TaxTMI Updates e-Newsletter
Apr 28,2023

Regular bail - default bail - parity with co-accused - pre-trial custody and long incarceration as ground for bail - summoning stage of complaint - offence under Section 132 of the Goods and Services Tax Act

Regular bail - parity with co-accused - pre-trial custody and long incarceration as ground for bail - summoning stage of complaint - offence under Section 132 of the Goods and Services Tax Act - Grant of regular bail to the petitioner in the GST complaint. - HELD THAT: - The Court granted regular bail to the petitioner on the basis that the petitioner had been in custody for over one and a half years while the complaint remained at the summoning stage. The petitioner was shown to be similarly situated to a co-accused who had been granted regular bail and other accused had obtained default bail; parity with those co-accused weighed in favour of bail. The exact quantum of amount alleged against the petitioner was yet to be determined at trial and did not preclude bail; counsel for the parties accepted that even if amounts exceeded a threshold the maximum sentence under the relevant GST provision would be five years, a factor considered in the overall balance. Having regard to prolonged pre-trial incarceration, the stage of proceedings, and parity with co-accused, the Court deemed it fit to release the petitioner on regular bail. [Paras 5, 6, 7]

Petitioner released on regular bail subject to furnishing bail bonds/surety to the satisfaction of the trial Court/Duty Magistrate; observations not to be treated as expression on merits.

Final Conclusion: The petition under Section 439 CrPC is allowed and the petitioner is granted regular bail on furnishing bonds/surety; the Court's observations are confined to the bail order and do not express any view on the merits.

Natural justice - Right to personal hearing - Show-cause notice for cancellation of GST registration - Adjudication after issuance of show-cause notice

Natural justice - Right to personal hearing - Show-cause notice for cancellation of GST registration - Procedural entitlement of the petitioner on receipt of show-cause notice dated 06.12.2022 for cancellation of GST registration and the course to be followed by the adjudicating authority. - HELD THAT: - The Court held that cancellation of GST registration, if finally ordered against the petitioner, would operate to the petitioner's detriment and therefore the adjudication process must observe principles of natural justice. Consequently, before proceeding further pursuant to the show-cause notice, the petitioner must be afforded a period of four weeks to file a reply and must be granted a personal hearing, the date of which shall be intimated to the petitioner. After receipt of the reply and after providing personal hearing, the competent authority is to decide the question of cancellation. The authority is directed to take an appropriate decision within a further four weeks. The Court expressly refrained from examining the merits of the dispute and confined itself to issuing these procedural directions.

Petitioner to be given four weeks to reply and a personal hearing; the authority to decide the cancellation after hearing within a further four weeks; merits not considered by the Court.

Final Conclusion: Writ petition disposed by issuing procedural directions: petitioner granted four weeks to file reply and a personal hearing; the competent authority to decide the show-cause notice for cancellation of GST registration within a further four weeks; merits left open for the authority to decide.

Validity of show cause notice - Requirement of intelligible reasons in show cause notice - Cancellation and suspension of GST registration - Right to opportunity to be heard before adverse action

Validity of show cause notice - Requirement of intelligible reasons in show cause notice - Cancellation and suspension of GST registration - Impugned show cause notice suspending the petitioner's GST registration and proposing cancellation was deficient for failing to disclose intelligible reasons and therefore unsustainable. - HELD THAT: - The Court found that the show cause notice dated 13.03.2023 merely stated the cryptic reason "Ceased to be liable to pay tax" without particulars or explanation enabling the petitioner to understand and answer the case against it. The respondent was unable to defend the notice. It is a settled principle that a notice proposing adverse action must clearly set out the reasons so that the noticee can make an effective response. Applying that principle, the Court held that the impugned notice did not sufficiently disclose the grounds for suspension or proposed cancellation and was therefore liable to be set aside. The Court restored the petitioner's GST registration but clarified the respondent remains free to issue a fresh show cause notice which must clearly set out reasons; the petitioner must be given a full opportunity to address those reasons before any adverse order is passed. [Paras 3, 4, 5]

Impugned show cause notice set aside and the petitioner's GST registration restored; respondent may issue fresh notice stating clear reasons and must provide full opportunity to respond.

Final Conclusion: The petition is allowed: the defective show cause notice is quashed, the petitioner's GST registration is restored, and the respondent may, if it so chooses, initiate fresh proceedings by issuing a reasoned show cause notice, giving the petitioner full opportunity to be heard.

Revocation of cancellation of GST registration - cancellation of registration for non-filing of returns - application of notification No. 3/2023 dated 31.3.2023 - competent authority to consider revival applications - entitlement to avail Input Tax Credit during period of cancellation

Application of notification No. 3/2023 dated 31.3.2023 - revocation of cancellation of GST registration - competent authority to consider revival applications - Petitioner permitted to apply to the competent authority for revocation of cancellation of GST registration under the notification dated 31.3.2023 and the authority directed to consider the application. - HELD THAT: - The court noted that notification No. 3/2023 dated 31.3.2023 contemplates revocation of cancellation of registration effected on the ground of non-filing of GST returns if conditions are fulfilled. The petitioners were held to fall within the scope of that notification so far as entitlement to seek its benefit is concerned. The petitioners were therefore permitted to make an application to the competent authority invoking the said notification, and the competent authority was directed to deal with such application and give the benefit of the notification as warranted. The court expressly refrained from expressing any opinion on the merits of the underlying cancellation itself, leaving merits to be considered by the competent authority when it adjudicates the application. [Paras 3, 4, 5]

Petitioner allowed to apply for revocation under Notification No. 3/2023; competent authority to consider and grant benefit; court made no expression on merits.

Entitlement to avail Input Tax Credit during period of cancellation - cancellation of registration for non-filing of returns - Petitioner entitled to lodge claim for Input Tax Credit for the period from cancellation of registration until restoration when the competent authority considers revocation. - HELD THAT: - The court observed that if the competent authority, while considering the revocation application under the notification, restores the registration, the petitioner shall be entitled to lodge its claim for availment of Input Tax Credit in respect of the period from the date of cancellation until the date registration is restored. This entitlement to lodge the claim was left subject to the competent authority's consideration and determination in accordance with law. [Paras 6]

Petitioner entitled to claim Input Tax Credit for the intervening period subject to the competent authority's consideration on revocation and restoration.

Final Conclusion: Writ petition disposed permitting the petitioner to apply for revocation of GST registration cancellation under Notification No. 3/2023; competent authority directed to consider the application and, in the event of restoration, the petitioner permitted to lodge claim for Input Tax Credit for the period from cancellation until restoration; no opinion expressed on merits by the court.

Show cause notice - principles of natural justice - cancellation of registration - quashing and setting aside - opportunity of being heard - fresh consideration and decision on merits

Show cause notice - quashing and setting aside - Impugned notice dated 28.6.2022 was quashed and set aside to enable fresh exercise by the competent authority. - HELD THAT: - The Court found that, having regard to the subsequent issuance of a show cause notice of even date and the circumstances narrated, it was appropriate to permit the authority to undertake a fresh adjudicatory exercise. For that purpose the impugned notice dated 28.6.2022 is quashed and set aside so that the authority may proceed afresh; the Court expressly refrained from expressing any opinion on the merits or factual contentions of the parties. [Paras 6]

Impugned notice dated 28.6.2022 quashed and set aside to enable fresh consideration by the authority.

Principles of natural justice - opportunity of being heard - fresh consideration and decision on merits - Authority directed to give the petitioner opportunity to reply, grant personal hearing and thereafter decide the matter on merits within prescribed timelines. - HELD THAT: - In the interests of natural justice and fair adjudication the Court directed a remedial procedure: the petitioner to be given 15 days from the date of the order to file a reply with supporting documents; a personal hearing to be fixed within 15 days thereafter; and once reply and hearing are complete the authority to decide the matter on merits within three weeks. These directions constitute a remand for fresh consideration rather than a decision on merits by the Court. [Paras 6]

Petitioner to file reply within 15 days, personal hearing to be fixed within 15 days thereafter, and authority to decide on merits within three weeks after hearing.

Final Conclusion: Writ petition allowed in part: earlier impugned notice dated 28.6.2022 quashed and set aside; matter remanded to the authority to afford the petitioner a reply and personal hearing within specified short timelines and to decide the issue on merits; Court made no adjudication on the substantive merits.

Levy of IGST on ocean freight - unconstitutional and ultra vires - importer made liable to pay tax by notification (reverse charge on ocean freight) - deeming fiction - refund of IGST with statutory interest

Levy of IGST on ocean freight - unconstitutional and ultra vires - Validity of Notification Nos. 8/2017-IT (Rate) and 10/2017-IT (Rate) dated 28.06.2017 (as read with corrigendum) insofar as they impose IGST liability on importers for ocean freight. - HELD THAT: - The court recorded that the vires of the said entries in the notifications had already been considered and declared unconstitutional and ultra vires by this Court in Mohit Minerals Pvt. Ltd. and that this view was followed in subsequent decisions. The earlier decision was affirmed by the Supreme Court in Civil Application No. 1390 of 2022 dated 19.5.2022. In view of these authoritative pronouncements, the challenge to the notifications in the present petition did not require fresh adjudication and the notifications stand declared ultra vires for the purposes of this petition. [Paras 4, 5]

The impugned notifications imposing IGST on ocean freight were regarded as already declared ultra vires and required no further consideration.

Refund of IGST with statutory interest - importer made liable to pay tax by notification (reverse charge on ocean freight) - Entitlement to refund of IGST paid by the petitioner on ocean freight for imports during the specified period. - HELD THAT: - Having found the notifications to be ultra vires by earlier binding decisions, the court directed that if the IGST collected pursuant to those notifications had been recovered from the petitioner, the competent authority must refund the amount to the petitioner. The court prescribed a time-bound mechanism: refund to be made within six weeks from receipt of the order and to include interest at the statutory rate. The direction is remedial and follows from the concluded invalidity of the notifications and the petitioner's payments reflected in its returns. [Paras 6]

Respondents directed to refund the IGST collected (if recovered) for the period July, 2017 to December, 2019, with statutory interest, within six weeks from receipt of the order.

Final Conclusion: Writ petition allowed: impugned notifications were treated as already declared ultra vires; petitioner is entitled to refund of IGST paid on ocean freight for July, 2017 to December, 2019, with statutory interest, and respondents directed to effect refund within six weeks.

Power to summon under Section 70 of the CGST Act - Summons to produce documents and give evidence - Tax liability of a club prior to insertion of Clause (aa) to Section 7(1) w.e.f. 01.01.2022 - Principle of mutuality

Power to summon under Section 70 of the CGST Act - Summons to produce documents and give evidence - Validity and scope of the summons issued under Section 70 of the CGST Act calling for production of documents and attendance. - HELD THAT: - The Court, on a plain reading of Section 70, held that the provision confers wide power on the proper officer to summon any person whose attendance is considered necessary either to give evidence or to produce documents or other things in an inquiry, in the same manner as a civil court under the Code of Civil Procedure. Given the breadth of Section 70, the Court declined to interfere with the impugned summons and found no legal basis in the writ for quashing the summons at this stage.

The impugned summons under Section 70 is not interfered with and the writ petition is disposed insofar as challenge to the summons is concerned.

Tax liability of a club prior to insertion of Clause (aa) to Section 7(1) w.e.f. 01.01.2022 - Principle of mutuality - Entitlement of the petitioner to contend before the proper officer that the club had no GST liability prior to the amendment effective 01.01.2022. - HELD THAT: - The Court recorded the petitioner's contention that the club, operating on principles of agency and mutuality, was not liable to GST until Clause (aa) was inserted into Section 7(1) effective 01.01.2022, and directed that the petitioner may raise this plea while responding to the summons. The Court emphasised that it is incumbent on the proper officer to take into account the said legal provision and any other plea advanced by the petitioner while making further decisions, thereby leaving the question of pre-amendment tax liability to be examined by the assessing authority.

The question of tax liability prior to 01.01.2022 is left open for the proper officer to consider on the petitioner's response to the summons.

Final Conclusion: Writ petition disposed. The summons issued under Section 70 of the CGST Act is upheld; however, the petitioner is permitted to raise before the proper officer the plea that the club had no GST liability prior to the amendment effective 01.01.2022, and the proper officer shall consider that plea and any other contentions while proceeding further.

Opportunity of being heard under Section 148A(b) of the Income-tax Act, 1961 - order under Section 148A(d) of the Income-tax Act, 1961 - notice initiating proceedings under Section 148 r.w.s. 148A - consideration of replies placed on record before further proceedings - time-bound disposal of reassessment proceedings

Opportunity of being heard under Section 148A(b) of the Income-tax Act, 1961 - consideration of replies placed on record before further proceedings - Whether the Assessing Officer must take on record and consider the replies filed by the petitioner to the show-cause proceedings before proceeding further. - HELD THAT: - The Court recorded that the petitioner did not file a reply to the initial show-cause notice dated 15.03.2022 but subsequently placed on record a reply dated 06.03.2023 and asserted that a further reply dated 17.03.2023 was filed. The Court directed that the AO shall take the reply dated 06.03.2023 into account and, if the 17.03.2023 reply is not on record, grant leave to the petitioner to place it on record; the AO is to consider any such replies before proceeding further in the matter. The Court observed that the show-cause notice, and the order under Section 148A(d), lacked clarity as to the connection between alleged increase in share capital and the transactions with the other party, and therefore the AO must consider the petitioner's responses when deciding the matter. The Court did not adjudicate the merits of the allegations but required that the statutory opportunity of hearing be meaningfully respected by considering the replies before any adjudicatory step is taken.

AO directed to take the replies dated 06.03.2023 and, if necessary, 17.03.2023 on record and consider them before proceeding further.

Time-bound disposal of reassessment proceedings - notice initiating proceedings under Section 148 r.w.s. 148A - Whether the reassessment proceedings should be completed within a specified time-frame and whether any limitation objections are to be raised. - HELD THAT: - Having noted that the period for completing the assessment was approaching, the Court granted a limited, eight-week period to the AO to take a decision in the matter, the period to commence from the date of receipt of a copy of the judgment. The petitioner expressly agreed not to press any objections regarding limitation. The direction is procedural and administrative to ensure expeditious disposal; the Court did not decide the substantive tax issues or the merits of the proposed variation, but imposed a time-bound mandate for the AO to act after considering the replies on record.

AO given eight weeks from receipt of the judgment copy to decide the matter; petitioner will not press limitation objections.

Final Conclusion: Writ petition disposed by directing the Assessing Officer to take on record and consider the petitioner's replies (dated 06.03.2023 and, if not on record, 17.03.2023) before proceeding further, and to decide the reassessment within eight weeks from receipt of the copy of this judgment, the petitioner foregoing limitation objections.

Rectification under Section 154 for correction of excess depreciation - treatment of capital work in progress and capitalization of interest - availability of depreciation limited by period of actual use (less than 180 days) - application of Section 36(1)(iii) concept of disallowance until asset is first put to use

Rectification under Section 154 for correction of excess depreciation - availability of depreciation limited by period of actual use (less than 180 days) - treatment of capital work in progress and capitalization of interest - Validity of proceedings under Section 154 to disallow excess depreciation where evidence showed assets were put to use in February 2007 and therefore eligible for only 50% depreciation for AY 2007-08. - HELD THAT: - The Tribunal's conclusion that proceedings under Section 154 were impermissible because the question whether the assets were put to use earlier was debatable was incorrect. The Assessing Officer's rectification under Section 154 reworked depreciation on the basis of material already on record - the assessee's Own Fixed Assets Register for 2005-06 and 2006-07 showing dates of purchase, installation and put-to-use, certificates from an approved chartered engineer and the Central Excise Department, and the assessee's monthly WIP details indicating capitalization in February 2007. Those documents supported a finding that the machinery was first put to use in February 2007, i.e. for less than 180 days in the assessment year, and therefore only 50% depreciation was permissible. Because the factual position was established by the evidence before the assessing authority and did not require fresh investigation, correcting the earlier allowance by invoking Section 154 was permissible to disallow excess depreciation. The Tribunal erred in setting aside the exercise of rectification on the ground of debatable facts where the documentary evidence furnished by the assessee itself supported the Assessing Officer's conclusion.

Proceedings under Section 154 were correctly initiated and sustained to disallow excess depreciation as the evidence showed the assets were put to use in February 2007, allowing only 50% depreciation for AY 2007-08.

Final Conclusion: The appeal is allowed; the Tribunal's order quashing the rectification under Section 154 is set aside and the Assessing Officer's correction disallowing excess depreciation for AY 2007-08 is upheld.

Escape of income - statutory liabilities reflected in books - order under Section 148A(d) of the Income Tax Act, 1961 - treatment of unpaid statutory dues under Section 43B principles - personal hearing and de novo adjudication

Order under Section 148A(d) of the Income Tax Act, 1961 - statutory liabilities reflected in books - escape of income - Validity of the order dated 30.07.2022 passed under Section 148A(d) insofar as the Assessing Officer failed to consider the petitioner's specific stand and documents regarding statutory liabilities and payments. - HELD THAT: - The Court found that the Assessing Officer's order did not deal with the petitioner's contention that the statutory liabilities shown in the balance sheet were not claimed as expenditure for the year in question and that the said liabilities had been liquidated in the subsequent year. Those factual and legal aspects were not considered in the impugned order. In view of this omission, the Court set aside the order dated 30.07.2022 and directed a fresh adjudication to ensure that the petitioner's contentions and the challans and balance sheet entries are considered afresh with an opportunity of personal hearing. [Paras 11, 12, 13]

Impugned order under Section 148A(d) set aside; matter remitted for de novo consideration and fresh personal hearing.

Treatment of unpaid statutory dues under Section 43B principles - personal hearing and de novo adjudication - Scope of reconsideration and directions on remand. - HELD THAT: - The Court directed that the Assessing Officer will carry out a de novo exercise and accord a personal hearing to the authorised representative of the petitioner. The Assessing Officer is to issue a notice specifying the date and time of the hearing. The remand encompasses consideration of whether the statutory liabilities, as reflected and evidenced, amount to income escaping assessment having regard to the petitioner's submission that the liabilities were paid subsequently and were not claimed as deductions in the relevant year. The Court clarified that the observations made in the order would not affect the merits of the controversy and that the AO must consider the material now on record. [Paras 14, 16]

Matter remanded for de novo adjudication; AO to issue notice for personal hearing and examine the payments and claims in accordance with law.

Final Conclusion: Writ petition disposed of by setting aside the impugned order dated 30.07.2022 under Section 148A(d); the Assessing Officer is directed to re-decide the matter de novo after issuing notice and according an opportunity of personal hearing to the petitioner, with examination of the petitioner's pleaded position and supporting documents regarding statutory liabilities and subsequent payments.

Violation of principles of natural justice - opportunity of hearing - penalty under section 271(1)(c) of the Income Tax Act, 1961 - show-cause notice requiring personal appearance with less than 24 hours' notice - quash and remand for fresh hearing

Violation of principles of natural justice - opportunity of hearing - show-cause notice requiring personal appearance with less than 24 hours' notice - penalty under section 271(1)(c) of the Income Tax Act, 1961 - Validity of the penalty order under section 271(1)(c) of the Act in light of the notice and opportunity of hearing afforded to the petitioner - HELD THAT: - The Court found a substantial breach of principles of natural justice because the show-cause notice dated 28.11.2022 required the petitioner to appear in person or through a duly authorised representative at 11:00 a.m. on 29.11.2022, thereby giving less than 24 hours' notice. The requirement of personal appearance on such short notice, without a practicable opportunity to comply, amounted to denial of a reasonable opportunity to be heard. The record indicated that an adjournment request had been made and was reflected on the Tribunal portal, but the penalty order was passed without regard to that request. In these circumstances the court declined to enter into the merits of the penalty and concluded that the procedure adopted vitiated the penalty order. [Paras 6, 7, 8]

Penalty order dated 30.11.2022 under section 271(1)(c) of the Act quashed and set aside for breach of principles of natural justice; matter remitted for fresh hearing from the stage where it was left.

Quash and remand for fresh hearing - opportunity of hearing - Directions for further proceedings following quashing of the penalty order - HELD THAT: - Having quashed the penalty order for procedural infirmity, the Court directed that an opportunity of hearing be provided to the petitioner from the stage where proceedings stood. The communication to the petitioner for the resumed hearing is to be made within four weeks from receipt of the copy of the order, and the entire proceedings are to be completed within eight weeks thereafter. The Court required cooperation by the petitioner and limited its intervention to procedural correction without adjudicating the substantive question of penalty on merits. [Paras 8, 9]

Proceedings remitted for fresh hearing with specific timelines: communication within four weeks and completion of proceedings within eight weeks; petition disposed accordingly.

Final Conclusion: The High Court quashed the penalty order dated 30.11.2022 imposed under section 271(1)(c) for AY 2010-11 for breach of natural justice (short notice requiring personal appearance), and remitted the matter for fresh hearing from the stage it was left with directions to communicate within four weeks and conclude proceedings within eight weeks.

Exercise of revisional power under Section 263 of the Income Tax Act - Requirement of satisfaction based on correct and verifiable facts for invoking Section 263 - Scope of "record" in explanation (1)(b) to Section 263 - Claim under Section 54B and necessity of reflection in return for exemption - Interference by the Tribunal with a revisional order

Condonation of delay - Whether the delay of 82 days in filing the appeal should be condoned. - HELD THAT: - The affidavit filed in support of the application to condone delay was examined and the Court was satisfied that sufficient cause had been shown by the appellant/revenue for the delay. On that basis the application to condone the delay was allowed and the delay in filing the appeal was condoned.

Delay of 82 days in filing the appeal condoned; appeal admitted for hearing.

Exercise of revisional power under Section 263 of the Income Tax Act - Requirement of satisfaction based on correct and verifiable facts for invoking Section 263 - Scope of "record" in explanation (1)(b) to Section 263 - Claim under Section 54B and necessity of reflection in return for exemption - Interference by the Tribunal with a revisional order - Whether the Tribunal was justified in setting aside the Principal Commissioner of Income Tax's exercise of jurisdiction under Section 263. - HELD THAT: - The Tribunal examined whether the twin tests for invoking Section 263 were satisfied and found that the foundational basis for the PCIT's invocation of Section 263 was absent. The Tribunal noted that the assessee had not claimed exemption under Section 54B in the return or computation, and that the PCIT did not record satisfaction based on a correct and verifiable set of facts demonstrating entitlement to Section 54B relief or agricultural use of the land. The Tribunal also interpreted the term "record" in explanation (1)(b) to include documentary evidence before the assessing officer and material submitted in response to the show-cause notice, requiring the PCIT to consider such documents before assuming revisional jurisdiction. Applying these findings, the Tribunal concluded that the PCIT's exercise of jurisdiction under Section 263 was erroneous.

Tribunal's interference with the PCIT's Section 263 order upheld; PCIT's exercise of jurisdiction under Section 263 held to be unjustified.

Substantial question of law - Whether any substantial question of law arises from the Tribunal's decision to be considered in the present appeal. - HELD THAT: - Having considered the Tribunal's factual and legal conclusions about the absence of necessary satisfaction by the PCIT, the court found that the matter involved no substantial question of law warranting interference. The Tribunal's fact-based enquiry and conclusions on the mandatory requirements for invoking Section 263 were treated as determinative and not as raising substantial legal questions for appellate consideration.

No substantial question of law arises; appeal dismissed.

Final Conclusion: The application for condonation of delay is allowed. On merits, the Tribunal correctly set aside the PCIT's exercise of jurisdiction under Section 263 as lacking a correct and verifiable factual basis (including absence of any claim under Section 54B in the return), no substantial question of law arises, and the revenue's appeal is dismissed; the related stay application is closed.

Manufacturing loss in job-work conversion - valuation of excess stock discovered in survey - survey under section 133A - evidentiary value of statements recorded during survey - deduction for impurities, stones and non-gold components in valuation - reconciliation with books of account

Manufacturing loss in job-work conversion - manufacturing loss - Validity and quantum of addition on account of manufacturing loss (wastage) in conversion of old gold into new gold jewellery - HELD THAT: - The Assessing Officer applied a 15% manufacturing loss on 7,071.590 gms of old gold to compute an addition of 1,060.738 gms; the Commissioner (Appeals) confirmed that addition. The assessee contended that conversion on job-work basis involves purification and addition of copper so that weight loss is negligible. The Tribunal accepted that some loss is inevitable in conversion and, on the material before it and the nature of the business, reduced the presumed manufacturing loss to 7.5% instead of 15%. The Tribunal therefore directed the Assessing Officer to sustain the addition but to compute it applying the 7.5% rate, setting aside the higher rate applied by the authorities below. [Paras 7]

Addition on account of manufacturing loss sustained but reduced to 7.5% for computation of income; grounds 3, 4 and 5 partly allowed.

Valuation of excess stock discovered in survey - survey under section 133A - evidentiary value of statements recorded during survey - deduction for impurities, stones and non-gold components in valuation - reconciliation with books of account - Sustainability of addition made by AO for difference in stock based on survey valuation and correctness of rate adopted for valuation of excess gold jewellery - HELD THAT: - Undisputedly excess jewellery was found at survey (13,262 gms) and the assessee offered 12,810.920 gms in the return, with a reconciliation and supporting books submitted. The AO revalued the excess by converting 22K jewellery into equivalent 24K bullion and applied a higher per gram rate, ignoring the presence and value of precious/semi precious stones and other non gold components. The Tribunal held that statements recorded during survey are not conclusive evidence and, on the particulars and reconciliations produced from books of account (which the AO did not displace), the higher valuation adopted by the AO could not be sustained. The Tribunal therefore set aside the addition and deleted the impugned valuation adjustment. [Paras 17]

Addition of Rs.33,90,758/- arising from AO's valuation of excess stock deleted; grounds 6 to 10 allowed.

Final Conclusion: The appeal is partly allowed: the manufacturing loss addition is sustained but to be computed at 7.5% (reduction from 15%), and the addition on account of valuation of excess stock found in survey is deleted; other general grounds need no adjudication.

Disallowance under section 40(a)(ia) - Form 15G/15H - procedural filing and evidentiary verification - verification by Assessing Officer and opportunity of hearing - income from other sources - alleged double taxation

Disallowance under section 40(a)(ia) - Form 15G/15H - procedural filing and evidentiary verification - verification by Assessing Officer and opportunity of hearing - Whether the disallowance of interest expenditure under section 40(a)(ia) for non-furnishing of Form 15G/15H can be sustained and what further proceedings are required. - HELD THAT: - The Tribunal noted that no TDS was deducted by the payers and that no supporting documents were placed before the Assessing Officer at the assessment stage. The Tribunal referred to precedent holding that where payees furnish Form 15G/15H, disallowance under section 40(a)(ia) may not be warranted and that filing of those forms is procedural and requires verification. Given the materials placed before the Tribunal, it directed the assessee to furnish the alleged Form 15G/15H to the Assessing Officer and directed the Assessing Officer to carry out necessary verification of the forms and the payees' tax filings, after affording the assessee an opportunity of being heard. On that basis the Tribunal did not decide the disallowance finally on merits but remitted the matter for verification and fresh consideration by the Assessing Officer. [Paras 4]

Grounds relating to disallowance under section 40(a)(ia) are allowed for statistical purposes and remitted to the Assessing Officer for verification of Form 15G/15H and reconsideration after affording opportunity of hearing.

Income from other sources - double taxation - verification by Assessing Officer and opportunity of hearing - Whether the addition treated as income from other sources resulted in double taxation and required reconsideration. - HELD THAT: - The Tribunal observed that the assessee's returned loss figure, adopted for computation, may already have taken into account the income from other sources, raising a possibility of double taxation. The Tribunal did not adjudicate the merits but directed the Assessing Officer to verify the contention and consider the claim in accordance with law, implying remand for factual and legal verification. [Paras 5]

Ground concerning alleged double taxation under the head 'Income from Other Sources' is remitted to the Assessing Officer for verification and decision in accordance with law.

Final Conclusion: The appeal is allowed for statistical purposes: the disallowance under section 40(a)(ia) and the addition under 'Income from Other Sources' were not finally decided on merits but remitted to the Assessing Officer for verification of the Form 15G/15H and the alleged double taxation respectively, with directions to afford the assessee an opportunity of being heard and to decide both matters in accordance with law.

Revision under section 263 - Erroneous assessment causing prejudice to Revenue - Section 144 best judgment assessment - Independent application of mind - Assessee's failure to prove identity, genuineness and creditworthiness - Scope of Explanation (2)(a) and (b) to section 263 - Exclusion of s.263 where matter has been considered and decided in appeal

Revision under section 263 - Erroneous assessment causing prejudice to Revenue - Section 144 best judgment assessment - Scope of Explanation (2)(a) and (b) to section 263 - Independent application of mind - Validity of PCIT's exercise of revisionary jurisdiction under section 263 to set aside the AO's section 144 assessment as erroneous and prejudicial to Revenue. - HELD THAT: - The Tribunal upheld the PCIT's exercise of revisionary jurisdiction. There is no statutory prohibition on initiating section 263 proceedings on the basis of proposals from field authorities provided the prescribed authority applies its independent mind; the record does not show mere blind acceptance of proposals. The Assessing Officer had completed a best judgment assessment under section 144 after observing that the assessee failed to furnish cogent evidence to prove identity, genuineness and creditworthiness, yet made only partial disallowances where fuller enquiry was warranted. Explanation (2)(a) and (b) to section 263 (inserted w.e.f. 01.06.2015) treat framing of an assessment without due enquiries and verification or allowing relief without enquiry as circumstances rendering an assessment erroneous and prejudicial to Revenue. Reliance on precedents recognising that assessments made without detailed enquiries can be revised under section 263 was accepted. On these facts the PCIT was justified in holding the assessment erroneous and issuing revision directions. [Paras 4]

PCIT's revision under section 263 was valid and the revision directions were upheld.

Exclusion of s.263 where matter has been considered and decided in appeal - Revision under section 263 - Whether pendency of the assessee's appeal before the Commissioner (Appeals) precluded the PCIT from exercising revisionary power under section 263. - HELD THAT: - The Tribunal rejected the contention that pendency of appeal before the CIT(A) barred exercise of section 263. The exclusion applies only to matters that have been considered and decided in the appeal. There was no material to show that the CIT(A) had considered or decided the grievances which formed the basis for revision. Therefore the pendency of an appeal did not oust the PCIT's jurisdiction in the present case. [Paras 5]

Pendency of appeal before CIT(A) did not bar PCIT from invoking section 263 in respect of matters not considered and decided in that appeal.

Section 144 best judgment assessment - Assessee's failure to prove identity, genuineness and creditworthiness - Whether directing the Assessing Officer to finalise proceedings under section 144 as a consequence of revision caused prejudice to the assessee. - HELD THAT: - The Tribunal found no prejudice to the assessee from the PCIT's direction to finalise proceedings under section 144 because the Assessing Officer had already made findings that the assessee failed to prove the genuineness and creditworthiness of the challenged claims and had applied section 144 assessment accordingly. Given those findings and the nature of the assessment already framed, the consequential direction did not result in additional injustice to the assessee. [Paras 6]

PCIT's direction to the AO to finalise proceedings under section 144 did not prejudice the assessee and was not erroneous.

Final Conclusion: The Tribunal dismissed the assessee's appeal and upheld the PCIT's revision order under section 263 in respect of the AO's section 144 assessment for AY 2017-18, rejecting objections based on reliance on field proposals, pendency of appeal, and prejudice from consequential directions.

Unexplained cash u/s 69A - search and seizure under section 132 - onus to explain cash found - evidentiary value of statements of company employees - verification of directors' statements on remand

Unexplained cash u/s 69A - onus to explain cash found - evidentiary value of statements of company employees - verification of directors' statements on remand - Addition of Rs.9,05,120/- sustained by CIT(A) in respect of cash found at time of search remanded to Assessing Officer for fresh adjudication - HELD THAT: - The Tribunal noted that the Assessing Officer made additions under unexplained cash u/s 69A largely on the basis of the statement of the company's accountant recorded during search, and that neither the assessment order nor earlier proceedings disclose whether the statements of the directors-who alone could explain personal and group cash kept at the premises-were recorded or whether they were asked about the cash. Relying on a coordinate-bench decision in Ankit Biscuits (P) Ltd where a similar addition was restored to the AO to verify whether the director had been examined and what he stated, the Tribunal observed that the matter requires verification of the directors' statements and fresh consideration by the Assessing Officer. The Tribunal directed the AO to examine the issue afresh, verify whether statements of the directors were recorded under section 132(4) or during assessment, and if the directors admitted the cash belonged to family members or other entities, to delete the addition as appropriate, after giving the assessee opportunity of being heard. The Tribunal therefore did not adjudicate the addition on merits but remanded the matter for fact-finding and decision in accordance with law. [Paras 12, 13]

Issue restored to the file of the Assessing Officer for fresh adjudication after verification of the directors' statements and after affording opportunity of being heard.

Final Conclusion: Appeal allowed for statistical purposes; the addition sustained by the CIT(A) is not finally adjudicated and the issue is remitted to the Assessing Officer to verify directors' statements and decide afresh in accordance with law after giving the assessee an opportunity of being heard.

Deduction under Section 80P(2)(a)(iv) - deduction under Section 80P(2)(d) - allowance of cooperative society income - verification by Assessing Officer and opportunity of hearing

Deduction under Section 80P(2)(d) - allowance of cooperative society income - Deductibility of interest and dividend income of Rs. 96,371/- under Section 80P(2)(d). - HELD THAT: - The Tribunal observed that the assessee claimed interest and dividend income of Rs. 96,371/- from other cooperative societies in the computation of income. The Tribunal recorded that this component is allowable under Section 80P(2)(d) and that the issue is covered by binding decisions of the Division Bench of the Tribunal and the Hon'ble Jurisdictional High Court. Consequently, the Assessing Officer was directed to verify whether the interest and dividend income was in fact earned from cooperative societies and, if so, to allow the deduction. The direction preserves the requirement of factual verification while recognizing the legal entitlement under the cited precedents. [Paras 6]

The matter is remanded to the Assessing Officer to verify receipt from cooperative societies and allow the deduction under Section 80P(2)(d) if so verified.

Deduction under Section 80P(2)(a)(iv) - verification by Assessing Officer and opportunity of hearing - Allowability of deduction of Rs. 7,18,939/- under Section 80P(2)(a)(iv). - HELD THAT: - The Tribunal found that the assessee's papers did not furnish a complete bifurcation or sufficient details to enable an adjudication of the claimed deduction under Section 80P(2)(a)(iv). Accordingly, the Tribunal restored the matter to the file of the Assessing Officer for fresh verification and directed the assessee to furnish complete details and evidence, including bifurcations, and mandated that the Assessing Officer grant a reasonable and fair opportunity of hearing before passing order. No final decision on the merits was recorded by the Tribunal. [Paras 7]

The claim under Section 80P(2)(a)(iv) is remanded to the Assessing Officer for verification on production of complete details and after affording opportunity of hearing.

Final Conclusion: The appeal is allowed for statistical purposes; the deduction claimed under Section 80P(2)(d) is recognised as legally allowable subject to verification by the Assessing Officer, and the claim under Section 80P(2)(a)(iv) is remanded for fresh verification on production of full details and after affording hearing.

Reopening of assessment - escapement of income - reassessment under section 147 r.w.s. 143(3) - specific trust-taxation in the hands of beneficiaries - live link between trust income and beneficiaries' returns - invalid reassessment

Reopening of assessment - escapement of income - reassessment under section 147 r.w.s. 143(3) - Reopening of assessment and validity of reassessment for alleged escapement of income. - HELD THAT: - The Tribunal examined the reasons recorded for issue of notice under section 148 and the material before the Assessing Officer. The AO had recorded belief of escapement because the trust had not filed a return and there was alleged lack of a live link between rental income of the trust and amounts shown by beneficiaries; however the record (including returns of beneficiaries) showed that beneficiaries had declared their respective shares of rental income as per the trust deed. The Tribunal found that a direct live link existed between the rental income received by the trust and the income shown by the beneficiaries, and therefore there was no escapement of income warranting reopening. On this basis the Tribunal held the reassessment completed under section 143(3) r.w.s. 147 to be bad in law and liable to be quashed. [Paras 6, 7]

Reopening of the assessment was invalid; the reassessment under section 143(3) r.w.s. 147 is quashed for AY 2010-11.

Specific trust-taxation in the hands of beneficiaries - live link between trust income and beneficiaries' returns - invalid reassessment - Whether the rental income could be taxed in the hands of the trust despite beneficiaries having declared their shares. - HELD THAT: - The Tribunal considered the nature of the trust (specific trust) and the fact that beneficiaries had filed returns declaring their respective shares of rental income and claimed TDS credits. Given that the beneficiaries' returns were on record and showed the income in accordance with the trust deed, the Tribunal concluded that the same income could not properly be treated as escaping assessment in the hands of the trust. Consequently, taxing the income again in the hands of the trust as a basis for reassessment was unsustainable. [Paras 3, 7]

Since beneficiaries had declared their shares and a live link existed, the income could not be reassessed in the hands of the trust; the reassessment is unsustainable.

Final Conclusion: The appeal is partly allowed: the reassessment for AY 2010-11 completed under section 143(3) r.w.s. 147 is set aside and quashed because the reopening was invalid-beneficiaries had declared their shares of rental income showing a live link and there was no escapement of income.

Jurisdiction of appellate authority - reopening of assessment - reason to believe - finding necessary for disposal of appeal - unabsorbed depreciation - carry forward of depreciation - ready-to-use

Jurisdiction of appellate authority - reopening of assessment - finding necessary for disposal of appeal - reason to believe - Whether the Commissioner (Appeals) exceeded his jurisdiction by directing the Assessing Officer to consider reopening assessments for years other than AY 2011-12 (specifically AY 2010-11 and AY 2012-13 onwards). - HELD THAT: - The Tribunal considered whether the first appellate authority could direct remedial action for years other than the year before it. The court observed that an appellate authority's jurisdiction is generally confined to the assessment year under appeal and it cannot issue directions for other years unless a finding as to those years is necessary for disposing of the appeal. However, where the appellate authority records a factual finding for the year under appeal which may furnish a basis for the Assessing Officer to reopen other years, that finding does not amount to an impermissible enhancement of jurisdiction. Reopening of assessments for other years remains subject to the statutory test of 'reason to believe' and may be independently initiated by the AO on the basis of material or findings. The Court further noted absence of any factual basis in the record to support the assessee's contention that earlier years had attained finality in a manner that precluded reopening, and emphasised precedent establishing that challenge to denial of set-off normally arises in the year in which the set-off is denied. Applying these principles to the facts, the Court held that the direction to the AO to consider reopening the impacted years was within the appellate authority's competence and did not constitute excess of jurisdiction. [Paras 4]

Direction to the AO to consider reopening assessments for AY 2010-11 and AY 2012-13 onwards was not an excess of jurisdiction and was validly made.

Unabsorbed depreciation - carry forward of depreciation - ready-to-use - Whether there was factual or legal basis to allow carry forward of the claimed unabsorbed depreciation for the earlier years (notably AYs. 1998-99 to 2009-10) and to permit set-off in AY 2011-12. - HELD THAT: - On the merits the Court endorsed the first appellate authority's factual finding that the assets were not kept in a state of readiness for use in the intervening years and that there was no credible material to establish continuity or resumption of the earlier business. The Tribunal's earlier finding that no material was placed to dispel CIT(A)'s conclusion was also upheld. The Court noted that carry forward of unabsorbed depreciation presupposes a claim and determination of depreciation in the earlier year; where no such claim or allowance exists for intervening years, the question of carry forward does not arise. The court observed that the CIT(A)'s direction to verify filing of returns for earlier years and to take remedial action was a proper consequence of his findings and that those findings could legitimately be relied upon by the Revenue or contested by the assessee in proceedings for the relevant years. [Paras 2, 4, 5]

CIT(A)'s factual and legal findings disallowing carry forward of unabsorbed depreciation for the intervening years are endorsed; there was no basis to allow set-off in AY 2011-12 in respect of those earlier years.

Final Conclusion: The appeal is dismissed: the Tribunal's endorsement of the appellate authority's factual findings on the absence of readiness of assets and non-entitlement to carry forward unabsorbed depreciation is affirmed, and the Commissioner (Appeals) did not exceed his jurisdiction in directing the Assessing Officer to consider reopening the assessments for the impacted earlier years; reopening remains subject to statutory requirements and available to be contested in proceedings for those years.

Doctrine of merger - merger of assessment order with rectification order - rectification under section 154 r.w.s. 143(3) - grant of credit for Tax Deducted at Source - levy of interest under section 234C - interest on refund under section 244A

Rectification under section 154 r.w.s. 143(3) - grant of credit for Tax Deducted at Source - doctrine of merger - Whether the grievance relating to non-grant of TDS credit to the extent claimed merged with the rectification order dated 09.06.2022 and is thereby not maintainable before the CIT(A). - HELD THAT: - The Tribunal examined the rectification order dated 09.06.2022 and found that the rectification application only raised the issue of non-granting of correct TDS credit. The AO, by the rectification order, enhanced TDS credit but did not grant the entire claimed credit, leaving a shortfall. On that basis the Tribunal held that the grievance in ground 4 had merged with the subsequent rectification order and therefore the appeal against the original assessment order could not be entertained on that ground. The Tribunal observed that if the assessee remains aggrieved by non-granting of the remaining TDS credit, the remedy lies in filing a fresh rectification application. [Paras 6]

Ground 4 and its sub-grounds are rejected as merged with the rectification order; assessee may file fresh rectification if so advised.

Levy of interest under section 234C - interest on refund under section 244A - merger of assessment order with rectification order - Whether the CIT(A) was justified in dismissing grounds relating to incorrect levy of interest under section 234C and non-grant of interest under section 244A on the basis that the assessment order merged with the rectification order. - HELD THAT: - The Tribunal found that the issues of incorrect levy of interest under section 234C and non-grant of interest under section 244A were not the subject matter of the rectification application and therefore were not dealt with in the order dated 09.06.2022. Consequently, the CIT(A) erred in treating those grounds as merged with the rectification order and dismissing them in limine. The Tribunal restored these grounds to the file of the CIT(A) and directed that the CIT(A) decide them on merits after affording the assessee a reasonable opportunity of hearing. [Paras 7]

Grounds 2 and 3 are restored to the files of the CIT(A) for fresh adjudication after hearing the assessee.

General ground - Whether the general ground (Ground 1) called for specific adjudication. - HELD THAT: - The Tribunal noted that Ground 1 is of a general nature without specific contention requiring separate adjudication and accordingly no specific adjudication was necessary. [Paras 8]

Ground 1 is rejected.

Final Conclusion: The appeal is partly allowed for statistical purposes: the challenge to non-grant of certain TDS credit is dismissed as merged with the rectification order (remedy by fresh rectification), whereas the grounds relating to interest under section 234C and interest under section 244A are restored to the CIT(A) for fresh adjudication after affording opportunity of hearing; the general ground is rejected.

Ad-hoc disallowance of business expenses - disallowance under section 40(a)(i) for failure to deduct tax at source - application of section 195-obligation to withhold tax on cross border payments - Fees for Technical Services (FTS) - "make available" test under DTAA - reimbursement versus income - cost to cost reimbursements not being taxable receipts - Most Favoured Nation (MFN) clause in DTAA and importation of restrictive scope/rates

Ad-hoc disallowance of business expenses - Whether the Assessing Officer was justified in making an ad hoc disallowance of 10% of certain business expenses. - HELD THAT: - The Tribunal found that the assessee had produced project wise ledgers, sample invoices, agreements and other supporting documents on the record and that many items (insurance, rent allocation, other expenses) were incurred pursuant to contractual obligations and substantiated. The AO did not point to specific defects in the documents or request production of particular vouchers during assessment; the assessee had furnished sufficient evidence before the DRP and in the paper book. Reliance was placed on precedents that ad hoc disallowances are impermissible where no specific documentary defects are identified. On the factual material before it the Tribunal concluded that the AO's 10% ad hoc disallowance was unjustified. [Paras 7, 8, 9, 10, 11]

Ad hoc disallowance of 10% of expenses set aside; appeal allowed on this ground.

Disallowance under section 40(a)(i) for failure to deduct tax at source - application of section 195-obligation to withhold tax on cross border payments - Whether payments of professional fees to Euroestudios India Pvt. Ltd. and to TPF Getinsa Euroestudios S.L. (Spain) were liable to disallowance under section 40(a)(i) for failure to deduct tax at source under section 195. - HELD THAT: - For payments to Euroestudios India Pvt. Ltd., the Tribunal noted that the actual amount paid and recorded (withholding tax deducted and deposited) was less than the figure used by the AO, and that TDS compliance was substantiated by ledger entries and Form 16; therefore no addition was warranted. As regards amounts routed through the assessee (receipts from Indian service providers credited as other income and corresponding payments to head office), the Tribunal held that the amounts were pass through receipts and corresponding reimbursements/payments, evidenced by MOUs and invoices, and hence deductible. On the characterisation as FTS, the Tribunal applied the DTAA analysis: there was no material to show that technical knowledge/know how was "made available" to the assessee; payments were for services rendered to the ultimate customer and/or were reimbursement items. The MFN/protocol arguments and precedent authorities were considered; the Tribunal concluded that the payments did not attract withholding under section 195 as FTS. [Paras 18, 19, 20, 21, 22]

Additions/disallowances in respect of professional fees to Euroestudios India Pvt. Ltd. and to TPF Spain under section 40(a)(i)/section 195 deleted.

Reimbursement versus income - cost to cost reimbursements not being taxable receipts - disallowance under section 40(a)(i) for failure to deduct tax at source - Whether salary payments reimbursed to TPF Getinsa Euroestudios S.L. (Spain) for expatriates deployed to the Indian project office were taxable receipts in the hands of the recipient attracting withholding under section 195 and disallowance under section 40(a)(i). - HELD THAT: - The Tribunal examined the service agreement which provided that head office invoices internal costs and reimbursable costs (including expatriate salaries) on a pure cost to cost basis with no markup. The payments were evidentially reimbursement of actual salary costs incurred by the head office for employees deputed to assist in the Indian contracts; invoices, employee details and time records were available on record. Relying on precedent and the principle that reimbursements without profit element do not constitute income, and on decisions on the "pure reimbursement" character and on the "make available" test for FTS, the Tribunal concluded that these were not taxable receipts in the hands of the non resident and therefore did not attract withholding obligation under section 195 nor disallowance under section 40(a)(i). [Paras 31, 32, 33, 34, 35]

Disallowance in respect of expatriate salary reimbursements deleted; no withholding under section 195 warranted.

Disallowance under section 40(a)(i) for failure to deduct tax at source - Whether small reimbursements (bank charges and sundry expenses) paid to the associate concern required withholding and were liable to disallowance. - HELD THAT: - The Tribunal observed that these were reimbursements for travelling, hotel and bank charges borne by the associate on behalf of the Indian project office and that no TDS was applicable on such reimbursements. On review of the expense details the Tribunal found no basis for disallowance. [Paras 12, 13]

No disallowance called for in respect of bank charges and other small reimbursed expenses; addition deleted.

Final Conclusion: The Tribunal allowed the assessee's appeal in full: the ad hoc 10% disallowance was set aside and all additions/disallowances made under section 40(a)(i)/for failure to deduct tax under section 195 in respect of professional fees, expatriate salary reimbursements and related small expenses were deleted.

Admission of additional evidence on appeal - Rule 46A of the Income tax Rules, 1962 - Section 250(1) and Section 250(2) of the Income tax Act, 1961 - principles of natural justice - remand report - co terminus powers of Commissioner (Appeals) and Assessing Officer

Admission of additional evidence on appeal - Rule 46A of the Income tax Rules, 1962 - Section 250(1) and Section 250(2) of the Income tax Act, 1961 - principles of natural justice - remand report - Whether the Commissioner of Income Tax (Appeals) erred in admitting and accepting evidence filed for the first time on appeal without calling for remand report/comments from the Assessing Officer and without providing the Assessing Officer an opportunity of hearing, thereby violating Rule 46A and Sections 250(1) and 250(2) and principles of natural justice. - HELD THAT: - The Tribunal found as an admitted fact that statutory notices and a show cause notice were issued by the Assessing Officer and were received at the assessee's registered email, but no replies or evidence were filed before the Assessing Officer and an ex parte assessment under section 144 was passed. The assessee filed evidences and explanations for the first time before the Commissioner (Appeals), who admitted and accepted them and granted substantial relief without calling for a remand report or comments from the Assessing Officer and without issuing notice to enable the Assessing Officer to represent his case. The Tribunal held that admission and acceptance of such additional evidence by the Commissioner (Appeals) without seeking the Assessing Officer's comments and without granting the Assessing Officer an effective opportunity of hearing amounted to breach of Rule 46A of the Rules and of Sections 250(1) and 250(2), and violated the principles of natural justice. The Tribunal emphasised that the Commissioner (Appeals) must ensure that both the assessee and the Assessing Officer, being litigating parties, are given proper opportunity and that material admitted on appeal should ordinarily be verified through remand or by obtaining the AO's comments before being accepted. The Tribunal observed that it did not decide the merits of the additions themselves but confined its order to setting aside the appellate order on these procedural grounds and restoring the matter to the file of the Commissioner (Appeals) for fresh adjudication in accordance with law. [Paras 6]

Appellate order of the Commissioner (Appeals) set aside on grounds of procedural infirmity; matter restored to the file of the Commissioner (Appeals) for fresh adjudication after affording proper and adequate opportunity of hearing to both the assessee and the Assessing Officer and after obtaining remand report/comments as required by Rule 46A and Sections 250(1) and 250(2).

Final Conclusion: The Revenue's appeal is allowed for statistical purposes: the CIT(A)'s order is set aside and the matter is remitted to the CIT(A) for fresh adjudication after giving the Assessing Officer and the assessee proper opportunity of hearing and complying with Rule 46A and Sections 250(1) and 250(2); no pronouncement is made on the merits of the additions.

Condonation of delay - Limitation for filing review petition - Requirement of particularised explanation for each day of delay - Bona fide effort and duty of government departments to explain delay

Condonation of delay - Limitation for filing review petition - Requirement of particularised explanation for each day of delay - Whether the delay of 470 days in filing the review petition should be condoned - HELD THAT: - The Court examined the sequence of events relied upon by the review petitioner and found multiple deficiencies in the explanation for delay. The respondents first filed a Special Leave Petition belatedly and that SLP was dismissed; the review period had already expired. The review petitioner failed to specify the date on which it became aware of the dismissal of the SLP or to explain delay in acquiring that knowledge. The account of internal approvals (before the Commissioner and Chief Commissioner), the purported transfer of the officer and loss and subsequent tracing of documents were asserted without particulars or timelines. The Court noted unexplained gaps between the asserted approvals and the eventual filing (including a two month span after final approval), and reiterated the settled requirement that each day of delay must be explained. Reliance was placed on the principle that government departments bear a special obligation to furnish reasonable and acceptable explanations and that condonation is exceptional, not routine. In the absence of a particularised, credible justification and bona fide efforts to explain and minimise delay, the application for condonation could not be allowed. [Paras 5, 6, 7, 8, 10]

Application for condonation of delay dismissed; accordingly, review petition dismissed.

Final Conclusion: The application for condonation of delay was dismissed for want of a satisfactory, particularised explanation for the 470 day delay, and the review petition was consequently dismissed.

Summary order. Special Leave Petition dismissed; delay condoned; impugned judgment and order of the High Court not interfered with; pending applications disposed of.

Provisional release of detained imports on conditions - payment of duty assessed under Section 18 of the Customs Act, 1962 - bank guarantee for differential duty - furnishing bond for differential duty - personal undertaking by proprietor for payment of assessed and differential duty - expeditious completion of investigation - binding effect of earlier Division Bench precedent

Provisional release of detained imports on conditions - payment of duty assessed under Section 18 of the Customs Act, 1962 - bank guarantee for differential duty - furnishing bond for differential duty - personal undertaking by proprietor for payment of assessed and differential duty - expeditious completion of investigation - binding effect of earlier Division Bench precedent - Validity of the condition imposed by the customs authority for provisional release of the petitioner's consignment and the appropriate terms for such provisional release. - HELD THAT: - The Court accepted that the facts and issue in the present petition corresponded to those decided by the Division Bench in Besto Tradelink Limited and, on that basis, directed provisional release of the detained magnesite consignment subject to specified conditions. The authority's unilateral condition (as communicated) was superseded by the Court's direction that provisional release be granted provided the petitioner: (a) pays the entire amount of duty as may be assessed under Section 18 of the Customs Act, 1962 as per the Bill of Entry; (b) furnishes a bank guarantee of Rs. 10 lakhs to operate until the investigation is over; (c) submits a bond for differential duty under the Act and Rules; and (d) the proprietor furnishes an undertaking both to the Court and to the competent authority that he will personally pay the assessed duty if the proprietary firm cannot, will pay any differential duty if the consignment is ultimately found to have originated from Pakistan, and possesses sufficient assets to meet such liabilities. The Court declined to express any opinion on the merits of the underlying customs inquiry and directed that the investigation be completed expeditiously, preferably within 12 weeks. The direction was founded on the principle that an earlier Division Bench decision on identical facts governs the present case, warranting provisional relief subject to safeguards to protect fiscal interest.

Provisional release of the goods ordered on compliance with the Court-prescribed conditions; no expression of opinion on merits; investigation to be completed expeditiously.

Final Conclusion: Writ petition disposed by directing provisional release of the detained consignment on the specified conditions (payment of assessed duty, bank guarantee, bond for differential duty, proprietor's undertaking), with a direction for expeditious completion of the investigation; Court refrained from adjudicating merits.

Pre-deposit requirement under Section 129-E of the Customs Act, 1962 - non-discretionary nature of the substituted provision - effect of substitution of a statutory provision - scope of review limited to error apparent on the face of the record

Scope of review limited to error apparent on the face of the record - Review petition against the High Court's earlier order dismissing writ petition for non-compliance with pre-deposit requirement is not maintainable as there is no error apparent on the face of the record. - HELD THAT: - The Court considered whether the order dated 07.09.2020 in W.P. No.12344/2020 warranted review on the ground that an earlier Supreme Court decision (Government of Andhra Pradesh & Others v. P. Laxmi Devi) was not taken into account. Having perused the record and relevant decisions, including the later Supreme Court pronouncement in Chandra Shekhar Jha v. Union of India, the Court held that the scope of review is limited and no error apparent on the face of the order under review was demonstrated. The earlier order had expressly referred to Section 129E and the legal position as expounded by the Supreme Court in Chandra Shekhar Jha reinforces that the challenged order did not suffer from any demonstrable mistake of law or fact warranting review.

Review petition dismissed for being devoid of merit; no error apparent on the face of the order.

Pre-deposit requirement under Section 129-E of the Customs Act, 1962 - non-discretionary nature of the substituted provision - effect of substitution of a statutory provision - Applicability and effect of the substituted Section 129E - the pre-deposit obligation is mandatory in nature after substitution and the discretionary power to reduce pre-deposit has been removed. - HELD THAT: - Relying on the Supreme Court's reasoning in Chandra Shekhar Jha, the Court observed that the substituted provision altered the earlier regime by reducing the percentage required for pre-deposit but simultaneously removing the appellate authority's discretion to scale down the pre-deposit. The first proviso limits the maximum amount payable, and the substitution effects a repeal of the earlier provision and re-enacts the new regime. Accordingly, the petitioner's reliance on the earlier pre-substitution proviso (as interpreted from earlier decisions) was not found persuasive where the order sought compliance after substitution and the appeal was filed post-substitution. The Court found no basis to read back the discretionary benefit of the earlier provision into appeals falling under the substituted Section 129E.

Section 129E as substituted is applicable; its pre-deposit requirement is not discretionary and must be complied with in accordance with the substituted provision.

Final Conclusion: The review petition is dismissed. The High Court's earlier order which applied the substituted Section 129E stands affirmed; the pre-deposit obligation under the substituted provision is mandatory and the petitioner has not shown any error warranting review.

Anticipatory bail under Section 438 CrPC - custodial interrogation - forgery of share transfer documents - FSL report as investigative evidence - court's restraint from detailed evidence analysis at bail stage - conditions attendant to grant of anticipatory bail (joining investigation, non tampering, travel restriction) - security/interim deposit as condition for interim protection

Anticipatory bail under Section 438 CrPC - court's restraint from detailed evidence analysis at bail stage - conditions attendant to grant of anticipatory bail (joining investigation, non tampering, travel restriction) - Anticipatory bail applications of the applicants were allowed subject to conditions. - HELD THAT: - The High Court examined the material on record, the scope of Section 438 CrPC and binding principles that a court should avoid undertaking a detailed analysis of evidence at the bail stage. While noting serious allegations relating to transfer of shares and various documentary discrepancies, the Court held that much of the contested material (including the FSL report) and other investigative leads were already in the possession of the investigating agency and that the Additional Sessions Judge had impermissibly engaged in a merits level scrutiny when dismissing the earlier bail applications. Balancing the applicants' liberty against the societal interest and the progress of investigation, the Court concluded that custodial interrogation was not warranted merely because the applicants had not produced certain documents or had given allegedly evasive replies; there was no convincing material showing a risk of flight or that documents could not be recovered without custody. Accordingly, anticipatory bail was granted on furnishing personal bond and surety and subject to conditions that the applicants join and cooperate with investigation, not tamper with evidence or influence witnesses, and not leave the country without prior permission. [Paras 14]

Bail applications allowed; applicants to be released on bail on furnishing bonds and subject to conditions (join investigation, no tampering/influencing witnesses, court permission for travel abroad).

Custodial interrogation - forgery of share transfer documents - FSL report as investigative evidence - security/interim deposit as condition for interim protection - Custodial interrogation of the applicants was held unnecessary and the previously deposited interim FDR ordered to be released. - HELD THAT: - The Court considered the prosecution's request for custodial interrogation to recover documents and elicit information. It observed that the investigating agency had already conducted a large part of the investigation, possessed the FSL report indicating mismatches in signatures, and had access to documents and leads. The Court held that custodial interrogation cannot be ordered merely because the applicants failed to produce certain original certificates or gave replies described as evasive; there must be convincing material showing that custody is necessary to recover evidence. Given the stage of investigation and absence of a clear risk of flight or obstruction that custody would prevent, custodial interrogation was not warranted. The Court further noted that the interim condition requiring an FDR of Rs. 5 crores should not operate as an indirect denial of relief and therefore directed immediate release of the FDR to the applicant no. 1. [Paras 14]

Custodial interrogation not ordered; interim FDR ordered to be released to applicant no. 1; applicants to comply with bail conditions.

Final Conclusion: Anticipatory bail granted to both applicants subject to furnishing personal bond and surety and compliance with conditions to cooperate with investigation, not to tamper with evidence or leave the country without court permission; custodial interrogation was held unnecessary and the interim deposit directed to be released.

Opportunity of being heard - person interested - intervention in proceedings under section 71(10) - discretionary power of Tribunal under section 71(10) - consideration of financial condition of the company - public interest in proceedings under Rule 73(4)

Opportunity of being heard - person interested - intervention in proceedings under section 71(10) - consideration of financial condition of the company - public interest in proceedings under Rule 73(4) - Whether the ICA Lenders led by Bank of Baroda were entitled to be heard/intervene in the company petition filed under section 71(10) and whether the NCLT's denial of intervention and subsequent order directing redemption/payments without hearing them was correct. - HELD THAT: - The Tribunal examined section 71(10) read with Rule 73(3) (4) and Rule 2(18) of the NCLT Rules and held that the statutory scheme requires giving a reasonable opportunity of hearing to the company and any other person interested. The definition of "person interested" in Rule 2(18) is broad and includes creditors; where the financial condition of the company and an ongoing resolution process are implicated, creditors who are actively engaged in that process (here the ICA Lenders) are important parties. The NCLT ought to have considered the impact of an order for redemption on the company's financial health and on the implementation of the resolution plan; Rule 73(4) expressly requires consideration of the company's financial condition and public interest when directing repayment. Denying the ICA Lenders an opportunity to be heard was therefore an incorrect reading of the statutory requirement and Rules. Applying settled principles on the meaning of "may" and the nature of proceedings, the Appellate Tribunal concluded that the ICA Lenders should have been afforded a hearing before the NCLT passed the impugned orders, particularly given their role in the resolution process and the potential effect of the order on that process. [Paras 21, 30, 31, 32, 33]

Impugned Order II (denying intervention) and Impugned Order I (directing redemption/payment without hearing ICA Lenders) set aside; matter remanded to NCLT, Mumbai to allow intervention of ICA Lenders, hear all parties afresh and pass a reasoned order taking into account the contentions of ICA Lenders and other parties.

Final Conclusion: The appeals are allowed; the NCLT orders dated 27.5.2021 and 21.6.2021 are set aside and the matter is remanded to the NCLT, Mumbai for fresh hearing after permitting intervention by the ICA Lenders and for the Tribunal to pass a reasoned order considering the financial condition of the company, the resolution process and public interest.

Liability of surety co-extensive with principal debtor - date of default for corporate guarantor - commencement of limitation under Article 137 of the Limitation Act - effect of demand/recall notice on guarantor's liability - continuing guarantee and running of limitation - application under Section 7 of the IBC against a corporate guarantor - acknowledgement of liability and Section 18 of the Limitation Act

Liability of surety co-extensive with principal debtor - date of default for corporate guarantor - continuing guarantee and running of limitation - Default in payment by the corporate guarantor is not automatically the same dated default as that of the principal borrower; the date from which limitation runs for the guarantor depends on the terms of the guarantee and whether a demand/recall has been made. - HELD THAT: - The Court examined the definitions of 'debt' and 'default' under the Code and the principles under the Contract Act. While Section 128 recognises that a guarantor's liability is co extensive with the principal debtor, the guarantor's liability and the point from which limitation runs must be ascertained from the guarantee deed. A continuing guarantee may suspend commencement of limitation so long as the account is live and there is no breach by the guarantor, but where the guarantee contemplates payment on demand or a recall/demand notice is required to be issued to the guarantor, limitation against the guarantor does not commence until the guarantor is called upon to pay and commits breach by non payment. Applying these principles to the guarantee deed in the present case, which expressly contemplated a demand/recall notice (including a 60 day period to pay) and contained continuing guarantee language, the Court held that the limitation against the corporate guarantor did not commence on the earlier default date of the principal borrower but from the date on which the bank issued the demand/recall as contemplated by the deed. [Paras 13, 26, 27, 30, 31]

Date of default for the corporate guarantor is governed by the terms of the guarantee; in this case the guarantor's limitation period did not commence on the principal borrower's earlier default date but from the demand/recall made in accordance with the guarantee.

Commencement of limitation under Article 137 of the Limitation Act - effect of demand/recall notice on guarantor's liability - acknowledgement of liability and Section 18 of the Limitation Act - The Section 7 application filed on 17.03.2020 by the bank against the corporate guarantor was not barred by limitation in the facts of this case. - HELD THAT: - Article 137 prescribes a three year limitation from the time the right to apply accrues. The Court accepted that where the guarantee requires a demand and the bank issued a notice dated 03.04.2017 calling upon the guarantor to discharge liabilities within 60 days, the right to initiate proceedings against the guarantor accrued after that demand. The Section 7 application proceeded on the date of NPA and the record contained the demand notice to the guarantor; accordingly the Section 7 filing in March 2020 fell within the applicable period. The Court also noted that acknowledgements (where present) can revive limitation under Section 18, but reliance here was principally on the demand/notice required by the guarantee. [Paras 23, 24, 31, 32, 33]

The bank's Section 7 application dated 17.03.2020 is not time barred against the corporate guarantor on the facts before the Court.

Application under Section 7 of the IBC against a corporate guarantor - effect of procedural default in filing reply before adjudicating authority - The Adjudicating Authority's order admitting the Section 7 application is sustainable. - HELD THAT: - Having found that the Section 7 application was not barred by limitation and that the guarantee and demand notice supported initiation of proceedings against the guarantor, the Tribunal observed no error in admission. The Court also noted procedural aspects: the corporate guarantor failed to file a reply despite opportunity and forfeited the right to reply; the Adjudicating Authority recorded undisputed disbursement of a portion of the loan. On these factual and legal considerations the Tribunal found no infirmity in the order admitting the petition under Section 7. [Paras 32, 33, 34]

The impugned admission order of the Adjudicating Authority stands; the admission is sustainable.

Final Conclusion: Appeal dismissed with direction staying constitution of the Committee of Creditors for one month to enable the appellant to negotiate settlement; if no settlement is reached within one month the IRP may constitute the Committee and proceed in accordance with law.

Existence of financial debt and default - admission of Section 7 application - limitation for Section 7 - date of default/NPA - evidentiary value of One Time Settlement and its rejection - scope of adjudicating authority under Section 7 - satisfaction from records - discretion of adjudicating authority under Section 7

Existence of financial debt and default - evidentiary value of One Time Settlement and its rejection - scope of adjudicating authority under Section 7 - satisfaction from records - Whether the financial creditor proved existence of a financial debt and default so as to justify admission of the Section 7 application. - HELD THAT: - The Tribunal held that the materials placed by the financial creditor - including the One Time Settlement proposal dated 18.12.2021 (and its rejection), records showing the account having been declared NPA, and ancillary documents - established that a financial debt existed and that default had occurred. Applying the principle that the adjudicating authority under Section 7 is to satisfy itself from information-utility records or evidence furnished by the financial creditor, the Tribunal concluded that once satisfied that a default has occurred the application must be admitted unless incomplete. The Tribunal found no legal interdiction to payment or other bar on the debt and was subjectively satisfied on the default on the available records; consequently the Adjudicating Authority acted within law in admitting the petition, appointing an interim resolution professional and declaring moratorium. [Paras 30, 51, 54, 55, 56]

The Section 7 application was properly admitted as the financial debt and default were proved on the records; IRP appointed and moratorium declared.

Limitation for Section 7 - date of default/NPA - Whether the Section 7 application was barred by limitation having regard to the date of default/NPA. - HELD THAT: - The Tribunal accepted the financial creditor's position that the loan account was classified as NPA on 01.06.2019 and noted that the Section 7 petition filed on 27.10.2021 was within the limitation period calculated from that date. The Tribunal rejected the appellant's contention that the stated date of default was incorrect for limitation purposes, holding that the NPA classification date is a valid temporal marker for reckoning default. [Paras 13, 53]

The Section 7 petition was filed within limitation and is not time-barred.

Discretion of adjudicating authority under Section 7 - Whether the admission was arbitrary, lacking reasoned application of mind, or otherwise vitiated by non-application of mind. - HELD THAT: - The Tribunal examined the appellant's allegations of arbitrariness and want of reasoning and found that the Adjudicating Authority applied the correct legal tests - assessing records, noting admission of liability and the rejected OTS proposal, and applying precedent on the limited scope of enquiry under Section 7. The Tribunal concluded that the Adjudicating Authority's subjective satisfaction on default was supported by material on record and there was no legal flaw or arbitrariness in admitting the petition. [Paras 56]

Allegations of arbitrariness and non-application of mind are rejected; the impugned order stands.

Final Conclusion: The appeal is dismissed. The admission of the Section 7 petition was upheld on the findings that financial debt and default were established on the records, the petition was within limitation, and the Adjudicating Authority did not act arbitrarily; IRP appointment and moratorium remain in place.

Distinction between licensee and tenant under Maharashtra Rent Control Act - bar on instituting suits after liquidation and limited right of liquidator to institute proceedings - residuary jurisdiction of the NCLT under Section 60(5)(c) in insolvency/liquidation matters - duties and powers of the liquidator to protect, preserve and realise assets under Section 35 - overriding effect of the Insolvency and Bankruptcy Code under Section 238

Distinction between licensee and tenant under Maharashtra Rent Control Act - Leave and Licence Agreement - Characterisation of the appellant's occupation of the premises as licensee (and thereafter illegal occupant) and not as tenant - HELD THAT: - The admitted contractual position was that a Leave and Licence Agreement existed from 03.08.2016 to 02.08.2019 and was extended by the Resolution Professional from 03.08.2019 to 02.07.2020; no further extension took place. Communications from the liquidator repeatedly referred to the arrangement as a Leave and Licence and demanded licence fees; the appellant's references to 'rent' were loose and inconsistent with earlier admissions. The appellant's letter dated 26.04.2022 acknowledged occupation on a Leave and Licence basis and sought time to vacate after e-auction. In these circumstances the Tribunal found that the relationship was that of licensor and licensee, and that after expiry of the licence the appellant was in illegal possession. The finding rests on the contract terms, the absence of a subsisting licence after 02.07.2020, and the appellant's own admissions in correspondence. [Paras 36, 37, 38, 39, 40]

The appellant was a licensee under the Leave and Licence Agreement and, after expiry of the licence, an illegal occupant - not a tenant covered by the Rent Control Act.

Bar on instituting suits after liquidation and limited right of liquidator to institute proceedings - residuary jurisdiction of the NCLT under Section 60(5)(c) in insolvency/liquidation matters - duties and powers of the liquidator to protect, preserve and realise assets under Section 35 - overriding effect of the Insolvency and Bankruptcy Code under Section 238 - Whether the NCLT had jurisdiction to direct lock and seal of the premises and whether the NCLT was justified in passing the impugned order despite the Small Causes Court's status quo order - HELD THAT: - The liquidator filed I.A. No. 1635 of 2022 under the powers conferred by Section 33(5) and Section 35 to protect and realise assets of the corporate debtor; Section 33(5) bars suits against the corporate debtor in liquidation while permitting the liquidator to institute proceedings with prior approval of the Adjudicating Authority. Section 60(5)(c) gives the NCLT jurisdiction over questions of law or fact arising in relation to liquidation proceedings, and Section 238 confers overriding effect to the Code where inconsistent laws exist. The NCLT noted that the appellant had obtained a status quo order from the Small Causes Court without impleading the liquidator and without placing complete facts; the property formed part of the corporate debtor's assets and the liquidator was required to secure custody pending disposal. Applying these provisions and the factual finding that the appellant was occupying as a licensee/illegal occupant after licence expiry, the Tribunal held that the NCLT had the correct jurisdiction to order the lock and seal and that the impugned order did not require interference. [Paras 43, 44, 48, 61, 62]

NCLT possessed jurisdiction to entertain the liquidator's application and was correct in directing the lock and seal of the premises pending disposal of the application; the impugned order is upheld.

Final Conclusion: Appeal dismissed. The Tribunal affirms that the appellant occupied the premises as a licensee and, post expiry of the licence, as an illegal occupant; the NCLT rightly exercised its jurisdiction under the IBC to direct the liquidator to secure the premises pending disposal of the liquidation related application.

Proviso to Section 45(1) of the PMLA - sick or infirm exception - threshold test under Section 45(1) PMLA - reasonable grounds for believing not guilty and not likely to commit offence - medical ground for bail and adequacy of jail/prosecution medical facilities - risk of tampering with evidence and influencing witnesses as a ground to deny bail - independence of PMLA investigation from the predicate/scheduled offence - overlap of multiple ECIRs and requirement of detailed perusal before deciding duplicity/identity of proceeds

Proviso to Section 45(1) of the PMLA - sick or infirm exception - threshold test under Section 45(1) PMLA - reasonable grounds for believing not guilty and not likely to commit offence - medical ground for bail and adequacy of jail/prosecution medical facilities - risk of tampering with evidence and influencing witnesses as a ground to deny bail - Whether the petitioner is entitled to bail under the proviso to Section 45(1) of the PMLA on medical grounds - HELD THAT: - The Court examined the proviso to Section 45(1) which permits, in the court's discretion, release of a person who is sick or infirm notwithstanding the twin conditions in the main limb. The statute does not define 'sick' or 'infirm', so the condition must be inferred from materials in each case. The court reviewed medical reports and custodial events and noted: the petitioner was earlier granted bail on medical grounds, was reinstated in service and continued working until retirement; he refused a suggested second medical opinion while in custody and withdrew consent for a scheduled surgery that had been fixed while admitted. On the evidence placed before it (including witness statements, WhatsApp chats, and bank/locker material forming a prima facie chain pointing to involvement), the court found a foreseeable risk that, if released, the petitioner - a person of considerable influence - could tamper with evidence and influence witnesses. The court also observed that adequate medical treatment can be provided in custody and that prior decisions recognizing medical grounds were under challenge before the Supreme Court and do not bind the present exercise. Balancing the petitioner's liberty and the broader public interest in protecting the integrity of the investigation, the court exercised its discretion to refuse relaxation of Section 45(1)'s rigour in this case. [Paras 26, 27, 41, 43, 44]

Bail under the proviso to Section 45(1) PMLA on medical grounds refused; application for regular bail dismissed.

Overlap of multiple ECIRs and requirement of detailed perusal before deciding duplicity/identity of proceeds - independence of PMLA investigation from the predicate/scheduled offence - Whether the present ECIR/crime is identical to or barred by the earlier ECIR and supplementary complaint (i.e., whether the present prosecution is a re registration of the same proceeds) - HELD THAT: - The Court declined to decide, at the bail stage, the larger question whether the instant ECIR duplicates the earlier ECIR/complaint arising out of the same substratum of allegations. The Court held that resolving identity/overlap of the two crimes requires meticulous perusal of the complete records of both investigations and is a matter for determination at an appropriate stage. Accordingly the question is left open for detailed consideration after referring all materials in both crimes. [Paras 7, 25, 36]

Question of overlap/duplicity between the ECIRs left to be decided at the appropriate stage after detailed perusal of records.

Final Conclusion: On the materials placed before it the High Court declined to relax the rigour of Section 45(1) PMLA and refused regular bail; the contention of duplicity between the present ECIR and an earlier ECIR is left open for detailed consideration at the appropriate stage.

Auctioneer's Service versus Tender - Business Support Service and commission/appraisal charges - GTA service liability and entitlement to Notification No. 32/2004 ST abatement - Extended period of limitation - requirement of deliberate suppression/mala fides

Auctioneer's Service versus Tender - Auctioneer's Service - Marketing and sale of members' agricultural produce by the co operative through the tender process is not taxable as Auctioneer's Service. - HELD THAT: - The Tribunal applied established distinctions between auctions and tenders: an auction involves open, on the spot competitive bidding where bidders can outbid one another, whereas a tender involves submission of sealed/closed offers with no opportunity to raise bids in response to others. The society's practice of receiving produce, fixing a base price, inviting sealed bids/tenders, and selling on acceptance by the farmer was held to be a tendering process and not an auction. Reliance was placed on prior Tribunal decisions analysing the auction/tender distinction and on the factual finding that sales were effected through tenders rather than by open competitive bidding. Accordingly, services rendered in that tendering mode do not fall within the scope of Auctioneer's Service as construed for levy of service tax. [Paras 5]

Demand under Auctioneer's Service set aside.

Business Support Service and commission/appraisal charges - Business Support Service - Charges for appraisal of pledged jewels and lending activity undertaken by the society do not constitute Business Support Service liable to service tax. - HELD THAT: - The Tribunal found that the society borrowed funds from a cooperative bank on its own account and re lent those funds to its farmer members; the appraisal charges collected for sanctioning jewel loans were incurred in the course of the society's lending activity to its own members and were not services rendered to the bank or to any third party. As such, the activity did not amount to Business Support Service provided to others. On this basis the demand of service tax under BSS and consequential interest and penalties were held unsustainable. [Paras 5]

Demand under Business Support Service set aside; related interest and penalties set aside.

GTA service liability and entitlement to Notification No. 32/2004 ST abatement - GTA service - The society's carriage of goods by road falls within GTA service liability for the normal period, but the appellant is entitled to computation of demand after giving benefit of Notification No. 32/2004 ST (75% abatement) where applicable. - HELD THAT: - The Tribunal accepted that the society undertook lifting and delivery of goods (including under PDS) and is covered by the GTA provisions and the rule that liability rests on the person paying freight when consignor/consignee is a co operative society. However, the Tribunal also held that the appellant could avail the benefit of Notification No. 32/2004 ST despite earlier findings that documentary endorsements were not furnished, relying on precedent that denial of the abatement for want of such endorsement is not maintainable. The Tribunal directed that the demand in respect of GTA service be confirmed only for the normal period after allowing the Notification No. 32/2004 ST benefit in computation. [Paras 5, 6]

Demand for GTA service confirmed for the normal period, subject to computation after allowing Notification No. 32/2004 ST benefit; certain penalties not sustained.

Extended period of limitation - requirement of deliberate suppression/mala fides - Invocation of the extended period for assessment and imposition of penalties could not be sustained because there was no finding of deliberate suppression or malafide on the part of the co operative society. - HELD THAT: - The Tribunal noted that the issue was interpretational and that various notifications and exemptions applicable to GTA services during the period created ambiguity. The appellant's non payment was held to be attributable to bona fide belief rather than deliberate omission; there was no finding in the adjudication that the appellant knowingly withheld material particulars. In that factual and legal context the Tribunal held that the Revenue failed to establish wilful suppression required to invoke extended limitation and to justify imposition of penalties under the Finance Act provisions. [Paras 5, 6]

Extended period invocation and penalties under Sections 77 & 78 set aside insofar as based on wilful suppression.

Final Conclusion: Appeals allowed in part: demands and penalties confirmed under Auctioneer's Service and Business Support Service set aside; GTA service demand confirmed for the normal period but to be recomputed after granting benefit of Notification No. 32/2004 ST; invocation of extended period and certain penalties not sustained. Consequential reliefs to follow as per law.

Abatement of appeal - merger of appellate order in NCLT-approved resolution plan - binding effect of approved resolution plan on stakeholders including Central Government - extinguishment of claims not included in the resolution plan - Standard Operating Procedure for filing claims in CIRP by tax authorities - functus officio - Rule 22 of the CESTAT Procedure Rules, 1982

Abatement of appeal - functus officio - Rule 22 of the CESTAT Procedure Rules, 1982 - merger of appellate order in NCLT-approved resolution plan - The appeal before the Tribunal abated and the Tribunal became functus officio upon approval of the resolution plan by the NCLT, with the impugned appellate order merging in the NCLT order. - HELD THAT: - The Tribunal found that the resolution plan in respect of the appellant company was approved by the Hon'ble NCLT on 24.02.2023 and that, consequent to such approval, any demands against the appellant prior to the closing date are discharged as per the resolution plan. Relying on the principle that an order approving a resolution plan is binding on all stakeholders, the Tribunal held that the appellate proceedings related to demands prior to approval stand abated and the Tribunal has become functus officio. The Tribunal further applied Rule 22 of the CESTAT Procedure Rules, 1982 to hold that the appeal abated with effect from the date of NCLT approval and the impugned order merged in the NCLT order approving the resolution plan. [Paras 6, 7, 17]

Appeal abated w.e.f. 24.02.2023; Tribunal is functus officio and the impugned order merged in the NCLT-approved resolution plan.

Extinguishment of claims not included in the resolution plan - binding effect of approved resolution plan on stakeholders including Central Government - Standard Operating Procedure for filing claims in CIRP by tax authorities - Claims or demands in respect of periods prior to approval of the resolution plan that are not part of the approved plan stand extinguished and cannot be pursued against the corporate debtor or the resolution applicant. - HELD THAT: - The Tribunal relied on the CBIC SOP (Instruction No.1083/04/2022-CX9) emphasizing the requirement and timeline for tax authorities to file claims in the CIRP and the consequence of non-admission/extinguishment of delayed claims. The Tribunal further applied the legal principle articulated by the Hon'ble Supreme Court in Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss ARC that once a resolution plan is approved under Section 31, claims not provided for in the plan stand frozen or extinguished and no proceedings in respect of such claims may be continued. In the present case the demands relate to periods prior to initiation/closing and the resolution plan approved by the NCLT did not admit such claims outside the plan; accordingly those claims cannot be pursued. [Paras 14, 15, 17]

Demands relating to periods prior to approval that are not part of the approved resolution plan stand extinguished and cannot be pursued against the appellant.

Final Conclusion: The Tribunal disposed of the appeal by holding that, upon approval of the resolution plan by the NCLT on 24.02.2023, the appeal abated and the Tribunal became functus officio; further, claims/demands in respect of periods prior to approval which are not included in the approved resolution plan stand extinguished and cannot be pursued.

Service tax by way of agreeing to the obligation to tolerate an act or a situation - liquidated damages / forfeiture not being consideration for a service - taxable event as the time when service is provided or agreed to be provided - negative list - services by Government to business entities and amendment w.e.f. 01.04.2016 - reverse charge liability in relation to royalty / dead rent under grant of mining rights - amounts held on behalf of third parties not income for provision of services - allocation of area development charges not consideration for taxable service

Service tax by way of agreeing to the obligation to tolerate an act or a situation - liquidated damages / forfeiture not being consideration for a service - Whether amounts received as contractual adjustments and forfeiture are chargeable to service tax under clause (e) of section 66E of the Finance Act. - HELD THAT: - The Tribunal accepted the reasoning in South Eastern Coalfields that liquidated damages or penalties recovered for breach or non-performance are deterrent in nature and are not consideration for any service. An activity falls within the declared service only where the agreement specifically contemplates an obligation to do, refrain from, or tolerate an act and there is a flow of consideration linked to that specific activity. The appellant's contracts imposed penal clauses as safeguards of contractual performance and did not create an independent arrangement whereby the appellant agreed to tolerate or do an act in return for consideration. The Board's circular endorses this approach and records decisions not to pursue appeals in similar cases. Applying this principle, the demand in respect of contractual adjustment and forfeiture cannot be sustained. [Paras 12]

Demand in respect of contractual adjustments and forfeiture set aside.

Taxable event as the time when service is provided or agreed to be provided - negative list - services by Government to business entities and amendment w.e.f. 01.04.2016 - reverse charge liability in relation to royalty / dead rent under grant of mining rights - Whether dead rent / surface rent paid to the State Government is taxable on reverse charge basis for the agreement executed on 02.01.2016. - HELD THAT: - Service tax is levied when a service is provided or agreed to be provided. Prior to 01.04.2016, services by Government to business entities broadly fell within the negative list and were not taxable. The mining-rights agreement between the parties was executed on 02.01.2016, before the amendment of the negative list effective 01.04.2016. Consequently the receipts in question, arising from that agreement, cannot be subjected to service tax for the relevant period even if labeled as dead rent or surface rent; the taxable character under reverse charge cannot be fastened for the pre-amendment period. [Paras 20]

Demand in respect of dead rent / surface rent (royalty) for the relevant period set aside.

Amounts held on behalf of third parties not income for provision of services - Whether amounts received from joint venture companies as directors' sitting fees and retained by the appellant are taxable as consideration for services. - HELD THAT: - The record shows the amounts were received by the appellant as monies due to the directors and were merely held by the appellant, not appropriated as consideration for services. The underlying transaction was between the JV company and the directors; the appellant had no role in providing a service for which consideration was received. Thus such amounts are not chargeable to service tax as income for services rendered by the appellant. [Paras 21]

Demand in respect of directors' sitting fees set aside.

Allocation of area development charges not consideration for taxable service - Whether amounts retained by the appellant as 30% of area development charges constitute consideration for taxable services to the State Government. - HELD THAT: - For a taxable service there must be a provider-recipient relationship and a service rendered in exchange for consideration. The statutory/orderly allocation of 30% of area development charges was for meeting the appellant's administrative expenses as a public sector undertaking and contains no stipulation that the appellant would perform specified services in return. Consequently the amounts are revenue of the appellant but are not consideration for any taxable service and cannot be subjected to service tax. [Paras 24]

Demand in respect of area development charges set aside.

Final Conclusion: The impugned order dated 27.03.2019 confirming service tax, interest and penalty in respect of the amounts challenged is set aside and the appeal is allowed.

Export of services - refund of accumulated Cenvat credit under Rule 5 of the CENVAT Credit Rules, 2004 - Rule 6A(1) condition for export under the Service Tax Rules, 1994 - intermediary - Place of Provision of Services Rules concept of intermediary - sub contracting is not intermediary - principal to principal supply - Circular No.159/15/2021-GST clarifying intermediary

Export of services - refund of accumulated Cenvat credit under Rule 5 of the CENVAT Credit Rules, 2004 - Rule 6A(1) condition for export under the Service Tax Rules, 1994 - Whether the services rendered by the appellant to overseas entities qualify as export of services and entitle the appellant to refund of accumulated Cenvat credit under Rule 5. - HELD THAT: - On examination of the subcontracting agreement and the facts recorded, the Tribunal found that the appellant rendered administrative support services to overseas contractees and there was no dispute that the taxable output services were exported or that payment in convertible foreign exchange was not received. The contractual terms show that the appellant performed services on its own account and the parties remained responsible for their own obligations. Applying the condition in Rule 6A(1) of the Service Tax Rules, 1994, the Tribunal held that the requirements for treating the transaction as export of services were satisfied. Consequently the appellant was eligible for the refund of accumulated Cenvat credit under Rule 5 read with the relevant notification, and the impugned orders rejecting the refund were set aside with consequential relief. [Paras 6, 9]

The transaction qualifies as export of services under Rule 6A(1) and the appellant is entitled to refund under Rule 5; impugned rejection set aside.

Intermediary - Place of Provision of Services Rules concept of intermediary - sub contracting is not intermediary - principal to principal supply - Circular No.159/15/2021-GST clarifying intermediary - Whether the appellant was an intermediary (agent) so as to disqualify the transaction from being treated as export of services. - HELD THAT: - The Tribunal analysed the definition and scope of 'intermediary' as explained in the Place of Provision of Services Rules and in Circular No.159/15/2021-GST. The agreement was a subcontracting arrangement whereby the overseas entity procured clients and subcontracted performance to the appellant; the appellant supplied the services to the overseas contractor on a principal to principal basis. The Tribunal relied on the principle that sub contracting, where the subcontractor provides the main supply on its own account, is excluded from the definition of intermediary. Though the circular was issued under GST, the Tribunal applied it mutatis mutandis to the Service Tax regime to ensure uniform interpretation. On these grounds the appellant could not be regarded as an intermediary. [Paras 6, 7, 8]

The appellant is not an intermediary; the subcontracting arrangement is a principal to principal supply and does not attract the intermediary exclusion.

Final Conclusion: The Tribunal allowed the appeal, holding that the appellant's services to overseas entities qualify as export of services and that the appellant is not an intermediary; the impugned orders rejecting the refund claim for July 2016 to June 2017 were set aside and the appellant granted consequential refund relief as per law.

Entitlement to Cenvat credit on items used in fabrication of capital goods - construction of the term capital goods under the Cenvat Credit Rules, 2004 - inputs for capital goods - invocation of extended period of limitation under Section 11A of the Central Excise Act, 1944 - retrospective or clarificatory effect of amendment to the Cenvat Credit Rules

Entitlement to Cenvat credit on items used in fabrication of capital goods - construction of the term capital goods under the Cenvat Credit Rules, 2004 - inputs for capital goods - Whether Cenvat credit was admissible to the assessee on steel items (angles, joists, beams, plates and similar materials) used in fabrication of structures, by treating them as inputs for capital goods. - HELD THAT: - The Court accepted the view taken by the Chhattisgarh High Court (in Vandana Global Ltd. and subsequent decision) that goods such as angles, joists, beams, bars and plates which go into the fabrication of structures embedded to earth are to be treated as inputs in relation to capital goods and accordingly eligible for Cenvat credit under the Cenvat Credit Rules, 2004. The Tribunal had followed that larger High Court decision and allowed the respondent's appeal on merits insofar as the classification of the steel items is concerned. The High Court noted that subsequent Chhattisgarh decisions sustained the same legal position and that no contrary binding authority was shown to displace that view. Having regard to those authorities, the Court found that the Tribunal's conclusion on entitlement to credit was covered by precedent and properly made.

The Tribunal's allowance of the appeal on the question of entitlement to Cenvat credit in respect of the steel items was upheld.

Invocation of extended period of limitation under Section 11A of the Central Excise Act, 1944 - retrospective or clarificatory effect of amendment to the Cenvat Credit Rules - Whether the show cause notice dated 03.06.2011, issued by invoking the extended period under Section 11A, was sustainable or barred by limitation in the facts of the case. - HELD THAT: - The Tribunal, applying the Chhattisgarh High Court precedent, held the show cause notice to be unsustainable and barred by limitation. The High Court observed that the Chhattisgarh decisions had considered the interplay of amendments to the Cenvat Credit Rules and concluded that the amendment was not clarificatory such as to alter the entitlement retrospectively; nonetheless, those decisions resulted in recognition of credit for the items in question. On the facts, because the Tribunal followed the Chhattisgarh rulings and did not proceed to disallow credit on merits, the impugned notice and consequential demand were held to be not sustainable in view of applicable limitation principles as applied by the Tribunal in light of precedent.

The Tribunal was correct in holding the show cause notice to be not sustainable and barred by limitation; the consequential demand, interest and penalties were set aside to the extent determined by the Tribunal.

Final Conclusion: In light of binding High Court authority on the classification of the steel items as inputs for capital goods and the Tribunal's application of limitation principles, the appeal is dismissed and the Tribunal's order allowing the respondent's appeal is upheld.

Valuation under Section 4A of the Central Excise Act, 1944 - Valuation under Section 4 of the Central Excise Act, 1944 - Applicability of the Legal Metrology (Packaged Commodities) Rules, 2011 to packaged goods sold to institutional consumers - Definition of "institutional consumer" pre-amendment and post-amendment of LMPCR, 2011 - G.S.R.359(E) Notification dated 06/06/2013 - amendment to Rule 2 and Rule 3 of LMPCR, 2011 - Extended period for issuance of show cause notice for suppression - Deemed retail sale price and confiscation where RSP not declared on package

Valuation under Section 4A of the Central Excise Act, 1944 - Valuation under Section 4 of the Central Excise Act, 1944 - Applicability of the Legal Metrology (Packaged Commodities) Rules, 2011 to packaged goods sold to institutional consumers - Definition of "institutional consumer" pre-amendment and post-amendment of LMPCR, 2011 - Whether table top wet grinders sold by the appellant to TNCSC are to be valued under Section 4A or under Section 4 of the CEA, 1944. - HELD THAT: - The Tribunal examined applicability of Chapter 2 of LMPCR, 2011 and whether TNCSC qualifies as an "institutional consumer". Pre-amendment definitions (Explanation to Rule 3) were applied to the period before notification G.S.R.359(E) and the Tribunal concurred with earlier coordinate-bench authority that TNCSC, being a Government undertaking procuring goods for free distribution, is not an "institutional consumer" under the pre-amendment law. The Tribunal further noted that omission to declare RSP on packages does not automatically remove goods from Section 4A if they are otherwise covered; Section 4A(4) provides for deemed RSP and confiscation where RSP is not declared. For the post-amendment period the amendment broadened the definition of "institutional consumer", but the Tribunal found that the amended Rule 2/3 was not made part of the show cause notice and appellants were not required to meet that legal challenge; consequently demand based on Section 4 for the post-amendment period was also held to fail. On these bases the demand for duty and consequential penalty quantified under Section 4 for the entire period was held to be not legal and set aside. [Paras 6, 7, 8, 9]

Demand and penalty based on valuation under Section 4 of CEA, 1944 for the period December 2012 to December 2015 are set aside; goods were properly assessable under Section 4A for the pre-amendment period and the demand for the post-amendment period fails because the amended rule was not pleaded in the show cause notice.

Valuation under Section 4A of the Central Excise Act, 1944 - Appropriation of duty paid during investigation - Whether the clearance of 1000 table top wet grinders to TNCSC in December 2012 without payment of duty was proper and how amounts paid during investigation are to be treated. - HELD THAT: - The Tribunal noted that during investigation the appellant paid duty and interest adopting Section 4A valuation for the 1000 machines cleared in December 2012. The appellant did not seek specific relief in the appeal regarding these amounts. The Tribunal held that duty was payable on those goods and that valuation for them is as per Section 4A for reasons already discussed. Consequently, the appropriation of amounts paid during investigation as recorded in the impugned order is correct and is upheld. [Paras 10]

Amounts paid by the appellant during investigation in respect of the 1000 wet grinders cleared in December 2012 are correctly appropriated and are upheld.

Extended period for issuance of show cause notice for suppression - Whether invocation of the extended period for issuance of the show cause notice is attracted. - HELD THAT: - Having held that no differential duty was payable as quantified in the impugned order, the Tribunal observed that the question of extended period became largely academic. The Tribunal additionally considered the appellant's late reliance on an unauthenticated audit report allegedly advising Section 4A valuation; that document was not placed before the adjudicating authority, was not pleaded in appeal, was not properly filed or authenticated and therefore was held to be unreliable and not admitted. The Tribunal thus did not accept the document as defeating any allegation of suppression. [Paras 11]

Invocation of extended period is rendered irrelevant by the substantive ruling; the appellant's belated, unauthenticated document is not admitted and does not negate any allegation of suppression.

Final Conclusion: The appeal is allowed in part: the demand for differential duty and penalty based on valuation under Section 4 for the period December 2012 to December 2015 is set aside; however, the amounts relating to the 1000 wet grinders cleared in December 2012 for which duty and interest were paid during investigation are upheld and preserved as confirmed by the impugned order.

Marketability of intermediate goods - excisability of intermediate product - classification under sub-heading 1702 90 90 (sugar syrup blends containing 50% fructose in dry stage) - burden of proof on department to establish marketability and chemical composition - applicability of notification exempting inputs used in manufacture of exempt final products

Marketability of intermediate goods - excisability of intermediate product - classification under sub-heading 1702 90 90 (sugar syrup blends containing 50% fructose in dry stage) - burden of proof on department to establish marketability and chemical composition - applicability of notification exempting inputs used in manufacture of exempt final products - Whether the sugar syrup produced as an intermediate captive-use product in the manufacture of biscuits is an excisable and marketable commodity attracting central excise duty, and whether the demand based on its alleged classification and marketability is sustainable. - HELD THAT: - The Tribunal concluded that the department failed to produce evidence to show that the sugar solution/syrup emerging during the biscuit-manufacturing process is marketable in the condition in which it emerges; it has very short life and is not shown to be commercially marketable. The department also did not establish, by chemical testing or other evidence, that the fructose content in the product meets the threshold required for classification under sub-heading 1702 90 90 (i.e., 50% by weight in dry stage). Absent such proof, classification under that sub-heading and the consequent liability cannot be sustained. The Tribunal applied its consistent precedents holding that marketability must be shown in the condition of emergence and that presumptions of identity with other manufacturers' products are impermissible without evidence; similarly, filing classification lists or past payments cannot be treated as admission of conformity to a contested description. Where the necessary chemical analysis and marketability evidence were not produced, the demand and confirmation by lower authorities were held unsustainable. The Tribunal also noted that, where the intermediate product is not shown to be excisable/marketable, notifications exempting inputs used in manufacture of exempt final products and procedural compliance under the relevant rules operate in favour of the appellant. [Paras 4, 5]

Findings of the adjudicating authorities that the sugar syrup is an excisable, marketable product are unsupported by evidence; the impugned Order in Appeal is set aside and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, set aside the orders demanding excise duty on the intermediate sugar syrup produced for captive use, holding that the department failed to prove marketability or requisite composition for classification and therefore the duty demand was unsustainable.

Value addition norms - export obligation / export performance - exemption under notification no. 53/97-Cus - exemption under notification no. 1/95-CE - no statutory requirement of minimum value addition under EXIM policy - forgoned customs duty recovery for breach of EXIM conditions - role of Ministry of Commerce/Appellate Committee in adjudicating EXIM policy compliance

Value addition norms - exemption under notification no. 53/97-Cus - exemption under notification no. 1/95-CE - forgoned customs duty recovery for breach of EXIM conditions - Whether the respondent violated conditions of the exemption notifications so as to render itself liable to recovery of customs and excise duty - HELD THAT: - The Tribunal examined the relevant exemption notifications and the EXIM policy applicable to EOUs and noted that the notifications conditioned duty-free imports on compliance with export obligations and policy conditions. The adjudicating authority found, on perusal of the EXIM policy and the unit's performance, that the unit's achieved value addition (about 25%) did not constitute a substantial breach of the policy norms applicable to the product and period, and that the period used to judge performance was unduly short compared to the five-year export period. Having regard to the policy provisions and the factual finding that the unit was engaged in exports and met policy-prescribed benchmarks cumulatively, the Tribunal concluded there was no violation of the conditions of notification no. 53/97-Cus and notification no. 1/95-CE entitling recovery of the forgone duties. [Paras 4]

No violation of the conditions of the exemption notifications was established and demand for recovery of duties does not survive.

No statutory requirement of minimum value addition under EXIM policy - export obligation / export performance - role of Ministry of Commerce/Appellate Committee in adjudicating EXIM policy compliance - Whether findings of the Development Commissioner and the Appellate Committee/Ministry of Commerce that there was no statutory minimum value addition and that export performance did not warrant penal action preclude the revenue's demand - HELD THAT: - The Tribunal placed weight on the concurrent decisions of the Development Commissioner and the Appellate Committee of the Department of Commerce which had reviewed the unit's export performance and the applicable EXIM policy and had set aside the Development Commissioner's adverse order, holding there was no statutory requirement of achieving any minimum value addition and that the shorter period used for assessment was inappropriate. The Tribunal held that officers of the Ministry of Commerce are the appropriate authorities to determine compliance with EXIM policy, and their categorical findings that there was no violation operate as a relevant and decisive conclusion for the present proceedings under the exemption notifications. Consequently, the revenue's attempt to relitigate policy compliance for the same period was rejected. [Paras 3, 4]

Findings of the Development Commissioner and the Appellate Committee that there was no statutory minimum value addition and no breach of EXIM policy preclude the revenue's demand.

Final Conclusion: The departmental appeal is dismissed; the recovery proceedings under the impugned show cause notice are not sustained as there was no breach of the exemption notifications or EXIM policy, and the Commerce Ministry/Appellate Committee had already held there was no statutory minimum value addition or ground for penal action.

Applicability of the proviso to Section 11A for invocation of extended period of limitation - suppression of facts as ground for reopening assessments - assessment under Section 4A based on MRP and prescribed abatement - ignorance of law is no excuse - mandatory levy of penalty under Section 11AC upon confirmation of duty

Applicability of the proviso to Section 11A for invocation of extended period of limitation - suppression of facts as ground for reopening assessments - ignorance of law is no excuse - Extended period of limitation under the proviso to Section 11A could be invoked for the period 24.12.2008 to 31.03.2011 despite the appellant's plea of bonafide error/ignorance. - HELD THAT: - The Tribunal accepted the Revenue's finding that the appellant failed to disclose in statutory returns the basis (notification/abatement) on which assessable value under Section 4A was computed and that such non-mentioning amounted to deliberate masking. The adjudicating authority and Commissioner (Appeals) drew on audit scrutiny which unearthed the discrepancy and held that the facts satisfied the ingredients of suppression of facts in the proviso to Section 11A, thereby justifying reopening within five years. The appellate tribunal rejected the contention that the error was bonafide or that ignorance of law absolved the appellant; it relied on precedents and the principle that taxpayers are bound to determine assessable value correctly and that ignorance of law is no excuse. [Paras 4, 5, 6]

The extended period of limitation under the proviso to Section 11A was rightly invoked and the demand for unpaid duty for 24.12.2008 to 31.03.2011 is sustainable.

Mandatory levy of penalty under Section 11AC upon confirmation of duty - assessment under Section 4A based on MRP and prescribed abatement - Penalty under Section 11AC was correctly imposed and could not be waived merely because duty (or part of it) was paid after issuance of show cause notice. - HELD THAT: - The Tribunal applied the legal position that once duty is determined and the statutory conditions for penalty are satisfied, the levy of penalty under Section 11AC is mandatory and not discretionary. Reliance was placed on higher court decisions construing Section 11AC to the effect that payment of duty after notice does not preclude imposition of the statutorily mandated penalty where the proviso to Section 11A is attracted by suppression of facts. Consequently, interest on delayed payment was also held to be automatically attracted. [Paras 5, 6, 10]

The penalty under Section 11AC was justified and the direction for payment of interest on delayed payment of duty stands attracted.

Final Conclusion: The appeal is dismissed; the Tribunal upheld invocation of the extended limitation period on the finding of suppression of facts, sustained the confirmed duty demand for the periods specified, and upheld the mandatory penalty under Section 11AC together with consequential interest.

Adjustment of excess excise duty against shortfall at finalisation of provisional assessment - Provisional assessment finalisation under Rule 7 of the Central Excise Rules - Unjust enrichment - Effect of Cenvat credit on adjustment of excess duty - Captive consumption / supplies to sister unit and adjustment

Adjustment of excess excise duty against shortfall at finalisation of provisional assessment - Effect of Cenvat credit on adjustment of excess duty - Captive consumption / supplies to sister unit and adjustment - Unjust enrichment - Whether excess duty paid during provisional assessment in 2016-17 could be adjusted against shortfall at the time of finalisation of assessment where the assessee had not availed Cenvat credit and goods were captively consumed by another unit of the same entity. - HELD THAT: - The Tribunal found as an admitted fact that the appellant paid excess duty during the financial year 2016-17 and that the clearances were provisionally assessed. The adjudicating authorities denied adjustment of the excess on the ground that the duty element had been passed on to the ultimate consumer through a sister unit. The Tribunal applied the settled principle that provisional assessment being subject to finalisation requires that excess payments in one period may be set off against short payments in another period of the same financial year when the assessee has not availed Cenvat credit and no passing-on results in unjust enrichment. The Tribunal relied upon earlier authorities, including Hindustan Zinc Ltd. , Toyota Kirloskar Auto Parts Pvt. Ltd. , Excel Rubber Limited , Mercedes Benz (I) Pvt. Ltd. , and Century Rayon , holding that adjustment is permissible on finalisation of provisional assessment and that the availability of Cenvat credit to a sister unit does not preclude such adjustment where the assessee itself has not taken credit. Applying that principle to the admitted facts - no Cenvat credit taken by the appellant and captive consumption within the same entity (not a distinct sister concern) - the Tribunal concluded that denial of adjustment was incorrect and that the question of unjust enrichment did not arise. [Paras 7, 8]

Adjustment of the excess duty paid during 2016-17 is allowable at the time of finalisation of provisional assessment; the orders below are modified and the appeal is allowed to that extent.

Final Conclusion: The Tribunal allowed the appeal in part, holding that the excess duty paid during 2016-17 must be adjusted against the confirmed shortfall on finalisation of the provisional assessment, and accordingly modified the impugned order.

Detention of goods under VAT regime - penalty for transportation without genuine documents - principles of natural justice in administrative detention - proof of genuine transaction for inter state storage - inadmissibility of documents in appeal under Section 33(3)

Detention of goods under VAT regime - penalty for transportation without genuine documents - Detention of the vehicle and imposition of penalty for transporting goods in the State of Haryana without production of proper and genuine documents was legally sustainable. - HELD THAT: - The Court found that on interception the driver failed to produce the original statutory Form DVAT 33 and only a photocopy was shown, which lacked essential particulars such as vehicle serial number, consignor and consignee signatures and accompanying goods receipts. The authorized representative's explanation that the goods were for storage was unsupported by contemporaneous documentary proof at the point of detention. In these circumstances the detaining authority's conclusion of transportation without proper documents and the consequent levy of tax/penalty were upheld. The Tribunal's reasoning on this factual and documentary shortfall was held to be unimpeachable and not liable to interference. [Paras 6]

The authorities' detention and penalty were upheld as justified on the record.

Principles of natural justice in administrative detention - proof of genuine transaction for inter state storage - No violation of principles of natural justice occurred in passing the detaining authority's order on the same day. - HELD THAT: - The Court observed that a written reply was filed but that the material produced did not substantiate the asserted purpose of storage; the photocopy of Form DVAT 33 was incomplete and therefore not persuasive. The detaining authority considered the explanation and documentary material and found them not genuine. On the record there was no shortcoming amounting to breach of natural justice sufficient to invalidate the order. [Paras 6]

Complaint of denial of natural justice was rejected and the orders were held not vitiated on that ground.

Inadmissibility of documents in appeal under Section 33(3) - detention of goods under VAT regime - Documents sought to be relied upon before the First Appellate Authority could not cure the defect where Section 33(3) bars acceptance of such documents in appeal, and the Tribunal's adverse finding was not perverse. - HELD THAT: - The Court noted that certain documents from the cold storage were attempted to be produced before the First Appellate Authority but could not be considered at that stage because Section 33(3) prohibits acceptance of such material in appeal proceedings. Having regard to the statutory bar and the absence of original, complete statutory documentation at the time of detention, the Tribunal's assessment and conclusion were not perverse. [Paras 6]

The Tribunal's rejection of the claim relying on those documents and its concurrent findings were sustained.

Final Conclusion: Finding no substantial question of law and no infirmity in the reasoning of the authorities below or the Tribunal, the appeal is dismissed.

Conviction of vehicle owner under Section 25 of the NDPS Act - knowledge and consent of owner as sine qua non for Section 25 - presumption of culpable mental state under Section 35 of the NDPS Act - prosecution's initial burden to prove foundational facts before shifting burden

Conviction of vehicle owner under Section 25 of the NDPS Act - knowledge and consent of owner as sine qua non for Section 25 - Whether the conviction of the registered owner under Section 25 of the NDPS Act can be sustained in the absence of evidence that the vehicle was used for illegal activity with the owner's knowledge and consent. - HELD THAT: - The Court found that the prosecution produced no material to show that the vehicle, if used for illegal activity, was used with the knowledge and consent of the appellant, the registered owner. The appellant was not arrested at the spot, the alleged driver and cleaner were not identified at trial (they were declared hostile and later acquitted), and no direct or reliable evidence linked the appellant to knowledge of the contraband. The Trial Court and High Court erred in treating registration of the vehicle as sufficient to fasten knowledge or in shifting the burden to the appellant to prove absence of knowledge. The Court held that the sine qua non for applicability of Section 25 is proof that the owner knowingly permitted use of the vehicle for the offence, which was not established on the facts of the case. [Paras 6, 11, 12]

Conviction under Section 25 could not be legally sustained in the absence of proof that the vehicle was used with the owner's knowledge and consent.

Presumption of culpable mental state under Section 35 of the NDPS Act - prosecution's initial burden to prove foundational facts before shifting burden - Whether the presumption under Section 35 could be drawn against the appellant when the prosecution had not discharged the initial burden of proving foundational facts. - HELD THAT: - Relying on this Court's precedents, the Court reiterated that Section 35 imposes a reverse burden only after the prosecution has proved foundational facts beyond reasonable doubt. Section 35 presupposes that the culpable mental state must be established as a fact; it does not operate where the prosecution has failed to discharge the initial onus. On the facts, because no evidence was led to prove the appellant's knowledge of misuse of the vehicle, the condition for invoking the presumption under Section 35 was absent and the onus could not be shifted to the accused. [Paras 7, 8, 11]

Presumption under Section 35 could not be raised in the absence of proof of foundational facts; the prosecution's initial burden remained unfulfilled.

Final Conclusion: The appeal is allowed. The convictions and sentences recorded by the Trial Court and affirmed by the High Court are set aside because the prosecution failed to prove that the vehicle was used for the offence with the owner's knowledge and consent and hence neither Section 25 nor the presumption under Section 35 could be validly applied; bail bonds discharged.

Enforceability of decree - commencement of limitation for execution proceedings - Article 136 of the Limitation Act, 1963 - compromise decree - cause of action for execution arising on dispossession - interpretation favouring the decree-holder

Enforceability of decree - commencement of limitation for execution proceedings - compromise decree - cause of action for execution arising on dispossession - Whether the period of limitation for instituting execution proceedings in respect of clause 6 of the compromise decree dated 26.04.1960 begins from the date of that compromise decree or from 31.03.1994 when the final decree in Suit No. 30 A/87 determined the rights of third parties and dispossession was confirmed. - HELD THAT: - The Court applied the governing provision on limitation for execution applications and the settled principle that limitation begins when a decree becomes enforceable. Article 136 requires that execution proceedings be initiated within twelve years from the date the decree or order becomes enforceable. Earlier authorities were cited to the effect that a decree is generally enforceable from its date, but may become enforceable on a future date where the decree itself or events make execution possible only later; in such cases the starting point is when the decree becomes capable of execution. Clause 6 of the compromise decree obliged the judgment-debtor to give alternative land only if the decree-holders were deprived of possession; therefore the right to execute arose only when dispossession occurred and the rights of a third party were finally determined by the Civil Court. The Court held that the cause of action to execute clause 6 arose on 31.03.1994 when the final decree confirmed dispossession, and hence the twelve-year period runs from that date. Applying this reasoning the execution application filed on 17.07.1995 fell within the prescribed limitation period. [Paras 2, 3, 9, 11, 13]

The limitation for the execution application commenced on 31.03.1994 when the decree became enforceable by reason of dispossession; the Execution Application filed on 17.07.1995 is within time.

Final Conclusion: The appeal is dismissed; the Courts below rightly held that the Execution Application was within the twelve-year limitation period because the decree became enforceable on 31.03.1994 when dispossession was finally determined.