TaxTMI Updates e-Newsletter
Apr 10,2021

Determination of tax under Section 74 - Voluntary payment under Section 74(5) - Self-ascertainment / self-assessment - Prohibition on collection prior to final determination - Refund of amounts paid during investigation - Form GST DRC-03 as intimation of voluntary payment

Voluntary payment under Section 74(5) - Self-ascertainment / self-assessment - Form GST DRC-03 as intimation of voluntary payment - Whether the instalments paid by the petitioner during investigation amounted to a valid self-ascertainment under Section 74(5) and thereby precluded further proceedings or refund. - HELD THAT: - The Court held that Section 74(5) and (6) provide an avenue for an assessee to effect a genuine self-ascertainment of tax, interest and penalty prior to issuance of a show cause notice, and that such self-ascertainment must be an unconditional determination by the assessee so as to attract the bar in Section 74(6). Mere payments made during the course of an investigation, particularly where the statement and schedule of instalments were subsequently retracted and the assessee continued to contest liability, do not constitute the unconditional self-ascertainment contemplated by Section 74(5). The Court found that the records did not demonstrate an unqualified acceptance by the assessee nor an application of mind by the revenue treating the payments as adequate; the assessee retracted its earlier statement and persisted in contesting liability, and investigation and show-cause proceedings remained pending. Accordingly, the payments recorded as 'voluntary' in FORM GST DRC-03 did not convert the instalments into a final self-ascertainment that would oust further proceedings under Section 74. The Court therefore rejected the revenue's contention that Section 74(5) amounted to a statutory sanction for advance collection in the circumstances of this case. [Paras 15, 16, 24, 25, 26]

Payments made during the investigation did not amount to a valid, unconditional self-ascertainment under Section 74(5) and did not preclude further proceedings.

Prohibition on collection prior to final determination - Refund of amounts paid during investigation - Determination of tax under Section 74 - Whether the amounts collected during the investigation should be refunded pending final determination of tax liability. - HELD THAT: - Relying on the long-standing principle that coercive collection prior to a final determination is impermissible and having concluded that the instalments did not constitute a valid self-ascertainment, the Court held that the collection could not be sustained. Although statutory procedure exists for voluntary payments (including use of FORM GST DRC-03), that procedure does not validate coerced or conditional payments made in the course of an ongoing investigation where ascertainment is retracted and show-cause proceedings are not foreclosed. In the exercise of writ jurisdiction the Court directed restitution: the amount collected during the investigation was to be refunded to the petitioner within four weeks. [Paras 25, 26, 29]

The sum collected during investigation is to be refunded to the petitioner; mandamus granted directing refund within four weeks.

Final Conclusion: Writ petition allowed: the Court held that the instalments paid during the course of investigation did not amount to an unconditional self-ascertainment under Section 74(5) and, accordingly, directed refund of the amounts collected during the investigation within four weeks.

Refund of accumulated input tax credit on zero-rated supplies - opportunity of being heard / principle of natural justice in refund proceedings - requirement of issuance of FORM GST RFD-08 before rejecting refund - procedure on deficiency memo and refiling of refund application - duty to pass a reasoned and speaking order

Opportunity of being heard / principle of natural justice in refund proceedings - requirement of issuance of FORM GST RFD-08 before rejecting refund - refund of accumulated input tax credit on zero-rated supplies - Adjudicating authority's rejection of the refund claim without issuance of FORM GST RFD-08 and without providing opportunity of being heard. - HELD THAT: - The Commissioner (Appeals) examined the record and the provisions of Rule 92(3) read with its proviso and found that where the proper officer is satisfied that refund is not admissible, a notice in FORM GST RFD-08 must be issued and an opportunity to reply afforded before passing an order in FORM GST RFD-06. The impugned RFD-06 rejected the appellant's refund on the ground of no transactions on the portal for the period, but no RFD-08 was issued and no hearing accorded. The appellate authority accepted the appellant's contention that documents were furnished in response to a deficiency memo yet the rejection was passed without the statutorily mandated show-cause process and hearing, thereby violating the principle of natural justice and the procedural requirements under the CGST Rules. [Paras 6, 7, 9]

Rejection of the refund without issuance of FORM GST RFD-08 and without hearing was unsustainable; the matter is remanded for compliance with procedural requirements and to afford opportunity of being heard.

Procedure on deficiency memo and refiling of refund application - duty to pass a reasoned and speaking order - refund of accumulated input tax credit on zero-rated supplies - Whether the adjudicating authority should follow the deficiency-memo procedure (including refiling where required) and pass a reasoned order on the refund claim. - HELD THAT: - The Commissioner (Appeals) noted Rule 90(3) and Circular No. 17/17/2017-GST which provide that where deficiencies are communicated, the proper officer may require rectification and refiling of the refund application. The appellate authority observed that the adjudicating authority had issued a deficiency memo but thereafter rejected the earlier-filed refund claim without following up the refiling requirement and without issuing a speaking order. In view of these procedural lapses and the need for a reasoned decision, the matter was remanded to the adjudicating authority to allow the appellant to submit his contentions and for the authority to pass a reasoned order after following the prescribed deficiency/refiling procedure where applicable. [Paras 8, 9]

Matter remanded to the adjudicating authority to follow the deficiency/refiling procedure where applicable and to pass a reasoned, speaking order after affording the appellant an opportunity to present submissions.

Final Conclusion: The appeal is disposed of by remitting the matter to the Adjudicating Authority for compliance with Rule 90/92 and relevant circulars: afford the appellant the opportunity of being heard, consider submissions and documents, and thereafter pass a reasoned order on the refund claim for October, 2018 to December, 2018.

Revocation of cancellation of registration - failure to furnish returns as bar to revocation - requirement to furnish returns and pay tax, interest and penalty before filing revocation - power of proper officer to reject revocation application after show cause and verification - verification of filing of returns and payment particulars prior to revocation - administrative clarification under Circular No. 99/18/2019-GST

Failure to furnish returns as bar to revocation - requirement to furnish returns and pay tax, interest and penalty before filing revocation - administrative clarification under Circular No. 99/18/2019-GST - Application for revocation could be considered only after compliance with the condition of furnishing the returns and payment of dues where cancellation arose from non-filing of returns. - HELD THAT: - The Commissioner (Appeals) examined the adjudicating authority's rejection of the revocation application on the ground that the appellant did not reply to the show cause notice. The appellate authority reproduced and applied Rule 23 of the CGST Rules, 2017 which provides that where registration is cancelled for failure to furnish returns, no application for revocation shall be filed unless such returns are furnished and amounts due in terms of such returns are paid; and noted the clarification in Circular No. 99/18/2019-GST that returns due till the date of cancellation must be furnished before filing for revocation. Having found that the appellant has now filed the returns and paid tax, interest and penalty up to the relevant period, the court held that the statutory precondition for consideration of revocation is satisfied. [Paras 6, 8, 9, 10]

The appellate authority held that the appellant has complied with the condition of furnishing returns and payment of dues and therefore the statutory bar under Rule 23 no longer prevents consideration of revocation.

Revocation of cancellation of registration - power of proper officer to reject revocation application after show cause and verification - verification of filing of returns and payment particulars prior to revocation - Whether the proper officer should reconsider the appellant's revocation application and the scope of such reconsideration. - HELD THAT: - The appellate authority directed that the appellant may file the revocation application through the common portal and ordered the proper officer to consider the revocation application. The consideration is to be subject to verification of the payment particulars, filing of returns and compliance with the provisions of the CGST Act and Rules. This does not amount to an adjudication on merits of revocation; rather, it remits the matter to the proper officer to undertake the prescribed verification and then decide the application under the procedure and timelines set out in Rule 23. [Paras 10, 11]

The matter is remitted to the proper officer to consider the revocation application after verification of returns filed and payments made, and to pass orders in accordance with law.

Final Conclusion: Appeal disposed by directing the appellant to file the revocation application on the common portal and by remitting the matter to the proper officer to consider and decide the revocation after verifying filing of returns and payment particulars in accordance with Rule 23 and relevant circular guidance.

Constitutional validity of the third proviso to Section 254(2A) of the Income Tax Act, 1961 - incidental power of the Appellate Tribunal to grant stay - discrimination under Article 14 of the Constitution of India - manifest arbitrariness under Article 14 - reading down / severance to save statute - legal maxim actus curiae neminem gravabit

Constitutional validity of the third proviso to Section 254(2A) of the Income Tax Act, 1961 - discrimination under Article 14 of the Constitution of India - manifest arbitrariness under Article 14 - reading down / severance to save statute - Whether the third proviso to Section 254(2A) of the Income Tax Act, 1961, as substituted by the Finance Act, 2008, is constitutionally valid under Article 14 and, if not, whether it can be read down or severed to cure any constitutional infirmity. - HELD THAT: - The Court held that the expression inserted by the Finance Act, 2008 - which provided that a stay order shall stand vacated after expiry of 365 days "even if the delay in disposing of the appeal is not attributable to the assessee" - results in treating unequals alike by denying any distinction between assessees who cause delay and those who do not. That classification impermissibly defeats the vested right of appeal and makes the statutory stay illusory in cases where delay is not attributable to the assessee. The provision therefore offends the equal protection guarantee under Article 14 both as discriminatory (clubbing distinct classes without rational relation to the object) and as manifestly arbitrary, being capricious and disproportionate to its ostensible object of speedy disposal. Applying the remedial doctrine of reading down/severance, the Court removed the words "even" and the words "is not" after the words "delay in disposing of the appeal", thereby preserving the remainder of the proviso while allowing the Tribunal power to extend stay where delay is not attributable to the assessee. The Court relied on established principles that where a statutory provision produces an unconstitutional result it may be confined by severance or reading down to effectuate the legislative purpose without invalidating the statute in toto. [Paras 13, 17, 25]

The third proviso to Section 254(2A) as amended by the Finance Act, 2008 is struck down to the extent that it mandates vacatur of stay "even if the delay in disposing of the appeal is not attributable to the assessee"; the provision is read down so that stay shall stand vacated after the specified period only if the delay is attributable to the assessee.

Incidental power of the Appellate Tribunal to grant stay - reading down / severance to save statute - Whether the Appellate Tribunal retains the incidental power to grant or extend stay orders in appeals and how that power operates in light of the read-down proviso. - HELD THAT: - The Court reaffirmed that the power to grant stay is ancillary to the appellate jurisdiction of the Tribunal and may be exercised in deserving cases where prima facie grounds, balance of convenience and likelihood of rendering the appeal nugatory exist. The read-down construction leaves intact the Tribunal's power to extend stay beyond the specified periods where it is satisfied that the delay in disposal of the appeal is not attributable to the assessee. Thus the legislative aim of expedited disposal is preserved while ensuring that the Tribunal's incidental power to prevent frustration of the appeal remains available in appropriate cases. [Paras 6, 7, 25]

The Tribunal retains the incidental power to grant and, where justified, to extend stay orders; under the read-down provision it may extend stay where delay is not attributable to the assessee.

Final Conclusion: The appeals of the Revenue are dismissed. The third proviso to Section 254(2A) is read down so that a stay order shall stand vacated after the prescribed period only if the delay in disposing of the appeal is attributable to the assessee; the Tribunal's ancillary power to grant or extend stay in deserving cases where delay is not the assessee's fault is preserved.

Taxability of DEPB/DFRC sale proceeds - reopening of assessment beyond four years - retrospective amendment affecting taxability - deduction under Section 80HHC - application of binding Supreme Court precedent

Taxability of DEPB/DFRC sale proceeds - retrospective amendment affecting taxability - application of binding Supreme Court precedent - Whether the reassessment to bring to tax sale proceeds of DEPB/DFRC (after a retrospective amendment) was justified - HELD THAT: - The Tribunal's decision to disallow reopening was sustained. The Court applied the ratio of the Supreme Court in Vikas Kalra (reported at [2012] 19 taxmann.com 25 (SC)), which treated the proceeds arising on sale of DEPB as falling within the classification addressed in that decision, and held that on those authorities the first substantial question of law must be decided in favour of the assessee. Having found the binding precedent dispositive, the Court concluded that there was no justification to reopen the assessment in respect of the DEPB/DFRC sale proceeds following the retrospective amendment, and therefore the reassessment was unsustainable on that ground. [Paras 6, 8]

First substantial question of law answered in favour of the assessee and against the Revenue; reassessment in respect of sale proceeds of DEPB/DFRC not justified.

Final Conclusion: The appeal is dismissed; the Court, applying the Supreme Court precedent, decided the principal question in favour of the assessee and treated the second question as redundant, accordingly dismissing the Revenue's appeal without costs.

Classification of land as agricultural land - exemption from long term capital gains on sale of agricultural land - concurrent findings of fact by assessing authorities and appellate tribunals - binding effect of earlier Division Bench decision on adjoining land

Classification of land as agricultural land - exemption from long term capital gains on sale of agricultural land - concurrent findings of fact by assessing authorities and appellate tribunals - binding effect of earlier Division Bench decision on adjoining land - Whether the land sold by the assessee is agricultural land and consequently whether the income from its sale is exempt from long term capital gains - HELD THAT: - The Commissioner of Income Tax and the Income Tax Appellate Tribunal recorded concurrent factual findings that the land in question is agricultural land. The Division Bench in T.C.A.No.268 of 2011 had earlier held that the adjoining survey-number land belonging to the assessee's husband was agricultural land, relying on inspection, the remand report, Tahsildar's certificate and absence of material showing non-agricultural use. That Division Bench order has become final as the Revenue did not prefer any further appeal. Given the proximity and adjoining nature of the lands, the earlier final decision applies to the assessee's land. In these circumstances the High Court found no reason to interfere with the concurrent findings of the assessing authorities and the Tribunal and accepted that the sale proceeds fall outside the charge of long term capital gains tax.

Appeal dismissed; the land is held to be agricultural and the income from its sale is exempt from long term capital gains.

Final Conclusion: The High Court dismissed the Revenue's appeal against the Tribunal's order for Assessment Year 2007-08, upholding the finding that the land is agricultural and that the income on its sale is not liable to long term capital gains tax, having regard to the concurrent findings below and the binding earlier Division Bench decision concerning the adjoining land.

Charitable purpose and exemption under section 11 and 12 - commercial activity test and proviso to section 2(15) r.w.s. 13(8) - income in form of voluntary contributions and exemption under section 11(1)(d) - registration and recognition under section 12A - reasonableness of Tribunal's factual finding and appellate interference - reliance on co ordinate bench precedent

Charitable purpose and exemption under section 11 and 12 - commercial activity test and proviso to section 2(15) r.w.s. 13(8) - Whether the assessee's activities were commercial so as to attract the proviso to section 2(15) r.w.s. 13(8) and disqualify it from exemptions under sections 11 and 12. - HELD THAT: - The Court adopted the reasoning in Director of Income Tax v. Gujarat Cricket Association, observing that the proper test is the object and activities of the assessee and not the commercial character of the donor or apex body. The Court noted the Tribunal's factual finding that profits, if any, were ploughed back into promotion and development of cricket and that the associations did not distribute profits outside the organisation. Given those findings, the activities could not be characterised as commercial so as to invoke the proviso to section 2(15) r.w.s. 13(8). The Tribunal's view was held to be a reasonable conclusion based on the material on record and not liable to interference. [Paras 5, 6]

The Court answered the question in favour of the assessee and held that the proviso to section 2(15) r.w.s. 13(8) did not apply to disqualify the assessee from claiming exemption under sections 11 and 12.

Income in form of voluntary contributions and exemption under section 11(1)(d) - Whether interest or income derived from contributions given with a direction to form part of the corpus qualifies for exemption under section 11(1)(d). - HELD THAT: - Relying on the reasoning in the cited Gujarat Cricket Association decision, the Court accepted that where donors have specifically directed that contributions and the interest thereon shall form part of the corpus, such interest partakes of the character of corpus voluntary contributions. The Tribunal's conclusion that such income qualified for exemption under section 11(1)(d) was upheld as a reasonable factual and legal conclusion. [Paras 3, 5, 6]

The Court sustained the Tribunal's allowance of exemption for income forming part of corpus voluntary contributions under section 11(1)(d).

Charitable purpose and exemption under section 11 and 12 - registration and recognition under section 12A - Whether the assessee's registration under section 12A and long recognition of its main object as promotion of cricket precluded cancellation and entitled it to exemption. - HELD THAT: - The Court noted that the assessee's predominant object was to promote, regulate and control cricket in the State and that over years the Income tax Department had recognised this activity as charitable by granting registration under section 12A. On these facts, and following the precedent, the Tribunal was right in setting aside cancellation of registration and allowing exemption claims. The Tribunal's factual findings and consequent legal effect were treated as reasonable and not susceptible to appellate interference. [Paras 3, 5, 6]

The Court upheld the Tribunal's setting aside of cancellation of registration and allowed exemption consequent to recognition under section 12A.

Reasonableness of Tribunal's factual finding and appellate interference - Whether the Tribunal erred in remitting the addition relating to infrastructure subsidy to the file of the Assessing Officer and in allowing related exemptions. - HELD THAT: - While the Tribunal had remitted the addition for further consideration, the High Court found that, on the whole, the Tribunal had taken a reasonable view of the matters on record. Having adopted the reasoning applied in the Gujarat Cricket Association decision and having recorded factual findings, the Tribunal's approach including the remittance was not interfered with. The Court declined to accede to Revenue's contention that once section 2(15) proviso applied the remittance and exemptions were impermissible. [Paras 5, 6]

The Court did not interfere with the Tribunal's remit and its allowance of exemptions; the remittance was left intact and the Tribunal's approach was sustained.

Reliance on co ordinate bench precedent - reasonableness of Tribunal's factual finding and appellate interference - Whether reliance by the Tribunal on a co ordinate bench decision (Gujarat Cricket Association) could be faulted because the Department had not accepted that decision and had proposed further appeal. - HELD THAT: - The High Court observed that similar issues had been decided against the Revenue in Director of Income Tax v. Gujarat Cricket Association and expressly adopted that reasoning. The Court held that the Tribunal had taken a reasonable view and recorded findings of fact based on materials on record; mere non acceptance of a co ordinate bench decision by the Department did not render the Tribunal's reliance unjustified. The Court therefore sustained the Tribunal's reliance on the precedent and its conclusions. [Paras 2, 3, 5, 6]

The Court upheld the Tribunal's reliance on the co ordinate bench precedent and entertained no interference on that ground.

Final Conclusion: The Tax Appeal is dismissed. The substantial questions of law raised by the Revenue for Assessment Year 2013-14 are answered in favour of the assessee; the Tribunal's factual findings and legal conclusions permitting exemption under the relevant provisions are sustained.

Deductibility of market-to-market losses - Anticipated loss on equity-linked debentures as business loss - Test in CIT v. Woodward Governor for allowability of provisions and MTM losses - Nature of provision versus ascertained liability

Deductibility of market-to-market losses - Test in CIT v. Woodward Governor for allowability of provisions and MTM losses - Anticipated loss on equity-linked debentures as business loss - Nature of provision versus ascertained liability - Assessee fulfilled the Woodward Governor test and market-to-market losses on equity-linked debentures are allowable as business loss. - HELD THAT: - The Court examined whether the assessee had satisfied the criteria laid down by the Hon'ble Supreme Court in CIT v. Woodward Governor India (P.) Ltd. for claiming deductibility of market-to-market (MTM) losses. The Commissioner (Appeals) had found that the assessee met the prescribed conditions for allowability of MTM losses and the Tribunal, upon review, was satisfied with those findings. The High Court, on consideration of the facts and circumstances and the appellate fora's determinations, found no error in the Tribunal's conclusion that the Woodward test was complied with and that the claimed MTM loss on equity-linked debentures could be treated as a business loss. By upholding the concurrent findings of the CIT(A) and the Tribunal, the Court rejected the Revenue's contention that such MTM loss was merely a provision or contingent liability incapable of being allowed as a deduction.

Appeals dismissed; finding that the Woodward Governor test was fulfilled and the market-to-market losses on equity-linked debentures are allowable as business loss.

Final Conclusion: The Tax Case Appeals are dismissed; the substantial questions of law are answered against the Revenue, upholding the Tribunal's order that the assessee satisfied the Woodward Governor test and the MTM losses on equity-linked debentures are allowable as business loss. No costs.

Time limits under Section 153 - procedure under Section 144C - remand to the Dispute Resolution Panel (DRP) - final assessment in conformity with DRP directions under Section 144C(13) - effect of Tribunal's order under Section 254 on time-bar

Time limits under Section 153 - remand to the Dispute Resolution Panel (DRP) - Proceedings before the DRP on remand are subject to the time limits prescribed by Section 153. - HELD THAT: - The Court found that although Section 144C constitutes a self contained code with inbuilt timelines, that scheme does not negate the overall time constraints embodied in Section 153 for completion of a fresh assessment pursuant to an order of the Tribunal. The Tribunal's orders in the two assessment years were received by the Department in specified financial years and the statutory periods for completion of reassessment under Section 153(2A) (for AY 2009 10) and Section 153(3) (for AY 2010 11) accordingly expired prior to the notices dated 06.01.2020. The Court observed that allowing proceedings on remand to the DRP to proceed without regard to Section 153 would defeat the objective of prompt finalisation and would be inconsistent with the statutory scheme governing time limits for fresh assessments after remand. [Paras 7, 15, 16, 24]

Notwithstanding the procedural scheme of Section 144C, DRP proceedings on remand are circumscribed by the time limits in Section 153 and the notices issued on 06.01.2020 were time barred.

Procedure under Section 144C - final assessment in conformity with DRP directions under Section 144C(13) - Section 144C does not operate as an absolute exclusion of Section 153 at all stages; the specific exclusion in Section 144C(13) applies only to the stage of passing the final assessment in conformity with DRP directions. - HELD THAT: - The Court analysed Section 144C and noted it provides distinct timelines for the draft order, filing of objections, disposal of objections by the DRP and for passing the final assessment once DRP directions are received. Sub section (13)'s explicit exclusion of Section 153/153B applies to the Assessing Officer's obligation to pass the final assessment within a short period after receiving DRP directions (and even without further hearing). That specific exclusion, however, cannot be read as a wholesale ouster of the time limits in Section 153 for purposes of giving effect to Tribunal orders or for proceedings on remand. The exclusion in Section 144C(13) reinforces the urgency in concluding the final assessment after DRP directions but does not licence unlimited time for remand proceedings before the DRP. [Paras 13, 14, 17, 18]

Section 144C's exclusion of Section 153 is confined to the narrow context of passing the final assessment under Section 144C(13) and does not render DRP proceedings on remand immune from the time limits of Section 153.

Final Conclusion: Writ petitions allowed: notices dated 06.01.2020 issued by the DRP in respect of AY 2009 10 and AY 2010 11 were held to be barred by limitation, the Court directing that the proceedings were time barred under the applicable provisions of Section 153.

Release of seized cash - Standard Operating Procedure of the Election Commission - mandamus under Article 226 - investigative determination of ownership of seized property - right of personal hearing in administrative adjudication

Mandamus under Article 226 - release of seized cash - investigative determination of ownership of seized property - Whether this Court should grant a positive direction for immediate release of the seized cash to the petitioner - HELD THAT: - The court declined to issue a positive direction for immediate release because the respondents have not admitted liability and the claim as to ownership of the seized cash is under investigation. In such circumstances, a writ of mandamus directing release cannot be issued without completion or outcome of the inquiry establishing entitlement. The court noted the respondents' position that investigation must determine whether the cash belongs to the Trust (the school) or to the managing trustee in his individual capacity, and treated the petition for immediate release as premature. [Paras 18, 21]

No positive direction for immediate release; writ for mandamus refused on the present record because there is no admission of liability and the matter is under investigation.

Standard Operating Procedure of the Election Commission - release of seized cash - right of personal hearing in administrative adjudication - Whether the respondents should be directed to consider the petitioner's representations and pass final orders - HELD THAT: - The court directed the first and second respondents to consider the representation dated 18.03.2019 and to pass final orders on merits and in accordance with law after giving due consideration to the Election Commission's Standard Operating Procedure and the Division Bench judgment of the Patna High Court in M/s. Indian Traders v. State of Bihar and others. The respondents were to afford the petitioner sufficient opportunity, including a right of personal hearing, and to complete the exercise within four weeks from receipt of the order. The direction is administrative and procedural, requiring expeditious consideration rather than an immediate substantive release without investigation. [Paras 22, 23]

Respondents directed to consider and decide the representations on merits in accordance with law (including the SOP and relevant judicial precedent), after giving the petitioner a personal hearing, within four weeks.

Final Conclusion: The petition for a mandamus directing immediate release of the seized cash is refused because liability has not been admitted and the ownership is under investigation; however, the respondents are directed to expeditiously consider the petitioner's representations, apply the Election Commission SOP and the cited Patna High Court decision, afford a personal hearing, and pass a reasoned order within four weeks.

Reopening of assessment and validity of reasons recorded - Effect of return already filed on validity of reassessment - Non-application of mind in formation of belief for reopening - Quashing reopening where reasons are based on incorrect or irrelevant facts

Reopening of assessment and validity of reasons recorded - Effect of return already filed on validity of reassessment - Non-application of mind in formation of belief for reopening - Quashing reopening where reasons are based on incorrect or irrelevant facts - Reopening of assessment under section 148 was invalid because the reasons recorded by the Assessing Officer were contradicted by the assessment record, showing non-application of mind. - HELD THAT: - The Tribunal found that the sole reason recorded by the AO for reassessment-that the assessee had not filed a return-was directly contradicted by the assessment order which recorded that the assessee had filed the return for AY 2010-11. That contradiction demonstrates that the formation of belief was a mechanical exercise without application of mind. Where reopening is founded on incorrect or irrelevant facts that inhere in the reasons recorded, the reopening is vitiated. The Tribunal relied on co-ordinate decisions holding that reassessment is invalid if the AO bases formation of belief on wrong facts (notably where a return had in fact been filed) and that such a defect cannot be cured by subsequent proceedings. Because the appeal was decided on the jurisdictional/legal issue, the Tribunal refrained from addressing merits on quantum and quashed the reassessment order. [Paras 6, 7, 8, 9]

The reopening was quashed as invalid for want of valid reasons and for non-application of mind; the appeal is allowed on this ground and the assessment order is set aside.

Final Conclusion: Reopening of assessment for AY 2010-11 was quashed because the reasons recorded were contradicted by the assessment record (return had been filed), showing a mechanical non-application of mind; appeal allowed on jurisdictional ground and assessment order set aside.

Allowability of interest under proviso to Section 36(1)(iii) - allowability of interest as revenue deduction relating to capital asset construction and use - remand for verification of evidence - principles of natural justice

Allowability of interest under proviso to Section 36(1)(iii) - allowability of interest as revenue deduction relating to capital asset construction and use - remand for verification of evidence - principles of natural justice - Whether the interest debited by the assessee is allowable under the proviso to Section 36(1)(iii) in view of additions to plant and machinery and the documentary evidence of completion and charge. - HELD THAT: - The Assessing Officer disallowed interest claimed as deduction on the view that the additions to plant and machinery and the completion of project did not support allowance under the proviso to Section 36(1)(iii). The CIT(A) noted absence of documentary proof of machinery value and of creation of charge in favour of the bank. The assessee maintained that relevant documents, including bank certificate and details of machinery purchases, were filed before the AO and CIT(A) and contended substantial completion and use of machinery during the relevant year. The Tribunal observed that the documentary material placed on record was not adequately verified by the authorities below and that the matter requires fresh adjudication on the evidence. For these reasons the Tribunal did not decide the allowability on merits but directed that the issue be remitted to the file of the Assessing Officer for proper verification of the documents produced by the assessee and for decision in accordance with law, with an opportunity of hearing being afforded to the assessee in accordance with the principles of natural justice. [Paras 7, 8]

Remitted to the Assessing Officer for verification of the evidence and fresh adjudication on the allowability of the interest, after giving the assessee an opportunity of hearing.

Final Conclusion: Appeal partly allowed for statistical purposes; the question of allowability of the interest under the proviso to Section 36(1)(iii) is remitted to the Assessing Officer for verification of documents and fresh decision in accordance with law, with the assessee to be heard.

Fees for technical services - Article 12 of India Sweden Double Taxation Avoidance Agreement - making available - Remand for fresh determination - Condonation of delay by Gazette relaxation

Fees for technical services - Article 12 of India Sweden Double Taxation Avoidance Agreement - The receipts from Sandvik Asia Pvt. Ltd. are not chargeable to tax in India under Article 12 of the India Sweden DTAA. - HELD THAT: - The assessee, a non resident, received IT support service fees from Sandvik Asia Pvt. Ltd. (SAPL). Although the receipt is conceded to fall within the domestic charging provision as Fees for technical services under section 9(1)(vii) of the Act, the question was whether it is taxable in India under Article 12 of the India Sweden DTAA. The Tribunal had earlier, in ITA No. 1310/PUN/2019 (order dated 25 11 2020), held that the amount received from SAPL was not chargeable to tax under Article 12 despite being in the nature of FTS. The Assessing Officer and DRP had relied on their contrary view for the year under consideration, but the Tribunal's earlier decision for the immediately preceding year overturns that view. Respectfully following that precedent and noting that the nature of services in the year under consideration is the same as in the earlier year, the Tribunal holds that the SAPL receipts are not chargeable under Article 12 of the DTAA. [Paras 6]

SAPL receipts of Rs. 31.29 crore are not chargeable to tax in India under Article 12 of the India Sweden DTAA.

Remand for fresh determination - Article 12 of India Sweden Double Taxation Avoidance Agreement - The taxability of receipts from Walter Tools India Pvt. Ltd., Seco Tools India Pvt. Ltd., and Dormer Tools India Pvt. Ltd. under Article 12 is set aside and remitted to the Assessing Officer for fresh determination. - HELD THAT: - The Assessing Officer treated the fees received from the three Indian entities as chargeable under Article 12 of the DTAA on the ground that the assessee could not establish the correct nature of services. The parties agreed that the factual matrix for the year under consideration is identical to that of the immediately preceding year, where the Tribunal's decision informed the treatment of SAPL receipts. Following that precedent and observing that the authorities below had not applied the Tribunal's conclusions for earlier years, the Tribunal sets aside the impugned treatment insofar as these three entities are concerned and remits the matter to the AO for fresh determination of the nature of services and consequent taxability after affording the assessee an opportunity of hearing. [Paras 8]

Impugned order set aside and matter remitted to the Assessing Officer for fresh determination in respect of receipts from Walter Tools India Pvt. Ltd., Seco Tools India Pvt. Ltd., and Dormer Tools India Pvt. Ltd.

Final Conclusion: Delay in filing the appeal is condoned under the Gazette relaxation; the appeal is partly allowed - SAPL receipts are held not taxable under Article 12 of the India Sweden DTAA, while the taxability of receipts from the other three Indian entities is remitted to the Assessing Officer for fresh consideration.

Addition based on unexplained bank credits - treatment of audited books and balance sheet filed with the return - admissibility of additional evidence under Rule 46A of the IT Rules - reopening of assessment on information from investigation wing - rejection of books of account versus additions where books are not rejected

Treatment of audited books and balance sheet filed with the return - addition based on unexplained bank credits - rejection of books of account versus additions where books are not rejected - Whether the addition made by the AO on the basis of alleged unexplained credits in bank accounts is sustainable where audited books and balance sheet filed with the return explain the bank deposits and the books were not rejected by the AO. - HELD THAT: - The Tribunal found that the assessee had filed a return accompanied by audited statements and that the balance sheet showed a substantial increase in issued, subscribed and paid-up share capital and movements in current assets and liabilities which, together with sale proceeds, explained the bank deposits. The AO had not invoked provisions to reject the books of account and the addition was made solely on information received from the Investigation Wing without confronting or considering the audited balance sheet that accompanied the return. Given that the books were not rejected and the audited balance sheet, if examined, would have explained the deposits, the addition based on a comparison of bank credits and declared turnover was not sustainable. Considering the totality of facts and the smallness of the disputed amount relative to the explanations on record, the Tribunal set aside the CIT(A)'s order and directed deletion of the addition. [Paras 11, 12]

Addition deleted and appeal allowed.

Admissibility of additional evidence under Rule 46A of the IT Rules - reopening of assessment on information from investigation wing - Whether the audited balance sheet and related material filed before the CIT(A) were admissible and whether the CIT(A) erred in rejecting such evidence under Rule 46A. - HELD THAT: - The Tribunal recorded that the audited balance sheet was filed with the return and therefore could not be treated as additional evidence at the appellate stage. The CIT(A) had rejected the additional evidence relying on inability of the assessee to justify admissibility under Rule 46A, but the Tribunal observed that the audited balance sheet was part of the original return and that a cursory examination by the AO would have revealed the sources of bank deposits. Since these documents were not newly produced and were effectively already on record, they could not be dismissed as inadmissible additional evidence; further, the AO had been provided the details filed before the CIT(A) for comments but had not furnished any. In these circumstances the CIT(A)'s rejection of the evidence was not upheld and the matter did not require remand. [Paras 3, 4, 11]

Documents treated as on-record; CIT(A)'s rejection of evidence set aside and no remand directed.

Final Conclusion: The Tribunal allowed the appeal for Assessment Year 2011-12, held that the audited balance sheet and accompanying records filed with the return explained the bank credits and could not be ignored or treated as inadmissible additional evidence, and deleted the addition made by the AO.

Reopening of assessment under section 147 - Notice under section 148 - Reason to believe - Disclosure in original return - Non-application of mind in recording reasons

Reopening of assessment under section 147 - Notice under section 148 - Disclosure in original return - Reason to believe - Non-application of mind in recording reasons - Validity of reassessment proceedings initiated by issuance of notice under section 148 read with section 147 in respect of capital gain disclosed in the original return. - HELD THAT: - The assessee had originally filed a return on 31.03.2010 for the relevant year declaring capital gains arising from sale of an immovable property and claiming indexed cost and transfer expenses. The Assessing Officer issued notice under section 148 on the basis that the assessee had sold the property and failed to respond to a notice under section 133(6), concluding that the assessee had not truly and fully disclosed material facts. The Tribunal found that the AO did not consider the material already on record - namely the original return disclosing the transaction - and therefore there was non-application of mind when recording the reasons for reopening. Where the very foundation of reopening is negated by the fact of prior disclosure and offering to tax of the same transaction in the original return, there was no live nexus between available material and a bona fide formation of belief that income had escaped assessment; accordingly the reassessment initiation was vitiated. The Tribunal followed the coordinate bench reasoning that acceptance by the AO of matters in the reassessment order which contradict the stated grounds for reopening demonstrates that the assumption of jurisdiction under section 147 cannot be sustained. As the reopening was invalid, subsequent proceedings under section 147/148 were set aside. The other additions made by the AO and confirmed by the CIT(A) were rendered academic and were not adjudicated upon. [Paras 8, 9]

The reassessment proceedings initiated by notice under section 148 read with section 147 are invalid and are set aside.

Final Conclusion: The appeal is partly allowed: the reopening of assessment for Assessment Year 2009-10 is quashed and the reassessment proceedings are set aside; other additions were not adjudicated as they became academic.

Remuneration from partnership firm chargeable as business income under section 28(v) - allowability of expenditure wholly and exclusively for the purpose of business under sections 30 to 37 - no employer-employee relationship between partner and firm - disallowance of expenditure for lack of nexus with remuneration unsustainable unless shown not to be incurred for business

Remuneration from partnership firm chargeable as business income under section 28(v) - allowability of expenditure wholly and exclusively for the purpose of business under sections 30 to 37 - Allowability of claimed business expenses against remuneration received by the assessee (Akshay Jaitly) from partnership firm for assessment year 2013-14. - HELD THAT: - The Tribunal held that remuneration received by the assessee as a partner is taxable as business income under section 28(v) and, accordingly, income referred to in section 28 is to be computed under sections 30 to 43D. There is no employer-employee relationship between the partner and the firm; therefore expenditures incurred wholly and exclusively for the purpose of earning such remuneration are allowable as business expenses. The Assessing Officer and CIT(A) made a disallowance without demonstrating that the impugned expenses were not incurred wholly and exclusively for the business; the assessee had already disallowed personal expenses and amounts under section 14A. Following the co ordinate bench decision in the companion appeal, the disallowance was held unsustainable and ordered to be deleted. [Paras 8, 9, 11]

Disallowance of expenditure for AY 2013-14 deleted; appeal allowed and Assessing Officer directed to delete the disallowance.

Remuneration from partnership firm chargeable as business income under section 28(v) - allowability of expenditure wholly and exclusively for the purpose of business under sections 30 to 37 - Allowability of claimed business expenses against remuneration received by the assessee (Akshay Jaitly) from partnership firm for assessment year 2014-15. - HELD THAT: - Facts being identical to AY 2013-14, the Tribunal applied the same legal reasoning: remuneration of a partner taxed under section 28(v) is business income and expenditures incurred wholly and exclusively to earn that remuneration are deductible under the relevant provisions; the Revenue did not demonstrate that the expenditures were not so incurred. Relying on the earlier coordinate bench conclusion, the Tribunal directed deletion of the disallowance confirmed by the lower authorities. [Paras 10, 11]

Disallowance of expenditure for AY 2014-15 deleted; appeal allowed and Assessing Officer directed to delete the disallowance.

Remuneration from partnership firm chargeable as business income under section 28(v) - allowability of expenditure wholly and exclusively for the purpose of business under sections 30 to 37 - Allowability of claimed business expenses against remuneration received by the assessee (Shri Anand Prasad) from partnership firm for assessment year 2013-14. - HELD THAT: - The Tribunal observed that the identical issue was considered in the companion appeal for AY 2014-15 where detailed reasoning established that expenditures incurred by a partner to earn remuneration taxable under section 28(v) are deductible if wholly and exclusively for business; the Assessing Officer had not shown that the expenditures were not so incurred. Applying that finding, the Tribunal reversed the disallowance for this assessee and directed the Assessing Officer to delete the disallowance. [Paras 13, 14, 15]

Disallowance of expenditure for AY 2013-14 deleted; appeal allowed and Assessing Officer directed to delete the disallowance.

Final Conclusion: Appeals allowed; the disallowances of business expenditure made by the Assessing Officer and confirmed by the CIT(A) for the specified assessment years are reversed and the Assessing Officer is directed to delete the disallowances.

Condonation of delay - substantial justice over technicality - registration under section 12AA and charitable purpose - failure to remove defects in registration application - remand for fresh adjudication - consequential consideration of approval under section 80G

Condonation of delay - substantial justice over technicality - Whether the delay of 784 days in filing the appeals should be condoned. - HELD THAT: - The Tribunal considered the assessee's affidavit explaining the delay, noted the Revenue did not rebut those averments, and applied the principle that technicalities should yield to substantial justice as enunciated in Collector Land Acquisition v. Katiji. On that basis the Tribunal found the delay to be inadvertent and not willful or wanton and exercised its discretion to condone the identical delay in filing both appeals. [Paras 1]

Delay of 784 days in filing the appeals is condoned and the appeals are admitted.

Registration under section 12AA and charitable purpose - failure to remove defects in registration application - remand for fresh adjudication - consequential consideration of approval under section 80G - Whether the CIT(Exemptions)'s denial of registration under section 12AA should be sustained and the consequential 80G approval determined. - HELD THAT: - The Tribunal examined the CIT(Exemptions)'s order and identified that the primary ground for denial was the assessee's failure to cure defects in its registration application, including matters regarding the dissolution clause. The assessee offered to cooperate and asserted its activities (scholarships) constitute charitable purpose. Rather than decide the merits on the existing record, the Tribunal restored the matter to the CIT(Exemptions) for fresh adjudication, directing the assessee or its authorised representative to appear with all relevant evidence within the stipulated opportunities. The Tribunal treated the appeal concerning 80G as consequential to the 12AA issue and ordered similar fresh consideration. [Paras 2, 4]

The question of registration under section 12AA is remitted to the CIT(Exemptions) for fresh adjudication with three effective hearings; the appeal on 80G is allowed for statistical purposes and remitted consequentially.

Final Conclusion: The Tribunal condoned the delay of 784 days and admitted the appeals; the denial of registration under section 12AA is remitted to the CIT(Exemptions) for fresh consideration (with specified opportunities to the assessee), and the appeal concerning section 80G is treated as consequential and remitted for determination.

Exemption under section 11 - application of section 13(1)(b) - religious society vs charitable society - precedent in assessee's own case - following coordinate bench/ITAT decisions

Exemption under section 11 - application of section 13(1)(b) - religious society vs charitable society - Whether denial of exemption under section 11 on the ground of alleged violation of section 13(1)(b) was sustainable where the assessee is a religious society - HELD THAT: - The Tribunal held that the mischief of section 13(1)(b) applies to charitable societies and not to religious societies. Having found the assessee to be a religious society, the alleged contravention of section 13(1)(b) did not justify denial of exemption under section 11. The Tribunal noted consistent allowances of the exemption in the assessee's earlier years and relied on the ITAT's own earlier decisions in the assessee's case for comparable assessment years. In the absence of any material placed by Revenue to controvert those findings or any binding contrary decision brought to the Tribunal's notice, the Tribunal declined to disturb the learned CIT(A)'s reasoned order permitting exemption. [Paras 7, 8]

The denial of exemption was not sustainable; the appeals of the Revenue are dismissed.

Precedent in assessee's own case - following coordinate bench/ITAT decisions - Whether the Tribunal should follow its earlier decisions in the assessee's own case and refuse to keep the present appeals pending despite earlier years being under challenge before the High Court - HELD THAT: - The Tribunal examined its earlier orders in the assessee's own case for multiple assessment years in which exemption under section 11 was allowed and found the facts of the year under consideration to be identical. It held that pendency of earlier years' appeals before the High Court did not warrant keeping these appeals pending. Respectfully following the ITAT's earlier findings in the assessee's own case, and noting that Revenue had not placed contrary material, the Tribunal upheld the learned CIT(A)'s order and dismissed the departmental appeals. [Paras 6, 7]

The Tribunal followed its prior decisions in the assessee's own case and refused to keep the appeals pending; the Revenue's appeals were dismissed.

Final Conclusion: The Tribunal dismissed the departmental appeals, holding that the assessee is a religious society and that section 13(1)(b) was not attracted so as to deny exemption under section 11, and that earlier ITAT decisions in the assessee's own case warranted following and disposing of the appeals rather than keeping them pending.

Validity of Registration Certificate/Advance Payment Certificate under the Foreign Trade Policy - Interpretation of trade notices relaxing registration for advance payment contracts - Transitional arrangements under paragraph 1.05 of the FTP - Effect of notification changing import policy from 'free' to 'restricted' - Binding nature of Registration Certificate on administrative authorities until completion of registered import quantity

Validity of Registration Certificate/Advance Payment Certificate under the Foreign Trade Policy - Transitional arrangements under paragraph 1.05 of the FTP - Interpretation of trade notices relaxing registration for advance payment contracts - Effect of notification changing import policy from 'free' to 'restricted' - Whether the Registration Certificate (RC) dated 06.09.2017 issued to the petitioner remained valid for imports covered by the registered contract and its addendums until completion of the registered quantity and/or the extended FTP period (up to 31.03.2021). - HELD THAT: - The Court construed the FTP, the notification of 05.08.2017 and trade notices of 11.08.2017 and 31.08.2017 together and held that the RC issued on the basis of advance payment under Trade Notice No.15/2015-2020 is not confined to the fiscal year 2017-18 merely because the notification spoke of an annual quota. Paragraph 1.05 (transitional arrangements) and the trade notices permit registration of contracts based on advance payment made prior to 05.08.2017; the RC issued to the petitioner contained no endorsement limiting its validity to FY 2017-18. The DGFT had taken cognizance of the contract addendums (including extension of shipping dates) and Customs itself had allowed multiple clearances after 31.03.2018, which reinforced that the RC was treated as operative beyond that fiscal year. A standalone internal letter dated 24.12.2020 stating expiry as 31.03.2018 was, therefore, inconsistent with the RC, the trade notices and the practice of the authorities. On this basis the Court concluded that the RC remained binding on the respondents until the completion of the import quantity registered thereunder and, in the facts of this case, was valid up to 31.03.2021 (the extended tenure of the FTP) insofar as the petitioner had effected imports under the RC. [Paras 12, 13, 14, 15, 16]

RC dated 06.09.2017 was valid for the petitioner's imports in question and remained binding until completion of the registered quantity and, in the facts of this case, up to 31.03.2021; the DGFT/Customs contention that the RC expired on 31.03.2018 is untenable.

Binding nature of Registration Certificate on administrative authorities until completion of registered import quantity - Relief in writ jurisdiction to enforce administrative compliance with RC - Whether the petitioner was entitled to immediate clearance of the 2,650 MT of Pigeon Peas covered by the specified bills of entry and to provisional clearance of further imports under the RC. - HELD THAT: - Having held that the RC was valid and binding, the Court found that continued detention of the perishable consignment was unjustified. The Court noted that Customs had previously cleared consignments under the RC after 31.03.2018 and that the respondents had not endorsed any time limitation on the RC. In exercise of writ jurisdiction to enforce compliance with the FTP and the RC, and having regard to the perishable nature of the goods and delay already suffered, the Court directed immediate clearance of the 2,650 MT listed in the petition and allowed clearance of the balance quantity available under the RC (8350 MT, if imported) for home consumption provided such imports were presented for clearance within six weeks from the date of the order. The Court refused to adjudicate the unpleaded/unsupported claim for reimbursement of bonding/detention costs, leaving that claim to be pursued in an appropriate forum with supporting material. [Paras 12, 16, 17, 21]

Respondents directed to clear the 2,650 MT forthwith; respondents also directed to allow clearance of any balance imports under the RC up to six weeks from the date of the order; claim for costs left open for separate forum.

Final Conclusion: Writ petition allowed: the RC dated 06.09.2017 was held valid for the petitioner's imports (and binding on respondents) up to 31.03.2021 as applicable; respondents directed to clear the 2,650 MT consignment immediately and to permit clearance of further imports under the RC within six weeks; no order as to costs.

Maintainability of writ petition in presence of disputed questions of fact - Interference by writ court with findings of fact - Availability and invocation of alternative statutory appellate remedy - Liberty to file statutory appeal and extension of time for filing

Maintainability of writ petition in presence of disputed questions of fact - Availability and invocation of alternative statutory appellate remedy - Writ petition challenging penalty was not maintainable before the High Court because the controversy involved disputed questions of fact and the appellant ought to invoke the statutory appellate remedy. - HELD THAT: - The Court agreed with the learned Single Judge that the challenge to the Order-in-Original imposing penalty involved several factual allegations as set out in the show cause notice and in the Order-in-Original. The High Court held that it would not be proper for the writ forum to adjudicate disputed questions of fact and that such factual controversies are better addressed by the Appellate Authority exercising the statutory appeal jurisdiction. The court expressly endorsed the Single Judge's reasoning (noting paragraph 18 of the impugned order) and found no grounds to interfere with that view. Consequently, the writ petition was dismissed while preserving the appellant's right to pursue the statutory appeal. [Paras 6]

Writ petition dismissed for want of maintainability; appellant permitted to file a statutory appeal before the Appellate Authority.

Liberty to file statutory appeal and extension of time for filing - Appellant granted liberty to institute the statutory appeal and permitted an extended period to file the appeal. - HELD THAT: - While dismissing the writ petition, the Court granted leave to the appellant to prefer a regular appeal before the Appellate Authority and directed that the time limit stipulated by the Single Judge shall enure in favour of the appellant. The appellant was permitted to file the appeal within two weeks from receipt of a copy of the judgment, thereby extending the appellate limitation period to enable adjudication by the Appellate Authority.

Liberty granted to file statutory appeal; two weeks' time allowed from receipt of this judgment; no costs.

Final Conclusion: The writ appeal is dismissed for want of maintainability as the dispute involves disputed questions of fact; the appellant is permitted to file a statutory appeal before the Appellate Authority within two weeks from receipt of this judgment, and no costs are awarded.

Summary order. Civil Miscellaneous Appeal disposed of as nothing survives for adjudication since the CHA licence was not renewed and the proprietor has died; the substantial questions of law are left open; no costs.

Quashing of administrative orders - right to be heard / audi alteram partem - exercise of discretion to afford opportunity before adjudication - settlement commission proceedings - conditional vacation of impugned order with recall mechanism - consideration of Covid-19 pandemic in procedural fairness

Quashing of administrative orders - right to be heard / audi alteram partem - consideration of Covid-19 pandemic in procedural fairness - Impugned adjudication orders passed without granting reasonable time or hearing were liable to be quashed in the circumstances of the case. - HELD THAT: - The court found that the petitioners had paid the principal duty liability and that proceedings had been conducted during the period affected by the Covid-19 pandemic. The adjudicating authority had given repeated communications and ultimately proceeded to decide the matter ex parte despite representations that the petitioners had been delayed by the pandemic and had sought to pursue settlement commission proceedings. While the authority was entitled to prevent indefinite pendency of adjudication, the court considered that additional time reasonably could have been afforded and that the absence of hearing in the specific factual matrix rendered the impugned orders unsustainable. The court therefore exercised its powers to set aside those orders and grant a limited opportunity to the petitioners to regularise their position.

Impugned orders quashed and writ petitions allowed.

Settlement commission proceedings - exercise of discretion to afford opportunity before adjudication - conditional vacation of impugned order with recall mechanism - Court directed a limited, conditional course of action permitting petitioners to pay quantified interest and pursue settlement commission, failing which the original orders would revive. - HELD THAT: - In granting relief the court recorded the petitioners' undertaking to pay the interest as quantified by the authorities within six weeks of receipt of the order and ordered that thereafter the petitioners shall immediately move the settlement commission. The court framed the relief on a conditional basis: non-compliance with the timeline would automatically recall the present order and revive the impugned orders. The direction balanced the interest of finality of adjudication against the petitioners' expressed intention to settle and the pandemic-linked delay, while preserving the authority's right to resume adjudication in case of non-compliance.

Petitioners directed to pay interest within six weeks and to approach the settlement commission; failure to comply will result in automatic revival of the impugned orders.

Final Conclusion: The High Court quashed the impugned orders for lack of reasonable opportunity in the circumstances, granted the petitioners a conditional opportunity to pay the quantified interest within six weeks and pursue settlement commission proceedings, and provided that non-compliance will resurrect the original orders.

Re-assessment of Bill of Entry - refund of customs duty for goods pilfered after unloading before delivery (Section 13) - remission of duty where goods lost, destroyed or abandoned before clearance (Section 23) - amendment of Bill of Entry on existing documentary evidence (Section 149) - refund under Section 27 consequent to re-assessment - custody and liability of airport authority for safe custody of imported goods - reassessment and refund in view of Priya Blue Industries (Supreme Court)

Re-assessment of Bill of Entry - refund of customs duty for goods pilfered after unloading before delivery (Section 13) - amendment of Bill of Entry on existing documentary evidence (Section 149) - refund under Section 27 consequent to re-assessment - custody and liability of airport authority for safe custody of imported goods - reassessment and refund in view of Priya Blue Industries (Supreme Court) - Petitioner entitled to amendment and re-assessment of the Bill of Entry and to have the claim for refund of customs duty on the missing pallet processed. - HELD THAT: - The Court found that the goods were assessed and duty paid on 15.10.2012 but one pallet was lost while in the custody of the Airport Authority of India after assessment and before physical delivery. Regulation placed the custody responsibility on the Airport Authority. Section 13 relieves an importer from liability to pay duty where imported goods are pilfered after unloading but before clearance for home consumption (subject to restoration exception). Section 23 deals with remission where goods are lost before clearance. Section 149 permits amendment of a bill on the basis of documentary evidence existing at the time the goods were cleared, deposited or exported. The amendment sought is based on documents available at import and the lost goods were never cleared for home consumption; therefore an amendment and re-assessment is permissible to enable processing of a refund under Section 27, subject to safeguards. The Court further held that reassessment and refund ought to be carried out in line with the Supreme Court decision in Priya Blue Industries. On these grounds the petition for writ relief was allowed to direct re-assessment and refund processing. [Paras 20, 21, 24, 25, 26]

Writ allowed; respondent directed to re-assess the Bill of Entry and to process the refund claim for the missing pallet in accordance with law and the decision in Priya Blue Industries.

Final Conclusion: The writ petition is allowed: the Bill of Entry shall be amended and re-assessed and the respondents shall process the petitioner's refund claim for the missing pallet in accordance with the statutory provisions and the Supreme Court's decision in Priya Blue Industries; no costs.

Validity of service of show cause notice - Substituted service as a measure of last resort - Deemed service and proof of delivery under Section 153 - Requirement of adjudicating authority's satisfaction as to service before ex-parte order - Nullity of ex-parte adjudication in absence of valid service

Validity of service of show cause notice - Deemed service and proof of delivery under Section 153 - Substituted service as a measure of last resort - Nullity of ex-parte adjudication in absence of valid service - Whether the show cause notice was validly served on the appellant and whether the ex-parte adjudication could stand in absence of valid service. - HELD THAT: - The Tribunal applied the modes of service prescribed by Section 153 and observed that when service is effected by registered post, speed post or courier, proof of delivery is necessary unless the contrary is proved. Revenue failed, despite opportunity, to produce proof of delivery of the show cause notice. The Adjudicating Authority did not record satisfaction about service before proceeding ex parte. The Tribunal reiterated that substituted service by affixation or publication is a last resort and such measures must be preceded by reasonable attempts to identify and serve the noticee as contemplated by clauses (d) and (e) of Section 153(1). In the facts of the case no reasonable substituted service steps were taken nor was service established; consequently the ex-parte order-in-original proceeded without jurisdiction and is a nullity. [Paras 8, 9, 10]

There was no valid service of the show cause notice; the ex-parte adjudication is without authority of law and must be set aside.

Final Conclusion: Impugned ex-parte order-in-original set aside for want of valid service of the show cause notice; appeal allowed with consequential benefits.

Financial Creditor - Corporate Debtor - Financial Debt - Agency/Principal-Agent relationship - Amounts raised from allottees deemed as borrowings with commercial effect - Admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Project specific CIRP - Force Majeure defence in apartment buyer agreement

Financial Creditor - Financial Debt - Amounts raised from allottees deemed as borrowings with commercial effect - The Home Buyer is a Financial Creditor in respect of HBPL and the amounts paid by the Home Buyer constitute Financial Debt of HBPL. - HELD THAT: - The Agreements (Collaboration, Assignment, Marketing and the Apartment Buyer Agreement) establish that HBPL was the developer entitled to construct and sell the flats while HCPL acted as its marketing arm authorized to receive payments on HBPL's behalf. The Apartment Buyer Agreement and the funding pattern (CA certificates) treat amounts received from allottees as advances/'advances from customers'. Explanation (i) to Section 5(8) and the Supreme Court's reasoning in Pioneer Urban lead to the commercial characterization that amounts raised from allottees have the commercial effect of borrowings. Consequently, even though payments were physically received by HCPL, those payments were for and on behalf of HBPL, bringing them within the definition of financial debt and designating the Home Buyer as a financial creditor vis a vis HBPL. [Paras 17, 18, 20, 21, 23]

The Home Buyer qualifies as a Financial Creditor and the amounts paid amount to Financial Debt of HBPL.

Corporate Debtor - Admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - HBPL falls within the definition of Corporate Debtor and the Section 7 petition against HBPL was maintainable and correctly admitted. - HELD THAT: - The Assignment and Marketing Agreements, together with the Apartment Buyer Agreement, show HBPL retained rights, title and interest in the project and authorised HCPL to act as its marketing arm. Agency principles under the Contract Act support treating HCPL's acts and receipts as binding on HBPL. The adjudicating authority correctly found default by HBPL and, since the petition was complete and the amount of default exceeded the statutory threshold, admission under Section 7(5) and declaration of moratorium under Section 14 were appropriate. Distinguishing Anuj Jain (Jaypee) on its facts, the Court held the present payments were for HBPL and hence the Section 7 application was properly maintainable against HBPL. [Paras 16, 17, 23]

HBPL is a Corporate Debtor; the Section 7 petition against HBPL was maintainable and rightly admitted.

Agency/Principal-Agent relationship - Amounts raised from allottees deemed as borrowings with commercial effect - HCPL was the marketing arm/agent of HBPL; payments received by HCPL were on behalf of HBPL and cannot absolve HBPL of liability. - HELD THAT: - The Marketing Agreement expressly creates HCPL as a marketing arm of HBPL authorised to market, sell, issue allotment letters, execute agreements and receive payments for HBPL. Under principles of agency (Sections 182 and 185 of the Contract Act as applied), a principal is bound by acts of an agent when authority is represented or conferred. The Apartment Buyer Agreement treats HBPL as the developer and obliges the allottee to pay amounts due to the developer. The material receipts reflected in HBPL's accounts as advances from customers further corroborate that HCPL acted for HBPL; hence the tangible receipt by HCPL does not negate HBPL's liability. [Paras 10, 12, 13, 17, 18]

HCPL acted as agent/marketing arm for HBPL; receipts by HCPL are attributable to HBPL.

Force Majeure defence in apartment buyer agreement - HBPL's plea of Force Majeure to excuse delay in delivery of possession is rejected. - HELD THAT: - Clause 33(b) of the ABA prescribes notice requirements for invocation of force majeure. Documentary record and relevant High Court orders (undertaking and injunctions) show there was no persistent or complete prohibition preventing construction; on a specific query it was admitted the project remains incomplete. Given absence of the necessary notice and the disproof of a compelling, sustained restraint on construction, the Court holds HBPL's force majeure defence untenable and finds breach of the delivery obligation under Clause C of the ABA, giving rise to a claim within Section 3(6)(b). [Paras 19]

Force Majeure defence fails; there was breach of the ABA entitling the Allottee to a claim.

Project specific CIRP - CIRP admitted against HBPL must be confined to the subject project; admission is maintainable despite related proceedings against HCPL where the Home Buyer has withdrawn claim. - HELD THAT: - The Tribunal accepted that CIRP should be project based for real estate companies so that assets and claims of the particular project are balanced among creditors of that project. The facts distinguish the Dr. Vishnu Kumar Agarwal line where parallel petitions on the same claim were impermissible: here, a CIRP against HCPL existed but the Home Buyer withdrew its claim before the IRP in that HCPL proceeding. Taking that withdrawal into account, the Section 7 petition against HBPL was not barred as a duplicate; nonetheless the CIRP must be limited to the IRIDIA project to protect interests of other projects. [Paras 23, 24]

Admission against HBPL is maintainable; CIRP to be confined to the subject project only.

Final Conclusion: The Tribunal affirms admission of the Section 7 petition against HBPL: the Home Buyer is a Financial Creditor, amounts paid to HCPL are HBPL's financial debt, HCPL acted as HBPL's marketing agent, the force majeure defence fails, and the CIRP is maintainable but must be confined to the subject project only.

Moratorium under the Insolvency and Bankruptcy Code, 2016 - development and possessory rights as assets of the corporate debtor - protection of intangible/sub-stratum assets during corporate insolvency resolution process - jurisdiction of the Adjudicating Authority under the Code to protect possession without adjudicating ownership - status quo orders and their limited scope - rights of a licensee under an expired leave and licence agreement

Moratorium under the Insolvency and Bankruptcy Code, 2016 - development and possessory rights as assets of the corporate debtor - protection of intangible/sub-stratum assets during corporate insolvency resolution process - Whether the moratorium protects the corporate debtor's development and possessory rights and permits the Resolution Professional to retain control of those rights during the CIRP - HELD THAT: - The Tribunal held that where a development agreement subsists at the commencement of CIRP and the corporate debtor holds development/possessory rights, Section 14 operates to protect those rights as part of the corporate debtor's assets until approval of a resolution plan or liquidation. The Adjudicating Authority was therefore entitled to ensure that the Resolution Professional's control over the development rights and related possession is preserved so as to protect the sub stratum and enable an effective CIRP. The Tribunal noted that the RP must disclose the status of the property in the Information Memorandum and other required documents, but that the moratorium applies to such intangible possessory/development rights while CIRP proceeds. [Paras 15]

The moratorium applies to protect the corporate debtor's development and possessory rights and the RP's control over those rights during the CIRP.

Jurisdiction of the Adjudicating Authority under the Code to protect possession without adjudicating ownership - status quo orders and their limited scope - Whether the Adjudicating Authority erred in directing that respondents shall not disturb the RP's possession and activities and in declining to decide ownership disputes - HELD THAT: - The Tribunal affirmed that the Adjudicating Authority confined itself to the scope of Section 14(1)(d) by protecting the RP's possession and activities necessary for CIRP, without adjudicating the underlying question of ownership. The Tribunal emphasised that the Adjudicating Authority need not decide title disputes when it is preserving the status quo and protecting the corporate debtor's assets under the moratorium. The findings observed that the Adjudicating Authority did not usurp a forum for deciding civil rights but limited its order to preventing disturbance of the RP's possession and facilitating completion of CIRP. [Paras 15, 17]

The Adjudicating Authority acted within its remit in restraining disturbance of the RP's possession under the Code while not deciding ownership; its order was not infirm.

Rights of a licensee under an expired leave and licence agreement - status quo orders and their limited scope - Effect of the impugned order on Victory Iron Works Limited as a licensee and the consequence of the expiry of the leave and licence agreement - HELD THAT: - The Tribunal noted that Victory Iron Works had been permitted use of approximately 10,000 sq. ft. by a leave and licence agreement and recognised that the Adjudicating Authority's earlier status quo direction was not intended to disturb the licensee's activities. While the licence had expired, the Tribunal observed that the Adjudicating Authority made clear its order would not affect the applicant's possession and activities until the original owner decided the further course of action concerning the licence. The Tribunal therefore treated the licensee's use as preserved in the immediate term by the Adjudicating Authority's clarificatory direction. [Paras 16]

The impugned order does not presently disturb Victory Iron Works Limited's use of the specified land; their activities remain unaffected until the original owner decides otherwise.

Final Conclusion: The appeals are dismissed. The impugned order of the Adjudicating Authority dated 12.02.2020 is upheld: the moratorium protects the corporate debtor's development/possessory rights and the RP's control necessary for CIRP, the Adjudicating Authority acted within its jurisdiction in preserving possession without adjudicating title, and the licensee's immediate use was left undisturbed pending action by the original owner.

Applicability of the Limitation Act to proceedings under the Insolvency and Bankruptcy Code via Section 238A - Limitation under Article 137 - three years from date of default for applications under the Code - Effect of acknowledgement in writing on limitation (Section 18 of the Limitation Act) - Effect of payment on account of debt in computing fresh limitation (Section 19 of the Limitation Act) - Computation of date of default / NPA and its displacement by subsequent acknowledgement or payment

Limitation under Article 137 - three years from date of default for applications under the Code - Computation of date of default / NPA and its displacement by subsequent acknowledgement or payment - Effect of acknowledgement in writing on limitation (Section 18 of the Limitation Act) - Effect of payment on account of debt in computing fresh limitation (Section 19 of the Limitation Act) - Whether the Section 7 application filed on 22.11.2019 was barred by limitation having regard to the NPA date of 30.09.2016. - HELD THAT: - The Tribunal applied the principle that applications under the Code fall under Article 137 of the Limitation Act, and that the three year period from the date of default is subject to recomputation where there is a valid acknowledgement in writing or a payment on account of the debt. The Appellant's own conduct - an acknowledgement dated 21.06.2017 - operated under Section 18 to commence a fresh three year period from that date. Further, part payments made between May and July 2019 engage Section 19, again giving rise to recomputation of limitation from the dates of such payments. Applying these principles to the facts, the impugned petition filed on 22.11.2019 falls within the recomputed limitation period and therefore is not time barred. The Tribunal relied on and followed the recent pronouncements of the Apex Court explaining applicability of Article 137 and Sections 18 and 19 to proceedings under the Code. [Paras 9, 10, 11]

The application under Section 7 filed on 22.11.2019 is not barred by limitation because the acknowledgment dated 21.06.2017 and subsequent part payments reset the three year limitation period.

Applicability of the Limitation Act to proceedings under the Insolvency and Bankruptcy Code via Section 238A - Limitation under Article 137 - three years from date of default for applications under the Code - Whether provisions of the Limitation Act, including Article 137 and Sections 18 and 19, apply to proceedings under the Insolvency and Bankruptcy Code before the NCLT/NCLAT. - HELD THAT: - The Tribunal accepted the Apex Court's exposition that Section 238A of the Code makes the provisions of the Limitation Act applicable, as far as may be, to proceedings under the Code before the NCLT/NCLAT. Consequently, Article 137 governs the residuary three year period for an application under Section 7, and Sections 18 and 19 are available for recomputing limitation where there is an acknowledgement in writing or payment on account of debt. The Tribunal therefore held that limitation principles under the Limitation Act must be applied to IBC proceedings in the manner explained by the Supreme Court. [Paras 8, 9]

The Limitation Act applies to IBC proceedings; Article 137 prescribes the three year period and Sections 18 and 19 operate to recompute limitation where applicable.

Final Conclusion: The appeal is dismissed. The Tribunal held that limitation rules under the Limitation Act (Article 137 and Sections 18 and 19) apply to IBC proceedings via Section 238A, and that the petition filed on 22.11.2019 was within the recomputed limitation period due to the 21.06.2017 acknowledgement and subsequent payments.

Pre-show cause notice consultation - voluntary statements before Senior Intelligence Officer - requirement of personal hearing prior to issuance of show cause notice - application of paragraph 5 of the 2017 Master Circular

Pre-show cause notice consultation - application of paragraph 5 of the 2017 Master Circular - Pre-show cause notice consultation as mandated by paragraph 5 of the 2017 Master Circular was not satisfied by the steps taken prior to issuance of the impugned show cause notices. - HELD THAT: - The Court examined paragraph 5 of the 2017 Master Circular and the factual posture that preceded issuance of the show cause notices dated 11.04.2018 and 24.04.2018. It held that the consultative process envisaged by paragraph 5 requires an actual discussion and deliberation between the parties - a two-way engagement leading to meaningful exchange. The steps relied upon by the contesting respondents did not demonstrate such a consultative meeting in the sense contemplated by the Master Circular. Consequently, the Court found that the mandatory consultative requirement had not been complied with before the show cause notices were issued by an officer of the rank of Additional Director General. [Paras 3]

Voluntary procedural steps taken earlier do not satisfy the pre-show cause notice consultation mandated by paragraph 5; the requirement must be complied with afresh.

Voluntary statements before Senior Intelligence Officer - requirement of personal hearing prior to issuance of show cause notice - Voluntary statements recorded before the Senior Intelligence Officer do not amount to the pre-show cause notice consultation or personal hearing required prior to continuation or revival of show cause proceedings. - HELD THAT: - The Court distinguished a 'voluntary statement' - described as essentially a one-way dialogue before an authority - from the consultative exercise envisaged in paragraph 5. A voluntary statement does not involve the back-and-forth deliberation or an authoritative decision on whether further proceedings should be continued; therefore, it cannot be equated with the pre-show cause notice consultation or a personal hearing by the officer empowered to issue the show cause notice. Given that the impugned show cause notices were issued by an officer of Additional Director General rank, statements made earlier before a Senior Intelligence Officer could not substitute the mandated consultation or personal hearing by the appropriate officer. [Paras 3]

Statements recorded before the Senior Intelligence Officer do not discharge the obligation to hold the consultative personal hearing required before issuance or revival of show cause proceedings.

Pre-show cause notice consultation - requirement of personal hearing prior to issuance of show cause notice - Court-directed remedy requiring respondents to hold fresh pre-show cause notice consultation and to accord a personal hearing before deciding whether proceedings should continue. - HELD THAT: - In view of the finding that the mandatory consultative requirement was not satisfied, the Court issued directions modeled on those given in W.P.(C) No. 5766/2019. The contesting respondents are to communicate a date, time and venue to convene the pre-show cause notice consultation; the concerned officer must accord a personal hearing to the authorised representative of the petitioner; submissions on merits and jurisdiction must be permitted; thereafter the officer shall decide whether to continue proceedings and, if so, whether to revive the impugned show cause notice or issue a fresh one in accordance with applicable law and any binding decision of the Supreme Court in the SLP arising out of Amadeus India Pvt. Ltd. [Paras 3, 4]

Petitions disposed with directions that respondents hold the mandated pre-show cause notice consultation, grant personal hearing, and then decide on continuation or revival/fresh issuance of show cause notice.

Final Conclusion: Writ petitions disposed by directing respondents to hold fresh pre-show cause notice consultation in terms of paragraph 5 of the 2017 Master Circular, to afford a personal hearing to the petitioners' authorised representatives, and thereafter to decide whether proceedings should continue or whether the impugned show cause notices should be revived or a fresh notice issued.

Penalty under Section 78 of Finance Act, 1994 - Reversal of CENVAT credit on audit objection - Payment of tax before issuance of show cause notice - Absence of material to prove suppression or concealment - Reliance on tribunal and High Court decisions dropping penalty on similar facts

Penalty under Section 78 of Finance Act, 1994 - Reversal of CENVAT credit on audit objection - Payment of tax before issuance of show cause notice - Absence of material to prove suppression or concealment - Whether the penalty under Section 78 could be sustained where the assessee reversed the disputed CENVAT credit on being pointed out by audit and paid/appropriated the tax before issuance of the show cause notice and the Department did not bring material proving suppression. - HELD THAT: - The Tribunal found as a fact that the appellant reversed the impugned CENVAT credit on being pointed out by the audit and did not utilize the said credit, informing the Department of the reversal prior to issuance of the show cause notice. The adjudicating authority had imposed penalty under Section 78 on the premise that, but for the audit, the wrong availment would have remained unnoticed. The Tribunal, applying the principle that where tax (or reversal/appropriation equivalent to tax) is made before issuance of the show cause notice and there is no material establishing suppression or concealment with intent to evade tax, imposition of penalty under Section 78 is not justified, followed the earlier Division Bench decision in YCH Logistics (India) Pvt. Ltd. which set aside penalties in identical circumstances and noted the absence of material proving suppression. The Tribunal also observed that the Karnataka High Court has upheld the Tribunal's approach in similar facts. Guided by those precedents and the facts that reversal/appropriation occurred before showcause notice and Department produced no evidence of deliberate concealment, the penalty was held unsustainable. [Paras 6, 7]

Penalty imposed under Section 78 set aside as unsustainable; appeal allowed with consequential reliefs, following the ratio of earlier Tribunal and High Court decisions where tax was paid or reversed before issuance of show cause notice and no material of suppression was produced.

Final Conclusion: The Tribunal allowed the appeal, setting aside the penalty imposed under Section 78 and granting consequential relief, on the grounds that the disputed CENVAT credit was reversed/appropriated before issuance of the show cause notice and the Department failed to produce material to establish suppression or concealment; the decision follows earlier Tribunal and High Court precedents in similar cases.

Manufacture as the taxable event for central excise - territorial jurisdiction of central excise authorities - collection as representing duty under section 11D - valuation by retail sale price under section 4A - extended limitation for fraud, collusion or suppression under section 11A(4) - res judicata / finality of adjudicatory finding

Manufacture as the taxable event for central excise - territorial jurisdiction of central excise authorities - valuation by retail sale price under section 4A - Whether the Thane Commissionerate had territorial jurisdiction to issue the impugned show cause cum demand notice for excise on goods manufactured at Tigaksha's factory in Una, Himachal Pradesh - HELD THAT: - The court accepted the settled legal proposition that the taxable event under central excise is manufacture, and that manufacture occurred in Tigaksha's factory at Una, Himachal Pradesh. The Central Board notification demarcating territorial jurisdiction places Himachal Pradesh within the jurisdiction of the Commissioner of Central Excise, Shimla (under Chief Commissioner, Chandigarh), whereas Thane Commissionerate's territorial ambit is confined to specified pin codes in Maharashtra. The adjudicating authority in the earlier order recorded the unchallenged finding that manufacture took place at Tigaksha in Himachal Pradesh. On these facts, neither respondent No.2 nor respondent No.3 had territorial jurisdiction to issue a notice demanding central excise on that manufacture; accordingly the impugned notice issued by the Thane Commissionerate was without jurisdiction and liable to be quashed. [Paras 33, 38, 39, 42, 43]

Impugned show cause cum demand notice dated 26.05.2020 is without territorial jurisdiction and is set aside.

Collection as representing duty under section 11D - extended limitation for fraud, collusion or suppression under section 11A(4) - res judicata / finality of adjudicatory finding - Whether the impugned notice could validly re open the earlier adjudication and invoke section 11D or the extended limitation under section 11A(4) in the absence of evidence that any amount was collected as 'representing duty of excise' or of fraud, collusion or suppression - HELD THAT: - The earlier adjudicating authority (order dated 20.11.2019) had found as a matter of fact that there was no evidence that any amount had been collected by the petitioner as representing duty of excise, and that the demand rested on a presumption drawn from identical MRPs rather than on proof of collection as duty. Those conclusions were not challenged and have attained finality. The impugned notice essentially seeks to re open the same issue (albeit for a curtailed period) and relies on the same basic premise; mere invocation of section 11A(4) cannot supplant the absence of factual foundation for invoking section 11D unless there is material of fraud, collusion or suppression which is shown to warrant extended limitation. The court found no valid distinction in facts to justify re opening, and the absence of evidence that amounts were collected as duty means section 11D is not attracted. Consequently the re initiation of demand on the same factual matrix was impermissible. [Paras 26, 40, 41, 42]

Impugned show cause cum demand notice cannot stand as it re opens an issue concluded by the earlier order and lacks the required evidence to attract section 11D or to justify invocation of extended limitation under section 11A(4); notice is quashed.

Final Conclusion: Writ petition allowed; impugned show cause cum demand notice dated 26.05.2020 set aside as without jurisdiction and impermissibly reopening matters concluded by the adjudicating authority; no order as to costs.

Clandestine removal - reliance on third-party documents - burden of proof on the Revenue to produce corroborative evidence - inadmissibility of presumptive findings based solely on private records of third parties - extended period of limitation and requirement of positive act of suppression

Clandestine removal - reliance on third-party documents - burden of proof on the Revenue to produce corroborative evidence - inadmissibility of presumptive findings based solely on private records of third parties - Whether the demand of duty and penalty could be sustained where it was founded on loose and handwritten documents recovered from a third party's premises without corroborative evidence linking the appellant to clandestine removal. - HELD THAT: - The Tribunal found that the show cause notice and the order-in-original rested primarily on loose parchments and handwritten private ledgers recovered from the premises of a third party (SSSRM). There was no independent evidence from the appellant's premises, no transporter evidence, and no inquiry establishing clandestine manufacture or removal by the appellant. The adjudicating authority relied on presumptive reasoning because the director of the appellant could not explain entries in the private record of SSSRM; such reliance on third-party records without clinching corroboration was held to be insufficient. The Tribunal applied the settled legal principle that charges of clandestine removal are serious and must be proved by tangible and sufficient evidence; mere third-party documents and presumptions cannot sustain a demand and proportionate penalty. [Paras 5, 6]

Demand and penalty confirmed on the basis of third-party documents are unsustainable; the confirmation of duty even for 201.165 MT is set aside.

Extended period of limitation - requirement of positive act of suppression - Whether the extended period of limitation could be invoked by the Department for the period June 2005 to September 2006 in the absence of any positive act of suppression by the appellant. - HELD THAT: - The Tribunal noted that the appellant had been regularly filing excise returns and that the Department did not produce evidence of any positive act by the appellant amounting to suppression of relevant facts. In the absence of such positive act, the requisites for invoking the extended period of limitation were not made out. Consequently, the show cause notice issued in 2009 seeking demand for a period beyond one year was held to be time-barred. [Paras 7]

Show cause notice and adjudication invoking the extended period are barred by limitation; adjudication cannot be sustained.

Final Conclusion: The order-in-original confirming duty and penalty is set aside: the demand based on uncorroborated third-party records is unsustainable and the extended period of limitation was wrongly invoked; appeal allowed.

Cenvat credit on outward transportation up to the customer's premises - place of removal - examination of factual aspects: FOR basis of sale; freight as integral part of sale price; value inclusive of freight - Board Circular No. 1065/4/2018-CX dated 08/06/2018 - remand for fresh consideration

Cenvat credit on outward transportation up to the customer's premises - place of removal - Board Circular No. 1065/4/2018-CX dated 08/06/2018 - examination of factual aspects: FOR basis of sale; freight as integral part of sale price; value inclusive of freight - Remand to the original authority to examine eligibility of cenvat credit of service tax paid on outward transportation up to the customer's premises for the disputed period - HELD THAT: - The Tribunal followed its earlier decision in Bharat Fritz Werner Ltd., noting that after the Apex Court decision and the subsequent Board Circular dated 08/06/2018 field formations were given liberty to examine each case on its facts. The impugned finding denying credit beyond the place of removal was set aside for the purpose of fresh adjudication. The matter is remitted because determination of entitlement requires factual verification of matters such as whether sales were on FOR basis, whether freight formed an integral part of the sale price, and whether duty was paid on value inclusive of freight for the period in question. In view of the Board Circular and the Tribunal's precedent, the appropriate course is to direct the original authority to re-examine the records and pass a fresh order for the disputed period applying the relevant legal principles and documentary evidence.

Impugned order set aside; matter remanded to the original authority to pass a fresh order after examining relevant documents in the light of Board Circular dated 08/06/2018.

Final Conclusion: Appeal disposed of by way of remand: the impugned order is set aside and the matter is remitted to the original authority for fresh adjudication on eligibility of cenvat credit of service tax on outward transportation for the period from April 2008 to March 2009, in accordance with the Board Circular dated 08/06/2018 and the Tribunal's directions.

Entitlement to encashment of surrendered earned leave after retirement - Reliance on post service circular for claim of surrender leave - Interest on belated payment of leave encashment - Direction for phased disbursement in instalments

Entitlement to encashment of surrendered earned leave after retirement - Reliance on post service circular for claim of surrender leave - The petitioner is entitled to settlement of surrender leave salary for 64 days in respect of the years specified in the petition. - HELD THAT: - The Court accepted that the question raised is covered by earlier orders of the Court in which similar claims for encashment of surrendered earned leave were allowed. Having regard to those decisions and the factual position placed before it, the Court held that the petitioner is entitled to the claimed surrender leave salary for the years 2011-2012 through 2018-2019. The Court applied the precedent of earlier single judge and Division Bench rulings which had upheld entitlement despite the Corporation's plea regarding earlier non permitting of surrender on account of financial crisis. [Paras 6]

Petition allowed insofar as entitlement to surrender leave salary for the specified years; respondents directed to settle the same.

Interest on belated payment of leave encashment - The petitioner is entitled to interest on the belated payment of the surrender leave salary. - HELD THAT: - The respondents contended that prior decisions granted leave encashment but not interest. The Court found no authoritative dictum in earlier decisions excluding interest on belated payment of earned leave encashment. In the absence of such a ruling, and having rejected the respondents' submission, the Court directed payment of interest at the rate it considered appropriate for belated disbursement. [Paras 8]

Interest awarded on the surrender leave salary from date of retirement until actual disbursement.

Interest on belated payment of leave encashment - Direction for phased disbursement in instalments - The manner, rate and schedule of payment: interest fixed at 6% per annum from date of retirement until actual payment; principal and interest payable in six equal monthly instalments beginning 1 April 2021. - HELD THAT: - Having concluded that interest is payable and that the substantive entitlement is established, the Court specified the rate of interest and permitted phased disbursement to the respondent Corporation. The Court exercised its equitable discretion to fix the rate of interest at 6% per annum and allowed the respondents to liquidate the liability in six equal monthly instalments, with the first instalment to commence on 1 April 2021. [Paras 9]

Respondents directed to pay the surrender leave salary with interest at 6% p.a. from retirement to payment, in six equal monthly instalments commencing 1 April 2021.

Final Conclusion: Writ petition allowed: respondents directed to settle the petitioner's surrender leave salary for the stated years with interest at 6% per annum from date of retirement until payment; payment to be made in six equal monthly instalments beginning 1 April 2021; no costs.

Bail under Section 439 Cr.P.C. - Successive bail petition - NDPS Act - commercial quantity and severity of offence - Voluntary statement recorded under the NDPS Act - Use of darknet and cryptocurrency in narcotics transactions - Risk of tampering with witnesses and absconding - Previous dismissal of bail application as a determinative factor

Bail under Section 439 Cr.P.C. - Successive bail petition - Previous dismissal of bail application as a determinative factor - Whether the petitioner has produced any fresh or additional ground to reopen a previously dismissed bail application. - HELD THAT: - The Court examined the record of the earlier dismissal of the petition (Crl.P.No.4017/2020) and the submissions now advanced on behalf of the petitioner. Aside from the asserted illness of the petitioner's father and the petitioner's student status and impending examinations, no new material facts, evidence, or legal grounds were placed before the Court that were not considered by the Co ordinate Bench in its earlier order dated 08.10.2020. The petition was therefore treated as successive and no basis was found to revisit the earlier adverse conclusion. [Paras 5]

No fresh or additional ground has been established to warrant reopening the earlier dismissal of the bail application; successive petition dismissed on that basis.

NDPS Act - commercial quantity and severity of offence - Voluntary statement recorded under the NDPS Act - Use of darknet and cryptocurrency in narcotics transactions - Risk of tampering with witnesses and absconding - Whether, on the merits, the nature of the offence, the material on record and attendant risks justify refusal of bail. - HELD THAT: - The Court noted the prosecution case that parcels containing suspected MDMA totalling 150 grams (a quantity exceeding the commercial threshold) were consigned in the petitioner's name, forensic analysis indicating contraband, and the recorded voluntary statement wherein the petitioner allegedly admitted ordering and effecting payment via darknet/Darknest.com and Bitcoins. Given that the seized quantity is significantly above commercial quantity and the prosecution material links the petitioner to the procurement using means designed for secrecy, the Court concluded that the offence is grave. In these circumstances, there is a real possibility of tampering with witnesses and of abscondence if bail were granted. The petitioner's lack of other connecting material in his favour and the serious nature of the allegations weigh against releasing him on bail. [Paras 5]

On the merits, having regard to the commercial quantity, the recorded statement and the manner of transaction, and the risk of tampering or absconding, bail is refused.

Final Conclusion: The successive bail petition is dismissed: no fresh grounds are made out to reopen the earlier order and, on the merits, the gravity of the NDPS offences, the commercial quantity involved, and the risk of tampering with witnesses or absconding justify refusal of bail.