conceded position of the SRA rather than by pronouncing on entitlement or on the jurisprudential question of condonation in comparable factual matrices.

Impugned order set aside; respondent/Resolution Professional to include the appellant's claim and submit the updated claim to the Adjudicating Authority.

Extinguishment of claim upon approval of resolution plan - effect of Committee of Creditors approval vis-a -vis Adjudicating Authority approval - Whether approval of the resolution plan by the Committee of Creditors extinguishes claims prior to approval by the Adjudicating Authority - HELD THAT: - The Tribunal noted and considered authorities addressing whether a claim stands extinguished merely upon CoC approval of a resolution plan or only after approval by the Adjudicating Authority. The parties relied on differing precedents, including a Supreme Court decision cautioning against permitting claims after CoC approval in certain circumstances and a three-member bench decision holding that claims extinguish only after Adjudicating Authority approval. The Tribunal observed these authorities but did not resolve the competing legal question on the merits in this appeal because the Successful Resolution Applicant conceded that it had no objection to entertaining the appellant's claim. Accordingly, the Tribunal refrained from making a substantive pronouncement on extinguishment and decided the matter on the basis of the concession.

No substantive determination on extinguishment; appellate relief granted on concession and administrative directions issued to the Resolution Professional.

Final Conclusion: The appeal succeeds on the basis of the concession by the Successful Resolution Applicant; the impugned order is set aside and the Resolution Professional is directed to include the appellant's claim and submit the updated claim to the Adjudicating Authority.

Reverse CIRP - Voting by Authorised Representative under section 25A(3) of the Insolvency and Bankruptcy Code, 2016 - Approval and implementation of a Project Completion Proposal by creditors' resolution - Role of Interim Resolution Professional in holding e-voting and filing compliance report

Voting by Authorised Representative under section 25A(3) of the Insolvency and Bankruptcy Code, 2016 - Role of Interim Resolution Professional in holding e-voting and filing compliance report - Validity of the e-voting conducted by the IRP and the Authorised Representative and acceptance of the compliance report recording the creditors' resolution in favour of the Project Completion Proposal. - HELD THAT: - The Tribunal recorded that on 27.02.2024 it had permitted the Authorised Representative of the allottees and the secured creditor to vote on the Project Completion Proposal and directed the IRP to carry out the formalities of holding the meeting and e-voting and to file a compliance report. The IRP filed a compliance affidavit dated 14.03.2024 stating that the voting window was made available from 10.03.2024 to 13.03.2024, the Authorised Representative cast the votes on behalf of the real estate allottees in accordance with section 25A(3) of the IBC, 2016, and the combined votes in favour amounted to the totality recorded in the compliance report. The Tribunal took the compliance report on record and treated the resolution passed by the creditors as having been validly carried with the voting percentages and the stated majority. [Paras 5, 6, 8]

Compliance report filed by the IRP is taken on record and the e-voting and resultant creditors' resolution in favour of the Project Completion Proposal are held valid.

Reverse CIRP - Approval and implementation of a Project Completion Proposal by creditors' resolution - Role of Interim Resolution Professional in holding e-voting and filing compliance report - Whether the appellant may implement the Project Completion Proposal to complete the Avalon Regal Court project under the aegis of the IRP on the principles of Reverse CIRP. - HELD THAT: - The Tribunal considered Prayer (b) of I.A. No. 546/2024 only after perusal of the compliance report which recorded that the creditors had approved the Project Completion Proposal. Relying on the principle of Reverse CIRP as propounded by this Tribunal and having regard to the affidavits filed by the appellant (dated 24.08.2023, 04.09.2023 and 23.12.2023) describing the Project Completion Proposal and settlement terms, the Tribunal allowed the Corporate Debtor to complete the project under the guidance of the IRP. The order expressly permits implementation in terms of the said affidavits and directs that the RP shall file its report after completion; parties are given liberty to approach the Tribunal in case of difficulties and are required to make requisite applications before the NCLT for compliance matters. [Paras 9, 10, 11]

Appellant is permitted to implement the Project Completion Proposal and complete the project under the guidance of the IRP on the principles of Reverse CIRP; the appeal is disposed of with liberty to approach the Tribunal for difficulties and direction that the RP shall file a post-completion report and parties shall make necessary applications before the NCLT for compliance.

Final Conclusion: The Tribunal recorded and accepted the IRP's compliance report that the Authorised Representative and secured creditor validly voted in favour of the Project Completion Proposal, and, applying the principle of Reverse CIRP and on the affidavits before it, permitted the appellant to implement the Project Completion Proposal to complete the project under the aegis of the IRP; the appeal is disposed of with directions for post-completion reporting and leave to approach the Tribunal or NCLT for compliance issues.

Liquidator's fee as percentage of the amount realised - interpretation of "amount realised" in liquidation - application under Section 60(5)(c) of the Insolvency & Bankruptcy Code, 2016 - remand for fresh consideration of fee claim

Liquidator's fee as percentage of the amount realised - interpretation of "amount realised" in liquidation - Whether the appellant is entitled to fee calculated as a percentage of the amounts realised during his tenure as liquidator beyond the single sale of a car, and whether the matter requires reconsideration in light of the clarified meaning of 'amount realised'. - HELD THAT: - The Tribunal and the present Liquidator did not consider the appellant's claim that he effected various sales during his tenure as liquidator, totaling the amounts set out in his claim, and limited award of fee to the sale of a car alone. The unamended Regulation 4(3) requires fee to be computed as a percentage of the "amount realised"; the IBBI circular dated 28.09.2023 elucidates that "amount realised" means proceeds from sale/realization where the asset changes form and clarifies treatment of liquid assets. The Appellate Tribunal found that the Tribunal erred in its approach by failing to consider the sales effected by the appellant and the clarified meaning of "amount realised". Accordingly the impugned order dismissing the appellant's application was set aside and the matter remanded to the Tribunal to restore and decide I.A. No. 893 of 2020 after the appellant furnishes a break-up of sales (first six months, next six months, next one year, etc.), and for the Tribunal to take into account Clause 2.1 of the IBBI circular while passing appropriate orders in accordance with law. [Paras 10, 11, 12]

Impugned order set aside; appeal allowed; matter remanded to the Tribunal for fresh consideration of the appellant's fee claim in accordance with the clarified meaning of "amount realised" and with directions to consider the detailed break-up of sales.

Final Conclusion: The appeal is allowed; the order dismissing I.A. No. 893 of 2020 is set aside and the matter is remitted to the Tribunal for reconsideration of the liquidator's fee claim in light of the clarified meaning of "amount realised", with directions to consider the sales break-up and pass appropriate orders in accordance with law.

Twin conditions for bail under Section 45 - Offence of money laundering - proceeds of crime - reason to believe - statutory presumption under Section 24 - powers of authorities under Section 50 (summons and recording of statements) - territorial jurisdiction - principle of parity in grant of bail

Twin conditions for bail under Section 45 - statutory presumption under Section 24 - Whether the petitioner satisfies the mandatory twin conditions in Section 45 of the PMLA to merit grant of bail - HELD THAT: - The Court applied the binding Supreme Court precedents holding that the twin conditions in Section 45 - (i) Public Prosecutor given opportunity to oppose and (ii) court satisfied there are reasonable grounds for believing the accused is not guilty and is not likely to commit an offence while on bail - are mandatory and must be complied with even when bail is sought under Section 439 CrPC. The statutory presumption under Section 24 that proceeds of crime are involved unless contrary is proved shifts the onus on the accused. Having considered the prosecution complaint, witness statements and investigative material, the Court found the twin conditions not satisfied: there are reasonable grounds to believe the petitioner is involved in activity connected with proceeds of crime and the petitioner failed to discharge the burden required to negate the statutory presumption. The Court therefore declined to exercise discretion to grant bail under Section 439 CrPC in light of Section 45 of PMLA. [Paras 73, 74, 103, 105, 106]

Application for bail rejected as Section 45 twin conditions are not met.

Reason to believe - proceeds of crime - Offence of money laundering - Whether there is prima facie material to form 'reason to believe' that the petitioner was involved in processes connected with proceeds of crime - HELD THAT: - The Court examined the prosecution complaint and statements recorded under Section 50, forensic findings and money transfer indications. On the material before it the Court concluded prima facie involvement: the prosecution contends the petitioner exerted influence to procure Khasmahal land, facilitated registration in the name of an associate, and funds flowed to a firm beneficially owned by the petitioner. Relying on the test of 'reason to believe' as construed by the Supreme Court, the High Court held such tangible and credible material suffices at the bail stage to sustain a prima facie view of the petitioner's involvement in activities connected with proceeds of crime. [Paras 64, 65, 69, 70, 71]

Court finds prima facie reason to believe the petitioner is involved in processes connected with proceeds of crime.

Principle of parity in grant of bail - Whether the petitioner is entitled to bail by parity with co accused who were granted bail - HELD THAT: - The Court applied the settled law that parity is not an absolute rule and must be invoked only when factual roles and involvement are substantially identical. On comparative assessment the Court found material distinctions: the petitioner is alleged to have played an active role in procuring the fraudulent transfer and to have exercised influence with officials, whereas the co accused who obtained bail (B. Agarwala) occupied a different factual position. The Court also noted that an adverse or irregular bail order in favour of another cannot create a right to 'negative equality'. Accordingly parity was rejected. [Paras 82, 85, 90, 99, 100]

Parity ground refused; petitioner not entitled to bail on that basis.

Territorial jurisdiction - jurisdictional fact to be decided at trial - Whether the Jharkhand authorities lacked jurisdiction because of a subsequent FIR in Kolkata - HELD THAT: - The Court held that territorial jurisdiction in PMLA matters depends on factual determination of where one or more of the processes in Section 3 were carried out. Following Supreme Court precedent the High Court held this is a matter of fact to be gone into at trial by the Special Court and is not amenable to resolution in the present writ/bail proceedings. The petitioner was directed to raise the territorial jurisdiction challenge before the trial court; the High Court did not decide the jurisdictional question on merits. [Paras 79, 80, 81]

Territorial jurisdiction question left to be determined by the trial court; not adjudicated in this bail petition.

Final Conclusion: On the material placed before it the High Court found prima facie involvement of the petitioner in activities connected with proceeds of crime, was not satisfied that the mandatory twin conditions of Section 45 PMLA were met, rejected the parity plea, left the territorial jurisdiction issue to the trial court, and dismissed the bail application.

Quashing for lack of service - remand for fresh consideration - right to personal hearing - binding precedent - limitation under Section 73(4B) of the Finance Act, 1994

Binding precedent - quashing for lack of service - Whether the impugned Order in Original should be quashed in view of the binding High Court judgment upheld by the Supreme Court and apparent non service of the order on the petitioner. - HELD THAT: - The Court noted that the Order in Original records that the Special Leave Petition filed by the tax authorities against the Telangana and Andhra Pradesh High Court decision was dismissed, leaving that High Court judgment operative (paragraph 4.3.4 as recorded in the Order). The absence of proof that the impugned order was served on the petitioner was also noticed. In these circumstances, and having regard to the continued effect of the High Court precedent, it was just and appropriate to set aside the impugned order to enable the petitioner to contest the tax demand afresh. [Paras 5]

Impugned order quashed.

Remand for fresh consideration - right to personal hearing - Whether the matter should be remanded to the 1st respondent for reconsideration and whether the petitioner must be afforded an opportunity, including personal hearing. - HELD THAT: - The Court directed that the matter be remitted to the 1st respondent for fresh consideration because the petitioner had not received the impugned order and relevant precedent favourable to the petitioner remained binding. The 1st respondent was directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and to issue a fresh order within three months from receipt of a copy of this order, thereby ensuring procedural fairness in reassessment. [Paras 5, 6]

Matter remanded to the 1st respondent for reconsideration with directions to afford opportunity including personal hearing and to pass a fresh order within three months.

Limitation under Section 73(4B) of the Finance Act, 1994 - Scope of the objection based on alleged non compliance with the time limits in Section 73(4B) is not finally adjudicated but is to be considered on reconsideration. - HELD THAT: - The petitioner challenged the impugned order on the ground that the requirements of Section 73(4B) concerning the period within which liability must be determined were flouted, noting the show cause notice dated 18.04.2017 and the Order in Original dated 30.01.2021 (paragraph 3). The Court did not decide the contention on limitation on the merits; instead, having quashed the order and ordered reconsideration, the question of compliance with Section 73(4B) and any consequent entitlement or bar was left open for fresh consideration by the assessing authority in accordance with law and after affording the petitioner an opportunity of hearing. [Paras 3, 6]

Objection under Section 73(4B) remitted for fresh consideration by the authority; not finally decided by the Court.

Final Conclusion: The Order in Original dated 30.01.2021 (assessment years 2011 2012 to 2015 2016) is quashed; the matter is remitted to the 1st respondent for reconsideration in light of binding precedent and procedural defects, with directions to afford the petitioner a reasonable opportunity including a personal hearing and to pass a fresh order within three months.

Business Support Service - infrastructural support services - Taxable Service - consideration for service - principal-to-principal relationship - joint venture

Business Support Service - infrastructural support services - Taxable Service - consideration for service - principal-to-principal relationship - joint venture - Whether the sum of Rs.50,00,000/- deposited by M/s a2z with the appellants constituted consideration for a taxable Business Support Service (in particular infrastructural support services) or formed part of a principal-to-principaljoint venture arrangement not attracting service tax - HELD THAT: - The Tribunal examined the MOU terms and the statutory definition of Business Support Service (including infrastructural support services) and the Board's clarificatory circular explaining that such support services ordinarily denote outsourced services involving deployment of personnel and operational assistance. The agreement showed reciprocal obligations: the appellants were to provide land, water and bagasse free of cost and a2z was to install a power unit, supply electricity/steam to the appellants and deposit funds for modernization, with a2z entitled to sell surplus power. No clause envisaged the appellants outsourcing business functions to a2z or rendering services/support personnel to a2z; the benefits were mutual and the advance was earmarked for modernization of the appellants' plant. The Tribunal held that viewing the deposit as consideration for a service was a mischaracterisation; modernization primarily benefited the appellants and the arrangement, on its true construction, was a principal-to-principaljoint venture-type commercial understanding rather than a service-provider/client relationship. Consequently, the Rs.50,00,000/- could not be treated as consideration for a Taxable Service under the Business Support Service head, and the Department erred in treating every monetary consideration as service consideration. [Paras 8, 9]

The deposit of Rs.50,00,000/- is not consideration for any Business Support Service and the MOU reflects a principal-to-principaljoint venture relationship; the impugned demand and connected orders do not survive legal scrutiny.

Final Conclusion: The appeal is allowed and the impugned demand and orders are set aside on the ground that the arrangement between the parties was a mutually beneficial principal-to-principal joint venture and the deposit was not consideration for a taxable Business Support Service.

Pre-deposit under Section 35F - Interest on delayed refund of pre-deposit - Applicability of amended Section 35FF - Entitlement to interest from date of deposit till refund - Rate of interest at 12% for delayed refund - Parimateria principle with Section 243 of the Income tax Act

Pre-deposit under Section 35F - Interest on delayed refund of pre-deposit - Whether the amount deposited by the appellant is a pre-deposit under Section 35F and whether interest is payable on its refund. - HELD THAT: - The Tribunal finds as admitted that the sum of Rs.8,00,000 was deposited by the appellant pursuant to an order of the original authority when an appeal was filed, and therefore constitutes a pre-deposit required under Section 35F. The refund claim arose after the appellate order (Order in Appeal dated 27.03.2018) setting aside the demand. The original authority sanctioned refund but declined interest; the Commissioner (Appeals) denied interest relying on pre amendment text of Section 35FF. The Tribunal examined the statutory scheme and precedents, holding that interest on delayed refund of pre deposits is payable. The Tribunal treated Section 35FF as governing the entitlement to interest on refunded pre deposits and, following analogous reasoning to Section 243 of the Income tax Act and decisions of higher fora, concluded that the appellant is entitled to interest on the refunded pre deposit. [Paras 7, 8, 11]

The amount is a pre deposit under Section 35F and the appellant is entitled to interest on its refund.

Applicability of amended Section 35FF - Parimateria principle with Section 243 of the Income tax Act - Whether the pre amendment or the amended provision of Section 35FF governs the appellant's claim for interest. - HELD THAT: - The Tribunal considered the proviso in the amended Section 35FF and the transitional provision which preserved pre amendment governance for amounts deposited prior to the Finance (No. 2) Act, 2014. Noting that the relevant factor for the amended Section 35FF is the date of the refund application (filed in 2020), and relying on precedent equating Sections 35FF and 243 of the Income tax Act as pari materia, the Tribunal held that the denial of interest based on the pre amended text was erroneous. The Tribunal relied on earlier decisions which interpret entitlement to interest from date of deposit until refund and applied the parimateria reasoning to conclude that the amended provisioning and judicial precedents entitled the appellant to interest. [Paras 10, 11]

Denial of interest by reference to the pre amendment Section 35FF was incorrect; the amended provision and pari materia principle support entitlement to interest on refund.

Rate of interest at 12% for delayed refund - What rate of interest is payable on the delayed refund of the pre deposit. - HELD THAT: - The Tribunal examined judicial authorities and departmental circulars and observed that, while the amended Section 35FF contemplates a rate notified by the Central Government (not below 5% and not exceeding 36%), judicial discipline and precedents (including decisions construing analogous provisions and Supreme Court guidance) have fixed the equitable rate at 12% per annum for delayed refund of pre deposits. The Tribunal rejected the department's reliance on a lower rate as in the cited High Court stay order and, having regard to Finacord Chemicals (supra) and other decisions as discussed, held that 12% per annum is the appropriate rate from the date of deposit until the date of payment. [Paras 11, 12]

Interest on the delayed refund is payable at 12% per annum from the date of deposit till the date of payment.

Final Conclusion: The appeal is allowed: the Commissioner (Appeals) erred in denying interest on the refunded pre deposit; the appellant is entitled to interest on the pre deposit from the date of deposit until refund at 12% per annum.

Refund of erroneously paid service tax - unjust enrichment - validity of credit notes as proof - non-availment of Cenvat Credit by recipient - distinction from assessable value reduction cases (Addison doctrine) - remand for verification and principles of natural justice

Validity of credit notes as proof - refund of erroneously paid service tax - Whether the Credit Notes issued by the appellant constitute proper documentary proof for establishing that service tax charged was returned to the clients. - HELD THAT: - The Tribunal held that the Credit Notes issued by the public limited company are proper documents reflecting the credit given to customers and form part of the appellant's profit and loss account and balance sheet; they cannot be dismissed as mere pieces of paper. However, the veracity and correctness of those documents may be subject to verification before being accepted as conclusive proof for refund purposes. [Paras 7]

Credit Notes are prima facie valid documentary evidence for claiming refund of erroneously paid service tax but their veracity can be verified by the Adjudicating Authority.

Distinction from assessable value reduction cases (Addison doctrine) - unjust enrichment - non-availment of Cenvat Credit by recipient - Whether the Supreme Court decision in Addison (concerning post-transaction credit notes and reduction of assessable value) applies to the present case and bars refund on the ground of unjust enrichment. - HELD THAT: - The Tribunal distinguished Addison as dealing with adjustments to assessable value (trade or turnover discounts) where the buyer has already discharged the price to the end customer and any subsequent discount cannot be passed on, thereby attracting unjust enrichment. In contrast, the present case concerns service tax erroneously paid on hiring of capital goods where, if it is established that the recipient did not avail Cenvat Credit and the appellant returned the tax by issuing Credit Notes, unjust enrichment would not arise. Consequently Addison is not applicable to this factual and legal matrix. [Paras 8, 9]

Addison is not applicable; unjust enrichment arises only if the recipient availed Cenvat Credit, which must be verified.

Remand for verification and principles of natural justice - refund of erroneously paid service tax - non-availment of Cenvat Credit by recipient - Whether the matter should be remanded for verification of documents and for determining applicability of unjust enrichment. - HELD THAT: - Having found that Credit Notes are prima facie acceptable and that the question of unjust enrichment depends on whether the clients availed Cenvat Credit, the Tribunal directed that the Adjudicating Authority should follow principles of natural justice, permit production of all relevant documents (letters from clients, Credit Notes, CA certificate and enclosures) and cause necessary verification to ascertain that no Cenvat Credit has been taken by the clients. The adjudicatory determination on refund/unjust enrichment is remitted for fresh consideration within four months from communication of the order. [Paras 10, 11, 12]

Matter remanded to the Adjudicating Authority for verification of documents, examination of non-availment of Cenvat Credit and fresh decision in accordance with natural justice.

Final Conclusion: The Tribunal held that the appellant's Credit Notes are prima facie proper evidence for claiming refund of erroneously paid service tax, distinguished the Addison principle as inapplicable to the facts, and remanded the matter to the Adjudicating Authority to verify the documents, ascertain that no Cenvat Credit was availed by the clients and decide the refund claim afresh in accordance with natural justice within four months.

Writ against show cause notice - maintainability of writ against demand notice - limited grounds for quashing show cause notice (lack of jurisdiction or malafide) - judicial review under Article 226 limited to compliance with statutory process - availability and obligation to exhaust efficacious statutory remedy - prematurity of challenging a show cause notice

Writ against show cause notice - maintainability of writ against demand notice - prematurity of challenging a show cause notice - Whether a writ under Article 226 is maintainable against the impugned show cause notices and demand notices at the present stage - HELD THAT: - The Court held that ordinarily a writ petition against a show cause notice or demand notice is not maintainable in a routine manner and is premature because a mere show cause notice does not amount to an adverse order affecting rights unless it is issued by an authority without jurisdiction or tainted by malafide. The Court emphasised that judicial review under Article 226 is concerned with whether the decision-making process complies with the Act and Rules and not to re adjudicate disputed questions of fact or substitute the Court's view for that of the adjudicating authority. The impugned notices were issued after investigation and communication to the petitioner; therefore, factual controversies concerning quantification and evidence must be resolved in the statutory adjudicatory process and not by the High Court at this stage. The Court relied on established precedents to underscore that writ jurisdiction should not ordinarily be exercised to quash show cause notices. [Paras 10, 11, 12, 13, 14]

Writ under Article 226 challenging the show cause notices is not maintainable at this stage and the High Court will not adjudicate the factual disputes underlying the demand.

Limited grounds for quashing show cause notice (lack of jurisdiction or malafide) - judicial review under Article 226 limited to compliance with statutory process - Whether any exceptional ground exists in the present petition to entertain writ jurisdiction (lack of jurisdiction or allegation of malafide) - HELD THAT: - The Court observed that writ relief against a show cause notice may be granted in limited circumstances where the issuing authority lacks jurisdiction or where clear malafide is alleged and, if malafide is alleged, the concerned officer must be impleaded in his personal capacity. The petition did not contend lack of jurisdiction nor did it establish malafide on the part of the issuing authorities. The record showed that the impugned notices were issued following an investigation and after communications to the petitioner. Consequently, no exceptional circumstance was made out to justify interference with the show cause notices by writ. [Paras 10, 13]

No exceptional ground of lack of jurisdiction or proved malafide exists to warrant quashing the show cause notices by writ.

Availability and obligation to exhaust efficacious statutory remedy - judicial review under Article 226 limited to compliance with statutory process - Whether the petitioner was obliged to avail the alternative statutory remedies under the CGST/central excise regime instead of approaching the High Court - HELD THAT: - The Court held that where the statute provides an efficacious statutory remedy, that remedy must ordinarily be availed and litigants should not resort to writ jurisdiction in the first instance. Citing a line of Supreme Court precedents, the Court noted that the petitioner had available remedies under the CGST/central excise scheme to contest the demand and quantification issues, and therefore should pursue those remedies rather than seek immediate interference by way of writ. The Court accordingly vacated the interim order and dismissed the petition while permitting the petitioner to avail statutory remedies. [Paras 15, 16]

Petitioner must avail the efficacious statutory alternative remedy; writ petition dismissed for failure to invoke statutory remedies.

Final Conclusion: The petition challenging the show cause notices is dismissed; interim relief is vacated and the petitioner is at liberty to pursue the available statutory remedies under the relevant fiscal statutes.

Valuation under Section 4(1)(a) of Central Excise Act, 1944 - principal-to-principal transaction - job-worker classification - application of Rule 10A of Central Excise Valuation Rules, 2000 - invocation of extended period - CENVAT credit

Principal-to-principal transaction - job-worker classification - CENVAT credit - Whether the appellant was a job-worker of M/s Sunbeam Auto Ltd. or a principal selling finished goods to Sunbeam on principal-to-principal basis. - HELD THAT: - The Tribunal found that work orders and invoices described supplies as sales of Brake Shoes and did not record any job-work arrangement. Correspondence showed that payments routed through M/s Sunbeam were financial arrangements debited to the appellant's account and did not establish that Sunbeam supplied inputs or exercised ownership such as to render the appellant a job-worker. The appellant recovered the full value of the finished goods from Sunbeam rather than mere job charges, and the inputs were purchased by the appellant on its account (with purchases also from vendors other than those specified by Sunbeam). The decision of the Commissioner (Appeals) recording that the transactions satisfied the three conditions for valuation under Section 4(1)(a) and that there was no evidence of manufacture on behalf of Sunbeam was held to be persuasive. On these facts Revenue failed to prove that the appellant was a job-worker of Sunbeam. [Paras 7, 8, 9]

Appellant is not a job-worker of M/s Sunbeam but sells on principal-to-principal basis; the finding of job-work is unsustainable.

Valuation under Section 4(1)(a) of Central Excise Act, 1944 - application of Rule 10A of Central Excise Valuation Rules, 2000 - invocation of extended period - Whether valuation of the brake shoes could be fixed at 110% of cost under Rule 10A/Rule 10(iii) of the Valuation Rules or whether valuation under Section 4(1)(a) was correctly applied. - HELD THAT: - The Tribunal accepted the Commissioner (Appeals)'s analysis that the three conditions for valuation under Section 4(1)(a) were met (sale at the time and place of removal, buyer and seller not related, price charged is sole consideration). Thus Rule 10A (which applies under Section 4(1)(b) when 4(1)(a) is not applicable) was not attracted. The adjudicating authority had not produced evidence of manufacture on behalf of Sunbeam or of suppression warranting invocation of extended period. The Commissioner (Appeals) relied on precedent and factual findings to hold the declared value correct; the Tribunal found Revenue had not justified rejection of declared value or application of 110% of cost. [Paras 9, 10]

Valuation under Section 4(1)(a) is applicable; Rule 10A/110% cost-based valuation and consequent demand (and penalty) are unsustainable and set aside.

Final Conclusion: The Tribunal set aside the adjudicating authority's order: the appellant is not a job-worker of M/s Sunbeam and valuation under Section 4(1)(a) stands; the demand computed at 110% of cost under Rule 10A/Rule 10(iii) (and attendant penalty) is quashed for the period 01.01.2007 to 31.08.2011, and the appeal is allowed.

Freight to buyer's premises not includible in assessable value - place of removal - refund claim for deposit not appropriated - self-assessment and admitted tax - notice under Section 11A for recovery of differential duty - application of ITC Ltd precedent on refund after assessment

Freight to buyer's premises not includible in assessable value - place of removal - Whether freight from factory to buyer's premises is includible in the assessable value for central excise - HELD THAT: - The Tribunal applied its prior Final Order in the assessee's own case and the Supreme Court's reasoning in Ispat Industries to hold that the buyer's premises cannot be the place of removal and that place of removal must be relatable to the seller's premises (factory/depots/consignment agents). On the facts recorded, the freight component from the factory gate to the buyer's premises was not included in assessable value at the time of clearance and the Revenue did not dispute this factual finding in the ROM. Consequently, the freight amount is not part of the assessable value. [Paras 1, 13]

Freight to buyer's premises is not includible in the assessable value.

Self-assessment and admitted tax - application of ITC Ltd precedent on refund after assessment - Whether the amounts deposited by the appellant constituted self-assessed or admitted tax thereby attracting the principle in ITC Ltd that refund is not maintainable unless the assessment is first challenged - HELD THAT: - Revenue relied on the ITC Ltd line of authority to contend that where duty has been self-assessed and reflected in returns, a refund claim is not maintainable unless the assessment is first contested. The Tribunal examined the records and found that the disputed amounts were deposited post-clearance in June/July 2015 and were not included in the ER-1 returns for the period at the time of clearance; the amounts were shown later in ER-1 under an 'arrears' column but there was no revision of returns or supplementary invoice reflecting the freight in assessable value. The Tribunal therefore concluded that these payments were not self-assessed or admitted tax as per the statutory returns and so the ITC Ltd principle did not apply to bar the refund claim. [Paras 12, 13, 14]

The amounts do not constitute self-assessed or admitted tax; ITC Ltd does not bar the refund.

Refund claim for deposit not appropriated - notice under Section 11A for recovery of differential duty - Whether the amounts paid after being pointed out by the department were appropriated as duty (and thus non-refundable) in absence of a show-cause notice under Section 11A, and whether limitation under Section 11B applies - HELD THAT: - The Tribunal reiterated that where differential duty is sought to be recovered, appropriation as duty requires a show-cause notice under Section 11A; payments made during enquiry/investigation may be treated as deposits unless appropriated following such a notice. On the facts, no show-cause notice under Section 11A had appropriated the amounts paid and therefore they remained deposits. Consequently, the limitation under Section 11B for refund did not apply to bar the refund claim. [Paras 7, 12]

Payments are deposits not appropriated as duty; refund is not barred by Section 11B in absence of appropriation under Section 11A.

Final Conclusion: The Tribunal allowed the appeal: the freight component is not includible in assessable value and the amounts paid (Rs.4,22,85,418/-) were deposits not self-assessed or appropriated as duty; the appellant is entitled to refund of the said amount with interest as per rules.

Liability of job worker for excise duty where raw materials are supplied by the principal manufacturer - procedural non-compliance under job work regime / Notification No.214/86-CE - CENVAT credit and inputs sent to job-worker - effect of discharge certificate under Sabka Vishwas / SVLDR scheme on demand

Liability of job worker for excise duty where raw materials are supplied by the principal manufacturer - procedural non-compliance under job work regime / Notification No.214/86-CE - CENVAT credit and inputs sent to job-worker - Demand of duty, interest and penalties cannot be sustained against the job worker where raw materials were supplied by the principal manufacturer despite non-compliance with job-work procedures. - HELD THAT: - The Tribunal found on the material that the appellant operated as a job-worker manufacturing machine-made dipped splints from raw materials supplied by M/s. Anja Lucifer Industries and that delivery challans showed the goods were being sent to the principal manufacturer. The court treated non-compliance with the procedural formalities of Notification No.214/86-CE as a procedural lapse which, by itself, does not fasten duty liability on the job-worker. Reliance was placed on the Tribunal's earlier reasoning in Sree Rayalaseema Dutch Kassenbow Ltd. that Rule 4(5)(a) (CENVAT regime) contemplates that duty liability lies on the raw-material supplier and not on the job-worker where it is established from records that inputs were supplied by the principal manufacturer; the rule permits CENVAT credit where inputs sent to a job worker are received back within the stipulated period and does not contemplate payment of duty by the job-worker. Applying that principle to the facts, the Tribunal held that the demand against the appellant was unsustainable. [Paras 6]

Demand, interest and penalties imposed on the job worker were set aside.

Effect of discharge certificate under Sabka Vishwas / SVLDR scheme on demand - Demand could not be sustained because the principal manufacturer had discharged the duty liability under the Sabka Vishwas scheme and was issued a discharge certificate. - HELD THAT: - The Tribunal noted that the department had issued a preliminary show cause notice to the principal manufacturer, who subsequently availed the Sabka Vishwas scheme and obtained a discharge certificate; the appeal filed by the principal manufacturer was dismissed in view of that discharge. Having found that the goods had already suffered duty at the hands of the principal manufacturer and that a discharge certificate had been issued, the Tribunal held that no separate demand could be maintained against the job-worker. [Paras 7]

In view of the principal manufacturer's discharge under Sabka Vishwas, the demand against the appellant could not be sustained.

Final Conclusion: The impugned order confirming demand, interest and penalties against the appellant (job-worker) was set aside and the appeal allowed; consequential relief, if any, to follow.

Cenvat credit - conditional exemption under Notification No.17/2009 - option to avail exemption or Cenvat credit - place of removal - Rule 2(l) of Cenvat Credit Rules, 2004 - scope upto the place of removal - ICD/Port as extended location of the manufacturing unit

Conditional exemption under Notification No.17/2009 - option to avail exemption or Cenvat credit - No compulsion on an exporter to avail the exemption under Notification No.17/2009 to the exclusion of taking Cenvat credit. - HELD THAT: - The Tribunal, relying on the decision in Save Industry, held that Notification No.17/2009 is a conditional exemption which requires that no Cenvat credit has been taken if the exemption is availed, but it does not prohibit an exporter from electing to take Cenvat credit instead of the exemption. The availability of Cenvat credit is governed by the Cenvat Credit Rules and the exporter may choose between availing the conditional exemption and claiming input service credit. Therefore the Revenue's contention that the exporter was obliged to take the exemption and could not claim Cenvat credit was rejected. [Paras 5, 6]

Revenue's contention that the appellant was bound to take the exemption under Notification No.17/2009 and could not claim Cenvat credit is dismissed.

Cenvat credit - place of removal - Rule 2(l) of Cenvat Credit Rules, 2004 - scope upto the place of removal - ICD/Port as extended location of the manufacturing unit - Services rendered at the port/ICD for export fall within the ambit of Rule 2(l) as services received 'upto the place of removal', and are eligible for Cenvat credit. - HELD THAT: - The Tribunal followed the earlier Division Bench reasoning in Shyam Metalics and Electrosteel Castings that the ICD/port of shipment is an extended location of the manufacturing unit and thus falls within the definition of 'place of removal' under Rule 2(l). Applying that ratio, services rendered at the port/ICD up to the place of removal are eligible for Cenvat credit even after the amendment to Rule 2(l). The Tribunal therefore held that the appellant's claim of Cenvat credit for services utilized at the port of export was permissible. [Paras 7]

Cenvat credit for services utilized at the port/ICD in relation to export is admissible as these fall 'upto the place of removal'.

Final Conclusion: The Revenue's appeal is dismissed; the exporter was not obliged to choose the Notification No.17/2009 exemption to the exclusion of Cenvat credit, and the services at the port/ICD fall within Rule 2(l)'s ambit so as to permit the claimed Cenvat credit.