TaxTMI Updates e-Newsletter
Apr 12,2024

Failure to specify date, time and venue of personal hearing - right to personal hearing under the U.P. GST Act - invalidity of order passed without compliance with hearing requirements - show-cause notice and reminder notice held insufficient - remand for fresh notice and personal hearing

Failure to specify date, time and venue of personal hearing - right to personal hearing under the U.P. GST Act - invalidity of order passed without compliance with hearing requirements - Impugned order dated 17.03.2023 was passed in violation of the requirement to afford a personal hearing by specifying date, time and venue and is therefore liable to be set aside. - HELD THAT: - The Court accepted the petitioner's contention that the show-cause notice and subsequent reminder did not disclose the date, time or venue for a personal hearing, thereby resulting in non-compliance with the statutory requirement for affording a hearing. Reliance was placed on earlier coordinate-bench decisions which addressed the same issue. In view of those precedents and the facts before it, the Court found no purpose in keeping the petition pending or in calling for a counter-affidavit and concluded that the impugned order could not stand. [Paras 2, 3, 4]

Impugned order set aside for non-compliance with hearing requirements; matter remitted for issuance of fresh notice and hearing.

Remand for fresh notice and personal hearing - show-cause notice and reminder notice insufficiency - Matter remitted to the assessing authority for fresh notice and opportunity of personal hearing; timeframe and procedural directions were prescribed. - HELD THAT: - The Court directed respondent no.2/Assistant Commissioner to issue a fresh notice to the petitioner within two weeks and recorded the petitioner's undertaking to appear on the next date so that the proceedings may be concluded expeditiously. The Court declined to require a counter-affidavit in view of the established position in earlier decisions and the clear deficiency in the notice. [Paras 4, 5]

Remitted to respondent no.2 for issuance of fresh notice within two weeks and fresh hearing to be conducted expeditiously.

Final Conclusion: Writ petition allowed; impugned order dated 17.03.2023 set aside and the matter remitted for fresh notice and personal hearing in accordance with the directions of the Court.

Benefit of Section 14 of the Limitation Act, 1963 - exclusion of time during pendency of writ proceedings - right to pursue statutory appellate remedy - quashing of impugned administrative order and direction to decide appeal on merits - expeditious adjudication of statutory appeal

Benefit of Section 14 of the Limitation Act, 1963 - exclusion of time during pendency of writ proceedings - Benefit of Section 14 of the Limitation Act applies to exclude the period during which the petitioner had challenged the adjudicating order before the High Court, thereby making the subsequently filed appeal within time. - HELD THAT: - The Court accepted the petitioner's contention that the period from March 12, 2018 (date of institution of writ challenging the adjudicating order) to September 13, 2021 (date when the writ was dismissed but liberty was granted to pursue statutory remedy) is to be excluded under the doctrine embodied in Section 14 of the Limitation Act so as to compute limitation for appeal under the Act. The Court relied on a coordinate decision in Murli Packers v. State of U.P. and others (Writ Tax No.407 of 2020 decided on January 24, 2024) holding that Section 14 applies in relation to appeals under Section 107 of the Act. Applying that principle, the petitioner's appeal filed on October 12, 2021 falls within the period of limitation when the excluded interval is deducted, and the State's objection that Section 14 would not apply was rejected.

Period from March 12, 2018 to September 13, 2021 excluded under Section 14, making the appeal filed on October 12, 2021 time barred only if exclusion not applied; exclusion applied, appeal treated as within time.

Right to pursue statutory appellate remedy - quashing of impugned administrative order and direction to decide appeal on merits - expeditious adjudication of statutory appeal - Impugned order of the appellate authority dated June 16, 2023 is quashed and the appellate authority is directed to hear and decide the petitioner's appeal on merits expeditiously. - HELD THAT: - Having concluded that the appeal was filed within time after applying the exclusion under Section 14 and in view of the coordinate Bench's earlier liberty to approach the appellate authority, the Court found it appropriate to set aside the appellate order which had rejected the appeal. The Court remitted the matter to the appellate authority with a clear direction to consider and decide the appeal on merits. The Court provided a timeline, preferring disposal within three months from presentation of a certified copy of this order, to ensure expeditious adjudication.

Impugned order dated June 16, 2023 quashed; appellate authority directed to hear and decide the petitioner's appeal on merits expeditiously, preferably within three months of receipt of certified copy of this order.

Final Conclusion: Writ petition allowed; appellate order dated June 16, 2023 set aside and appellant granted liberty to pursue the statutory appeal which the appellate authority is directed to decide on merits expeditiously after applying the exclusion under Section 14 of the Limitation Act.

Right to oral hearing under Section 75 of the Act - Show cause notice under Section 73 of the Act - Natural justice - opportunity of personal hearing - Setting aside ex-parte order for procedural infirmity - Remand for fresh adjudication

Right to oral hearing under Section 75 of the Act - Natural justice - opportunity of personal hearing - Show cause notice under Section 73 of the Act - Setting aside ex-parte order for procedural infirmity - Validity of the impugned ex-parte order in view of absence of opportunity of personal hearing and the statutory right to oral hearing - HELD THAT: - The first notice under the Act recorded "NA" against the columns for date, time and venue of personal hearing, and therefore did not afford the petitioner any opportunity of personal hearing. The court held that even if a show cause notice calls only for a written reply, Section 75 preserves the right to participate in an oral hearing and the two opportunities (written reply and oral hearing) are distinct and must be separately available. Failure to submit a written reply does not automatically extinguish the right to be heard orally. The impugned ex-parte adjudication was therefore passed in breach of the mandatory procedural requirement and principles of natural justice embedded in the statute, rendering the order procedurally infirm and liable to be set aside. The matter is to be remitted for fresh consideration after permitting the petitioner to file its final reply and to be heard. [Paras 5, 6, 7, 10, 11]

Impugned order dated 30.12.2023 set aside; matter remitted for fresh adjudication after permitting filing of final reply and grant of personal hearing.

Remand for fresh adjudication - Procedure for fresh hearing and filing of reply - Directions and remedial course to be followed on remand - HELD THAT: - The court directed that the petitioner may file its final reply to the show cause notice within two weeks from the date of the order, and be afforded an opportunity to appear before the Assessing Authority on the specified date for personal hearing. Thereafter the Assessing Authority is to pass an appropriate reasoned order. The remand is for fresh adjudication on merits after compliance with the statutory hearing requirement; no useful purpose would be served by calling for counter affidavit or relegating the petitioner to alternate remedies in view of the clear procedural deficiency. [Paras 11]

Petitioner permitted to file final reply within two weeks and to appear for personal hearing on 06.05.2024; Assessing Authority to pass reasoned fresh order.

Final Conclusion: Writ petition allowed; impugned order set aside and matter remitted for fresh adjudication after permitting filing of final reply and granting personal hearing as directed.

Bar on initiation of proceedings by Central authority where State authority has initiated on the same subject matter - Section 6(2)(b) of the CGST Act - effect of proceedings initiated by State/Union Territory authority on Central proceedings - distinction between subject matter and overlapping tax periods/transactions - coordination between Central and State GST investigative wings - liberty to respond to show cause cum demand notice and pursue statutory remedies

Section 6(2)(b) of the CGST Act - effect of proceedings initiated by State/Union Territory authority on Central proceedings - bar on initiation of proceedings by Central authority where State authority has initiated on the same subject matter - Whether initiation of proceedings by the DGGI is barred by operation of Section 6(2)(b) in view of pre existing State proceedings - HELD THAT: - The court observed that Section 6(2)(b) clearly bars initiation of proceedings under the CGST Act where a proper officer under the State Act has initiated proceedings on the same subject matter. Emphasis was placed on the meaning of "subject matter" (equated to cause of action) and the rationale for avoiding conflicting outcomes where the same subject matter is prosecuted by two authorities. However, having regard to the factual dispute between the parties about whether the Central and State investigations relate to the same subject matter, the court refrained from recording any definitive opinion on whether the impugned show cause notice is barred by Section 6(2)(b). The court noted competing contentions that the DGGI investigation concerned alleged clandestine supplies in March 2022 while the State investigation related to different suppliers and earlier periods, and that the parties dispute overlap and identity of seized materials. [Paras 20, 21, 22, 23]

No final adjudication on the applicability of Section 6(2)(b); the court refrained from expressing a definite opinion on this question.

Distinction between subject matter and overlapping tax periods/transactions - coordination between Central and State GST investigative wings - Whether the Central and State investigations before the Court in fact involve the same subject matter - HELD THAT: - The court analysed the factual matrix and rival contentions: the DGGI contended it was investigating clandestine supply in March 2022 whereas the State enforcement wing relied on earlier inspections and a supplier specific enquiry. Given these conflicting factual narratives, the court declined to resolve the factual controversy at the writ stage. The court noted precedent and the CBEC DO of 05.10.2018 concerning coordination but treated the factual overlap as a matter for adjudication in the appropriate statutory forum rather than for summary disposal in writ proceedings. [Paras 22, 23]

The question whether the two investigations involve the same subject matter was left undecided for determination in the appropriate forum.

Liberty to respond to show cause cum demand notice and pursue statutory remedies - Whether the writ petitions should be entertained to quash the summons and the show cause cum demand notice at the present stage - HELD THAT: - The court recorded that the petitioner did not respond to the summons issued by the DGGI and further observed that a show cause cum demand notice dated 29.12.2023 had been issued. Considering the pendency of contested factual issues and the availability of statutory remedies, the court declined to interfere by writ at this stage. The court emphasised that the petitioner remains at liberty to respond to the show cause cum demand notice and to raise all legal pleas, including reliance on Section 6(2)(b), before the appropriate authority or forum in accordance with the CGST Act. [Paras 23]

Writ petitions dismissed; court declined to interfere and granted liberty to the petitioner to respond to the show cause cum demand notice and avail statutory remedies.

Final Conclusion: Writ petitions disposed of without adjudicating the applicability of Section 6(2)(b) on the merits; court declined to interfere with the impugned proceedings and granted the petitioner liberty to reply to the show cause cum demand notice dated 29.12.2023 and pursue appropriate statutory remedies.

Rejection of appeal on technical grounds - order under Section 74 of the Central Goods and Services Tax Act, 2017 - right to be heard - quashing of appellate order - opportunity of hearing and reasoned order

Rejection of appeal on technical grounds - quashing of appellate order - Appellate authority's dismissal of the first appeal for non annexure of the certified order under Section 74 was not permitted to stand. - HELD THAT: - The High Court examined the appellate order which rejected the first appeal solely on the technical ground that the certified copy of the order under Section 74 was not annexed. The court held that such a technical ground for refusal of adjudication on merits should not be allowed to prevail and that the appellate authority's reliance on that defect alone to dispose of the appeal was improper. Consequently, the appellate order was quashed and set aside so that the appeal may be considered on its merits rather than defeated on a procedural lapse. [Paras 3, 4]

Impugned appellate order rejecting the appeal on the stated technical ground quashed and set aside.

Opportunity of hearing and reasoned order - right to be heard - Direction to the appellate authority to hear the first appeal on merits and pass a reasoned order after granting opportunity of hearing. - HELD THAT: - Having quashed the appellate dismissal, the court directed that the appellate authority must hear the petitioner's first appeal on merits, afford the petitioner an opportunity of hearing, and pass a reasoned order. The court mandated completion of this exercise within ten weeks from the date of the order, thereby remitting the matter for adjudication on substantive issues rather than procedural infirmity. [Paras 4]

Appellate authority directed to rehear the appeal on merits, grant hearing opportunity, and pass a reasoned order within ten weeks.

Final Conclusion: Writ petition allowed; appellate order dated 25.08.2022 quashed and set aside and the appellate authority directed to decide the first appeal on merits after granting opportunity of hearing and to pass a reasoned order within ten weeks.

Absence of application of mind - duty to indicate reasons - non-speaking/quasi-judicial order - quashing of administrative order - remand for de novo adjudication - opportunity of hearing - filing of reply to show-cause notice

Absence of application of mind - duty to indicate reasons - non-speaking/quasi-judicial order - quashing of administrative order - The original order cancelling the petitioner's registration was without application of mind and devoid of reasons and therefore liable to be set aside. - HELD THAT: - The Court found that the impugned order dated 30.12.2022 evidenced contradictory statements regarding whether a reply to the show-cause notice had been filed, demonstrating lack of application of mind. Reliance was placed on earlier decisions of this Court which hold that administrative or quasi-judicial orders affecting the right to conduct business must disclose reasons and that absence of such reasons renders the order vulnerable to challenge under Articles 14 and 226. Applying that principle, the Court concluded that the cancellation order did not satisfy the requirement of reasoned decision-making and therefore could not stand. [Paras 3, 6, 7]

The original order of cancellation dated 30.12.2022 is quashed and set aside for being non-reasoned and made without application of mind.

Remand for de novo adjudication - filing of reply to show-cause notice - opportunity of hearing - The matter was remanded for fresh consideration after permitting the petitioner to file a reply and after affording opportunity of hearing. - HELD THAT: - In view of the quashing of the original order, the appellate order was also set aside and the petitioner was directed to file its reply to the show-cause notice within three weeks. The adjudicating authority was directed to proceed afresh, consider the defence raised by the petitioner, and pass a reasoned order after granting an opportunity of hearing. The Court thereby remitted the controversy for de novo decision-making rather than deciding the merits itself. [Paras 7]

The appellate order dated 29.02.2024 is quashed; the petitioner to file reply within three weeks and the adjudicating authority to proceed de novo after hearing.

Final Conclusion: Writ petition allowed; the orders in original and in appeal are quashed and set aside, and the matter is remitted for fresh adjudication after the petitioner files its reply and is afforded an opportunity of hearing.

Retrospective cancellation of GST registration - Requirement of objective satisfaction for retrospective effect - Opportunity of hearing and adequacy of show cause notice - Consideration of reply by the proper officer - Statutory power to cancel registration under Section 29(2) of the Central Goods and Services Tax Act, 2017

Opportunity of hearing and adequacy of show cause notice - Consideration of reply by the proper officer - Validity of the Show Cause Notice dated 06.04.2021 and the impugned order dated 16.06.2021 insofar as they failed to inform the petitioner of the date/time for personal hearing, failed to put the petitioner on notice about retrospective cancellation, and failed to consider the petitioner's detailed reply. - HELD THAT: - The Court found that the Show Cause Notice did not specify date and time for personal hearing and did not put the petitioner on notice that registration could be cancelled retrospectively, depriving the petitioner of an opportunity to object to retrospective cancellation. The impugned order records a conclusion that the online reply was not relevant but does not disclose consideration of the petitioner's detailed reply. Procedural fairness required that the Show Cause Notice and the order disclose reasons and afford an opportunity to contest retrospective cancellation; absence of these requirements renders them unsustainable. [Paras 5, 6, 7, 8, 13]

Show Cause Notice and impugned order are defective for want of adequate notice and failure to consider the petitioner's reply; they cannot be sustained on that footing.

Retrospective cancellation of GST registration - Requirement of objective satisfaction for retrospective effect - Statutory power to cancel registration under Section 29(2) of the Central Goods and Services Tax Act, 2017 - Principle governing exercise of power to cancel GST registration with retrospective effect under Section 29(2). - HELD THAT: - The Court held that cancellation with retrospective effect under Section 29(2) cannot be mechanical or purely subjective; the proper officer must form satisfaction based on objective criteria. Non-filing of returns for some period does not automatically justify retrospective cancellation covering periods when the taxpayer was compliant. Retrospective cancellation has consequences, including denial of input tax credit to customers, and therefore may be exercised only where such consequences are warranted and the officer is objectively satisfied. [Paras 14, 15]

Retrospective cancellation must be based on objective satisfaction and cannot be applied mechanically to periods where the taxpayer was compliant.

Retrospective cancellation of GST registration - Consideration of reply by the proper officer - Appropriate effective date of cancellation in the circumstances where the petitioner has discontinued business and did not seek to continue registration. - HELD THAT: - Given that the petitioner no longer carries on business and the departmental process was procedurally defective, the Court modified the impugned order to treat the registration as cancelled with effect from the date the petitioner discontinued business. The Court directed the petitioner to make necessary compliances as required by Section 29 of the Act. This modification addresses both the petitioner's cessation of business and the lack of proper procedural footing for an earlier retrospective cancellation. [Paras 16, 17]

Registration is to be treated as cancelled with effect from 31.12.2019 (date of discontinuance of business); petitioner to comply with Section 29 requirements.

Opportunity of hearing and adequacy of show cause notice - Statutory power to cancel registration under Section 29(2) of the Central Goods and Services Tax Act, 2017 - Whether the respondents are precluded from taking further action including recovery or fresh retrospective cancellation. - HELD THAT: - The Court clarified that the respondents are not precluded from pursuing recovery of any tax, penalty or interest due in accordance with law. The respondents may also, if warranted, pass an order for retrospective cancellation after issuing a proper Show Cause Notice and affording an opportunity of hearing. The decision leaves open departmental remedies subject to compliance with procedural and substantive requirements. [Paras 18]

Respondents may pursue recovery and may effect retrospective cancellation in future only after issuing a proper Show Cause Notice and providing an opportunity of hearing.

Final Conclusion: The petition is disposed of by setting aside the impugned order to the extent it retrospectively cancelled registration from 25.05.2018; registration is treated as cancelled with effect from 31.12.2019, petitioner to comply with Section 29, and respondents remain entitled to pursue recovery or reassess cancellation subject to issuing proper show cause notice and affording hearing.

Mandatory personal hearing under Section 75(4) of the UPGST Act, 2017 - principles of natural justice - quashing for breach of natural justice - direction to pass a reasoned order after personal hearing

Mandatory personal hearing under Section 75(4) of the UPGST Act, 2017 - principles of natural justice - quashing for breach of natural justice - An opportunity of personal hearing was not afforded to the petitioner as mandated by Section 75(4) of the UPGST Act, 2017 and the impugned orders are vitiated for breach of principles of natural justice. - HELD THAT: - The Court found on the record that the petitioner was not given a personal hearing which Section 75(4) of the UPGST Act, 2017 makes mandatory. The judgment emphasises that the statutory use of the word "or" in Section 75(4) signals the dual circumstances in which a personal hearing must be afforded-either on application by the affected person or when an adverse order is contemplated-and that personal hearing is a core component of procedural fairness and natural justice. Relying on earlier decisions of coordinate Benches addressing similar facts, the Court held that administrative orders cannot be allowed to stand where the statutory mandate of hearing has not been complied with, and that failure to afford such hearing vitiates the consequent orders. [Paras 3, 4, 5]

The impugned orders are quashed and set aside for failure to afford the mandatory personal hearing.

Direction to pass a reasoned order after personal hearing - remand for fresh consideration - The matter is remitted to the tax authority for grant of personal hearing and for passing a fresh reasoned order in accordance with law within a specified time-frame. - HELD THAT: - Having quashed the orders for breach of natural justice, the Court directed that the respondent authority (respondent No.3) shall grant the petitioner an opportunity of personal hearing and thereafter pass a reasoned order in accordance with law. The Court specified a limited and concrete remedial course: the authority must conduct the hearing and decide the matter afresh, applying the relevant statutory and legal principles, within six weeks from the date of the order. The direction thus effects a remand for fresh consideration rather than an adjudication on the merits of tax liability. [Paras 6, 7]

Respondent No.3 to grant personal hearing and pass a reasoned order in accordance with law within six weeks; writ petition allowed.

Final Conclusion: Writ petition allowed; impugned orders dated July 12, 2023 and August 18, 2022 quashed for non-compliance with the mandatory personal hearing requirement under Section 75(4) of the UPGST Act, 2017, and the matter remitted to the tax authority to afford personal hearing and pass a reasoned order within six weeks.

Cancellation of registration - application of mind - reasons as heart and soul of an order - quasi-judicial order - opportunity of hearing - Article 14 of the Constitution

Cancellation of registration - application of mind - reasons as heart and soul of an order - quasi-judicial order - Article 14 of the Constitution - The original order for cancellation of the petitioner's registration was issued without application of mind and without reasons, and therefore was vitiated. - HELD THAT: - The Court examined the impugned original order and observed internal contradictions in its recital of facts addressing the reply to the show-cause notice, demonstrating absence of any real application of mind. Relying on the settled proposition that reasons are integral to any administrative or quasi-judicial order and that the omission of reasons affecting fundamental rights cannot satisfy the test of Article 14, the Court held that the cancellation order is non-speaking and defective. The Court further placed reliance on precedents of this Court emphasising that absence of reasons in a coercive order allowing cancellation of registration renders the order susceptible to judicial interference. [Paras 3, 6, 7]

The original cancellation order dated March 1, 2023 is quashed and set aside for lack of application of mind and absence of reasons.

Appellate order - doctrine of merger - quasi-judicial order - The appellate order passed under Section 107 was quashed in consequence of the original order being non-reasoned and set aside. - HELD THAT: - The Court observed that because the impugned original order was vitiated for want of reasons and was set aside, the appellate order which had dismissed the appeal was liable to be quashed as well. The Division Bench precedent was considered where, on similar facts, the original order was set aside and the petitioner permitted to file a reply to the show-cause notice; the present appeal was therefore not permitted to stand as validating the defective original order. [Paras 6, 7]

The appellate order dated March 15, 2024 is quashed and set aside.

Opportunity of hearing - reply to show-cause notice - de novo adjudication - The matter was remanded for fresh consideration: the petitioner was permitted to file its reply and the adjudicating authority directed to proceed afresh after affording hearing. - HELD THAT: - Recognising the defect in the original adjudication, the Court directed that the petitioner be allowed to file its reply to the show-cause notice within three weeks. The adjudicating authority was directed to consider the petitioner's defence and to pass a fresh order after granting an opportunity of hearing and applying its mind, thereby ensuring that the administrative process is conducted in a reasoned manner. The Court's directions are remedial and limited to ensuring fresh adjudication on merits after compliance with principles of natural justice. [Paras 7]

Petitioner to file reply within three weeks; adjudicating authority to proceed de novo and pass fresh order after hearing.

Final Conclusion: Both the original cancellation order and the appellate order were quashed for being non-reasoned and devoid of application of mind; the petitioner is permitted to file a reply to the show-cause notice within three weeks and the matter is remitted for fresh adjudication by the authority after affording an opportunity of hearing.

Penalty for transit seizure under Section 129 of the U.P.G.S.T. Act, 2017 - reduction of penalty from confiscation-rate to composition-rate under Section 129(1) - registered dealer status at time of transaction as material to levy of penalty - Tax Invoice as prima facie evidence of bona fides of transaction - release of seized goods and vehicle on payment of reduced penalty - electronic filing of appeals and creation of temporary IDs for owners/third parties

Registered dealer status at time of transaction as material to levy of penalty - Tax Invoice as prima facie evidence of bona fides of transaction - reduction of penalty from confiscation-rate to composition-rate under Section 129(1) - Whether penalty imposed at the higher rate under Section 129(1)(b) could be reduced where the petitioner was a registered dealer at the time of sale and a Tax Invoice was issued and produced at the time of detention - HELD THAT: - The Court accepted that the Tax Invoice issued on 04.08.2023 was present at the time of detention and that the petitioner was a registered dealer on the date of the transaction; subsequent cancellation of registration (on 14.08.2023) post-dated the transaction and therefore did not negate the prima facie validity of the sale document. In light of the petitioner's willingness to accept a lesser composition penalty under Section 129(1)(a) and the absence of evidence to doubt the issuance of the Tax Invoice or the petitioner's registration on the date of transaction, the Court found reduction of the penalty appropriate and directed that the penalty be reduced in terms of Section 129(1)(a) of the State Act. [Paras 3, 4, 8]

Penalty reduced to the composition rate under Section 129(1)(a) in place of the penalty imposed under Section 129(1)(b).

Release of seized goods and vehicle on payment of reduced penalty - Whether the seized goods and vehicle should be released upon payment of the reduced penalty and within what time frame - HELD THAT: - Having directed reduction of the penalty and noted the presence of the Tax Invoice and the petitioner's registered status on the date of transaction, the Court ordered release of the goods and vehicle forthwith, subject to payment of the due amount. A specific compliance period of three weeks from the order was provided for payment, failing which the order as to release would not operate. [Paras 8, 9]

Goods and vehicle to be released forthwith subject to payment of the due amount within three weeks.

Electronic filing of appeals and creation of temporary IDs for owners/third parties - Whether the revenue should provide a mechanism to enable owners or third parties to file electronic appeals by creating temporary IDs and how objections to maintainability are to be treated - HELD THAT: - The Court noted instances where temporary IDs had been created only in favour of truck drivers and not owners/consignors, which disabled affected persons from filing statutory appeals electronically. To avoid such procedural disability, the Court directed the Commissioner of Commercial Tax, U.P., to put in place appropriate arrangements permitting owners/third parties to file appeals electronically by creating temporary IDs with verifiable measures. The Court clarified that any objection to the maintainability of an appeal filed under such mechanism would remain open for determination by the appellate authority on individual facts, but citizens should not be prevented from filing appeals due to absence of temporary IDs at the stage orders are passed. [Paras 6, 10]

Commissioner directed to create mechanisms for electronic filing of appeals by owners/third parties through temporary IDs; maintainability objections to be tested on individual facts by the appeal authority.

Final Conclusion: Writ petition allowed in part: the penalty imposed under Section 129(1)(b) is reduced to the composition penalty under Section 129(1)(a); goods and vehicle ordered released on payment of the reduced amount within three weeks; Commissioner directed to establish a mechanism for creation of temporary IDs to enable electronic filing of appeals by owners/third parties, subject to maintainability being open to the appellate authority.

Absence of signature on tax notice/order - requirement of signed or digitally signed orders under Rule 26(3) of the Central Board of Service Tax Rules, 2017 - procedural validity of GST/Service Tax notices and orders - judicial review of unsigned administrative orders

Absence of signature on tax notice/order - requirement of signed or digitally signed orders under Rule 26(3) of the Central Board of Service Tax Rules, 2017 - procedural validity of GST/Service Tax notices and orders - Notices dated 10.02.2022 and 12.02.2021 and order dated 15.11.2023, which do not bear a signature or digital signature, are invalid for non-compliance with the statutory requirement and are liable to be set aside. - HELD THAT: - The Court examined the absence of any physical or digital signature on the impugned notices and order and held that such absence runs contrary to the statutory mandate reflected in Rule 26(3) of the Central Board of Service Tax Rules, 2017 (analogous to the Telangana Goods and Services Tax, 2017). Reliance was placed on binding High Court precedents, including this Court's recent decision in M/s. Silver Oak Villas LLP, establishing that an order or notice not authenticated by the competent authority's signature cannot sustain judicial scrutiny. The factual position that the notices and order lacked signatures was not disputed by respondents. In consequence, the Court set aside the impugned notices and order while expressly leaving open the department's liberty to proceed afresh in accordance with law. [Paras 2, 3, 5]

Impugned notices dated 10.02.2022 and 12.02.2021 and order dated 15.11.2023 are set aside for want of signature/digital authentication; department may proceed in accordance with law.

Final Conclusion: Writ petition allowed; the unsigned/undigitally signed notices and order were quashed for non-compliance with the statutory authentication requirement, with liberty to the department to initiate fresh proceedings in accordance with law.

Input tax credit - input service distributor - carry forward of transitional credit - GSTR Form-6 - Section 140(7) of the Central Goods and Services Tax Act, 2017 - Rule 36 of the CGST Rules - interim protection from coercive action

Interim protection from coercive action - input tax credit - Petition for interim protection restraining the respondent authority from taking coercive action during pendency of the writ petition - HELD THAT: - The High Court considered the petitioner's contention that it had received input tax credit distributed by its input service distributor which the respondent authorities were not permitting the petitioner to utilize because the ISD had not filed GSTR Form-6 for carry forward of transitional credit under Section 140(7) of the CGST Act. Taking note of the submissions, the court issued notice and granted interim relief by directing that no coercive action shall be taken by the respondent authority during the pendency of the petition. Service by e-mail was permitted.

Notice issued returnable 1 May 2024; in the meantime respondent directed not to take any coercive action against the petitioner.

Input service distributor - carry forward of transitional credit - GSTR Form-6 - Section 140(7) of the Central Goods and Services Tax Act, 2017 - Rule 36 of the CGST Rules - input tax credit - Merits of entitlement to utilize input tax credit distributed by the ISD and permissibility of filing GSTR Form-6 for carry forward of transitional credit reserved for adjudication - HELD THAT: - The court recorded the petitioner's grievance that the ISD could not file GSTR Form-6 due to absence of a column for carry forward of transitional credit and that respondent authorities therefore refused to allow utilization of the distributed credit, relying also on Rule 36 (receipt of invoice of distribution). The court noted existing proceedings elsewhere and submissions about pending consideration (including reference to other High Court orders and GST Council recommendations) but did not adjudicate the substantive legal questions concerning Section 140(7), the ISD's filing obligations, or the petitioner's entitlement to the distributed credit. Those contentions remain for final determination on merits after notice.

Substantive issues reserved for adjudication on merits; petition proceeded by issuance of notice.

Final Conclusion: The High Court granted interim relief restraining the respondents from taking coercive action during pendency of the petition and issued notice; the substantive disputes concerning the ISD's inability to file GSTR Form-6 and the petitioner's entitlement to carry forward or utilise the transitional input tax credit remain undetermined and are to be adjudicated on the merits.

Summary order. Petition admitted for consideration; notice issued; matter adjourned to 11.09.023; copy to respondents to be supplied; matter to be heard along with CWP-2687-2021; in the meantime no coercive steps shall be taken.

Consideration - advance payment - deposit - time of supply under section 13(2) - composite supply - principal supply - pure agent - rate of principal supply

Consideration - advance payment - deposit - time of supply under section 13(2) - Taxability of contributions towards corpus/sinking fund collected by the RWA - HELD THAT: - The Court examined whether contributions to a sinking/corpus fund are deposits or advance payments. Relying on the essential characteristic of a deposit (temporary custody with obligation to return) the Court observed that contributions to the RWA are not refundable and are retained to meet future contingencies. The contributions are therefore not deposits but represent acceptance of the RWA's offer to bear future expenses and constitute payments made in respect of future supply of services. Consequently such receipts fall within the definition of "consideration" and are taxable. The tax liability arises at the time of receipt of the amount in accordance with the proviso and the provisions of sub-section (2) of section 13 of the GST Act. [Paras 8, 9, 10, 11]

Contributions towards corpus/sinking fund are advance payments forming part of consideration and are taxable at the time of receipt under section 13(2).

Composite supply - principal supply - pure agent - rate of principal supply - Tax treatment of common area electricity charges collected by the RWA - HELD THAT: - The Court considered the TRU Circular clarifying that where electricity is bundled with maintenance/renting it forms part of a composite supply and is taxable at the rate applicable to the principal supply. The Circular also states that where electricity is charged on actual basis as a pure agent it would not form part of the value. In the present case the invoice aggregates Common Area Maintenance including electricity and does not show electricity separately; the charge is levied as a consolidated maintenance amount under SAC 999598 and taxed at the maintenance rate. Therefore the electricity component is bundled as an ancillary supply forming part of a composite supply whose principal supply is maintenance of premises; the GST rate of the principal supply applies. [Paras 12, 13, 14]

Electricity charges collected as part of consolidated Common Area Maintenance form part of a composite supply and are taxable at the rate of the principal supply (maintenance); they are not excluded as pure agent in the present invoicing.

Final Conclusion: The WBAAR Ruling No. 22/WBAAR/2023-24 dated 29.11.2023 is confirmed; the appeal is rejected.

Penalty under section 271(1)(c) - show cause notice under section 274(1) - concealment of particulars of income - furnishing of inaccurate particulars of income - non-application of mind - principles of natural justice

Show cause notice under section 274(1) - penalty under section 271(1)(c) - concealment of particulars of income - furnishing of inaccurate particulars of income - non-application of mind - principles of natural justice - Validity of the show-cause notices and consequential imposition of penalty under Sec. 271(1)(c) for A.Y.2009-10 and A.Y.2014-15 - HELD THAT: - The tribunal found that the Assessing Officer's show-cause notices dated 16.12.2016 and 18.05.2017 did not distinctly specify which limb of Sec. 271(1)(c) - 'concealment of particulars of income' or 'furnishing of inaccurate particulars of income' - was the ground for initiating penalty proceedings. Use of conjunctive language in the printed proforma without striking off the inapplicable limb evidenced non-application of mind and failed to convey the precise charge to the assessee, thereby defeating the statutory right to a meaningful opportunity of being heard under Sec. 274(1). Relying on the settled authorities that treat omnibus/printed notices that do not delete inapplicable portions as vitiating penalty proceedings, the tribunal held that such defect is not merely technical but fatal because Sec. 271(1)(c) is a penal provision requiring strict compliance with procedure and principles of natural justice. Having concluded that the statutory obligation to put the assessee clearly on notice was not discharged, the tribunal could not sustain the penalties imposed by the AO and upheld by the CIT(A). The same reasoning was applied mutatis mutandis to both assessment years before the tribunal. [Paras 11, 12, 14, 16]

The show-cause notices were invalid for failing to specify the particular limb of Sec. 271(1)(c); penalties imposed for A.Y.2009-10 and A.Y.2014-15 are quashed.

Final Conclusion: Penalties levied under Sec. 271(1)(c) for A.Y.2009-10 and A.Y.2014-15 quashed because the statutory show-cause notices failed to specify the precise charge (concealment or furnishing inaccurate particulars), demonstrating non-application of mind and denial of a proper opportunity of hearing under Sec. 274(1).

Unexplained credit u/s 68 - burden of proof on assessee under section 68 - creditworthiness and genuineness of shareholder - verification of source and source of source of investment - addition treated as income under Section 115BBE - appellate appreciation of evidence

Unexplained credit u/s 68 - creditworthiness and genuineness of shareholder - verification of source and source of source of investment - burden of proof on assessee under section 68 - Whether the addition of Rs. 2,00,00,000 made by the Assessing Officer by treating share application money received from Axis Propbuild Pvt. Ltd. as unexplained credit under section 68 is sustainable. - HELD THAT: - The Tribunal examined the material produced by the assessee and the findings of the CIT(A). The assessee produced confirmations, bank statements showing no cash deposits, ITR acknowledgements, financial statements, MOA/AOA and documents establishing the source (Toplink Projects Pvt. Ltd.) and source of source. The director of the investor appeared pursuant to summons and confirmed the investment. The Assessing Officer's conclusion rested on the investor's returned income being low and no change in share capital and reserves in the relevant year; the AO did not bring forward any independent material to displace the documents produced by the assessee. The Tribunal accepted the CIT(A)'s factual findings that identity, creditworthiness and genuineness of the investor and the transaction, as well as the source and source of source, were established. In these circumstances the burden cast on the assessee under section 68 stood discharged and the AO's addition, founded on what the Tribunal characterises as a preconceived notion and not on material evidence, was unsustainable. The Tribunal therefore upheld deletion of the addition by the CIT(A). [Paras 14]

Addition of Rs. 2,00,00,000 treated as unexplained credit u/s 68 is deleted; revenue's ground dismissed.

Final Conclusion: The departmental appeal is dismissed; the Tribunal upholds the CIT(A)'s deletion of the addition made u/s 68 for A.Y. 2017-18, holding that the assessee discharged the onus by establishing identity, creditworthiness and genuineness of the investment and its source.

Taxability of interest on compensation or enhanced compensation - Interest under Section 28 and Section 34 of the Land Acquisition Act, 1894 - Classification as income from other sources under Section 56(2)(viii) - Deeming provision in Section 145-B and its interplay with Section 56(2)(viii) - Effect of Finance (No. 2) Act, 2009 (w.e.f. 01.04.2010) on pre existing precedents - Distinction between compensation and interest for tax purposes

Taxability of interest on compensation or enhanced compensation - Classification as income from other sources under Section 56(2)(viii) - Deeming provision in Section 145-B and its interplay with Section 56(2)(viii) - Effect of Finance (No. 2) Act, 2009 (w.e.f. 01.04.2010) on pre existing precedents - Interest received on enhanced compensation is taxable as income from other sources under Section 56(2)(viii) and Section 145-B and is not to be treated as part of exempt compensation for the assessment year in question. - HELD THAT: - The Court held that the 2010 amendment (Finance (No. 2) Act, 2009) which inserted clause (viii) in Section 56(2) and Section 145-B effected a clear legislative change making interest on compensation or enhanced compensation chargeable as income from other sources in the year of receipt. A conjoint reading of Sections 56(2)(viii) and 145-B demonstrates that interest on compensation/enhanced compensation is to be taxed under the head "income from other sources." Consequently, conclusions based on pre amendment precedents (including Ghanshyam) cannot override the statutory position post 2010. The Court also noted earlier decisions (Sham Lal Narula, Bikram Singh) treating such interest as a revenue receipt and observed that later reliance by the ITAT on Ghanshyam to treat interest as part of compensation was unsustainable in view of the legislative departure. The amendment was a conscious change by the Legislature and there is no question of its vires or ambiguity; accordingly the concurrent findings of the Assessing Officer and the CIT(A) that the interest is exigible to tax were affirmed and the ITAT's contrary view was set aside. [Paras 24, 29, 30, 31]

The ITAT's deletion of the addition was set aside and the concurrent findings of the AO and CIT(A) that interest on enhanced compensation is taxable under Section 56(2)(viii)/Section 145-B were affirmed.

Final Conclusion: The appeal is allowed; the ITAT order dated 19.06.2020 is set aside and the concurrent finding that interest on compensation/enhanced compensation is taxable as income from other sources under the post 2010 statutory regime is affirmed.

Determination of disallowance under Section 14A read with Rule 8D - Requirement of Assessing Officer's recorded satisfaction and cogent reasons - Non-automatic application of Rule 8D - Pre-condition of AO's satisfaction before invoking prescribed computation

Determination of disallowance under Section 14A read with Rule 8D - Requirement of Assessing Officer's recorded satisfaction and cogent reasons - Whether the Assessing Officer had recorded requisite satisfaction and given reasons before invoking Rule 8D to compute disallowance under Section 14A - HELD THAT: - The Court examined the assessment order and the AO's statement that the assessee's explanation "is not acceptable" but found that the AO did not explain why the explanation was unacceptable nor record cogent reasons for being dissatisfied with the correctness of the assessee's claim. Sub section (2) of Section 14A and Rule 8D require that the AO, "having regard to the accounts of the assessee," must be not satisfied with the correctness of the claim before determining expenditure by the prescribed method; hence the AO must record satisfaction and the reasons leading to that conclusion. The Court relied on its prior decisions affirming that Rule 8D cannot be applied automatically and that invocation of Rule 8D is a consequential step only after the AO has first recorded a clear conclusion of dissatisfaction with the assessee's books or computations. The impugned assessment order (paragraph 5.2) showed the AO relied on non existent prior findings and did not state why he was not satisfied, indicating non application of mind. The ITAT and CIT(A) findings that the AO failed to record the necessary satisfaction and reasons were therefore upheld. [Paras 6, 7, 10, 11]

The disallowance computed under Rule 8D was unsustainable because the Assessing Officer had not recorded the required satisfaction with cogent reasons; the deletions by the lower authorities were affirmed.

Final Conclusion: No substantial question of law arises; the appeal is dismissed and the orders deleting the disallowance under Section 14A read with Rule 8D are upheld.

Power of appellate authority to exempt payment of advance tax under the proviso to sub section (4) of Section 249 - treatment of unexplained investment under Section 69 - application of higher tax rate under Section 115BBE - maintainability of appeal subject to conditional remittance - Faceless Appeal Scheme, 2021 - appellate adjudication after compliance with conditions

Power of appellate authority to exempt payment of advance tax under the proviso to sub section (4) of Section 249 - Faceless Appeal Scheme, 2021 - appellate adjudication after compliance with conditions - Whether the appeal against the assessment order for Assessment Year 2016-17 can be entertained without full payment of advance tax by invoking the proviso to Section 249(4). - HELD THAT: - The Court observed that it was not seriously disputed that the petitioner's case falls within the ambit of the proviso to Section 249(4)(b) and that the Appellate Authority has power to consider exemption from payment of advance tax in appropriate cases. Rather than directing unconditional exemption, the Court exercised its jurisdiction to permit prosecution of the appeal subject to a specific conditional remittance. The petition was disposed by directing that the appeal (Ext. P17) filed against the assessment order (Ext. P15) be taken up and adjudicated on merits only after the petitioner complies with the payment condition set out by the Court. This approach recognises the appellate power to grant relief under the proviso while balancing the fiscal protection of the revenue by requiring a substantial remittance before the appeal is entertained. [Paras 3, 5]

The appeal may be entertained and disposed of on merits after the petitioner complies with the payment condition directed by the Court.

Maintainability of appeal subject to conditional remittance - The quantum and schedule of remittance required to be made by the petitioner as a condition for maintaining the appeal. - HELD THAT: - The Court directed a conditional remittance totalling Rs. 12 crores to be paid by the petitioner as a precondition to maintain the appeal against Ext. P15 for AY 2016-17. The payment structure ordered was: Rs. 25 lakhs to be remitted on or before 31.03.2024, and the balance Rs. 11.75 crores to be remitted in eight equal monthly installments beginning 15.04.2024 and thereafter on or before the 15th of successive months. The Court recorded that failure to remit the amounts as directed would leave the Department free to proceed with recovery under the assessment order, and that the appeal shall be taken up for adjudication only after the entire directed remittance is paid. [Paras 5]

Petitioner must remit Rs. 12 crores in the manner directed; appeal will be adjudicated only after full payment, failing which revenue may proceed with recovery.

Final Conclusion: Writ petition disposed directing that the faceless appeal against the assessment for AY 2016-17 be heard and decided on merits only after the petitioner makes the specified remittance of Rs. 12 crores in the structured instalments; failure to comply permits the Department to proceed with recovery.

Reassessment under section 153A in unabated assessment years - incriminating material requirement for disturbing completed assessments - application of Section 115JB to incentives and notional reserves - treatment of government subsidy as capital receipt (purpose test) - reliability and weight of statements recorded under section 132(4) - addition for alleged bogus/over invoiced purchases - taxing profit element - disallowance of expenditure as freebies to medical practitioners - Explanation to Section 37(1) and MCI/CBDT regime - admissibility of fresh claims in proceedings under section 153A for abated years - requirement of opportunity to cross examine third party statements

Reassessment under section 153A in unabated assessment years - incriminating material requirement for disturbing completed assessments - Whether additions made earlier in original assessments could be re made in assessments completed under section 153A/143(3) for unabated AYs 2009 10 and 2010 11 - HELD THAT: - The Tribunal held that AYs 2009 10 and 2010 11 were unabated and, following the Supreme Court decision in Abhisar Buildwell approving CIT v. Kabul Chawla, the AO could disturb completed assessments only to the extent of incriminating material unearthed in the search. The AO had merely re applied the same reasoning of predecessors to re make four specific additions (transfer pricing adjustment, denial of deduction u/s 80IC on sale of scrap, disallowance of additional depreciation, disallowance of ESOP expenses) without any seized incriminating material; that action was therefore unsustainable. The Tribunal allowed the assessee's grounds and dismissed the Revenue's corresponding grounds.

Additions re made in assessments under section 153A for the unabated AYs 2009 10 and 2010 11 (on the four specified issues) deleted; assessee's grounds allowed and Revenue's dismissed.

Incriminating material requirement for disturbing completed assessments - application of Section 115JB to unit losses - Allowability of loss incurred by SEZ unit while computing book profit under section 115JB for unabated AY 2009 10 (and related claim in AY 2010 11) - HELD THAT: - The AO disallowed SEZ trial period loss under section 115JB(6). Tribunal found no incriminating material seized in respect of this issue for the unabated AYs and applied the Abhisar Buildwell principle to hold that the disallowance could not be made in the absence of such material. On merits the Tribunal also accepted the assessee's position that the unit had not commenced commercial production and trial losses did not fall within section 10AA/115JB(6). Consequently the disallowance for AY 2009 10 was deleted. The additional ground in AY 2010 11 seeking fresh deduction in a non abated year was dismissed following precedent that fresh claims cannot be entertained in unabated years under section 153A.

Disallowance of SEZ trial loss in AY 2009 10 deleted; additional claim in AY 2010 11 dismissed.

Reassessment under section 153A in unabated assessment years - Validity of disallowance of expenses for patent registration claimed under section 35(2AB) in unabated AY 2009 10 - HELD THAT: - The AO reappraised and disallowed patent registration expenses in the assessment completed under section 153A for an unabated year without any incriminating seized material. Applying the principle that completed assessments cannot be reopened absent incriminating material from search, the Tribunal held the disallowance unsustainable and upheld the CIT(A)'s deletion of the addition.

Disallowance of deduction under section 35(2AB) deleted; Revenue ground dismissed.

Reassessment under section 153A in unabated assessment years - tax treatment of tax paid on ESOPs for book profit computations - Addition of tax paid on ESOP (treated as income tax) to book profit under Explanation to section 115JB for unabated AY 2010 11 - HELD THAT: - The AO added tax paid on ESOP while computing book profit, but no incriminating material was seized in relation to this addition for the unabated year. The Tribunal applied the Abhisar Buildwell principle and noted that the addition was made by reappraisal of an accepted return entry; absent seized material the addition could not be sustained. Following Tribunal precedent, the CIT(A)'s deletion was upheld on this legal ground.

Addition deleted; Revenue ground dismissed.

Reliability and weight of statements recorded under section 132(4) - over invoicing allegations and evidentiary corroboration - Sustainability of additions on account of alleged over invoicing of raw materials across multiple AYs - HELD THAT: - The AO relied on statements recorded during search and a benchmarking exercise to infer over invoicing from several vendors and made additions. Tribunal examined the record: (i) the statements implicated over invoicing through a particular vendor (Reynolds Petro Chem Ltd) and related sister concern, whereas the assessee had not transacted with that vendor; (ii) retractions, subsequent tax assessment of the director for personal income, and absence of corroborative seized material undermined the original admissions; (iii) the AO's own comparative enquiries were selectively applied and ultimately not relied upon; (iv) no tangible evidence linked the alleged over invoicing to the assessee's purchases. On these facts the Tribunal found the AO's premise flawed and directed deletion of the additions across the AYs.

Additions for alleged over invoicing deleted across the relevant AYs; assessee's grounds allowed and Revenue's dismissed.

Addition for alleged bogus/over invoiced purchases - taxing profit element - weight of third party information and requirement of independent verification - Disallowance of purchases from suspicious suppliers and quantification - whether entire purchase or only profit element is taxable for AYs 2009 10 to 2012 13 - HELD THAT: - For seven suppliers flagged as suspicious, the AO disallowed entire purchases. Tribunal found (i) assessee supplied tax invoices, ledgers and bank evidence but AO's summons to suppliers under section 133(6) were unserved/non complied; (ii) authorities and courts (Bombay High Court and Tribunal precedents) require only the profit element embedded in purchases from bogus suppliers to be taxed where consumption/sales are not disputed. Applying that principle and having regard to facts and declared gross profit, the Tribunal held entire disallowance was unwarranted and directed the AO to restrict addition to 8% (fixed by Tribunal on the facts) of such purchases across the AYs.

Disallowance restricted to profit element; AO directed to assess profit at 8% of questioned purchases; balance deleted.

Requirement of opportunity to cross examine third party statements - use of third party information in assessment - Disallowance of professional fees paid to ACIAL where Revenue relied on statement of third party (Shirish Shah) - HELD THAT: - AO relied on investigatory material linking ACIAL's proprietor to accommodation entries; assessee produced contemporaneous invoices, TDS and payment evidence and the CIT(A) deleted the disallowance. Tribunal noted that the statement of the third party was not supplied to the assessee and no opportunity to cross examine was afforded; precedent holds that additions based solely on untested third party information are bad in law. In absence of corroboration the deletion by CIT(A) was upheld.

Disallowance of professional fees deleted; Revenue's grounds dismissed.

Disallowance of expenditure as freebies to medical practitioners - Explanation to Section 37(1) and MCI/CBDT regime - admissibility of CBDT Circular No.5/2012 as clarificatory from 14 12 2009 - Correctness and quantification of disallowance of sales promotion expenses (freebies) for AYs 2009 10, 2010 11, 2011 12, 2012 13 and 2014 15 - HELD THAT: - Tribunal applied apex and High Court precedent: CBDT Circular No.5/2012 is clarificatory and effective from implementation of MCI Regulation 6.8 (14 12 2009). For AY 2009 10 the Circular/Regulation did not apply and AO's disallowance was deleted in full. For portions of AY 2010 11 prior to 14 12 2009 the disallowance was deleted; disallowance for periods on/after 14 12 2009 and for later AYs was examined head wise. The Tribunal sustained disallowance only for expenditures that directly amounted to hospitality/air travel/hotel reimbursements to doctors and quantified specific heads to be added back (hotel and travel components, air tickets fully). Nominal brand recall/gifts under Rs.1,000 and sponsorship, printing, camp patient expenses, taxi hire and trade relation/gifts to distributors were held allowable or deleted. Tribunal directed attribution of any sustained disallowance to eligible units for computation of chapter VI A deductions per CBDT Circular No.37/2016 and allowed reassessment computations after hearing the assessee.

AY 2009 10 disallowance deleted; for other years partial deletions and specific quantifications made - only identified hospitality/air travel/hotel/travel amounts to be disallowed; other heads deleted; AO directed to attribute disallowance to eligible units for Chapter VI A computation.

Capital treatment of ESOP/compensation expenses - precedential reliance on Tribunal and Special Bench decisions - Deletion of disallowance of ESOP expenses for AYs 2011 12 and 2012 13 - HELD THAT: - The CIT(A) deleted the AO's disallowance following earlier Tribunal findings in the assessee's own case and the Special Bench/Bombay/Karnataka precedents which treated ESOP expense as allowable in the facts of those years. Tribunal found the issue squarely covered by those decisions and upheld the deletion.

Disallowance deleted; Revenue's grounds dismissed.

Treatment of sale of scrap in computing eligible business profits under section 80 IC - Whether profit from sale of scrap constitutes eligible profits of industrial undertaking for deduction under section 80 IC (AYs 2011 12, 2012 13, 2014 15) - HELD THAT: - Tribunal followed its earlier decision in the assessee's own case and relevant High Court authority to hold that sale of empty containers/scrap arising from eligible industrial undertakings forms part of undertaking's activities and is eligible for deduction under section 80 IC/80 IB. On that basis the CIT(A)'s deletion of the AO's exclusion was upheld.

Profit from sale of scrap held eligible for deduction under section 80 IC; AO's exclusion deleted.

Treatment of government subsidy as capital receipt (purpose test) - application of Section 115JB to incentives and notional reserves - admissibility of fresh claims in proceedings under section 153A for abated years - Exclusion of excise subsidy (refund) as capital receipt and exclusion from book profit under section 115JB for AYs 2012 13 and 2014 15; admissibility of the fresh claim - HELD THAT: - On facts the subsidy was granted to encourage setting up of new industry in Sikkim. Tribunal applied Supreme Court and High Court precedent (purpose test: Sahney/Ponni/Chaphalkar and Bombay High Court decisions) to hold the excise subsidy to be a capital receipt not chargeable to tax. Following coordinate Tribunal and High Court authorities, the subsidy was also excluded from book profit computation under section 115JB because it is not income. As to procedural admissibility, Tribunal relied on binding Bombay High Court and other precedent that fresh claims may be entertained in proceedings under section 153A where assessments abated; accordingly CIT(A)'s admission of the fresh claim was sustained.

Excise subsidy held capital and not taxable; excluded from normal income and from book profit under section 115JB; CIT(A)'s admission of fresh claim in abated years upheld; Revenue's grounds dismissed.

Application of Section 115JB to incentives and notional reserves - consistency of treatment across assessment years and doctrine against changing accepted position - Admissibility of reduction for foreign exchange translation reserve (notional gain) in computation of book profit under section 115JB for AY 2014 15 - HELD THAT: - Assessee had credited restatement gains on foreign currency loans to a foreign exchange translation reserve in the balance sheet (AS 11) and had not included comparable amounts in book profit for earlier abated years 2012 13 and 2013 14; same AO had accepted those computations earlier. Tribunal applied the principle that only adjustments specified in Explanation to section 115JB may be made to book profit and that a receipt not in the nature of income need not be included; in addition the consistency principle (Radhasoami) militates against altering a settled treatment in later years absent change in law/facts. On these bases the Tribunal allowed the assessee's additional ground and directed that the inadvertent addition be reduced.

Reduction of foreign fluctuation translation reserve (inadvertently added) allowed for computation of book profit in AY 2014 15.

Final Conclusion: The cross appeals were partly allowed. For the specified AYs (AY 2009 10, AY 2010 11, AY 2011 12, AY 2012 13 and AY 2014 15) the Tribunal: deleted several additions made in assessments completed under section 153A where no incriminating seized material justified reopening of unabated years; deleted specific disallowances (patent registration, ESOP/book profit adjustments where precedent favoured the assessee); struck down over invoicing additions; restricted disallowance for purchases from suspicious suppliers to an assessed profit element (fixed at 8% on the facts); upheld deletion of professional fees disallowance; upheld capital treatment and exclusion of excise subsidy from normal income and book profit; permitted reduction of an inadvertent foreign exchange reserve addition to book profit; and made quantified adjustments to sales promotion disallowances (deleting most heads but sustaining hospitality/air travel/hotel/travel components as identified). The AO is directed to give effect to these findings and to recompute tax/eligible deductions as directed, after affording the assessee opportunity of hearing.

Obligation of Commissioner (Appeals) to decide appeals on merits - power to dismiss appeal for non prosecution - duties under Section 250 and Section 251 of the Income tax Act - requirement to afford opportunity of hearing on de novo disposal

Obligation of Commissioner (Appeals) to decide appeals on merits - power to dismiss appeal for non prosecution - duties under Section 250 and Section 251 of the Income tax Act - Whether the Commissioner (Appeals) was entitled to summarily dismiss the appeal for non prosecution instead of deciding it on merits. - HELD THAT: - The Tribunal held that once an appeal is preferred before the CIT(A), the CIT(A) is statutorily obliged to apply his mind to the issues arising from the impugned order and to dispose of the appeal on merits. Reliance was placed on the statutory scheme in Sections 250 and 251 and the Explanation to Section 251(2) to conclude that the CIT(A) does not have power to summarily dismiss an appeal for non prosecution. The Tribunal noted that the CIT(A) must make such further inquiry as he thinks fit or direct the AO to do so and must render a reasoned, written decision on the points for determination; accordingly, summary dismissal for want of prosecution was held impermissible.

The CIT(A)'s order dismissing the appeal for non prosecution is set aside; the CIT(A) was directed to dispose of the appeal afresh on merits after affording a reasonable opportunity of hearing.

Requirement to afford opportunity of hearing on de novo disposal - appeal remitted for de novo consideration of disputed additions and adjustments - Disposition of the substantive issues in the assessment (higher rate of depreciation on JCB/Tata Hitachi, disallowance under Section 40(a)(ia) of interest, adjustment to book profit under Section 115JB, and validity of notice under Section 148/assumption of jurisdiction). - HELD THAT: - The Tribunal did not adjudicate the merits of the substantive contentions raised by the assessee (including entitlement to higher depreciation, correctness of disallowance under Section 40(a)(ia), computation/adjustment of book profit under Section 115JB, and the challenge to the jurisdictional validity of the notice). Instead, having found the CIT(A)'s summary dismissal impermissible, the Tribunal set aside the CIT(A)'s order and remitted the appeal for de novo disposal. The CIT(A) in the remand proceedings is to consider the grounds of appeal raised by the assessee, afford a reasonable hearing, and decide each issue on merits.

Substantive issues are remitted to the CIT(A) for fresh adjudication on merits and after affording the assessee a reasonable opportunity of hearing.

Final Conclusion: The Tribunal set aside the CIT(A)'s order of dismissal for non prosecution and remitted the appeal to the CIT(A) for de novo disposal on merits (AY 2013 14), directing that the assessee be afforded a reasonable opportunity to be heard and that the CIT(A) decide the substantive issues raised in the appeal.

Reopening of assessment under section 147/148 - unexplained bank credits treated as unexplained money under section 69A - best judgment assessment - burden of proof on assessee after establishment of deposits - alternative relief by allowing percentage deduction / peak-credit approach

Reopening of assessment under section 147/148 - best judgment assessment - Validity of reopening of assessment and issuance of notice under section 148 - HELD THAT: - The Tribunal examined the Assessing Officer's reasons and the material (bank statement and third-party information) relied upon to form belief that income had escaped assessment. The adjudicating bench found that tangible material supported recording of reasons and that the Assessing Officer had issued the notice dated 29.03.2019, which was reflected in the assessment order. The assessee did not contest reopening before the AO and the coordinate decisions relied upon by the assessee were found not to be squarely applicable. On these bases the Tribunal held the reopening and consequential best judgment proceedings to be valid. [Paras 13, 14]

Reopening under section 147/148 upheld; ground No.1 dismissed.

Unexplained bank credits treated as unexplained money under section 69A - burden of proof on assessee after establishment of deposits - alternative relief by allowing percentage deduction / peak-credit approach - Sustainability and quantum of addition under section 69A in respect of cash deposits and other bank credits - HELD THAT: - On merits the Tribunal accepted that bank credits (cash deposits and other credits) had been established from bank records and that the onus then shifted to the assessee to satisfactorily explain the nature and source of those credits. The assessee's explanations - withdrawal and redeposit, agricultural receipts and specific receipts claimed from third parties - were found to be largely unproved or unsupported, except for certain items (agricultural income and specified bank interest/FD interest) which the CIT(A) had allowed. Noting however that not all deposits necessarily represented taxable income, the Tribunal exercised its discretion to moderate the addition and directed that 10% of the balance addition (i.e., a limited deduction) be allowed in favour of the assessee instead of applying either the peak-credit method or making full addition. This reduction was directed to be given by the Assessing Officer while finalising assessment consequences. [Paras 7, 8, 15, 16]

Addition under section 69A sustained subject to allowing a 10% deduction of the balance amount; appeal partly allowed on quantum.

Final Conclusion: Reopening of assessment for AY 2012-13 upheld. Addition on account of unexplained bank credits under section 69A sustained but reduced by directing the Assessing Officer to allow a 10% deduction of the balance addition; appeal partly allowed on merits.

Arm's length price - transfer pricing adjustment - comparability and TNMM vs CUP - validity and admissibility of post facto addendum - interpretation of inter company agreement - rule of consistency in commercial conduct - definition of accumulated gross revenues - treatment of sales effected through an associated enterprise

Transfer pricing adjustment - arm's length price - comparability and TNMM vs CUP - Validity of the TPO/DRP adjustment disallowing part of the royalty paid and reduction of royalty to NIL in respect of revenues generated indirectly through TP USA - HELD THAT: - The Tribunal held that the adjustment made by the TPO/DRP treating royalty attributable to revenues generated through TP USA as not payable was unsustainable. The assessee had benchmarked the royalty transaction using TNMM with itself as the tested party and comparable operating margins supported the arm's length nature of the royalty payment. More importantly, the commercial and contractual matrix-especially the Foreign Collaboration Agreement and the Licence Agreement read together-demonstrated that the assessee provided services to overseas clients solicited by TP USA and intended to pay royalty on aggregate accumulated gross revenues. The TPO/DRP erred in construing the transactions as sales to the AE and in excluding revenues routed through TP USA from the royalty base. On these findings the Tribunal reversed the transfer pricing adjustment and sustained the royalty as allowable in accordance with the agreements and parties' conduct. [Paras 25, 31, 36, 37, 39]

The disallowance/adjustment of royalty made by TPO/DRP is set aside and royalty payment is to be accepted as at arm's length in accordance with the agreements and parties' conduct.

Validity and admissibility of post facto addendum - interpretation of inter company agreement - rule of consistency in commercial conduct - Admissibility and effect of the addendum to the Intangible and Proprietary Property and Licensing Agreement filed as additional evidence - HELD THAT: - The Tribunal accepted that the addendum admitted under Rule 29 was material and goes to the root of the controversy. It held that the law does not require inter company agreements or their amendments to be registered or notarised to be effective for transfer pricing analysis; contractual terms may be considered whether or not formal or in writing (as reflected in section 92F definition of 'transaction' and Rule 10B(2) comparability factors). The addendum did not introduce new terms but crystallised the parties' longstanding conduct and understanding that 'Third Party' includes entities to which services were rendered directly or indirectly through an affiliate. Consequently, the addendum, being retrospective to the effective date of the original agreement, is admissible and relevant to determine ALP. [Paras 24, 26, 27, 28, 33]

The addendum is admissible, relates back to the effective date of the original agreement, and must be taken into account in determining the arm's length price.

Definition of accumulated gross revenues - treatment of sales effected through an associated enterprise - Whether revenues for which bills were raised on TP USA (i.e., services rendered to TP USA's clients) are to be treated as sales to third parties for royalty computation - HELD THAT: - On construction of the Foreign Collaboration Agreement (clauses 4.1 and 5.1-5.9) and the Licence Agreement (including the addendum), the Tribunal found a clear consensus that the assessee's business was to provide services to clients of TP USA and TP USA would solicit and pay for such services. Clause 5 permits billing to TP USA for services actually rendered to TP USA's clients. Reading these documents together, the parties intended royalty to be payable on the entire sales revenue including that arising from services to TP USA's clients, and TP USA, as principal/intermediary, does not convert those sales into sales to an affiliate for the purpose of excluding them from 'accumulated gross revenues.' The TPO/DRP's contrary interpretation was therefore erroneous. [Paras 31, 35, 38]

Revenues corresponding to services rendered to TP USA's clients (and billed to TP USA) are to be treated as part of 'accumulated gross revenues' for royalty calculation and are not excluded as sales to an affiliate.

Final Conclusion: The appeals are allowed; the TPO/DRP erred in excluding royalty attributable to revenues routed through TP USA and in rejecting the addendum. The addendum is admissible and retrospective, the contractual matrix and parties' conduct establish royalty payable on aggregate accumulated gross revenues, and the transfer pricing adjustment is set aside with consequential effect.

Disallowance under section 40(a)(i) of the Income Tax Act - tax deduction under section 192 versus section 195 - fees for technical services (FTS) characterization - cost-to-cost reimbursement - branch office as real and economic employer - application of India Spain DTAA Articles on Business Profits and Non discrimination

Disallowance under section 40(a)(i) of the Income Tax Act - tax deduction under section 192 versus section 195 - cost-to-cost reimbursement - branch office as real and economic employer - fees for technical services (FTS) characterization - Whether the amounts reimbursed by the branch office to the head office for expatriate salaries can be disallowed under section 40(a)(i) on the ground that tax should have been withheld under section 195 treating the receipt as FTS, despite deduction and deposit of TDS under section 192. - HELD THAT: - The Tribunal found as fact that the impugned payments were reimbursements on a cost to cost basis of salary paid to expatriates engaged under the control and supervision of the branch office, that the expatriates were resident in India and that the branch office had deducted and deposited tax under section 192 on the entire salary (as evidenced by Form 16 and TDS returns). Revenue produced no evidence that the head office provided technical services to the branch office which would convert the reimbursements into FTS. Applying the legal principle that disallowance under section 40(a)(i) requires both (i) tax being deductible under Chapter XVII B and (ii) such tax not having been deducted or, after deduction, not paid on or before the due date, the Tribunal followed co ordinate and higher judicial decisions holding that where tax has been deducted and deposited under bona fide belief under a different TDS provision (here section 192), section 40(a)(i) is not attracted. Reliance was placed on precedents treating the branch/assessee as the real and economic employer and on authorities (including Serco India and other decisions cited) which hold that mere difference of opinion as to the correct TDS provision does not justify disallowance when TDS has in fact been deducted and paid timely. In those circumstances the addition treating the receipts as FTS for the purpose of invoking section 40(a)(i) was not sustainable. [Paras 8, 9, 10]

Disallowance under section 40(a)(i) is not justified where the branch office has deducted and deposited TDS under section 192 on the expatriates' salary; therefore the additions for AY 2020-21 and AY 2021-22 are deleted.

Final Conclusion: Appeals allowed; additions of the salary reimbursement amounts for AY 2020 21 and AY 2021 22 deleted as disallowance under section 40(a)(i) was not warranted where TDS under section 192 was duly deducted and deposited and the payments were cost to cost reimbursements by a branch which was the real and economic employer.

Fees for Technical Services - Double Taxation Avoidance Agreement - resident of a Contracting State / tax residence - fiscally transparent partnership / LLP treated as taxable unit - impact of Protocol amendment on treaty applicability - Permanent Establishment and business income

Fees for Technical Services - Permanent Establishment and business income - Double Taxation Avoidance Agreement - Taxability of receipts from provision of legal services on Indian engagements under the domestic FTS provision as opposed to characterization and taxation under the India UK DTAA - HELD THAT: - The Tribunal, following the earlier ITAT decision relied upon, held that the assessee's receipts from legal services to Indian engagements are business income under the India UK DTAA and do not constitute Fees for Technical Services as defined under the Treaty (Article 13) where the services do not make available technical knowledge, experience, skill, know how or process. In the absence of a Permanent Establishment in India, such business income is not taxable in India under Article 5 read with Article 7 of the Treaty. Consequently, the domestic characterization as FTS was not upheld to the extent treaty protection applied, and the assessment treating the impugned receipts wholly as FTS was set aside in favour of the assessee. [Paras 9, 11]

Receipts from legal services on Indian engagements are not taxable in India as FTS to the extent covered by the India UK DTAA and in the absence of a PE; the assessment on this ground is set aside.

Resident of a Contracting State / tax residence - fiscally transparent partnership / LLP treated as taxable unit - impact of Protocol amendment on treaty applicability - Eligibility of the UK LLP assessee for benefits of the India UK DTAA given its fiscal transparency under UK law and the Protocol amending the Treaty - HELD THAT: - The Tribunal accepted the view that a UK LLP which is taxable in the UK (even if tax is levied in practice through its partners) qualifies as a 'person' and a 'resident' for purposes of the India UK DTAA where the income is taxed in the UK. The Tribunal placed reliance on coordinate ITAT precedents (including Linklaters LLP and other decisions) holding that the fact of taxability in the residence State, rather than the mode of taxability, determines eligibility for treaty benefits. Applying those precedents to the identical facts of this case, the Tribunal held that the assessee LLP is entitled to treaty protection under Article 4(1) and related provisions, and that the Department's contention based on the Protocol's timing did not justify denying treaty benefits in the present factual matrix. [Paras 9, 11]

The UK LLP assessee is eligible for the beneficial provisions of the India UK DTAA as a resident/taxable person to the extent its income is taxed in the UK; the Revenue's denial of treaty benefit is rejected.

Penalty under section 271(1)(c) - Consideration of penalty initiated under section 271(1)(c) in the present quantum appeal - HELD THAT: - The Tribunal observed that penalty proceedings under section 271(1)(c) cannot be adjudicated in the present quantum appeal and are not amenable to consideration in this forum and appeal. The matter of penalty must be considered in separate penalty proceedings as per the appropriate procedure. [Paras 10]

Penalty issue not decided on merits here; to be taken up in separate penalty proceedings.

Final Conclusion: Following and applying the ITAT precedents to the identical facts, the Tribunal allowed the assessee's appeal for AY 2014 15 by rejecting the assessment's treatment of the impugned receipts as wholly FTS and holding the UK LLP eligible for India UK DTAA benefits to the extent its income was taxed in the UK; the penalty protest was not adjudicated in this quantum appeal and must be pursued in separate proceedings.

Genuineness of commission payments - remand for verification - disallowance under section 14A - application of Rule 8D - restriction of 14A disallowance to exempt income - treatment of bogus purchases by applying gross profit ratio - onus of proof for claimed purchases

Genuineness of commission payments - remand for verification - onus of proof for claimed purchases - Whether the commission payments claimed by the assessee are genuine and require fresh verification - HELD THAT: - The Tribunal observed that the assessee had placed material before the CIT(A) and that the CIT(A) had granted partial relief, but both parties agreed that the facts and credentials of the commission recipients were not adequately verified. In view of incomplete verification at assessment and subsequent appellate filings, the Tribunal found it appropriate to remit the issue to the Assessing Officer for fresh verification of the documents and evidence after affording the assessee a proper opportunity of hearing. [Paras 13]

Issue remitted to the Assessing Officer for fresh verification of evidences/documents and opportunity of hearing; grounds allowed for statistical purpose.

Disallowance under section 14A - application of Rule 8D - restriction of 14A disallowance to exempt income - Whether disallowance under section 14A (and computation under Rule 8D) is exigible where no exempt income was received in the year and the extent to which any disallowance may be made - HELD THAT: - The Tribunal noted the Assessing Officer computed a disallowance under Rule 8D even though the assessee did not earn exempt income in the year. Having regard to authoritative decisions referenced by the Bench and the consistent view adopted by the Tribunal, the Tribunal held that any disallowance under section 14A should not exceed the exempt income and where no exempt income is received the 14A disallowance cannot be sustained. Accordingly the Tribunal directed deletion of the 14A disallowance made by the Assessing Officer. The same conclusion was applied to the subsequent assessment year as the facts are mutatis mutandis. [Paras 21]

Disallowance under section 14A deleted; direction to Assessing Officer to delete the 14A disallowance (applies to both assessment years).

Treatment of bogus purchases by applying gross profit ratio - onus of proof for claimed purchases - Whether the Assessing Officer could treat purchases as wholly bogus and add back the entire amount, or whether the addition should be restricted to the gross profit element on such purchases - HELD THAT: - The Tribunal examined the CIT(A)'s approach of not disturbing accepted sales and of restricting addition to the gross profit element attributable to the alleged bogus purchases by applying the gross profit ratio of genuine purchases. Relying on jurisdictional High Court authority and consistent precedent, the Tribunal found no infirmity in the CIT(A)'s reasoning and upheld the reduction of the addition to the gross profit ratio (rather than adding the entire disputed purchase amount). Consequently the revenue's appeal on this point was dismissed. The same approach was held applicable to the other assessment year on identical facts. [Paras 40]

Addition restricted to gross profit element on disputed purchases as done by CIT(A); revenue's ground dismissed (applies to both assessment years).

Final Conclusion: The appeals are partly allowed: the question on genuineness of commission payments is remitted to the Assessing Officer for fresh verification; the section 14A disallowance is deleted (with the Tribunal directing the AO to give effect), and the Assessing Officer's deletion of full purchase additions in favour of taxing only the gross profit element (as adopted by the CIT(A)) is upheld.

Incriminating material - jurisdiction under section 153A in respect of completed/unabated assessments - corroboration requirement for statements recorded under section 132(4) - regular books of account seized during search not ipso facto incriminating - addition under section 68 in unabated assessments requires incriminating material found during search - admission of additional evidence on reasonable cause in appellate proceedings - disallowance under section 14A when no exempt income is earned - computation of book profit under section 115JB and applicability of section 14A

Incriminating material - jurisdiction under section 153A in respect of completed/unabated assessments - corroboration requirement for statements recorded under section 132(4) - regular books of account seized during search not ipso facto incriminating - Whether additions under section 68 for A.Y. 2013-14 and 2014-15 were sustainable in view of absence of incriminating material found during search - HELD THAT: - The Tribunal examined whether any material unearthed during the search on the assessee could be characterised as 'incriminating material' so as to revive completed (unabated) assessments under section 153A. It applied the principle that statements recorded under section 132(4) can be treated as incriminating only when supported by corroborative evidence discovered in the search, and that mere pre-search or post-search inquiries or third party statements unconnected with seized material do not, by themselves, constitute incriminating material. The seized items were confined to ledger entries, share application forms and other documents that formed part of the assessee's regular books of account and which had already been produced and scrutinised in the original assessments; these documents merely supported recorded share capital and did not prima facie demonstrate that the credits were bogus. The Tribunal held that the assessment officer relied heavily on pre-search enquiries, third party statements and non corroborated statements of employees/promoter, none of which were supported by independent incriminating documents found at the assessee's premises. Applying the binding principle that completed assessments can be reopened under section 153A only if incriminating material is unearthed during the search, the Tribunal upheld the CIT(A)'s finding that no such incriminating material existed and directed deletion of the additions. [Paras 12, 14, 18, 20]

Additions made under section 68 for A.Y. 2013-14 and 2014-15 deleted for lack of incriminating material found during search; Revenue's grounds dismissed.

Addition under section 68 - admission of additional evidence on reasonable cause in appellate proceedings - Whether the addition under section 68 and section 69C for A.Y. 2016-17 in respect of unsecured loan from M/s. Integral Distributors LLP was justified - HELD THAT: - The Tribunal reviewed the material produced by the assessee at appellate stage (ITR, bank statements, financials, confirmations and utilisation evidence) and the AO's remand report. The CIT(A) admitted the additional evidence having regard to limited opportunity earlier and on merits found that identity, creditworthiness and genuineness of the lender were proved: the lender had been assessed under section 143(3) (by the same AO) without adverse finding, the transactions were routed through banking channels and the lender's bank statements and earlier assessment showed adequate funds. The AO had not produced independent corroborative evidence to displace that material or to show the lender was a paper entity. The Tribunal concurred with the CIT(A)'s detailed examination of source and source of source and the finding that AO's enquiries did not demonstrate any infirmity warranting addition. [Paras 24, 25, 27, 29]

Addition under section 68 (and related section 69C/other additions) for A.Y. 2016-17 deleted; Revenue's appeal dismissed.

Disallowance under section 14A - computation of book profit under section 115JB and applicability of section 14A - Whether disallowance under section 14A for A.Y. 2017-18 was sustainable when no exempt income was earned - HELD THAT: - The Tribunal considered that it is an admitted fact that the assessee earned no exempt income in the year under consideration. Relying on precedents and the CIT(A)'s reasoning, the Tribunal held that disallowance under section 14A cannot be made where there is no exempt income; the AO's figure of dividend income was a manifest error carried forward from earlier assessment and AO was directed to verify actual exempt income. The Tribunal also noted that the amendment to section 14A by Finance Act 2022 is not retrospective and that established jurisdictional authority supports deletion where no exempt income arises. The same principle applies to computation of book profit under section 115JB. [Paras 31, 32]

Disallowance under section 14A and related computation adjustments for A.Y. 2017-18 deleted; Revenue's appeal dismissed.

Final Conclusion: All appeals filed by the Revenue are dismissed: additions under section 68 for A.Y. 2013-14 and 2014-15 were deleted for want of incriminating material unearthed during search; additions under section 68/69C for A.Y. 2016-17 were deleted on proof of genuineness and creditworthiness of the lender; disallowance under section 14A for A.Y. 2017-18 was deleted as no exempt income was earned. Cross objections by the assessee are rendered infructuous.

Supply of bonded bunker as ship's stores - application of Section 88 read with Section 69 of the Customs Act, 1962 - burden to prove clandestine diversion of duty free goods - evidentiary weight of shipping bills, landing certificates and customs endorsements - absence of entry in Export General Manifest (EGM) not determinative of duty liability - inadmissibility of third party Oil Record Book discrepancies to displace official shipping/landing records - penalty unsustainable without proof of diversion

Supply of bonded bunker as ship's stores - application of Section 88 read with Section 69 of the Customs Act, 1962 - evidentiary weight of shipping bills, landing certificates and customs endorsements - absence of entry in Export General Manifest (EGM) not determinative of duty liability - Validity of customs duty demand and confiscation based on alleged diversion of bonded bunker supplies to foreign going vessels - HELD THAT: - The Tribunal found that importers had warehoused bunker fuel under bonds/undertakings and filed shipping bills for supply as stores to foreign going vessels under the procedure governed by Section 88 read with Section 69, with statutory supervision and endorsements by customs officers. Documentary records - shipping bills bearing customs endorsements, masters'/chief engineers' acknowledgements, landing certificates and discharge/cancellation of transit bonds - established that bunkers were taken on board. The department's case rested on alleged diversion but failed to produce independent, cogent evidence of clandestine removal or delivery to third parties (no transport receipts, delivery challans, payments, or recipients identified). Absence of entries in EGMs, prepared and filed by the vessels or their agents, cannot by itself negate properly endorsed shipping/landing records or convert that absence into proof of diversion; the appellants had no control over EGM preparation. Discrepancies in third party Oil Record Books did not suffice to displace the official shipping and landing endorsements. In the absence of reliable evidence of diversion, the demand for customs duty and confiscation could not be sustained. [Paras 20, 21, 22, 23, 24]

Customs duty demand and confiscation confirmed by the adjudicating authorities are set aside for lack of evidence of diversion; goods held to have been supplied as ship's stores.

Burden to prove clandestine diversion of duty free goods - penalty unsustainable without proof of diversion - Sustainability of penalties imposed on co appellants for alleged diversion of bonded bunkers - HELD THAT: - Penalties imposed presuppose proof of wrongful diversion. The Tribunal held that the department did not produce the requisite independent and cogent evidence to establish clandestine diversion by the appellants. Given the official endorsements, receipts on shipping bills, landing certificates and discharged transit bonds, and absence of any third party recipient or documentary trail of diversion, the imposition of penalties was not justified. Accordingly, penalties levied on the co appellants were vacated. [Paras 23, 26]

Penalties imposed by the adjudicating authorities are quashed for want of proof of diversion.

Final Conclusion: The appeals are allowed; the impugned adjudication orders confirming duty demands, confiscation and penalties are set aside for lack of cogent evidence of clandestine diversion, with consequential relief as per law.

Liability of duty on transhipped goods - Transhipment under Section 54 - Transit and transhipment of stores - Imported stores consumed as ship stores - Foreign-going vessel - Conversion to coastal vessel

Liability of duty on transhipped goods - Transhipment under Section 54 - Foreign-going vessel - Whether customs duty is payable on bunker fuel consumed by the five tug vessels during their movement from Bedi Port to Alang following transshipment - HELD THAT: - The Tribunal held that when goods (here the tug vessels) are permitted to be transshipped to a customs station they become liable to duty only on arrival at that destination in accordance with the scheme of Section 55, and the vessels remained subject to assessment at Alang. The tugs had arrived from a foreign port on the mother vessel and were treated as foreign-going vessels; the IGM was filed at Alang and the vessels were not converted into coastal vessels at any stage. Having regard to the statutory scheme governing transit and transshipment of stores and the definition of foreign-going vessel, the bunker consumption during the transshipment leg from Bedi to Alang could not be treated as dutiable at that intermediate point. [Paras 7, 11]

Demand for customs duty on bunker fuel consumed between Bedi Port and Alang is not sustainable and is disallowed.

Transit and transhipment of stores - Imported stores consumed as ship stores - Conversion to coastal vessel - Whether the tug vessels were converted into coastal vessels thereby losing benefit of consumption of imported stores as ship stores without payment of duty - HELD THAT: - The Tribunal examined Sections 86 and 87 in the context of the facts and concluded that imported stores may be consumed without payment of duty while the vessel is a foreign-going vessel. The factual finding recorded is that the tugs had not undertaken any coastal voyage or coastal operations and were not converted into coastal vessels during the movement from Bedi to Alang. Towing of a dead imported vessel en route did not change the character of the tugs from foreign-going to coastal vessels. Consequently, the fuel consumed en route retained the protection available to imported stores on a foreign-going vessel. [Paras 7, 11]

The tugs were not converted into coastal vessels; therefore consumption of imported stores (bunkers) during transshipment is not dutiable.

Final Conclusion: The Tribunal allowed the appeals, set aside the impugned orders and held that the demand of customs duty on bunker consumption during the transshipment from Bedi to Alang is unsustainable because the tugs remained foreign-going vessels and liability to duty arose only at Alang.

Extended period of limitation - revenue neutral transaction - claim of IGST exemption - input tax credit - Advance Authorisation and Export Obligation Discharge Certificate - contributory negligence by revenue

Extended period of limitation - revenue neutral transaction - input tax credit - Validity of invoking extended period of limitation to demand IGST where the transaction is revenue neutral and input tax credit would have been available - HELD THAT: - The Tribunal found that the imported inputs were used in manufacture of goods which were ultimately exported and that the DGFT issued Export Obligation Discharge Certificate confirming fulfilment of export obligation. It was undisputed that, had IGST been paid at import, the appellant would have been entitled to input tax credit. The Tribunal noted the established principle that the Government does not export taxes and, following the Apex Court's ruling in Nirlon Ltd., held that in a revenue neutral situation where no mala fide or suppression is made out, the extended period of limitation cannot be invoked to demand tax. Applying that principle to the facts, the demand raised under the extended period for IGST was not sustainable. [Paras 12]

Demand of IGST invoked by resort to the extended period of limitation set aside; extended period not invokable in the revenue neutral circumstances of this case.

Claim of IGST exemption - Advance Authorisation and Export Obligation Discharge Certificate - contributory negligence by revenue - Effect of DGFT discharge and contributory negligence of Customs in relation to the claimed IGST exemption - HELD THAT: - The Tribunal recorded that DGFT had issued the Export Obligation Discharge Certificate and that the goods were indisputably used in exports. The Tribunal also observed contributory negligence on the part of the Customs authorities for having allowed exemption of IGST on the EDI system notwithstanding the registered Advance Authorisation showing entitlement under Notification No.21/2015-CUS. On these facts the Tribunal found no case of mala fide suppression by the appellant and, in light of revenue neutrality and the conduct of the revenue, declined to sustain the extended-period demand. [Paras 12]

Findings of contributory negligence on the part of the revenue noted; absence of mala fide and the DGFT discharge certificate weighed against upholding the demand.

Final Conclusion: Appeal allowed; impugned order demanding IGST by invoking the extended period set aside and the appellant entitled to consequential benefits in accordance with law.

Confiscation of goods as smuggled - burden of proof under section 123 of the Customs Act - evidentiary value of retracted statements - failure to examine witnesses under section 138B of the Customs Act - release of goods or payment of sale proceeds with interest where disposed - setting aside of penalties

Confiscation of goods as smuggled - evidentiary value of retracted statements - Whether the absolute confiscation of the seized gold (1129.460 gms and 129 gms) was sustainable on the materials on record. - HELD THAT: - The Tribunal found that Revenue adduced no independent evidence to prove that the seized gold was of smuggled origin other than the initial statements of the two employees recorded at the time of interception. Those statements were subsequently retracted and, in the view of the Tribunal, had thus lost their evidentiary value. The seized gold (other than the five biscuits later released by adjudication) did not bear foreign markings or standard shapes/sizes characteristic of imported bars, and Revenue did not lead corroborative proof of smuggling. The Tribunal accepted the appellant-owner's documentary business records and the statements of the melters/smelters as cogent explanation for licit source and conversion of ornaments into bullion. Applying these findings, the Tribunal concluded that the appellants discharged the onus to explain the source and that confiscation was unsustainable. [Paras 31, 32, 33]

Confiscation of the contested gold set aside and appellants entitled to return of the gold or sale proceeds with interest.

Burden of proof under section 123 of the Customs Act - cogent explanation as discharge of onus - Whether the appellants discharged the statutory burden to show licit possession of the seized gold under section 123 of the Act. - HELD THAT: - The Tribunal held that once the seized goods were sought to be treated as smuggled, the onus lay on the person from whose possession the goods were seized (or the claimant) to explain licit source. The owner-appellant produced business records, stock registers, balance sheets and related entries showing issue/stock and a stock-journal entry reflecting goods with DRI. The Tribunal found these records, together with corroborative statements from persons who melted/converted the gold, to be a cogent explanation which Revenue did not successfully discredit. Consequently the onus under section 123 was regarded as discharged by the appellants. [Paras 32]

Onus under section 123 discharged; explanation of licit source accepted.

Failure to examine witnesses under section 138B of the Customs Act - evidentiary value of retracted statements - Whether reliance on the initial statements of the employees and the failure of Revenue to examine witnesses in adjudication under section 138B vitiated the case for confiscation. - HELD THAT: - The Tribunal observed that Revenue relied primarily on the initial statements recorded at the time of seizure, which were later retracted. Those retractions, coming months later, undermined the earlier accounts and, in the Tribunal's view, deprived the initial statements of evidentiary weight. Further, Revenue did not examine its witnesses in the adjudication proceedings as required under section 138B. Taking these factors together, the Tribunal concluded that the evidentiary foundation for treating the gold as smuggled was inadequate. [Paras 31]

Reliance on retracted statements and failure to examine witnesses rendered Revenue's case infirm.

Setting aside of penalties - Whether penalties imposed on the appellants under the adjudication order were sustainable. - HELD THAT: - Having set aside the confiscation on the ground that the appellants discharged the onus and Revenue failed to prove smuggling, the Tribunal held that the concomitant penalties imposed on the appellants could not stand. The Tribunal therefore quashed all penalties as consequential relief. [Paras 33]

All penalties imposed are set aside.

Final Conclusion: Appeals allowed; confiscation set aside, appellants entitled to return of the gold or to receive sale proceeds with interest if already disposed, and all penalties quashed.

Interest on delayed refund under Section 129EE - pre-deposit treated as revenue deposit - doctrine of unjust enrichment - onus of proving passed-on of duty under Section 28D

Interest on delayed refund under Section 129EE - pre-deposit treated as revenue deposit - interest on delayed refund - Grant of interest on the amount deposited during investigation which was subsequently found refundable. - HELD THAT: - The Tribunal held that the amount deposited under protest during the investigation stage assumes the character of a 'Revenue deposit' or pre-deposit where the assessee contests the show cause notice and succeeds in adjudication/appellate proceedings. Relying on the reasoning in Sandvik Asia Ltd and subsequent coordinate Bench decisions, the Tribunal treated the deposit as pre-deposit and entitled the assessee to compensatory interest for the period the sum was locked in litigation. Considering precedents and the nature of deposit made during investigation, the Tribunal modified the impugned order and directed payment of interest from the date of deposit till refund. [Paras 17, 19]

Assessee entitled to interest on the refundable deposit; interest awarded @6% per annum from date of deposit till date of refund.

Doctrine of unjust enrichment - onus of proving passed-on of duty under Section 28D - Whether the doctrine of unjust enrichment is attracted to the amount deposited during investigation and refunded to the assessee. - HELD THAT: - The Tribunal found no evidence that the assessee had passed on the incidence of duty to another party and observed that deposits made during investigation are in the nature of deposits under protest, to which the principle of unjust enrichment does not ordinarily apply. Noting absence of material from Revenue to discharge the burden under Section 28D, the Tribunal held that the assessee had discharged the onus and that unjust enrichment was not attracted in the facts of the case. [Paras 18]

Doctrine of unjust enrichment not attracted; Revenue failed to establish that the incidence of duty was passed on.

Final Conclusion: Assessee's appeal allowed - refund directed with interest @6% per annum from date of deposit till refund; Revenue's appeal dismissed for lack of merit.

Re-determination of assessable value under Customs Valuation Rules - confiscation under section 111 - penalty under section 112(a) - penalty under section 114A - recovery of differential duty under section 28 - extended period invoked under section 28(4) - authorization and representation in response to summons - role of 'sales incharge' and knowledge imputed to persons connected with importer - show cause notice and de-novo adjudication

Show cause notice and de-novo adjudication - re-determination of assessable value under Customs Valuation Rules - recovery of differential duty under section 28 - penalty under section 114A - extended period invoked under section 28(4) - Validity of the de-novo Order-in-Original dated 4.1.2018 and liability of the proprietor (Umesh Kumar/M/s Aromatech) for re-determined duty, confiscation, and penalties - HELD THAT: - The Tribunal considered the evidence that accompanied the adjudication and re-adjudication: seizure of consignments showing excess/undeclared goods; statements and ensuing investigation revealing repeated imports claiming SAD exemption without complying with VAT conditions; bank transactions and a writ filed in the High Court bearing the proprietor's affidavit and signature; appearances and statements before Customs. The proprietor's contention that he had merely lent his IEC and was unaware of the imports was rejected as implausible against contemporaneous documentary and testimonial facts-attested affidavit before Oath Commissioner, representation before the High Court by a law firm on behalf of the proprietor, appearance before Customs and giving statement, and banking and CHA records. The Tribunal held that these materials sustain the findings of mis-declaration, re-determination of assessable value, invocation of extended period for recovery of past shipments, confiscation/redemption option and penalties as set out in the de-novo order. The proprietor's unsupported assertions and failure to produce contrary evidence did not disturb the impugned findings. [Paras 21, 22, 23, 24, 25]

Customs Appeal No. 51578 of 2018 is dismissed; the de-novo Order-in-Original dated 4.1.2018 is upheld insofar as it pertains to M/s Aromatech and its proprietor.

Penalty under section 112(a) - confiscation under section 111 - authorization and representation in response to summons - role of 'sales incharge' and knowledge imputed to persons connected with importer - Sustainability of penalty imposed on Rajat Arora under section 112(a) for acts rendering imported goods liable to confiscation - HELD THAT: - The Tribunal examined the appellant's submissions that he was only a freight forwarder and had merely assisted in customs clearance. The record showed that Rajat Arora appeared before Customs on summons with an authorization, introduced himself as the sales incharge of the importer and furnished detailed importer-related information (IEC, VAT registration status, bank account details) which was verified during investigation. The Tribunal found that by representing himself before authorities, providing detailed business particulars and acting as sales incharge, he had placed himself as intricately connected with the importer's business and could not disown that role. Given the finding of mis-declaration liable to confiscation under section 111(m)/(o), imposition of penalty under section 112(a) on a person who had introduced himself into the matter and possessed requisite knowledge was sustained. The Tribunal therefore found no reason to interfere with the penalty. [Paras 39, 40, 41, 42, 43]

Customs Appeal No. 51595 of 2016 is rejected; the penalty under section 112(a) imposed on Rajat Arora is upheld.

Final Conclusion: The Tribunal dismissed the appeal of M/s Aromatech and its proprietor, upholding the de-novo adjudication re-determining assessable value, confirming recovery of duties (including invocation of extended period) and associated penalties; and rejected the appellant Rajat Arora's plea, upholding the penalty imposed on him under section 112(a).

Confiscation of goods - prohibited goods - redemption under Section 125 - attempted export - customs area - declaration under Section 77 - penalty under Section 114 - penalty under Section 13(1) of FEMA - search and seizure jurisdiction

Customs area - declaration under Section 77 - attempted export - confiscation of goods - Whether confiscation under Section 113(e) and (h) of the Customs Act was justified where the appellant was intercepted outside the customs area and had not entered the international/ customs area or obtained a boarding pass. - HELD THAT: - The Tribunal found as a fact that the appellant was intercepted by CISF officials outside the customs area and had not approached the airline counter or obtained a boarding pass, which is supported by the 'no-show' status of the ticket. In those circumstances there was no occasion for filing the declaration required under Section 77 and the ingredients of Sections 113(e) and 113(h) were not attracted. The court treated the facts as amounting at best to an intention or attempt to export, which is distinct from bringing goods within the limits of a customs area or concealment in a customs-area container. Consequently absolute confiscation under Sections 113(e) and 113(h) could not be sustained. [Paras 27, 28]

Absolute confiscation under Section 113(e) and Section 113(h) set aside.

Confiscation of goods - prohibited goods - attempted export - Whether the seized foreign currency was liable to confiscation under Section 113(d) of the Customs Act. - HELD THAT: - The Tribunal agreed with the adjudicating authority that foreign currency falls within the definition of goods and can be treated as 'prohibited goods' for the purposes of confiscation. Applying Section 113(d), which addresses goods attempted to be improperly exported or brought within the limits of a customs area for the purpose of export contrary to law, the Tribunal found a venial breach in the facts of this case-an intention or attempt to export-but not the completed conditions necessary for Sections 113(e) or (h). On that basis the foreign currency was held liable to confiscation under Section 113(d) only. [Paras 27, 28]

Seized foreign currency liable to confiscation under Section 113(d) (venial breach).

Redemption under Section 125 - penalty under Section 114 - penalty under Section 13(1) of FEMA - Whether redemption and penalties imposed should be modified in view of the nature of breach and surrounding facts. - HELD THAT: - The Tribunal held that discretion under Section 125 to permit redemption on payment of a fine must be exercised having regard to relevant facts and cannot be arbitrary. Considering the factual circumstances and mitigatory factors, absolute confiscation was inappropriate; the currency could be redeemed on payment of a redemption fine. The Tribunal reduced the penalty under Section 114 of the Customs Act and set aside the penalty under Section 13(1) of FEMA 1999. The order thus substitutes a redemption fine and reduced/revoked penalties for the absolute confiscation and original penalties. [Paras 28, 29]

Seized currency redeemable on payment of redemption fine; penalty under Section 114 reduced; penalty under Section 13(1) of FEMA set aside.

Final Conclusion: Appeal allowed in part: absolute confiscation under Sections 113(e) and (h) set aside; currency held liable under Section 113(d); redemption permitted on payment of a redemption fine; penalty under Section 114 reduced and penalty under Section 13(1) of FEMA set aside, with consequential benefits to the appellant.

Classification of imported goods - extended period of limitation for recovery of customs duty - penalty for collusion or willful mis-statement or suppression of facts - charge of customs duty distinct from remedy for recovery - confiscation liability where goods not available - penalty where goods liable for confiscation - penalty for use of false or incorrect material

Extended period of limitation for recovery of customs duty - penalty for collusion or willful mis-statement or suppression of facts - charge of customs duty distinct from remedy for recovery - Whether penalty under section 114A was required when demand was confirmed under the extended period under section 28(4). - HELD THAT: - The Tribunal accepted the Commissioner's finding that there was no collusion, willful mis-statement or suppression of facts in the import transaction. The demand under section 28(4) was confirmed on the basis of the respondent's concession to pay the duty and interest, not because the Commissioner found the requisite elements for invoking the extended limitation period. The court emphasised that section 12 creates the charge of customs duty while section 28 provides the remedy for recovery subject to limitation; the existence of a charge does not itself establish the factual predicates for penalty under section 114A. Section 114A is a penal provision which requires proof of collusion or willful mis-statement or suppression of facts; absent such findings, penalty could not be imposed merely because the extended limitation remedy was invoked or the duty was agreed to be paid. [Paras 12, 13]

No penalty under section 114A could be imposed where the Commissioner found no collusion, willful mis-statement or suppression of facts; confirmation of demand based on the respondent's concession did not supply the missing elements.

Confiscation liability where goods not available - penalty where goods liable for confiscation - classification of imported goods - Whether the goods ought to have been held liable to confiscation under section 111(m) and whether omission to record such liability was an error. - HELD THAT: - The Commissioner recorded that the goods were not confiscated because they were not available for confiscation; nevertheless a penalty under section 112 (which attaches where goods are liable for confiscation) was imposed. The respondent did not contest payment of that penalty. The Tribunal held that making a retrospective formal finding of liability to confiscation when the goods are not available would be an academic exercise, particularly where the consequential penalty has already been imposed and accepted. There was therefore no ground to direct actual confiscation or to fault the Commissioner for not making a further formal confiscation order in circumstances where the goods could not be seized. [Paras 14]

No interference: omission to record confiscation under section 111(m) is not a ground for directing confiscation where goods are unavailable and penalty under section 112 has been imposed and accepted.

Penalty for use of false or incorrect material - classification of imported goods - Whether penalty under section 114AA applies to imports and whether it was attractable on the facts of this case. - HELD THAT: - The Tribunal rejected the respondent's submission that section 114AA was intended to apply only to exports, noting that the statutory language does not confine the provision to exports and that the parliamentary committee's report merely records the background of fraudulent export cases. Section 114AA applies to false or incorrect declarations in transactions for the purposes of the Act, whether import or export. However, the Commissioner found no evidence that the respondent knowingly or intentionally made, signed or used false or incorrect declarations in any material particular; the goods had been examined and assessed before clearance. In absence of such evidence of knowledge or intent, penalty under section 114AA could not be imposed. [Paras 15, 16, 17]

Section 114AA is not limited to exports but cannot be invoked without evidence of knowingly or intentionally using false or incorrect material; no penalty under section 114AA was warranted on the facts.

Final Conclusion: The impugned order was upheld; the Revenue's appeal is dismissed.

Mandatory certificate of compliance under Rule 126 of Central Motor Vehicle Rules - proof of conformity of production under Rule 126A of Central Motor Vehicle Rules - registration by competent transport authority as substantive compliance with CMVR - confiscation under Section 111(d) of the Customs Act, 1962 - import licensing conditions in Import Licensing Note to Chapter 87

Mandatory certificate of compliance under Rule 126 of Central Motor Vehicle Rules - registration by competent transport authority as substantive compliance with CMVR - confiscation under Section 111(d) of the Customs Act, 1962 - import licensing conditions in Import Licensing Note to Chapter 87 - Whether non-production of the Rule 126 certificate rendered the imported vehicles restricted goods warranting confiscation under Section 111(d), or whether registration/certification by the transport authority sufficed to meet the import licensing condition - HELD THAT: - The Tribunal observed that the Import Licensing Note requires a certificate as per Rule 126 CMVR and that the statutory text employs mandatory language. Accordingly the Rule 126 certificate is a mandatory requirement in the import policy. However, on the facts the imported Mercedes vehicles had been registered and certified by the Transport Department, Government of NCT of Delhi, which issued Certificate of Fitness and All India Tourist Permits stating compliance with the Central Motor Vehicle Act and Rules, including proof of conformity of production. The Tribunal held that such registration and certification by the competent transport authority amounted to substantive compliance with the import policy condition and rendered the separate production of the Rule 126 certificate redundant. Reliance was placed on precedents holding that once registration by the competent authority is achieved, the purpose of the type-approval condition (to ensure roadworthiness and compliance with CMVR) is satisfied and confiscation for non-production of the certificate is not warranted. The Tribunal therefore distinguished the departmental reliance on other authorities where registration/certification was not present and declined to uphold confiscation that flowed solely from the procedural lapse when the regulatory objective had been fulfilled. [Paras 5]

The mandatory Rule 126 requirement is recognised, but where the vehicles were duly registered and certified by the transport authority demonstrating compliance with CMVR (including Rule 126A obligations), the import licensing condition is satisfied; the order of confiscation under Section 111(d) is unsustainable and is set aside.

Final Conclusion: The Tribunal allowed the appeal, set aside the order of confiscation, and held that registration and certification by the competent transport authority satisfied the import licensing condition so as to render the separate Rule 126 certificate requirement redundant in the present case.

Implementation of approved resolution plan - interim directions for maintaining going concern - entertainability of appeal against interim order - liberty to parties to determine rights in respect of shared utilities located outside leasehold

Entertainability of appeal against interim order - implementation of approved resolution plan - Whether the appeal against the Adjudicating Authority's interim order dated 23.02.2024 should be entertained - HELD THAT: - The Tribunal noted that the Resolution Plan had been upheld by this Bench in Company Appeal (AT) (Insolvency) No. 70 of 2024 and that the only interim direction earlier granted by this Tribunal was that implementation of the Resolution Plan shall abide by the result of the Appeal. Observing that the order dated 23.02.2024 was an interim direction passed by the Adjudicating Authority while IA No.435 of 2024 remained pending, the Tribunal recorded that the Adjudicating Authority had passed the interim direction to ensure the Corporate Debtor continued as a going concern and for implementation of the Resolution Plan. In view of these circumstances and having upheld the Resolution Plan (subject to the liberties granted), the Tribunal found no reason to entertain the present Appeal against the interim order and therefore disposed of the Appeal. [Paras 9, 10]

The Appeal against the interim order dated 23.02.2024 is not entertained and is disposed of.

Liberty to parties to determine rights in respect of shared utilities located outside leasehold - implementation of approved resolution plan - Directive to the Adjudicating Authority when disposing IA No.435 of 2024 - HELD THAT: - While upholding the order approving the Resolution Plan, the Tribunal expressly granted liberty to the parties to enter into arrangements and to establish their rights and obligations in a competent Court with regard to shared utilities and equipment located outside the leasehold land of the Corporate Debtor. The Tribunal therefore directed that, in disposing IA No.435 of 2024, the Adjudicating Authority shall take into consideration the Tribunal's judgment (including the liberty carved out regarding shared utilities) contained in paragraph 13 of the decision in Company Appeal (AT) (Insolvency) No.70 of 2024. [Paras 9]

The Adjudicating Authority is directed to take into consideration this Tribunal's judgment (including the liberty regarding shared utilities) while disposing IA No.435 of 2024.

Final Conclusion: The Tribunal upheld the Resolution Plan (with liberty to parties to determine rights in respect of shared utilities located outside leasehold), declined to entertain the challenge to the Adjudicating Authority's interim order dated 23.02.2024, disposed of the Appeal, and directed the Adjudicating Authority to consider the Tribunal's judgment while disposing IA No.435 of 2024.

Pre-existing dispute - rejection of Section 9 application on ground of pre-existing dispute - Demand Notice under Section 8 - operational creditor - acknowledgement of liability - deduction under Section 194C

Pre-existing dispute - rejection of Section 9 application on ground of pre-existing dispute - Demand Notice under Section 8 - Validity of rejection of Section 9 application by Adjudicating Authority on the ground of a pre-existing dispute - HELD THAT: - The Adjudicating Authority found that the Corporate Debtor had, prior to the service of the Demand Notice dated 09.08.2021, brought to the Operational Creditor's notice disputes regarding demurrages and penalties levied by the principal employer. The record includes the Operational Creditor's correspondence dated 22.04.2021 (reply to the Corporate Debtor's letter dated 11.02.2021) and the Corporate Debtor's detailed reply dated 13.06.2021 which expressly denied the claim and claimed entitlement to set off penal/demurrage amounts against the Operational Creditor's invoices. Those communications constituted a dispute existing before the demand notice. The Tribunal applied the established principle that a Section 9 application is barred where a bona fide pre-existing dispute on the same claim exists and was brought to the notice of the Operational Creditor before issuance of the demand notice. On that basis the Appellate Tribunal concluded that the Adjudicating Authority did not err in dismissing the Section 9 petition for existence of a pre-existing dispute. [Paras 3, 5, 8]

Appeal dismissed insofar as the Section 9 application was rejected on account of a pre-existing dispute raised by the Corporate Debtor prior to the Demand Notice.

Deduction under Section 194C - acknowledgement of liability - operational creditor - Whether deduction under Section 194C by the Corporate Debtor amounted to acknowledgement of liability so as to negate existence of dispute - HELD THAT: - The Appellant contended that TDS deducted under Section 194C after receipt of invoices indicated acceptance of the bills and thus acknowledgement of liability. The Tribunal rejected this contention, noting that the Corporate Debtor's reply dated 13.06.2021 expressly referred to the deduction under Section 194C and the provisional nature of GST credit and stated that debit/credit notes could be issued after reconciliation. That reply simultaneously raised and explained the dispute regarding penalties, under-loading/overloading and demurrage which the Corporate Debtor alleged the Operational Creditor was liable to adjust. Consequently, a mere tax deduction under Section 194C did not operate as an unequivocal acknowledgement of liability to pay the entire invoiced amount and could not defeat the identified pre-existing dispute. [Paras 6, 7]

Deduction under Section 194C did not amount to an acknowledgement of liability sufficient to negate the pre-existing dispute; the contention was rejected.

Final Conclusion: The Adjudicating Authority correctly rejected the Section 9 application for existence of a bona fide pre-existing dispute disclosed prior to the Demand Notice; the Appellant's plea that TDS deduction under Section 194C constituted acknowledgement of liability was repelled and the appeal is dismissed.

Right to bail under Section 436-A of the Code of Criminal Procedure, 1973 - explanation to Section 436-A - delay in trial attributable to accused - entitlement where half of maximum sentence is undergone - necessity of showing death penalty exclusion for Section 436-A - priority and conduct of trial where PMLA offences and scheduled offences coexist - discretion to deny Section 436-A relief despite statutory threshold being met

Entitlement where half of maximum sentence is undergone - necessity of showing death penalty exclusion for Section 436-A - right to bail under Section 436-A of the Code of Criminal Procedure, 1973 - Whether the Applicants satisfy the statutory pre-conditions of Section 436-A Cr.P.C. and are therefore prima facie entitled to bail under that provision. - HELD THAT: - The Court found that Section 4 of the PMLA prescribes maximum imprisonment of seven years and does not attract the death penalty; accordingly the statutory exclusion in Section 436-A is not engaged. The Applicants were taken into custody on 17 October 2019 and have been in detention for more than one-half of the maximum sentence prescribed for the offence. The Court reiterated that, while Section 436-A provides a statutory right subject to exceptions, satisfaction of the provisos (no death penalty and having suffered one-half of the maximum punishment) is a necessary threshold which is met in this case. Applying the settled principles in relevant Supreme Court decisions, the Court observed that fulfilment of the statutory conditions entitles the Applicants to consideration for bail and directed their release on stringent terms and conditions and higher-than-usual surety to secure attendance at trial. [Paras 7, 32, 45, 53]

Applicants satisfy the threshold conditions of Section 436-A Cr.P.C.; bail granted subject to personal bond and surety and other conditions.

Explanation to Section 436-A - delay in trial attributable to accused - discretion to deny Section 436-A relief despite statutory threshold being met - Whether the Applicants are disentitled to Section 436-A relief because they caused delay in the conduct of the trial by filing applications and other steps. - HELD THAT: - The trial Court had found that the Applicants were responsible for delay, observing multiple applications and other proceedings had consumed time and impeded framing of charge. This Court examined those findings and the record and noted that the Special Judge did not sufficiently elaborate how three years of delay was attributable to the Applicants. The Court emphasised that legitimate actions - seeking medical care, raising jail-facility grievances, filing bail applications, seeking recording of statements, or pursuing constitutional remedies - are not ipso facto mala fide or dilatory unless shown to be so. While recognizing that courts may deny Section 436-A relief where delay is attributable to the accused, the High Court concluded that on the material before it the trial Court had not made adequate specific findings to displace the Applicants' statutory entitlement, and that the prosecution had not furnished an assurance or demonstrated that trial would commence in the near future. [Paras 16, 17, 18, 46]

The Special Court's conclusion that delay was caused by the Applicants was not sufficiently elaborated; delay attributable to the Applicants was not established so as to deprive them of Section 436-A relief.

Priority and conduct of trial where PMLA offences and scheduled offences coexist - right to bail under Section 436-A of the Code of Criminal Procedure, 1973 - Whether the pendency or sequencing of trial of the 'scheduled offence' vis-a -vis the PMLA trial justifies continued detention of the Applicants despite meeting Section 436-A thresholds. - HELD THAT: - The Court considered the scheme of the PMLA and the Explanation to Section 44, noting that jurisdiction of the Special Court does not depend on any order in respect of the scheduled offence and that trials for scheduled offences and PMLA offences may proceed independently and even simultaneously. Given the extensive record, multiple accused, the presence of voluminous documents and the absence of any assurance from prosecution as to imminent trial commencement, the Court found it uncertain when the PMLA trial would meaningfully proceed. The Court held that uncertainty about trial scheduling or the fact that complicated, multi-accused proceedings may take long does not justify indefinite deprivation of liberty where Section 436-A conditions are satisfied and delay attributable to accused is not shown. Consequently, the pendency/priority argument could not sustain refusal of bail. [Paras 36, 40, 41, 42, 44]

Pendency or sequencing of the scheduled-offence trial does not preclude Section 436-A bail where conditions are satisfied and delay by accused is not established.

Final Conclusion: Bail Applications allowed; both applicants released on furnishing personal bond and heavy surety, subject to conditions (restriction on leaving State without trial Court permission, non-contact with prosecution witnesses, attendance at trial, surrender of passports, and other directions).

Provisional attachment - reasons to believe - proceeds of crime - second proviso to Section 5(1) of the PMLA - person-process-product test - maintainability and entertainability of writ petition - precondition for attachment - confidentiality of reasons under the Rules of 2005

Maintainability and entertainability of writ petition - pure question of law - Whether the writ petition is maintainable and should be entertained. - HELD THAT: - The Court held that jurisdiction under Article 226 exists and the petition is maintainable. Because the challenges raise pure questions of law (interpretation of the definition of proceeds of crime) and jurisdictional issues (compliance with the preconditions of provisional attachment), the High Court in its discretion should entertain the petition rather than relegating the petitioners to statutory remedies. The Court relied on settled principles distinguishing maintainability from entertainability and concluded that these questions justify exercise of writ jurisdiction. [Paras 15, 16, 17, 47]

The writ petition is maintainable and, in the exercise of discretion, is entertained.

Proceeds of crime - person-process-product test - Whether property acquired prior to the PMLA or prior to inclusion of an offence in the Schedule (e.g. 1997 acquisition) can be treated as "proceeds of crime." - HELD THAT: - The Court construed proceeds of crime under Section 2(1)(u) purposively but strictly: the definition covers properties "derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to or relatable to a Scheduled Offence," and thereby encompasses (i) property directly/indirectly derived as a result of the criminal activity, (ii) the value of such property, and (iii) equivalent property held in India/abroad where applicable. The date of acquisition is not decisive; what matters is whether the property was derived/obtained as a result of criminal activity relating to or relatable to a Scheduled Offence and whether the person is engaged in the continuing processes (concealment/possession/acquisition/use/projecting/claiming) connected with such proceeds. Thus a property acquired in 1997 may be subject to PMLA action if it falls within the definition and the relevant processes are shown. [Paras 25, 29, 31, 33, 47]

Property acquired prior to the enactment or prior to scheduling can be proceeds of crime if it is derived/obtained as a result of criminal activity relating to or relatable to a Scheduled Offence and the requisite process/activity continues or is shown.

Reasons to believe - second proviso to Section 5(1) of the PMLA - precondition for attachment - Whether the provisional attachment order complied with Section 5(1) and its second proviso - in particular whether the Authorized Officer recorded adequate reasons (based on materials) prior to issuing the attachment and demonstrated urgency. - HELD THAT: - The Court found that Section 5(1) and its second proviso require the Authorized Officer to record, in writing and on the basis of materials in his possession, satisfaction (reasons to believe) about (a) possession of proceeds of crime and (b) likelihood that those proceeds would be concealed, transferred or otherwise dealt with so as to frustrate confiscation proceedings, and that such reasons must demonstrate immediacy/urgency. The reasons produced in this case did not identify the materials upon which the belief was formed, did not articulate the existence of the three P's (person, process, product), and were recorded after the provisional attachment order (i.e., not antecedent to its issuance). Merely parroting statutory language without stating the material basis or urgency does not satisfy the statutory precondition. Consequently the impugned provisional attachment did not meet the mandatory requirements of Section 5(1) and its second proviso. [Paras 40, 41, 45, 46, 47]

The provisional attachment order is vitiated for failure to record adequate reasons based on materials and for recording reasons after the attachment; the impugned order is set aside.

Adjudication jurisdiction - consequences of invalid provisional attachment - Whether adjudication proceedings initiated on the basis of the invalid provisional attachment retain jurisdiction. - HELD THAT: - The Court held that the Adjudicating Authority derives jurisdiction from an existing valid provisional attachment order. Because the provisional attachment was set aside for non-compliance with Section 5(1) and its second proviso, the consequential adjudication proceedings (show cause / adjudication under Section 8) initiated on that basis cannot stand and must also be quashed. The Court, however, clarified that the decision does not bar the respondent authorities from legally re-initiating action under Section 5 after complying with statutory mandates. [Paras 46, 47]

Adjudication proceedings founded on the quashed provisional attachment are set aside; authorities remain free to proceed lawfully afresh.

Final Conclusion: The High Court entertained the petition, held that the definition of "proceeds of crime" is not tied to the date of acquisition and may include property acquired earlier if derived from criminal activity relating to or relatable to a Scheduled Offence, but found the provisional attachment defective because the authorized officer failed to record antecedent, material-based reasons demonstrating the requisite urgency under the second proviso to Section 5(1). The provisional attachment order and consequent adjudication proceedings were set aside; the respondents remain at liberty to act afresh in accordance with law.

Jurisdiction to issue summons - maintainability of writ against show cause notice - appointment of Central Excise Officers under Rule 3 of Service Tax Rules, 1994 - competent authority to determine service tax liability - challenge to Rule 5 of Service Tax (Determination of Value) Rules, 2005 and its temporal effect

Maintainability of writ against show cause notice - Whether the writ petition challenging the issuance of a show cause notice and summons requires interference at this stage. - HELD THAT: - The Court applied settled law that a writ petition will not ordinarily be entertained against the mere issuance of a show cause notice unless the notice is a nullity or issued without jurisdiction. A show cause notice, being a procedural step that does not yet determine liability, does not usually infringe rights that warrant pre emptive judicial intervention. Objections as to jurisdiction or other legal contentions can be raised before the Authority and any adverse order arising thereafter can be challenged by appropriate remedies. Applying this principle, the Court found no ground to interfere with the learned Single Judge's rejection of the writ petition against the show cause notice and summons. [Paras 9, 10]

Writ petition against the show cause notice and summons is not maintainable at this stage and no interference is warranted.

Jurisdiction to issue summons - appointment of Central Excise Officers under Rule 3 of Service Tax Rules, 1994 - competent authority to determine service tax liability - Whether the second respondent had jurisdiction to issue the summons and whether proceedings would result in impermissible duplication given the role of the competent Commissioner. - HELD THAT: - The Court examined Rule 3 of the 1994 Rules, which empowers the Central Board of Excise and Customs to appoint Central Excise Officers to exercise powers under Chapter V within local limits and in relation to specified taxable services. In consequence, notifications issued by the Principal Commissioner/Chief Commissioner can confer jurisdiction on officers. The impugned notification dated 15.12.2015 was held to have conferred jurisdiction upon the second respondent to act in the capacity alleged. Moreover, the show cause notice itself calls upon the appellants to show cause before the Commissioner of Central Excise and Service Tax 1, Commissionerate, Bengaluru, who is the competent authority to determine service tax liability; no assessment or final determination has been made at this stage. On these facts the Court concluded there was no jurisdictional defect warranting interference. [Paras 9, 10]

Second respondent possessed jurisdiction to issue the summons and there is no present duplication or jurisdictional infirmity requiring interference.

Challenge to Rule 5 of Service Tax (Determination of Value) Rules, 2005 and its temporal effect - Whether the appellants' additional grounds (including challenge to Rule 5 of the 2005 Rules and reliance on the Delhi High Court decision) required fresh judicial consideration at this stage or should be addressed by the Authority. - HELD THAT: - The Court noted that certain objections raised in I.A. No. 2/2017 concern the validity and temporal application of Rule 5 of the 2005 Rules and related decisions (including the Delhi High Court's ruling). The show cause notice dated 13.12.2016 did not take note of the post 2012 legal position and the amendments effected by the Finance Act/Bill, 2015. Rather than adjudicating those contentions on writ, the Court directed that the appellants may raise all such objections before the competent Authority (the fifth respondent), which must consider them while passing an appropriate order. The Court further indicated that the Authority should take into account the cited judicial decisions when examining the appellants' reply. [Paras 9, 11]

Appellants' additional grounds and objections are to be raised before and considered afresh by the Authority; the Court declined to decide those merits in the writ.

Final Conclusion: Writ challenge to the summons and show cause notice is declined; the impugned order of the Single Judge is upheld. The appellants are permitted to appear before the competent Authority and file objections (including those raised in I.A. No. 2/2017), which the Authority shall consider and decide in accordance with law.

Exemption under Notification No. 25/2012-ST - public health - emergency response services - appropriation of amounts paid - extended period of limitation - penalty under Section 78 of the Finance Act, 1994 - bundled services / Section 66F(3) - taxability of Dial 100 Project

Exemption under Notification No. 25/2012-ST - public health - emergency response services - Emergency response services rendered under Dial 102/104/108 are exempt as services provided to Government by way of public health under Notification No. 25/2012-ST. - HELD THAT: - The Tribunal accepted the Commissioner's factual finding that the contracts for Dial 102/104/108 were with State Governments under NHM/related schemes, the services were aimed at providing pre hospital medical care and life saving support (including trained paramedics, medical officers, medical equipment and monitoring) and the beneficiaries were the general public rather than the State as a paying user. The Board Circular of 30.05.2018 (examined by the authority) clarifies that provision of ambulance/emergency response services to State Governments under NHM amounts to service to Government by way of public health and is exempt under Notification No. 25/2012-ST. On the facts (agreements, scope of work and that consideration was paid by Governments and not by beneficiaries), the Tribunal held the services under Dial 102/104/108 fall within the exemption and the tax demand in respect of those receipts cannot be enforced. [Paras 25, 29, 42]

Exemption under Notification No. 25/2012-ST upheld for Dial 102/104/108 emergency response services; related tax demand dropped.

Taxability of Dial 100 Project - appropriation of amounts paid - Services under Dial 100 Project (police emergency) were admitted by the assessee as taxable and the amounts paid were appropriated against the confirmed liability for the relevant period. - HELD THAT: - The assessee had separately accepted liability for the Dial 100 contracts with Police/Home Departments and deposited service tax and interest during investigation. The Commissioner appropriated the amount deposited towards the confirmed liability for the Dial 100 Project for the period April 2013 to March 2016, noting an excess payment which resulted in appropriation as per annexure. The Tribunal recorded the admitted tax liability and the Commissioner's appropriation without re opening taxability of Dial 100 which had been conceded and discharged by the assessee prior to the show cause notice. [Paras 30, 31]

Appropriation of amounts paid by the assessee towards the Dial 100 liability confirmed; tax on Dial 100 treated as admitted and extinguished by payment.

Extended period of limitation - penalty under Section 78 of the Finance Act, 1994 - Extended period of limitation was not available to Revenue; penalty under Section 78 was set aside. - HELD THAT: - The Tribunal found that the assessee maintained proper books, received consideration from State Governments through banking channels, had registered and paid admitted taxes, and acted under a bona fide belief in entitlement to exemption for the major part of its services. Given these facts, the Tribunal held there was no deliberate suppression or mala fides warranting invocation of the extended period of limitation and concluded that mandatory penalty under Section 78 was not sustainable. Consequently, the demand was confined to the normal period of limitation and the Section 78 penalty was vacated. [Paras 48, 49]

Extended period of limitation denied to Revenue; penalty under Section 78 set aside.

Bundled services / Section 66F(3) - Where emergency services for police/fire were a minuscule component (less than 5%) of comprehensive contracts naturally bundled with health services, no bifurcation under Section 66F(3)(a) was required and exemption for the bundle was sustained. - HELD THAT: - Revenue argued that inclusion of police/fire elements in comprehensive emergency contracts precluded exemption. The Tribunal examined the contractual scope, the admitted minimal quantum of police/fire calls and the absence of separate remuneration for those elements, and applied Section 66F(3)(a) which treats naturally bundled elements as a single service given the bundle's essential character. Finding that police/fire response constituted only a negligible portion and was not separately remunerated, the Tribunal held there was no basis to bifurcate and tax the small non health element separately. [Paras 41, 43]

No bifurcation under Section 66F(3) required; bundled service retains essential character of public health and remains exempt.

Final Conclusion: The Tribunal dismissed Revenue's appeal and allowed the assessee's appeal: service tax demand for Dial 102/104/108 was dropped as exempt under Notification No. 25/2012-ST (public health); amounts paid in respect of Dial 100 were appropriated against the admitted liability for April 2013-March 2016; the extended period of limitation was held unavailable and the mandatory penalty under Section 78 was set aside; consequential benefits to the assessee were directed.

Definition of service under Section 65B(44) of the Finance Act 1994 - educational services exemption under the negative list - taxability of externally funded academic research - consideration and nexus in determining service - suppression and penalty under Section 78

Educational services exemption under the negative list - definition of service under Section 65B(44) of the Finance Act 1994 - Taxability of fees charged to students in the Post Graduate Student Status Program (PGSSP). - HELD THAT: - The Tribunal examined whether PGSSP fees fall outside the exemption for services by an educational institution to its students. The impugned order that had demanded service tax treated PGSSP as not conferring a recognised qualification. The Tribunal held that the notification must be read in plain terms and that the Institute, being a deemed university offering recognised degree programmes, is an educational institution. Permitting PGSSP students to attend regular degree courses constitutes a service to students by an educational institution and is covered by the negative list exemption. Therefore the demand for service tax on PGSSP fees was not sustained. [Paras 9]

Demand for service tax on PGSSP fees set aside; PGSSP services held exempt as educational services to students.

Definition of service under Section 65B(44) of the Finance Act 1994 - taxability of externally funded academic research - consideration and nexus in determining service - Whether externally funded research projects undertaken by the Institute constituted a 'service' rendered to funders attracting service tax. - HELD THAT: - The critical question was whether the activity was "an activity by one person for another for a consideration". Revenue relied on the existence of two parties, funds as consideration, and contractual conditions (utilisation certificates, deliverables, account inspection) to establish nexus and reciprocity. The Tribunal found that such factors are not individually determinative. On the total facts - the Institute's academic objectives, student participation in research as part of education, publication of results, and the predominant academic character of the projects - the activity was not rendered "for" the funders as a service within the statutory definition. Shared or funder-held IP and project conditions did not alter the academic character; publication in the public domain was unrefuted. Applying the statutory definition to the factual matrix, the Tribunal concluded no service was provided to funders and set aside the demands. [Paras 15]

Demands of service tax on externally funded research projects set aside; research funding held not to be consideration for a taxable service.

Suppression and penalty under Section 78 - Validity of penalties and extended period of limitation based on alleged suppression of facts. - HELD THAT: - The Tribunal considered whether there was suppression warranting penalty under the extended period. Relying on precedent and the factual record, it held there was no suppression; omissions did not amount to intentional concealment. Given the absence of suppression or malafide, neither the extended limitation nor penalties under the provision were justified. The Tribunal noted analogous authority where penalty was set aside for organisations governed by non pecuniary public bodies and applied that reasoning here. [Paras 16]

All penalties and any reliance on extended period of limitation set aside.

Final Conclusion: Appeals allowed: service tax demands in respect of PGSSP fees and externally funded research projects quashed, and all penalties set aside, with consequential relief to the appellant.

Construction of building forming part of airport / aerodrome - definition of "airport" and "aerodrome" construed to include appertaining buildings - exclusion of works contract service where construction pertains to airport/aerodrome

Construction of building forming part of airport / aerodrome - definition of "airport" and "aerodrome" construed to include appertaining buildings - exclusion of works contract service where construction pertains to airport/aerodrome - Whether the air cargo agent building constructed by the appellant forms part of the airport/aerodrome and is therefore excluded from taxable works contract service - HELD THAT: - The Tribunal examined the statutory definitions of "airport" as in the Airport Authority of India Act read with the definition of "aerodrome" in the Aircraft Act and the factual positioning and functional role of the cargo agent building. The building was constructed as an annexure to the air cargo terminal, is shown on the master plan as the cargo satellite (agent) building, and is functionally interlinked with the cargo terminal (agents accept, partly process and forward cargo to the terminal for finalisation and customs formalities). There is no material separation in use or site planning between the two buildings; the cargo agent building is necessary for the smooth functioning of the cargo terminal and facilitates operations that are integral to airport cargo handling. Applying the definitions, buildings appertaining to the aerodrome are within the scope of "airport," and therefore construction of such appertaining buildings is excluded from the definition of taxable works contract service. The Tribunal found these factors determinative and held that the construction activity falls within the exclusion. [Paras 16]

The air cargo agent building constitutes part of the airport/aerodrome and the construction activity is excluded from taxable works contract service; the appeal is allowed and the impugned order set aside.

Final Conclusion: The Tribunal allowed the appeal, holding that the air cargo agent building is part of the airport/aerodrome and therefore the construction service is excluded from works contract service; the impugned demand and penalties were set aside and the appellant entitled to consequential relief.

Eligibility for Cenvat credit on input services used for provision of taxable services - interaction between Notification No. 1/2006 (abatement) and availment/utilisation of Cenvat credit - application of Rule 6(5) of the Cenvat Credit Rules, 2004 as a non-obstante provision - use of accumulated Cenvat credit to discharge service tax liability while claiming abatement - precedential weight of co-ordinate bench decisions in identical facts

Eligibility for Cenvat credit on input services used for provision of taxable services - application of Rule 6(5) of the Cenvat Credit Rules, 2004 as a non-obstante provision - Appellant entitled to claim Cenvat credit on the specified input services used in relation to its hotel business despite part use for services listed in Notification No.1/2006 - HELD THAT: - The Tribunal accepted the appellant's submission that Rule 6(5) of the Cenvat Credit Rules, 2004 (as it stood during the relevant period) is a non-obstante provision widening eligibility for credit on specified input services where such services are not exclusively used for exempted services. Applying the definition of "input service" and the authorities in the appellant's favour, the Tribunal held that services used in bringing into existence premises used to render taxable output services qualify as input services. The Tribunal relied on co-ordinate bench precedents (Hyderabad, Chennai and Mumbai) on identical facts which set aside similar demands, and concluded there was no merit in denying credit in the facts of the case.

Claim for Cenvat credit on the specified services upheld and demand on this ground set aside.

Interaction between Notification No. 1/2006 (abatement) and availment/utilisation of Cenvat credit - use of accumulated Cenvat credit to discharge service tax liability while claiming abatement - Utilisation of accumulated Cenvat credit to discharge service tax liability did not disentitle appellant to benefit of abatement under Notification No.1/2006 where credit on input services used for the abated services had not been taken for those services - HELD THAT: - The Tribunal followed co-ordinate bench decisions which interpreted the proviso to Notification No.1/2006 as applying to "cases" where Cenvat credit on inputs or input services used for providing the specified taxable service has been taken in relation to that case. The notification does not prohibit an assessee from choosing, contract by contract, whether to avail credit or claim abatement; nor does it bar using previously accumulated credit to discharge the tax liability on the non-ablated portion. Applying these principles to the facts, the Tribunal found that the credit utilised had been accumulated earlier and that the appellant had not availed credit on input services specifically for the short-term accommodation and restaurant services in the disputed period; accordingly abatement could not be denied on the ground of utilisation of accumulated credit.

Denial of abatement on account of utilisation of accumulated Cenvat credit set aside; appellant entitled to abatement subject to the proviso's conditions.

Final Conclusion: Appeal allowed. Impugned order set aside; appellant entitled to Cenvat credit on the specified input services and to the benefit of abatement under Notification No.1/2006 for the disputed periods, with consequential reliefs as applicable, following co-ordinate bench precedents.

Classification as commercial training or coaching service - exemption for educational services leading to grant of a certificate recognised by law - negative list exclusion for educational services - service tax liability on coaching integrated with regular education - reliance on coordinate Tribunal precedents

Classification as commercial training or coaching service - exemption for educational services leading to grant of a certificate recognised by law - negative list exclusion for educational services - Whether the appellant society's activity of imparting Intermediate education together with intensive coaching for competitive examinations attracts service tax for the period 2011-12 to 2014-15 - HELD THAT: - The Tribunal held that the facts are squarely covered by its earlier decision in M/s Sri Chaitanya Educational Committee v. CCE, Guntur, which addressed the post-2011 legal position. After 2011 the determinative requirement is that the coaching or training must lead to the grant of a certificate recognised by law; it is not necessary that the institute itself issues that certificate. For the period up to 30.06.2012 the activity falls within the exemption available under Notification No.33/2011-ST where the coaching forms part of an educational activity leading to a recognised certificate. For the period from 01.07.2012 the Tribunal extended benefit of the negative list exclusion for educational services, and on identical facts declined to sustain the departmental demand. The Tribunal further noted and followed a coordinate bench decision in SHIV CHHATRAPATI SHIKSHAN SANSTHA v. Commissioner which applied the same ratio. Applying these precedents to the present facts, the demand confirmed by the adjudicating authority was held not sustainable. [Paras 6, 7]

Demand for service tax for 2011-12 to 2014-15 set aside; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal and set aside the impugned order, holding that the appellant's combined Intermediate education and competitive-exam coaching did not attract the service tax demand for the period 2011-12 to 2014-15 in view of the exemption and negative-list treatment applied by coordinate Tribunal precedents.

Cenvat credit - input service tax credit - taking Cenvat credit within the prescribed period under Rule 4 read with Rule 9 of CCR, 2004 - maintenance of electronic records as acceptable evidence - utilisation of Cenvat credit for payment of output service tax

Cenvat credit - taking Cenvat credit within the prescribed period under Rule 4 read with Rule 9 of CCR, 2004 - maintenance of electronic records as acceptable evidence - utilisation of Cenvat credit for payment of output service tax - Validity of the appellant's claim to input service tax (Cenvat) credit and its utilisation for payment of output service tax - HELD THAT: - The Tribunal examined the appellant's books of account maintained in electronic form (Tally), the ledger entries, year-wise schedules of input invoices showing invoice number, date, service provider, breakup of service and service tax, bank payment evidence, and audit reports/forms filed with Income Tax authorities. The Court found that the appellant had recorded input service tax (including cesses) as debit balances in the trial balance under 'duties and taxes' and had regular ledger and journal entries for each service provider and invoice. The reflection of input tax under a regrouped head created confusion for Revenue but did not negate the documentary and accounting evidence. Having regard to admissibility of computerized records under the Board Circular and Service Tax Rules, and the demonstrated invoice-wise entries and bank payments, the Tribunal held that the appellant had taken Cenvat credit regularly and within the prescribed period from the date of invoice as required under Rule 4 read with Rule 9 of CCR, 2004. There was no dispute on output tax liability and the utilisation of legitimately taken credit for discharge of output service tax was acceptable. [Paras 11]

Appeal allowed; impugned order set aside and appellant entitled to consequential benefits.

Final Conclusion: The Tribunal held that the appellant validly availed input service tax (Cenvat) credit and lawfully utilised it for payment of output service tax, finding the electronic records, invoice-wise ledger entries and bank payments sufficient to show credit taken within the period prescribed under Rule 4 read with Rule 9 of CCR, 2004; the impugned order is set aside and the appellant granted consequential relief.

Manpower Recruitment or Supply Agency service - Contract manufacturing / Job-work - Renting of Immovable Property - limitation - Limitation under Section 73

Manpower Recruitment or Supply Agency service - Contract manufacturing / Job-work - Services rendered by the appellant are contract manufacturing/job-work and not manpower recruitment or supply agency services - HELD THAT: - A scrutiny of the manufacturing agreements shows that the appellant manufactured IMFL in its own distillery using its own manpower and bore the costs of running the unit and overheads, while consideration was payable on a per-case basis for goods manufactured. Clause 5 makes the appellant responsible to arrange manpower and bear expenses but clause 13(a) establishes the consideration as bottling charges per case. The Tribunal held that this payment structure and the nature of the obligations demonstrate contract manufacturing rather than a service of recruitment or supply of manpower. Reimbursement entries and debit notes did not warrant an adverse inference that the appellant was supplying manpower; the agreements and the consideration model govern the classification. The Tribunal relied on analogous decisions including S. S. Associates and Divya Enterprises to support that such arrangements amount to contract manufacturing and not manpower supply. [Paras 13, 14]

Demand of service tax as 'Manpower Recruitment and Supply Service' set aside

Renting of Immovable Property - limitation - Limitation under Section 73 - Demand of service tax for renting of immovable property for 01.04.2008 to 31.03.2009 is time-barred and set aside - HELD THAT: - The Tribunal observed that levy of service tax on renting of immovable property was the subject of considerable judicial controversy during the relevant period and ultimately resolved only after a retrospective legislative amendment. For the period 01.04.2008 to 31.03.2009 the relevant date was the due date of filing the return (25.04.2009), so the one-year limitation under Section 73 expired on 25.04.2010. The show cause notice was issued on 21.10.2011, beyond the normal limitation period. Given the uncertainty in law at the material time and the lapse of the limitation period, the Tribunal set aside the demand for that period. [Paras 15, 16]

Demand of service tax on 'Renting of Immovable Property' for the stated period held time-barred and quashed; penalties set aside

Final Conclusion: The impugned order is set aside; demands of service tax and all penalties in respect of the challenged manpower-supply classification and the renting-of-immovable-property charge (for the period 01.04.2008-31.03.2009) are quashed and the appeal is allowed with consequential relief as per law.

Taxability of construction of residential complex prior to 01.07.2010 - Self service / non-taxability of service rendered before completion certificate and transfer - Construction of complex services versus Works Contract Service - Board Circular No. 151/2/2012-ST dt.10.02.2012 - Principal-to-principal relationship - absence of service provider/recipient

Taxability of construction of residential complex prior to 01.07.2010 - Self service / non-taxability of service rendered before completion certificate and transfer - Board Circular No. 151/2/2012-ST dt.10.02.2012 - Service tax is not leviable on construction of residential complex provided to the land owner prior to 01.07.2010 - HELD THAT: - The Tribunal applied the explanation introduced w.e.f. 01.07.2010 and the Board's clarification in Circular No. 151/2/2012-ST dt.10.02.2012 to conclude that construction services of a residential nature provided prior to 01.07.2010 are not taxable. The Tribunal accepted the principle that where construction is completed and the land owner's share is handed over before 01.07.2010 the activity falls within the category of self service or is otherwise excluded from service tax liability for that period, consistent with the Board's clarification and earlier exposition distinguishing service simpliciter and works contract treatment. On that basis the demand for service tax framed for the period 2005 to June 2009 was held not tenable and was set aside. [Paras 5, 6, 10]

Demand of service tax for construction activity of residential nature for the period 2005 to June 2009 is set aside as not leviable prior to 01.07.2010.

Principal-to-principal relationship - absence of service provider/recipient - Construction of complex services versus Works Contract Service - There was no service-provider/service-recipient relationship between the developer and the land owner; they operated on a principal-to-principal basis - HELD THAT: - The Tribunal examined the contractual arrangement and factual matrix and concluded that the developer and the land owner dealt on a principal-to-principal basis. Consequently, there was no inter se service rendered by the developer to the land owner attracting service tax. This finding was treated as an independent basis for setting aside the demand in addition to the temporal non-taxability rationale. [Paras 3, 10]

The finding that the parties dealt on a principal-to-principal basis negates any service relationship and supports allowing the appeal.

Final Conclusion: Appeal allowed; impugned order set aside on merits on the grounds that construction of residential complex allotted to the land owner prior to 01.07.2010 is not taxable and, in any event, the parties acted on a principal-to-principal basis; ground of limitation left open and appellant entitled to consequential benefits in accordance with law.

Classification of complex contracts under works contract service - joint development agreement treated as principal-to-principal transaction (no service relationship) - advances/deposits prior to execution of sale deed not taxable as service - sale of semi-finished/undivided share as sale of immovable property outside service tax - reverse charge liability on import of services where no service received - Rule 6(3) CCR - reversal of proportionate Cenvat credit - Rule 14(ii) CCR - interest payable only if erroneously taken credit was utilised (amendment effective 01.03.2012) - penalties under the Finance Act set aside where primary demands unsustainable

Classification of complex contracts under works contract service - Complex construction contracts executed by the appellant are rightly classifiable under works contract service (WCS). - HELD THAT: - The work undertaken by the appellant involved both transfer of materials and provision of labour/services and thus constituted complex contracts. Following the principle in CCE & C, Kerala vs Larsen & Toubro Ltd, prior to 01.06.2007 complex contracts were not bifurcated for taxation, and upon introduction of the WCS head from 01.06.2007, such complex contracts fall under WCS. The Tribunal accordingly upheld classification of the appellant's activities as WCS and allowed the appellant's challenge to any contrary classification by the Revenue. [Paras 6]

Allowed in favour of the appellant; classification as WCS upheld.

Joint development agreement treated as principal-to-principal transaction (no service relationship) - The appellant's transactions with land-owners under joint development agreements do not attract service tax as they constitute principal-to-principal sharing and not a provider-recipient service relationship. - HELD THAT: - The appellant developed land pursuant to Joint Development Agreements and shared constructed area with landowners according to agreed ratios. The relationship is a joint venture/partnership on a principal-to-principal basis, not one of service provider and service receiver. The Tribunal relied on its precedent in V. Green Projects vs CCT and CBEC circulars to conclude that the landowner's share is not exigible to service tax under WCS. [Paras 7]

Allowed in favour of the appellant; no service tax on land-owner's share.

Advances/deposits prior to execution of sale deed not taxable as service - sale of semi-finished/undivided share as sale of immovable property outside service tax - Amounts received prior to execution of the sale deed (including for undivided land share and semi-finished construction) are not exigible to service tax; sale of such semi-finished units is a sale of immovable property outside the Finance Act, 1994. - HELD THAT: - Under the appellant's business model the sale deed conveying undivided land share and semi-finished construction was executed prior to any construction agreement; until execution of the sale deed the prospective buyer had no right to the dwelling unit and work done amounted to self-service. Post-sale construction obligations arose under a separate construction agreement, creating the service relationship only thereafter. Amounts received before execution of the sale deed, including advances absent a contract of sale, are deposits for immovable property and not consideration for a taxable service under section 67. Consequently, service tax was not exigible on such amounts and sale of the semi-finished flat is outside the scope of the Finance Act. [Paras 8, 9]

Allowed in favour of the appellant; no service tax on pre-sale-deed receipts or on sale of semi-finished/undivided share.

Reverse charge liability on import of services where no service received - No reverse charge service tax liability arises where the appellant paid advances to a foreign consultant but received no services and subsequently wrote off the amount as bad debt. - HELD THAT: - The appellant paid an advance in foreign exchange to a foreign entity for management/consultancy services, but no service was rendered and the amount was written off as bad debt. As there was no receipt of service, the reverse charge mechanism could not be invoked and no service tax liability arose. The Tribunal accordingly allowed the appellant's challenge to the demand. [Paras 10]

Allowed in favour of the appellant; no service tax under reverse charge for non-received services.

Rule 6(3) CCR - reversal of proportionate Cenvat credit - Rule 14(ii) CCR - interest payable only if erroneously taken credit was utilised (amendment effective 01.03.2012) - No interest under Rule 14(ii) CCR is payable where the proportionate Cenvat credit required to be reversed under Rule 6(3) was not utilised prior to reversal; the 01.03.2012 amendment to Rule 14(ii) applies. - HELD THAT: - The appellant admitted reversal of the proportionate credit prior to the SCN and maintained that the credit which required reversal was never utilised. Rule 14(ii) was amended effective 01.03.2012 to make interest payable only where wrong credit has been taken and utilised; this clarificatory amendment and Board clarification indicate retrospective application. The Tribunal followed the view that interest is not payable if the credit was not utilised, distinguished the applicability of contrary Supreme Court authority in light of the amendment, and held that the appellant need not pay interest. [Paras 11, 12, 13]

Allowed in favour of the appellant; interest not leviable as the proportionate credit was not utilised.

Penalties under the Finance Act set aside where primary demands unsustainable - Penalties imposed under Sections 76, 77 and 78 of the Finance Act are set aside consequent to acceptance of the appellant's substantive grounds. - HELD THAT: - Having allowed the appellant on all substantive grounds (classification, non-taxability of landowner share and pre-sale receipts, reverse charge, and interest), the Tribunal set aside the penalties imposed under the Finance Act since the primary demands were unsustainable. The Tribunal directed consequential benefits in accordance with law. [Paras 14, 15]

Allowed in favour of the appellant; penalties set aside and impugned orders set aside.

Final Conclusion: All appeals allowed: the Tribunal upheld classification under WCS, held joint development transactions and pre-sale receipts not exigible to service tax, rejected reverse charge and interest demands on the facts, set aside penalties and the impugned orders, and directed consequential relief in accordance with law.

Includible in taxable value - reimbursement on actual basis - pre-arrangement / MOU - reverse charge basis - best judgment method - extended period of limitation - no fraud or suppression - issue no longer res-integra

Includible in taxable value - reverse charge basis - reimbursement on actual basis - pre-arrangement / MOU - Whether the value of facilities and reimbursements provided by the service recipient (accommodation, medical, vehicles, telephone, dog squad, imprest, etc.) are includible in the taxable value of security services provided by the appellant - HELD THAT: - The Tribunal followed earlier decisions holding that expenses incurred or facilities provided by the service recipient to CISF personnel - including medical and telephone facilities, imprest expenses, notional value for rent-free accommodation, free supply of rented vehicles, dog squad expenditure and similar reimbursements - are not includible in the taxable value of security services on reverse charge basis. The decision emphasises that where reimbursements are made on actual basis and there is a specific pre-arrangement/MOU with the service recipient, such expenses are not to be added to the assessable value. Reliance on precedents (including the Allahabad Bench decision and the Principal Bench decision cited in the order) establishes that the legal position is settled and the issue is no longer res-integra; accordingly, the addition of such reimbursements to the taxable value cannot be sustained.

Expenses and facilities so provided or reimbursed by the service recipient are not includible in the taxable value of the appellant's security services; the demand on this ground is unsustainable.

Best judgment method - extended period of limitation - no fraud or suppression - issue no longer res-integra - Validity of the department's invocation of the best-judgment valuation (25% addition) and issuance of show cause notice under extended period of limitation - HELD THAT: - The Tribunal noted that the department applied the best-judgment method to estimate the value of the facilities at 25% of cost of deployment and invoked extended limitation. Having held that the underlying items were not includible in taxable value (and that reimbursements were on actual basis with pre-arrangement), the Tribunal found the impugned demand and the use of best-judgment addition unsustainable. Further, in the absence of any case of fraud or suppression, invocation of the extended period of limitation was not warranted. The Tribunal therefore set aside the adjudication order which confirmed the demand, interest and penalties.

The best-judgment addition and the notice issued under extended limitation are not sustainable; the adjudication confirming the demand, interest and penalties is set aside.

Final Conclusion: Following earlier Tribunal precedents holding that reimbursements and facilities provided by the service recipient to CISF personnel are not includible in taxable value, the impugned adjudication confirming demand (including best-judgment addition and extended period invocation) is set aside and the appeal is allowed.

Service tax liability on provision of 'information technology software' service - transfer of right to use goods (deemed sale) under Article 366(29A)(d) - End User Licence Agreement and its role in characterisation of transaction - artificial segregation of sale and post-sale updates/services

Service tax liability on provision of 'information technology software' service - transfer of right to use goods (deemed sale) under Article 366(29A)(d) - End User Licence Agreement and its role in characterisation of transaction - Whether supply of license codes/keys of Kaspersky antivirus software in retail packs to end users is liable to service tax as an 'information technology software' service or amounts to a 'deemed sale' (transfer of right to use goods) not liable to service tax. - HELD THAT: - The Tribunal found that the End User Licence Agreement in the present case is substantially similar to that considered in Quick Heal Technologies and examined by the Supreme Court. The licence granted was non exclusive, limited to a specified term, allowed use on specified client devices, restricted copying, transfer and sublicensing, preserved title and intellectual property with the vendor, and provided updates and support during the licence term. Applying the tests laid down in Tata Consultancy Services and the subsequent Quick Heal decisions, the decisive question is whether the transaction results in transfer of the right to use goods in the sense of Article 366(29A)(d). The Supreme Court in Quick Heal held that where the terms of the licence do not interfere with the licensee's free enjoyment and the transaction results in the licensee acquiring the effective right to use the software (with possession and control akin to purchase), the transaction constitutes a 'deemed sale' and is not liable to service tax; artificially segregating the sale consideration to impose service tax on updates/services is not permissible. Given the similarity of the End User Licence Agreement here to that examined in Quick Heal, the adjudicating authority was not justified in treating supply of licence keys/codes in retail packs as a taxable 'information technology software' service under the Finance Act. The Tribunal therefore set aside the demand confirmed by the Adjudicating Authority. [Paras 19, 20]

Order dated 29.02.2016 confirming service tax demand for supply of licence codes/keys in retail packs is set aside; supply in the facts of this case is not leviable to service tax but constitutes a deemed sale as in Quick Heal.

Final Conclusion: The appeal is allowed; the order confirming service tax demand for the period 01.04.2012 to 30.09.2013 in respect of supply of licence codes/keys in retail packs is set aside in view of the Tribunal's and the Supreme Court's decisions in Quick Heal Technologies, on the ground that the transactions amount to deemed sale (transfer of right to use goods) rather than a taxable information technology software service.

Cenvat credit reversal - work-in-progress - inputs issued for production - removal as such from the factory - remission of duty - Rule 3(5) of the Cenvat Credit Rules - Rule 3(5C) of the Cenvat Credit Rules

Cenvat credit reversal - work-in-progress - inputs issued for production - Rule 3(5) of the Cenvat Credit Rules - Rule 3(5C) of the Cenvat Credit Rules - Whether Cenvat credit taken on inputs issued for production and forming part of work-in-progress/semi-finished goods destroyed in fire is required to be reversed - HELD THAT: - The Tribunal examined the scheme of the Cenvat Credit Rules and the factual admission that the destroyed materials constituted work-in-progress or semi-finished goods which had been issued for production. Rule 3(5) addresses payment where inputs or capital goods are removed as such from the factory and Rule 3(5C) mandates reversal of credit where duty remission is allowed on goods manufactured or produced. The Tribunal held that once inputs have been issued for production and have become work-in-progress or semi-finished goods, they cease to be "inputs" in the sense contemplated for reversal as "removed as such". Accordingly, the liability to reverse credit is confined to inputs removed as such or where specific provisions for reversal on remission of manufactured goods apply. Applying these principles to the admitted facts, the demand for reversal of Cenvat credit on inputs forming part of WIP/semi-finished goods destroyed by fire was not sustainable. [Paras 11, 12, 13]

No reversal of Cenvat credit is required in respect of inputs forming part of work-in-progress/semi-finished goods destroyed in the fire; the demand is set aside.

Final Conclusion: Appeal allowed. The impugned order directing reversal of Cenvat credit in respect of inputs forming part of work-in-progress/semi-finished goods destroyed by fire is set aside; the appellant is not required to reverse the declared Cenvat credit and shall be entitled to consequential benefits in accordance with law.

Manufacture - classification by tariff sub-heading - change in character, use and name - Section 2(f) of the Act - extended period of limitation - knowledge of facts

Manufacture - classification by tariff sub-heading - change in character, use and name - Section 2(f) of the Act - Whether the processing undertaken on purchased plain-end seamless steel pipes amounted to manufacture attracting Central Excise duty. - HELD THAT: - The Tribunal held that the processes of upsetting, heat treatment, straightening, inspection, threading, phosphating, affixing couplings and related finishing operations did not result in emergence of a new product with a different character, use or name so as to constitute manufacture. Relying on the precedent that mere conversion of goods falling under different tariff sub-headings does not ipso facto amount to manufacture, the Tribunal applied the principle in CCE vs SR Tissues that winding/cutting/slitting which does not change character or end-use is not manufacture under Section 2(f). The change in tariff sub-heading consequent to introduction of an 8 digit tariff was held insufficient, by itself, to convert the admitted activities into manufacture where the end-use and character remained unchanged; therefore the demands on merits were unsustainable. [Paras 14, 15]

The processes do not amount to manufacture and the excise demand on that ground is not sustainable.

Extended period of limitation - knowledge of facts - Whether Revenue could invoke the extended period of limitation for the impugned demand. - HELD THAT: - The Tribunal found the extended period invocation to be impermissible because all material facts were within the knowledge of the Revenue-earlier show cause notices and adjudications (including prior excise and service tax proceedings) put the department on notice. The appellant had maintained books and filed returns; documents relied upon by Revenue were records maintained in the ordinary course of business. In these circumstances the extended period of limitation could not be invoked and the SCN was therefore bad on limitation grounds. [Paras 15]

Extended period of limitation is unavailable and the SCN is bad on limitation grounds.

Final Conclusion: Appeals allowed; impugned orders set aside and appellant entitled to consequential benefits in accordance with law.

Clubbing of clearances - SSI exemption - aggregate value of clearances - lifting the corporate veil - suppression with intent to evade - interest on duty under Section 11AA - penalty under Rule 25(1) read with Section 11AC - personal penalty under Rule 26

Clubbing of clearances - SSI exemption - aggregate value of clearances - lifting the corporate veil - Whether clearances of M/s L.S. Plastics required clubbing with those of M/s TSM Plastics for determining entitlement to SSI exemption for the relevant years - HELD THAT: - Tribunal upheld the finding that the two units were effectively operating under common control and management and that M/s L.S. Plastics was created as an additional factory/premises to bifurcate clearances so as to continue availing SSI benefit. The authorities relied on documentary and testimonial material showing centralized purchase of raw material, maintenance of books for both concerns on a single Tally installation at TSM premises, common accountant and staff, lack of statutory records at the L.S. Plastics premises, overlap of ownership/management within the same family and common customers/marketing. On this factual foundation the Tribunal applied the principle of looking at substance over form and lifting the veil where entities are used to evade tax and concluded that the aggregate value of clearances must be treated for the purpose of the Notification; accordingly the values for 2013-14 and for 2014-15 (upto Nov. 2014) were held to exceed the SSI threshold and the demand for duty was sustained. The Tribunal distinguished precedents relied upon by the appellant where facts showed independent functioning and absence of common control or where procedural defects (e.g., non-issuance of notice) existed. The clubbing was therefore sustained on the record of centralized control, common records and deliberate fragmentation to avail exemption. [Paras 4]

Clearances of M/s L.S. Plastics were to be clubbed with those of M/s TSM Plastics for the purpose of SSI exemption; duty demand for 2013-14 and 2014-15 (upto Nov. 2014) upheld.

Interest on duty - Section 11AA - Whether interest is payable on the duty held recoverable as a consequence of the clubbing and demand - HELD THAT: - Having sustained the duty demand, the Tribunal held that interest follows as a natural legal consequence. The Tribunal applied the mandatory character of the statutory levy of interest on short/non-payment of excise duty and observed there is no discretion to withhold interest where duty is determined to be payable. [Paras 4]

Interest under the relevant statutory provision was confirmed as payable on the duty sustained.

Penalty under Rule 25(1) read with Section 11AC - personal penalty under Rule 26 - suppression with intent to evade - Whether penalties imposed on the partnership firm and personal penalties on the partners are sustainable - HELD THAT: - Tribunal agreed that suppression of material facts and the scheme of fragmenting clearances to evade duty attracted penal consequences. Penalty on the firm under Rule 25(1) read with Section 11AC was sustained as justified by the established suppression and intent to evade. As to personal penalties under Rule 26, the Tribunal found the partners responsible for planning and control; however in exercise of appellate discretion the Tribunal reduced the quantum of personal penalties on the two partners from the amounts imposed below to the modified amounts specified in the order. [Paras 4]

Penalty on the firm upheld; personal penalties on the partners sustained but reduced in amount.

Final Conclusion: Appeal by the partnership firm dismissed; appeals by the two partners partly allowed only to the extent of reducing their personal penalties; duty demand (with interest) and penalty on the firm confirmed for the periods 2013-14 and 2014-15 (upto Nov. 2014) following clubbing of clearances.

Amended definition of "business" including transactions after closure - distinction between "goods" and "capital goods" - taxability of sale of capital goods after closure under the amended definition of Section 2(e) of the U.P. VAT Act, 2008 - appellate/tribunal fact finding and scope of revisional interference (perverse/unbelievable standard) - exclusion of plant and machinery from levy under the Act by virtue of definition of "capital goods"

Distinction between "goods" and "capital goods" - taxability of sale of capital goods after closure under the amended definition of Section 2(e) of the U.P. VAT Act, 2008 - appellate/tribunal fact finding and scope of revisional interference (perverse/unbelievable standard) - Whether sale of plant and machinery and allied items sold after closure of business is exigible to tax under the amended definition of "business" in Section 2(e)(iv) of the U.P. VAT Act, 2008 - HELD THAT: - The Tribunal found that the items sold after closure were plant and machinery falling within the definition of "capital goods" under Section 2(f) and not "goods" as defined in Section 2(m). The Court accepted the Tribunal's factual conclusion, observing that a revisional court will not disturb findings of fact recorded by the Tribunal unless they are patently illegal, perverse or factually unbelievable. The amendment to Section 2(e)(iv) extends liability to sale of "goods" acquired during the period of business and sold after closure; the legislature chose the term "goods" and did not expressly include capital goods within that amendment. Consequently, the statutory definition of "goods" in Section 2(m) must be applied, and items qualifying as capital goods under Section 2(f) fall outside the scope of the levy as framed by the amendment. On these grounds the Tribunal's conclusion that the sales of the impugned items are not exigible to tax was upheld. [Paras 8, 9, 10, 11]

Tribunal's finding that the sold items are capital goods and not exigible to tax under the amended Section 2(e)(iv) is affirmed; revisional interference not warranted.

Final Conclusion: The revision petition is dismissed. The questions of law are answered against the revisionist and in favour of the assessee: sales of the impugned plant and machinery after closure are not exigible to tax under the amended provision, and the Tribunal's order is upheld.

Power under Section 311 CrPC to recall/re-examine witnesses - Requirement of evidence being essential to the just decision - Discretionary power to be exercised with caution and for strong and valid reasons - Delay and abuse of process as relevant factors in Section 311 applications - Special nature of Summary trial under Section 138 NI Act and complainant-driven prosecution - Right to expeditious trial and prejudice to the accused

Power under Section 311 CrPC to recall/re-examine witnesses - Requirement of evidence being essential to the just decision - Discretionary power to be exercised with caution and for strong and valid reasons - Delay and abuse of process as relevant factors in Section 311 applications - Right to expeditious trial and prejudice to the accused - Validity of the Trial Court's rejection of the petitioner's application under Section 311 CrPC to place on record documents and to recall/re-examine himself as a witness - HELD THAT: - The Court applied the settled principles governing Section 311 CrPC: the power is discretionary and may be exercised only when the evidence sought to be summoned or recalled is essential to a just decision, for strong and valid reasons, and with caution. The petitioner had earlier sought identical relief by an application under Section 311 which was withdrawn, closed his evidence thereafter, and made no explanation for the withdrawal or for the belatedness of the subsequent application filed only after recording of the accused's statements and fixation for final arguments. The Court held that the application was a belated afterthought, bereft of explanation for delay, and would amount to re-opening a summary trial under Section 138 NI Act that has already dragged on for years; permitting it would prejudice the accused and defeat the object of expeditious disposal of cheque-bounce complaints. The Court distinguished precedents relied upon by the petitioner on their peculiar facts where change of circumstances or material new facts justified recall, and noted authorities holding successive or belated applications are not maintainable. Given the complainant-controlled nature of Section 138 proceedings and the need for stricter application of Section 311 against complainants who delay filing documents in their possession, the Trial Court's detailed reasons for rejecting the application warranted no interference. [Paras 30, 31, 33, 34, 35]

The Trial Court's dismissal of the Section 311 application was proper and is upheld; interference is unwarranted.

Special nature of Summary trial under Section 138 NI Act and complainant-driven prosecution - Right to expeditious trial and prejudice to the accused - Whether the petitioner may rely on the High Court's earlier Order dated 18.02.2019 - HELD THAT: - While rejecting the belated Section 311 application, the Court clarified that the petitioner remains entitled to rely upon a certified copy of the High Court's earlier Order dated 18.02.2019. This preserves the complainant's ability to place on record an authenticated copy of the Court's judgment without reopening the trial by admitting the other documents sought belatedly under Section 311. [Paras 37]

The petitioner can rely on a certified copy of the High Court's Order dated 18.02.2019.

Final Conclusion: The petitions under Section 482 CrPC are dismissed. The Trial Court's order refusing the belated Section 311 CrPC application is upheld; the petitioner may, however, rely upon a certified copy of this Court's Order dated 18.02.2019.