TaxTMI Updates e-Newsletter
May 01,2024

Retrospective cancellation of GST registration - Requirement of objective satisfaction for cancellation under Section 29(2) of the Central Goods and Services Tax Act, 2017 - Validity and adequacy of show cause notice - Requirement of reasons and opportunity of hearing before cancellation - Consequences of retrospective cancellation on input tax credit - Restoration of registration subject to compliance

Validity and adequacy of show cause notice - Requirement of reasons and opportunity of hearing - Show Cause Notice dated 14.02.2024 and the cancellation order dated 11.03.2024 were unsustainable for want of adequate particulars, reasons and opportunity regarding retrospective cancellation. - HELD THAT: - The notice summoned the petitioner to appear but did not identify the officer, the place of appearance or state that cancellation, if effected, would be retrospective. The impugned order states only that it is with reference to the Show Cause Notice and fixes an effective retrospective date without articulating reasons for retrospective cancellation or any material justifying such date. A notice and order bereft of such particulars and reasoning fail to provide a meaningful opportunity of hearing and cannot be sustained. The Court set aside the show cause notice and the cancellation order on these grounds and restored the petitioner's registration. [Paras 5, 6, 7, 11, 14]

Show Cause Notice and cancellation order quashed and GST registration restored for want of adequate particulars, reasons and opportunity.

Retrospective cancellation of GST registration - Requirement of objective satisfaction for cancellation under Section 29(2) of the Central Goods and Services Tax Act, 2017 - Consequences of retrospective cancellation on input tax credit - Retrospective cancellation under Section 29(2) cannot be mechanical or purely subjective; it requires objective satisfaction and consideration of consequences, including impact on input tax credit. - HELD THAT: - Section 29(2) permits cancellation from such date as the proper officer may deem fit, including retrospective dates, but the power is not to be exercised mechanically. The officer's satisfaction must be based on objective criteria. Mere non-filing for some periods does not justify cancelling registration retrospectively over periods when returns were filed and the taxpayer was compliant. Where retrospective cancellation would affect third-party rights such as input tax credit, the officer ought to take such consequences into account before fixing a retrospective effective date. [Paras 12, 13]

Retrospective cancellation must rest on objective satisfaction and appropriate consideration of its consequences; it cannot be applied mechanically.

Restoration of registration subject to compliance - Right to recovery and re-initiation after proper notice - Registration is restored but the respondents retain the right to recover tax and to seek retrospective cancellation after issuing proper notice and providing opportunity of hearing; petitioner must make requisite compliances. - HELD THAT: - Having set aside the defective notice and order, the Court restored the petitioner's GST registration. The petitioner was directed to make necessary compliances and file returns and information inter alia under Rule 23 of the Central Goods and Services Tax Rules, 2017. The respondents are not precluded from pursuing recovery of tax, penalty or interest in accordance with law, and may proceed to seek retrospective cancellation again provided they give proper notice and an opportunity of hearing. [Paras 14, 15]

Registration restored; petitioner to comply with statutory requirements; respondents may pursue recovery and may reinitiate cancellation only after proper notice and hearing.

Final Conclusion: The show cause notice dated 14.02.2024 and the cancellation order dated 11.03.2024 are quashed for lack of adequate particulars, reasons and opportunity; the petitioner's GST registration is restored subject to statutory compliances, without prejudice to the respondents' right to recover tax or seek cancellation afresh after issuing proper notice and hearing.

Reopening of assessment - validity of order passed u/s 148A(d) - Second round of litigation - non independent application of AO's mind to the information furnished by the DDIT - Delay filling SLP

As decided by HC [2023 (2) TMI 1119 - CALCUTTA HIGH COURT] only conclusion that can be arrived at is to hold that the reopening of the assessment was bad as it was based on certain alleged “potential” cash borrowings and certain alleged “possible” financial transactions - AO did not independently apply its mind to the information furnished by the DDIT which he is required to do while exercising the power to reopen an assessment - entire reopening proceedings commencing from issuance of the notice u/s 148A(b) and culminating in the order u/s 148A(d) is a clear abuse of the process of law.

HELD THAT:- There is a gross delay of 399 days in filing this special leave petition. The explanation given for condonation of the delay is not satisfactory or sufficient in law to condone the same.

Hence, the application seeking condonation of delay is dismissed. Special leave petition also stands dismissed.

Liberty to raise legal and factual contentions before the Prescribed Authority - remand to the Prescribed Authority by the Tribunal - challenge to an ex-parte order - disposal of Special Leave Petition - Penalty under section 271(1)(c) -

HELD THAT: - The petitioners informed the Court that they had not challenged the Tribunal's order [2009 (4) TMI 1064 - ITAT DELHI] because it was passed ex parte and was not within their knowledge. Counsel stated the petitioners' intention to join the proceedings before the Prescribed Authority. Having regard to this position and to the fact that the Tribunal had remitted the matter to the Prescribed Authority, the Court disposed of the Special Leave Petition while granting liberty to the petitioners to raise all legal and factual contentions before the Prescribed Authority to whom the matter stands remitted. No adjudication on the merits of the underlying disputes was made by this Court; the order is procedural, permitting participation and consideration afresh by the Prescribed Authority. [Paras 1, 2, 3]

Special Leave Petition disposed of with liberty to the petitioners to join the proceedings and raise all legal and factual contentions before the Prescribed Authority to whom the matter has been remitted by the Tribunal.

Final Conclusion: The Special Leave Petition is disposed of; petitioners are permitted to join the remanded proceedings and to raise all legal and factual contentions before the Prescribed Authority.

Nature of expenses - re-characterizing revenue expenses incurred by as capital expenditure by AO - correct approach in law and on the facts adopted or not? - as per AO assessee had made no effort to earn income - as per ITAT AO’s approach, was that the respondent/assessee was not earning revenue, was completely misdirected - as per HC [2023 (10) TMI 329 - DELHI HIGH COURT] proposition put forth by the AO that since there is no income chargeable under Section 28 of the Act, therefore, no expenses could be claimed by an assessee under Sections 30 to 37 of the Act, in our view, is completely unsustainable.

HELD THAT:- There is a delay of 106 days in preferring the present special leave petition.

Even on merits, however, we are not inclined to interfere with the impugned judgment as it is accepted that business had commenced. Hence, the special leave petition is dismissed.

Validity of reopening of assessment - period of limitation - date of notice or date of dispatch which is required to be looked into - As decided by HC [2023 (11) TMI 1255 - RAJASTHAN HIGH COURT] in the absence of there being any factual foundation, the argument on issue of the limitation, does not have any substance - HELD THAT:- We are not inclined to interfere in the matter.

The special leave petition is hence, dismissed. Pending applications, if any, shall also stand disposed of.

Claim of foreign tax credit - Filing of Form No.67 - Due date for filing return under section 139(1) of the Income Tax Act - Directory versus mandatory requirement - Amendment of intimation under section 143(1) of the Income Tax Act

Claim of foreign tax credit - Filing of Form No.67 - Due date for filing return under section 139(1) of the Income Tax Act - Directory versus mandatory requirement - Amendment of intimation under section 143(1) of the Income Tax Act - Whether credit for foreign tax paid can be denied by CPC because Form No.67 was not filed within the due date for filing the return of income under section 139(1). - HELD THAT: - The Tribunal found that although Form No.67 was not filed within the due date under section 139(1), the assessee uploaded Form No.67 on 26.03.2021 and the CPC processed the return on 06.08.2021, so the Form was available to the CPC at the time of processing. The Tribunal held that the requirement to file Form No.67 within the due date is directory and not a mandatory ground for denying the claim for foreign tax credit where the Form is available to the assessing/processing authority before or at the time of processing. In view of this, the Tribunal directed the CPC to amend the intimation under section 143(1) to give effect to the Form No.67 filed by the assessee and to allow the credit for foreign tax paid. The Tribunal therefore concluded that the mere fact of belated filing of Form No.67, when the Form was on record with the CPC at processing, did not justify denial of the foreign tax credit. [Paras 7]

Directed CPC, Bangalore to amend the intimation under section 143(1) to take into consideration the Form No.67 filed by the assessee and allow the credit for foreign tax paid; appeal partly allowed.

Final Conclusion: The appeal is partly allowed: the Tribunal held that belated filing of Form No.67 does not, by itself, justify denial of foreign tax credit where the Form was available to the CPC at processing; directed amendment of the intimation under section 143(1) to grant the credit.

Addition on account of bogus purchases - restriction of addition to a percentage of purchases - beneficiary of accommodation entries - reassessment under section 147/148 of the Act - binding effect of coordinate bench order - infructuous appeal

Binding effect of coordinate bench order - addition on account of bogus purchases - infructuous appeal - Effect of a coordinate bench order restricting addition to a percentage on the pending appeal filed by the Assessing Officer - HELD THAT: - The Tribunal noted that in the assessee's separate appeal (ITA No. 3625/M/2023) a coordinate bench, by order dated 20/03/2024, had already restricted the addition arising from alleged non genuine purchases to 5% of the total purchases. In the absence of any application to recall that coordinate bench order, that determination stands and is binding for the purposes of adjudication. Consequently, the assessee's liability in respect of the purported bogus purchases for A.Y. 2012 13 has already been quantified to the extent of 5%, which renders the present appeal filed by the Assessing Officer-seeking enhancement of the addition-moot. The Tribunal therefore held that there was no effective controversy left to decide in this appeal and it had become infructuous. [Paras 8, 9]

Appeal of the Assessing Officer dismissed as infructuous; 5% addition already determined by coordinate bench remains effective.

Final Conclusion: The appeal filed by the Assessing Officer for A.Y. 2012 13 is dismissed as infructuous because a coordinate bench has already restricted the addition on alleged bogus purchases to 5%, and that determination stands unless recalled.

Unexplained cash deposits - section 69A - affidavit evidence - acceptance of uncontroverted evidence - demonetisation-period deposits

Unexplained cash deposits - section 69A - affidavit evidence - acceptance of uncontroverted evidence - demonetisation-period deposits - Deletion of addition made under section 69A in respect of cash deposits during the demonetisation period - HELD THAT: - The Tribunal examined the cash flow statements, day wise withdrawal/deposit particulars, family settlement deed and the affidavit of the assessee's wife asserting that the cash deposited in the assessee's bank accounts belonged to her. The lower authorities doubted the reconciliation but did not produce any contrary evidence to disprove the withdrawals or the wife's affidavit. Relying on the principle that uncontroverted affidavits and books (or reconciliations) should be accepted, as illustrated in Mehta Parikh & Co., the Tribunal held that the material on record sufficiently explained the deposits. On this basis the Tribunal found the addition sustained by the lower authorities to be unsustainable and deleted the addition of Rs. 12,87,100/-. The Tribunal noted the applicability of section 69A even where books are not maintained but, on the evidentiary material before it, concluded that the claimed sources were satisfactorily proved and therefore no unexplained income survived for assessment. [Paras 8]

Addition under section 69A in respect of demonetisation period cash deposits deleted.

Final Conclusion: The appeal is allowed by deleting the addition made under section 69A for the assessment year 2017-18; other grounds were either consequential or not pressed and were not adjudicated.

Penalty for under-reporting and misreporting of income under section 270A - distinction between under-reporting and misreporting for penalty rates - vagueness of penalty notice and requirement to specify limb of misreporting

Penalty for under-reporting and misreporting of income under section 270A - distinction between under-reporting and misreporting for penalty rates - vagueness of penalty notice and requirement to specify limb of misreporting - Whether penalty @200% could be imposed when notice and proceedings related to under reporting and AO did not invoke or identify any clause of misreporting under section 270A(9). - HELD THAT: - The Tribunal noted that the notice dated 27.12.2019 called upon the assessee to show cause only for 'Under reporting of income' and the AO's order did not state that any of the misreporting limbs in sub section (9) of section 270A were attracted. Section 270A prescribes different rates: 50% for under reporting and 200% where under reported income is in consequence of misreporting as defined by sub section (9). Where the AO proceeds to impose the higher misreporting penalty but neither the notice nor the order identifies the applicable misreporting limb(s), the higher rate cannot be sustained. Applying these principles to the facts, the Tribunal held that the AO ought to have restricted the penalty to the 50% rate leviable for under reporting, since clause (8) (misreporting) was neither invoked nor made out in the penalty proceedings. [Paras 10, 11]

Penalty confirmed only to the extent of under reporting; AO's imposition of 200% set aside and limited to 50%.

Final Conclusion: Appeal partly allowed: penalty sustained but reduced to the rate applicable for under reporting (50%) for AY 2017 18 as AO did not invoke or establish misreporting under section 270A(9).

Exemption under section 11 - Accumulation and set apart under section 11(2) - Belated return under section 139(4) treated as return within time for section 11 - Effect of CBDT circulars on rectification of assessment demands - Registration under section 12AA

Exemption under section 11 - Accumulation and set apart under section 11(2) - Belated return under section 139(4) treated as return within time for section 11 - Deduction of the amount accumulated and set apart under section 11(2) allowed despite return of income having been filed belatedly under section 139(4). - HELD THAT: - The Tribunal examined whether filing the return within the extended time under section 139(4) disqualifies a trust registered under section 12AA from claiming exemption under section 11 in respect of amounts accumulated and set apart under section 11(2). The court noted there was no dispute that Form 10B had been filed within the prescribed time and that the only objection by the Assessing Officer related to belated filing of the return. The Tribunal relied on the reasoning in Tulsidas Gopalji Charitable and Chaleshwar Temple Trust vs. CIT that a return filed within the period specified in section 139(4) must be regarded as a return within the time prescribed by section 139 for the purposes of claiming the benefit under section 11. Applying that principle to the facts, the Tribunal found no infirmity in allowing the deduction claimed under section 11(2) where the return (albeit belated) and the audit documentation were on record and accepted in the assessment. [Paras 6]

Deduction under section 11(2) allowed; the belated return filed under section 139(4) did not disentitle the trust from claiming the exemption.

Effect of CBDT circulars on rectification of assessment demands - Registration under section 12AA - Belated return under section 139(4) treated as return within time for section 11 - Applicability of CBDT circulars directing rectification of demands where returns filed within time allowed under section 139, and consequent upholding of the CIT(A)'s reliance on those circulars. - HELD THAT: - The Tribunal considered CBDT Circular No.173/193/2019-ITA-I dated 23.04.2019 and Circular No.6/2020 dated 19.02.2020, which clarify that a trust registered under section 12A/12AA that files its return within the time allowed under section 139 is entitled to claim the benefit of section 11 and that demands raised contrary to this position are liable to rectification. The NFAC/Ld. CIT(A) had applied these circulars to hold that section 139 includes belated returns under section 139(4) for the purpose of section 11 and directed rectification of demands. On independent examination, the Tribunal found no infirmity in that approach and affirmed the view that the CBDT circulars support allowing the claimed exemption and rectifying the demand raised by the Assessing Officer. [Paras 6]

CIT(A)'s reliance on the CBDT circulars was upheld and the direction for rectification of the demand was affirmed.

Final Conclusion: The Revenue's appeal is dismissed; the order of the National Faceless Appeal Centre/CIT(A) allowing the exemption under section 11(2) (on the basis that a return filed within the time allowed under section 139, including under section 139(4), entitles a registered trust to the benefit) is affirmed and the demand is to be rectified in accordance with the CBDT circulars.

Penalty for under-reporting of income as consequence of misreporting - disclosure in audited accounts and computation as defence to penalty - quantum proceedings do not ipso facto attract penalty proceedings - refusal to remand for verification where material is on record

Penalty for under-reporting of income as consequence of misreporting - disclosure in audited accounts and computation as defence to penalty - quantum proceedings do not ipso facto attract penalty proceedings - refusal to remand for verification where material is on record - Whether the penalty under section 270A(8) and (9) could be sustained for alleged non-disclosure of interest income shown during quantum assessment. - HELD THAT: - Tribunal found on the record that the assessee had disclosed the interest income in its audited books and in the computation submitted during quantum proceedings (material in paper book, pages 10-22, and ledgers), and therefore the impugned penalty for under-reporting as a consequence of misreporting could not be sustained. The Tribunal relied on the principle that additions in quantum proceedings do not automatically attract penalty proceedings and rejected the Revenue's request to remit the matter for verification since the relevant material was already part of the assessment and penalty file. In view of these findings, the Tribunal concluded that the penalty was not justified on merits.

Impugned penalty under section 270A(8) and (9) deleted and appeal allowed.

Final Conclusion: Penalty imposed under section 270A(8) and (9) deleted as the interest income was found disclosed in the assessee's audited books and computation and additions in quantum do not ipso facto justify penalty; remand for further verification refused.

Exemption under section 80P(2)(a)(i) and section 80P(2)(d) - Interest on fixed deposits as business income - Attribution of investment income to cooperative society's activities

Exemption under section 80P(2)(a)(i) and section 80P(2)(d) - Interest on fixed deposits as business income - Attribution of investment income to cooperative society's activities - Assessee entitled to deduction under section 80P(2)(a)(i) and section 80P(2)(d) in respect of interest income earned on fixed deposits with cooperative banks - HELD THAT: - The Tribunal noted a divergence of opinions among High Courts on whether interest arising from surplus invested by a cooperative society in short term deposits or securities is attributable to the society's activities and thus eligible for exemption under section 80P(2)(a)(i). After surveying contrary High Court decisions, the Tribunal followed the view of the Coordinate Bench of this Tribunal and the Karnataka High Court in Tumkur Merchants Souharda Credit Cooperative Ltd. which hold that interest on fixed deposits with cooperative/scheduled banks partakes the character of business income of a cooperative society. Applying that view, the Tribunal held that such interest is attributable to the activities of the cooperative society and is eligible for exemption under section 80P(2)(a)(i) and consequently under section 80P(2)(d), and directed the Assessing Officer to allow the claimed exemption. [Paras 8]

Appeal allowed; Assessing Officer directed to allow exemption under section 80P(2)(a)(i) and section 80P(2)(d) in respect of the interest income on fixed deposits with cooperative banks.

Final Conclusion: The Tribunal allowed the appeal for AY 2018-19, holding that interest earned on fixed deposits with cooperative banks is business income attributable to the cooperative society and is eligible for exemption under section 80P(2)(a)(i) and section 80P(2)(d); the Assessing Officer was directed to grant the exemption.

Deduction under section 80P(2)(a)(i) - Eligibility of credit cooperative society for section 80P deduction - Validity of claim where e-filed return shows status as AOP/BOI - Requirement of correct filing of Schedule VI-A and reconcilability of e-filed return - Rejection of claim based on procedural defects versus substantive entitlement

Deduction under section 80P(2)(a)(i) - Eligibility of credit cooperative society for section 80P deduction - Validity of claim where e-filed return shows status as AOP/BOI - Requirement of correct filing of Schedule VI-A and reconcilability of e-filed return - Allowability of the deduction claimed by the assessee under section 80P(2)(a)(i) for AY 2019-20 - HELD THAT: - The Tribunal examined the return of income filed by the assessee and found that the claim under section 80P(2)(a)(i) was made in the ITR (paper book page 5) and the society's object is to provide credit facilities to its members. The Assessing Officer and the National Faceless Appeal Centre rejected the claim on the ground that the e-filed return was not correctly filled (alleged incorrect status and Schedule VI-A entries) and that the claim could not be reconciled with the statutory return. The Tribunal held that the AO's reasons were not supported by any specific demonstration of how the claim was incorrectly made; the ITR did contain the 80P claim and the society's eligibility on merits was not disputed. Further, the Tribunal observed that the mention of status as AOP/BOI does not disqualify a cooperative society from claiming the deduction because section 2(31) does not create a separate statutory status named 'cooperative society' distinct from persons such as association of persons/AOP. The Tribunal relied on the principle that mere procedural or technical defects, not shown to have prejudiced verification of the substantive entitlement, cannot defeat a clearly made claim, and noted a co-ordinate bench decision on similar facts allowing correction of status. Applying these conclusions, the Tribunal directed the AO to allow the deduction claimed by the assessee under section 80P(2)(a)(i). [Paras 9]

Appeal allowed; Assessing Officer directed to allow the deduction claimed under section 80P(2)(a)(i) as made in the ITR for AY 2019-20.

Final Conclusion: The Tribunal allowed the assessee's appeal and directed the Assessing Officer to admit and allow the deduction claimed under section 80P(2)(a)(i) in the return filed for AY 2019-20, rejecting the revenue's denial based on alleged procedural defects and status designation.

Year of taxability of capital gains - Deemed transfer under section 2(47) read with section 53A of the Transfer of Property Act, 1882 - Scope of limited scrutiny - Admission of additional evidence in appellate proceedings - Proportionate cost of land for partial transfer - Fair market value of building as on 01-04-1981 - Deduction under section 54 - apportionment and eligible cost

Year of taxability of capital gains - Deemed transfer under section 2(47) read with section 53A of the Transfer of Property Act, 1882 - Capital gains arising from the transaction are taxable in AY 2016-17 as returned by the assessee and not in AY 2013-14 or AY 2015-16. - HELD THAT: - The Tribunal held that the assessee had offered the gains for the first time in AY 2016-17 and had not previously acted on alternative contentions that the transfer crystallised earlier. The CIT(A)'s conclusion that the original Joint Development Agreement was substantially modified by the supplementary agreement of 30-09-2013 (alteration of plans, change in individual shares), and that therefore the transaction could not be treated as having crystallised earlier under the facts of this case, was concurred with. Reliance placed on earlier tribunal precedent was accepted to the extent it supported the need for unconditional willingness/ performance by the developer for Sec.53A to operate, which was not shown here. The assessee's contrary, late-filed stand that possession/delivery occurred in earlier years was not acted upon in any prior year and could not be permitted to defeat taxation now. [Paras 10]

Contentions that the capital gains were taxable in AY 2013-14 or AY 2015-16 are rejected; gains are taxable in AY 2016-17 as offered.

Scope of limited scrutiny - Admission of additional evidence in appellate proceedings - The AO's limited scrutiny could encompass examination of computations under the capital gains head but did not permit re-opening the year-of-taxability issue; additional evidence tendered late before the Tribunal was not admitted to alter the year of chargeability. - HELD THAT: - The Tribunal observed that the case was selected for limited scrutiny to examine whether the deduction from capital gains had been claimed correctly; that scope legitimately included scrutiny of computations of cost of acquisition/improvement and related verifications. However, year of taxability lay outside the scope of the limited scrutiny and could not validly have been canvassed by the AO in assessment proceedings. The assessee's belated attempt to admit a builder's confirmation and completion certificate before the Tribunal to reframe the year of chargeability was rejected because the assessee had not previously offered the gains in earlier years and could not now take contrary stands so as to evade tax. Consequently, the application to admit additional evidence for the purpose of altering the year of taxability was refused. [Paras 6, 7, 8, 9]

Limited scrutiny did not justify revisiting the year of taxability; additional evidence tendered to change the year of chargeability is rejected.

Proportionate cost of land for partial transfer - Only the proportionate cost of land corresponding to the undivided share transferred is allowable for computation of capital gains; the AO's addition in that respect is confirmed. - HELD THAT: - The Tribunal agreed with the AO that the assessee had transferred only a part of the land (UDS of 4,274 sq.ft. out of the whole) and therefore could not claim indexation benefit on the entire land cost. The AO's apportionment of indexed cost to the proportion transferred and resultant addition was upheld since the assessee's approach of applying indexation to the whole property was incorrect and unsupported. [Paras 11]

Assessee is entitled only to proportionate cost of land corresponding to the area transferred; AO's adjustment is confirmed.

Fair market value of building as on 01-04-1981 - FMV of the building as on 01-04-1981 is to be adopted at the assessed figure of Rs. 20 Lacs (no further depreciation to be applied); AO to recompute gains accordingly. - HELD THAT: - The Tribunal found the assessee's claim of construction expenditure in 1983-84 unsubstantiated and accepted AO's material showing the building extent at demolition to be 18,593 sq.ft. The AO had estimated FMV by PWD rates and, allowing for the assessee's plea of superior construction, adopted Rs.20 Lacs as FMV on 01-04-1981. The Tribunal agreed with these findings but held that once FMV as on 01-04-1981 is fixed, it should not be further depreciated; accordingly directed recomputation of gains using FMV = Rs. 20 Lacs. [Paras 12]

FMV of the building on 01-04-1981 to be adopted as Rs. 20 Lacs; AO directed to recompute gains on that basis.

Deduction under section 54 - apportionment and eligible cost - The deduction under section 54 must be computed by apportioning the construction cost to the assessee's actual built-up area; the AO's method of proportionate apportionment (resulting in reduced deduction) is sustained. - HELD THAT: - The assessee had attempted to attribute cash outflow, service tax and alteration costs incurred for all flats (entire allotted area) exclusively to two joined flats for claiming section 54 deduction. The Tribunal agreed with the AO that the developer's stated total construction cost and incidentals relate to the entire 33,200 sq.ft. allotted to the assessee under the supplementary agreement, and the deduction must be limited to the proportionate cost attributable to the assessee's combined flats (6,300 sq.ft.). The AO's computation and working were found correct and endorsed. [Paras 13]

Deduction under section 54 to be allowed only on proportionate cost attributable to the assessee's actual flats; AO's computation is upheld.

Recomputation of capital gains - Recomputation directed to reflect the FMV of building as on 01-04-1981 being Rs. 20 Lacs and to apply the proportionate cost apportionments affirmed by the Tribunal. - HELD THAT: - Having upheld the AO's apportionments for land and section 54 deduction method, but modified the treatment of the building FMV (no depreciation after adopting FMV = Rs.20 Lacs), the Tribunal directed the Assessing Officer to recompute the capital gains and consequent tax liability for AY 2016-17 in accordance with these findings. [Paras 12, 13]

Matter remitted to the AO for recomputation of gains consistent with the Tribunal's directions (FMV Rs.20 Lacs and proportionate apportionments).

Final Conclusion: The appeal is partly allowed: grounds seeking recharacterisation of the year of chargeability and admission of additional evidence are dismissed; the AO's adjustments on proportionate land cost and restricted section 54 deduction are confirmed; FMV of the building as on 01-04-1981 is fixed at Rs. 20 Lacs (no further depreciation) and the matter is remitted to the AO for recomputation of capital gains for AY 2016-17 in accordance with these directions.

Exemption under RFCTLARR Act for compensation - application of state land acquisition enactments and retrospective validation - deeming provision under section 50C and computation of cost of acquisition - burden to substantiate cost of improvement and remand for verification

Exemption under RFCTLARR Act for compensation - application of state land acquisition enactments and retrospective validation - Whether compensation received on 02.12.2013 for land acquired under the Tamil Nadu Highways Act, 2001 is exempt from income tax under section 96 of the RFCTLARR Act, 2013 - HELD THAT: - The Tribunal examined the chronology: award dated 27.11.2013 under the Tamil Nadu Highways Act, 2001 and receipt of compensation on 02.12.2013, whereas the RFCTLARR Act, 2013 was notified with effect from 01.01.2014. The State's attempts to place the Tamil Nadu enactments within a schedule or to revive them and to make RFCTLARR provisions applicable by way of later amendments and revival legislation were considered. The Tribunal noted the Madras High Court's declaration regarding the invalidity of Sec. 105-A (RFCTLARR (Tamil Nadu Amendment) Act) and that the subsequent Tamil Nadu revival statute (TNLAL (ROAV) Act, 2019) limits applicability (Sec.10) to compensation, rehabilitation and resettlement but Sec.11 excludes the Central Act otherwise. There was no notification shown whereby the RFCTLARR Act's exemption (Sec.96) was made to apply to the State enactment for the relevant acquisition, and the award and receipt predate the RFCTLARR Act's coming into force. Reliance was placed on the principle that statutory exemption requires specific grant and cannot be inferred. On these bases, the Tribunal found that the assessee could not claim exemption under Sec.96 of RFCTLARR Act for the compensation received on the noted dates. [Paras 6]

Additional grounds asserting exemption under Sec.96 RFCTLARR Act dismissed.

Deeming provision under section 50C and computation of cost of acquisition - Whether the assessee could adopt the stamp registration value (section 50C value) as cost of acquisition instead of actual purchase cost for computation of capital gains - HELD THAT: - The Tribunal agreed with the Assessing Officer that section 50C is a deeming provision applicable to a seller for computation of capital gains and cannot be adopted by the purchaser/assessee in place of actual cost. The Tribunal further held that provisions such as section 43CA or section 56(2)(viib) do not assist the assessee in altering the cost of acquisition calculation in this factual matrix. Consequently, the AO's computation of indexed cost, which rejected the assessee's adoption of the registration value as cost, was upheld. [Paras 7]

Assessee not permitted to adopt section 50C value as cost of acquisition; AO's computation upheld.

Burden to substantiate cost of improvement and remand for verification - Whether the claimed cost of improvement is allowable in computing long term capital gains - HELD THAT: - The AO disallowed the claim for cost of improvement because the work order and bill did not identify the land location and therefore did not conclusively establish that the expenditure pertained to the acquired property, despite payments through banking channels and TDS deduction. The Tribunal found that the claim was not sufficiently substantiated on the material before the authorities but that the matter warranted verification rather than final rejection. Accordingly, the Tribunal restored the claim to the file of the AO and directed the assessee to substantiate the expenditure, leaving the quantification/verification to the AO. [Paras 7]

Claim for cost of improvement remitted to AO for substantiation and verification; grounds partly allowed.

Final Conclusion: Appeal partly allowed: exemption under Sec.96 RFCTLARR Act for the compensation received on 02.12.2013 is rejected; section 50C valuation cannot be adopted by the assessee as cost of acquisition and AO's computation is upheld; claim for cost of improvement remitted to the AO for verification and substantiation.

Revision under section 263 - treatment of excess stock found during survey as business income - deeming provisions under section 69 read with section 115BBE - survey under section 133A - possible view standard for interference in revisional proceedings

Revision under section 263 - possible view standard for interference in revisional proceedings - Whether the order of the Assessing Officer could be revised under section 263 as erroneous and prejudicial to the interest of the Revenue - HELD THAT: - The Tribunal held that revision under section 263 is not warranted where the Assessing Officer has taken a possible view after inviting and considering explanations from the assessee. Where two views are possible and the AO, after enquiry, accepts the assessee's explanation and records satisfaction, such a view cannot be characterised as erroneous so as to justify exercise of revisional powers. Applying that principle to the facts, the AO had considered the disclosures made during survey and assessment and accepted the assessee's treatment; there was no perversity or lack of enquiry to render the AO's order erroneous under Explanation 2 to section 263. Consequently, the PCIT's invocation of revisionary jurisdiction was held to be inappropriate. [Paras 12]

Revision under section 263 could not be invoked as the Assessing Officer's view was a possible view and not erroneous or prejudicial to revenue

Treatment of excess stock found during survey as business income - deeming provisions under section 69 read with section 115BBE - survey under section 133A - Whether the excess stock discovered during survey should be taxed as unexplained investment under section 69 read with section 115BBE or as business income - HELD THAT: - On the facts the survey revealed excess mixed stock not separately identifiable and the partner admitted the excess as unaccounted business income which was reflected in the return and audit schedule as business income. The Tribunal noted consistent judicial authorities holding that where excess stock found in survey/search is not separately identifiable or does not have independent physical existence, it is appropriately treated as business income rather than as 'undisclosed investment' under section 69. The AO had considered the explanations and accepted the additional income as business income; therefore the deeming provisions of section 69 read with section 115BBE were not automatically attracted. In these circumstances the Assessing Officer's treatment as business income was not erroneous. [Paras 5, 14]

Excess mixed stock found during survey, admitted as unaccounted business income and not separately identifiable, is to be treated as business income and not taxed under the deeming provisions of section 69 r.w.s. 115BBE

Final Conclusion: The Tribunal allowed the appeal, holding that the Assessing Officer's acceptance of the undisclosed excess stock as business income was a possible and tenable view and that exercise of revisionary powers under section 263 was not justified; accordingly, the PCIT's revision was set aside.

Summary order. Special Leave Petition disposed of, with liberty to the petitioner to raise all contentions regarding the show cause notice which the High Court has termed as an independent show cause notice in accordance with law; pending applications, if any, stand disposed of.

Summary order. Delay condoned; Special Leave Petition dismissed; any question of law left open; pending applications disposed of.

Condonation of delay - Exercise of discretionary appellate jurisdiction - Dismissal of appeal for refusal to interfere

Condonation of delay - Delay in filing the appeal was condoned. - HELD THAT: - The Court recorded that delay in filing the appeal has been condoned after hearing the parties. The order contains a direct grant of condonation without further reasoning or conditions.

Delay condoned.

Exercise of discretionary appellate jurisdiction - Dismissal of appeal for refusal to interfere - The civil appeal was dismissed as the Court was not inclined to interfere. - HELD THAT: - After hearing learned counsel for the petitioner, the Supreme Court declined to exercise its discretionary jurisdiction to grant the relief sought and stated it was not inclined to interfere in the matter. No substantive reasons are articulated in the order beyond the Court's stated disinclination to interfere.

Civil appeal dismissed.

Final Conclusion: Delay in filing the appeal was condoned; on the merits the Supreme Court declined to interfere and dismissed the civil appeal, disposing of any pending applications.

Summary order. Review Petition dismissed for lack of merit; pending applications, if any, disposed of.

Penalty under section 114(iii) of the Customs Act - Penalty under section 114AA of the Customs Act - Mis-declaration rendering goods liable for confiscation - Liability of a Custom House Agent for filing benami shipping bills - Requirement of due verification of exporter/IEC by CHA - Use of false and incorrect material in customs declarations - Assessment of excessiveness of penalty

Penalty under section 114(iii) of the Customs Act - Mis-declaration rendering goods liable for confiscation - Liability of a Custom House Agent for filing benami shipping bills - Requirement of due verification of exporter/IEC by CHA - Whether the appellant is liable to penalty under section 114(iii) of the Customs Act for filing shipping bills containing mis-declared description, quantity and value and thereby rendering the goods liable for confiscation - HELD THAT: - The record establishes mis-declaration of description, quantity and value discovered on examination and consequent re-determination of value. The appellant, as manager of the CHA, filed shipping bills using an IEC belonging to a person who was unaware of the exports and did so at the behest of another person who supplied the documents. The Tribunal held that filing benami shipping bills without verifying that the IEC holder was the actual exporter and without taking normal precautions expected of a CHA amounted to conduct which rendered the goods liable for confiscation. In that factual matrix the appellant could not claim good faith; he was required to verify the exporter/IEC and ensure the genuineness of the transaction. Consequently, the appellant was liable to penalty under section 114(iii) which applies where acts or omissions render goods liable for confiscation. [Paras 16, 17]

Liability under section 114(iii) affirmed and penalty upheld.

Penalty under section 114AA of the Customs Act - Use of false and incorrect material in customs declarations - Whether the appellant is liable to penalty under section 114AA for willfully using false or incorrect material in customs declarations - HELD THAT: - Section 114AA penalises knowingly or intentionally making, signing or using any declaration or document which is false or incorrect in any material particular. The Tribunal found that the appellant filed shipping bills containing materially false particulars of description, quantity and value and thus willfully mis-declared facts before customs authorities. Given these findings, the requirements of section 114AA were satisfied. The Tribunal further observed that, having regard to the value involved, the penalties imposed were not excessive. [Paras 11, 17]

Liability under section 114AA affirmed and penalty upheld.

Assessment of excessiveness of penalty - Whether the penalties imposed on the appellant were excessive - HELD THAT: - The Tribunal considered the magnitude of the mis-declaration, the use of a benami IEC and the role played by the appellant in filing the shipping bills without proper verification. On that basis the Tribunal found no reason to treat the imposed penalties as excessive and declined to interfere with the quantum imposed by the adjudicating authorities. [Paras 17]

Penalties held not excessive; no interference with quantum.

Final Conclusion: All impugned orders upheld; appeals dismissed and the penalties imposed under section 114(iii) and section 114AA of the Customs Act affirmed.

Regulation 10(n) of the Customs Brokers Licensing Regulations, 2013 - scope of Customs Broker's obligations under Regulation 10(n) - verification of IEC and GSTIN - presumption of genuineness of government-issued certificates - principles of natural justice - revocation of Customs Broker's licence and imposition of penalty

Principles of natural justice - Failure to furnish DGARM report and physical verification report to the appellant in the show cause notice infringed the principles of natural justice. - HELD THAT: - The Commissioner relied on a letter from DGARM and a physical verification report showing that the exporter did not exist at the declared premises, but neither document was enclosed with the show cause notice nor provided to the appellant, and the appellant had no opportunity to cross-examine those who produced them. Withholding these materials prevented the appellant from meeting the case against it and amounted to a violation of the principles of natural justice. For this reason alone, the impugned order deserved to be set aside. [Paras 13]

Impugned order set aside insofar as it relied on documents not furnished to the appellant; natural justice breach established.

Regulation 10(n) of the Customs Brokers Licensing Regulations, 2013 - scope of Customs Broker's obligations under Regulation 10(n) - verification of IEC and GSTIN - presumption of genuineness of government-issued certificates - Whether the appellant violated Regulation 10(n) in verifying client identity, IEC/GSTIN and functioning at declared address, and whether revocation and penalty were proportionate. - HELD THAT: - Regulation 10(n) requires the Customs Broker to verify the correctness of IEC and GSTIN, the identity of the client, and the client's functioning at the declared address by using reliable, independent and authentic documents, data or information. The obligation to verify IEC and GSTIN is satisfied if the broker verifies that these certificates were issued by the concerned government officers; it does not require the broker to investigate or ensure the correctness of the issuing officers' actions. Section 79 presumption supports treating government-issued certificates as genuine. Identity and address may be verified by documents, data or information that are independent, reliable and authentic; physical inspection of premises is not mandated and continuous surveillance is not required. On the facts, the appellant produced authentic government-issued documents (GSTIN, IEC, partnership deed, identity documents) and there was no evidence that these documents were forged or procured by the appellant through fraud. Consequently, the appellant did not fail to discharge its obligations under Regulation 10(n), and the findings of violation based on subsequent departmental verification of non-existence do not render the appellant liable where the broker had relied on authentic government-issued records. [Paras 16, 18, 19, 20, 21]

Appellant did not violate Regulation 10(n); revocation of licence and penalty were not justified on the established facts.

Final Conclusion: Appeal allowed; impugned order revoking the Customs Broker's licence and imposing penalty set aside and consequential relief granted to the appellant.

Chargeability of customs duty on the goods actually imported - Application of exemption notification based on correct technical specification - Admissibility and probative value of post-issue evidence (product brochure, test report, supplier clarification) - Typographical error in commercial documents and its rectification by contemporaneous evidence - Right of assessee to produce evidence after issuance of show cause notice

Application of exemption notification based on correct technical specification - Chargeability of customs duty on the goods actually imported - Whether the imported iRETs were of less than 5 amperes and therefore eligible for the exemption, so that duty demanded on the basis of declaration of 5 amperes in Bills of Entry cannot be sustained - HELD THAT: - The undisputed facts show import of two specific models of iRETs and contemporaneous commercial documents (invoices, packing lists, Bills of Entry) recorded "5 amperes." The appellant, however, produced model-specific product brochures, test reports from the Electronics Regional Test Laboratory and a supplier's clarification stating the actual current rating is 1.3 A and that the missing "<" in invoices was a typographical error. The Tribunal held that where there is a discrepancy between declared particulars and the actual goods imported, duties must be charged on the goods actually imported. Given that the product literature and an independent government test report confirm the models' rating as less than 5 amperes, and the supplier's letter corroborates a typographical mistake, the departmental approach of insisting on the printed declaration in the Bills of Entry was misplaced. The Tribunal found no reason to treat the models as different from those documented, and therefore concluded that the exemption applies to the imported goods as they were actually of less than 5 amperes. [Paras 6, 12, 14, 16, 19]

The goods were of less than 5 amperes and eligible for the exemption; the duty demand based on the declaration of 5 amperes cannot be sustained.

Admissibility and probative value of post-issue evidence (product brochure, test report, supplier clarification) - Right of assessee to produce evidence after issuance of show cause notice - Typographical error in commercial documents and its rectification by contemporaneous evidence - Whether the Commissioner was justified in rejecting the product brochures, government laboratory test reports and the supplier's clarification as evidence to establish the actual amperage - HELD THAT: - The Commissioner rejected the brochures because they were not uploaded at the time of clearance, declined to accept the government laboratory test reports, and disbelieved the supplier's letter on the ground that invoices must reflect goods actually supplied. The Tribunal held that once an SCN is issued the assessee has the right to produce evidence and the Commissioner erred in refusing to consider such corroborative material. The supplier's clarification was consistent with the technical specifications in the brochures and with independent test reports; rejecting the supplier's letter on the speculative basis that invoices cannot be corrected ignored the corroborative evidence. In these circumstances the brochures, test reports and supplier clarification were admissible and probative to establish the typographical error and the actual specification of the imported models. [Paras 11, 14, 15, 16]

The Commissioner erred in rejecting the product brochures, test reports and supplier's clarification; such evidence is admissible and probative to establish that a typographical error occurred and the goods were of less than 5 amperes.

Chargeability of customs duty on the goods actually imported - Legal principle that duties are leviable on the goods actually imported and not on what is merely stated in documents - HELD THAT: - The Tribunal restated the statutory principle that customs duties are to be levied on goods imported into India and not on what is said to have been imported. Illustrative examples were used to show that where declared particulars differ from actual import, assessment must follow actual goods. Applying this principle to the present facts, where model identity is undisputed and independent technical evidence establishes the actual amperage, duty must be determined on that factual basis rather than on an erroneous declaration. [Paras 17, 18, 19]

Duties must be charged on the goods actually imported; the department cannot insist on the incorrect declaration when verifiable evidence shows the true specification.

Final Conclusion: The appeal is allowed, the impugned order confirming duty and imposing penalty is set aside, and consequential relief granted to the appellant, the Tribunal accepting the appellant's evidence that the imported iRETs were of less than 5 amperes and hence entitled to the exemption.

Confiscation of improperly imported goods - confiscation of goods used for concealing smuggled goods - penalty for improper importation of goods - penalty for use of false and incorrect material - benami Bill of Entry - redeemption of confiscated goods

Confiscation of improperly imported goods - Confiscation of the undeclared cigarettes concealed in the containers was validly made under sections 111(f), 111(l) and 111(m). - HELD THAT: - The cigarettes were neither mentioned in the Bill of Entry nor in the Bill of Lading/Import General Manifest and thus were not declared. They were concealed behind declared HDPE granules and also lacked the statutory health warning, bringing them within the scope of prohibited or improperly imported goods. For these reasons the Tribunal upheld confiscation under sections 111(f), (l) and (m) as appropriately applied to the smuggled cigarettes. [Paras 15, 21]

Confiscation of the cigarettes under sections 111(f), 111(l) and 111(m) upheld.

Confiscation of goods used for concealing smuggled goods - redeemption of confiscated goods - Confiscation of the declared HDPE granules used to conceal the cigarettes under section 119, with option of redemption, was valid. - HELD THAT: - The HDPE granules were used to conceal the smuggled cigarettes and therefore attract confiscation under section 119. As the granules themselves were not prohibited goods, the adjudicating authority's grant of an option to redeem them on payment of redemption fine was treated as fair and balanced and was not interfered with. [Paras 16, 22]

Confiscation of HDPE granules under section 119 upheld; option of redemption sustained.

Penalty for improper importation of goods - benami Bill of Entry - Penalties under section 112 on the de-facto importers and the CHA/its employee were sustainable and proportionate. - HELD THAT: - Section 112 applies to persons whose acts render goods liable to confiscation. The appellants Ajay, Parshottam and Gagan were admitted (and found) to be the actual importers who filed a benami Bill of Entry; Guha Sarkar & Co. and its employee acted as CHA facilitating the import. Given the appellants' admitted roles and the grave nature of smuggling, the penalties imposed under section 112 upon the importers and the CHA/employee were held to be within statutory scope and not excessive; the Tribunal regarded the quantums as proportionate to the offence. [Paras 14, 23, 24]

Penalties under section 112 on all five appellants sustained as lawful and proportionate.

Penalty for use of false and incorrect material - benami Bill of Entry - Penalties under section 114AA for knowingly using false/incorrect declarations were sustainable against all five appellants. - HELD THAT: - Section 114AA penalises knowingly making or using false or incorrect material. The Tribunal found that the Bill of Entry was filed in the name of a defunct entity while the real importers were the appellants, and the true nature of goods was concealed. Accordingly, imposition of penalties under section 114AA on the de-facto importers and on the CHA/employee was upheld; the Tribunal considered the quantum of penalties to be balanced in view of the value and gravity of the smuggling. [Paras 14, 25]

Penalties under section 114AA on all five appellants upheld.

Confiscation of improperly imported goods - The Supreme Court decision in Canon India does not invalidate issuance of the SCN under section 124 by DRI in this case. - HELD THAT: - Canon India addressed issuance of SCNs under section 28 by DRI officers seeking duty assessments previously made by the Appraising Group; it held DRI could not issue section 28 notices in that context. This case involves an SCN under section 124 proposing confiscation and penalties (not a demand of duty under section 28). The Tribunal therefore held Canon India inapplicable and upheld competence of DRI to issue the SCN under section 124. [Paras 19]

SCN issued by DRI under section 124 is valid; Canon India does not apply.

Confiscation of improperly imported goods - The appellants' contention that the case property was illegally disposed of and therefore smuggling charge cannot be sustained is barred by finality of the High Court withdrawal and did not succeed before the Tribunal. - HELD THAT: - The Commissioner recorded that the goods were available and the appellants had an option to redeem HDPE granules; moreover the appellants had earlier filed a writ in the Delhi High Court on alleged illegal disposal and withdrew that petition without seeking leave to refile. The Tribunal held that the issue has attained finality and cannot be reopened before it, and found no basis to accept the contention that absence of case property vitiated the proceedings. [Paras 17, 18]

Claim of illegal disposal / absence of case property rejected as final and without basis before the Tribunal.

Final Conclusion: The Tribunal upheld the adjudicating authority's order: the undeclared cigarettes were absolutely confiscated; the HDPE granules used to conceal them were confiscated with option of redemption; penalties under sections 112 and 114AA were sustained against the importers and the CHA/employee as proportionate; the SCN under section 124 by DRI was held competent and the appellants' challenge regarding disposal of case property was rejected; all five appeals are dismissed.

Compliance with Regulation 10(n) of the Customs Brokers Licensing Regulations, 2013 - Verification of IEC and GSTIN by Customs Broker - Verification of client identity and functioning at declared address by reliable, independent, authentic documents, data or information - Presumption as to genuineness of certificates issued by government officers - Scope and limits of Customs Broker's obligation to investigate government-issued registrations - Liability of Customs Broker for clients becoming non-existent after verification - Proportionality of disciplinary action (revocation, forfeiture, penalty)

Compliance with Regulation 10(n) of the Customs Brokers Licensing Regulations, 2013 - Verification of IEC and GSTIN by Customs Broker - Verification of client identity and functioning at declared address by reliable, independent, authentic documents, data or information - Presumption as to genuineness of certificates issued by government officers - Appellant's compliance with the verification obligations under Regulation 10(n). - HELD THAT: - Regulation 10(n) requires the Customs Broker to verify (a) correctness of IEC, (b) correctness of GSTIN, (c) identity of the client, and (d) functioning of the client at the declared address by using reliable, independent, authentic documents, data or information. Verification of IEC and GSTIN is satisfied if the broker verifies that the certificates/registrations were issued by the concerned government officers; the broker is not obliged to re-examine or supervise the correctness of actions by DGFT or GST authorities. Certificates issued by government officers attract the presumption of genuineness and need not be further investigated by the broker unless the broker has reason to believe they were obtained by fraud. The identity and functioning obligations can be fulfilled by obtaining independent, reliable and authentic documents, data or information and do not mandate physical inspection of premises. Where the broker had obtained authentic documents such as GSTIN, IEC, PAN and other independent proofs, the obligation under Regulation 10(n) is discharged. The subsequent finding by officers that an exporter was 'non-existent' at the time of verification does not, without more, establish that the exporter never existed at the time of export or that the broker failed to verify as required. Applying these principles to the case, the Tribunal finds that the appellant fulfilled the verification obligations under Regulation 10(n) through authentic documents and information and did not fail in its duties under the Regulation. [Paras 19, 20, 21, 22, 23]

The appellant did not violate Regulation 10(n); its verification obligations were satisfied.

Liability of Customs Broker for clients becoming non-existent after verification - Scope and limits of Customs Broker's obligation to investigate government-issued registrations - Proportionality of disciplinary action (revocation, forfeiture, penalty) - Validity and proportionality of revocation of licence, forfeiture of security and penalty imposed on the appellant. - HELD THAT: - Because there was no failure by the Customs Broker to discharge its duties under Regulation 10(n), the disciplinary measures-revocation of the Customs Broker's licence, forfeiture of the security deposit and imposition of penalty-were not justified. The Tribunal also notes that the verification reports relied upon recorded non-existence only at the time of later verification and did not establish non-existence at the time of exports, nor did they impugn the authenticity of the government-issued IEC/GSTIN relied upon by the broker. Given the absence of a breach of Regulation 10(n), the consequent punitive action lacked a proper foundation. The impugned order premised on the officers' later verification therefore cannot stand. [Paras 11, 12, 15, 23, 24]

The revocation, forfeiture and penalty are set aside as unjustified; the impugned order is quashed.

Final Conclusion: The appeal is allowed; the Commissioner's order dated 16.06.2021 revoking the Customs Broker's licence, forfeiting the security deposit and imposing penalty is set aside, with consequential relief to the appellant.

Conversion of shipping bill - Section 149 of the Customs Act, 1962 - proviso to Section 149 - documentary evidence existing at the time of export - CBEC circular cannot curtail statutory power

Conversion of shipping bill - Section 149 of the Customs Act, 1962 - proviso to Section 149 - documentary evidence existing at the time of export - CBEC circular cannot curtail statutory power - Conversion of free shipping bills to drawback shipping bills under Section 149 allowed independent of the CBEC Circular dated 16.01.2004 where statutory conditions are satisfied - HELD THAT: - The Tribunal held that the power conferred on the proper officer by Section 149 to amend a shipping bill after presentation cannot be curtailed by a Board/CBEC circular. The proviso to Section 149 permits amendment after export only on the basis of documentary evidence which existed at the time of export. The appellant possessed the requisite documentary evidence antecedent to export and therefore met the statutory requirement. The adjudicating authority erred in denying conversion by importing conditions not found in Section 149 - including insistence on physical examination of goods or treating the request as an impermissible change of character of documents - and by relying on the CBEC circular to override the statutory proviso. In view of settled precedents relied upon by the Tribunal, the conversion should have been allowed if otherwise permissible under the proviso to Section 149. Accordingly the impugned order refusing conversion was held legally unsustainable and set aside. [Paras 9, 10]

Impugned order set aside and conversion of the free shipping bills to drawback shipping bills allowed subject to satisfaction of conditions in Section 149.

Final Conclusion: The appeal is allowed: the order denying conversion is set aside and the free shipping bills are directed to be converted into drawback shipping bills in terms of Section 149 of the Customs Act, 1962, independent of the CBEC Circular, the conversion being subject only to the statutory conditions prescribed in the proviso to Section 149.

Seizure and confiscation - redemption fine - proof of lawful import under Bill of Entry - release of seized goods - payment of applicable customs duty with interest - penalty reduction - appropriation of security deposit

Proof of lawful import under Bill of Entry - seizure and confiscation - release of seized goods - Validity of confiscation of the seized plastic scrap and entitlement to release - HELD THAT: - The Appellant produced a Bill of Entry dated 15.06.2016 for imported plastic scrap (11,000 kgs) and an invoice (10,000 kgs), whereas the seized quantity was 9,388 kgs. The Assistant Commissioner confirmed that the goods had been imported legally. Reading these documents together, the Tribunal found that the documentary evidence was sufficient to demonstrate that the seized scrap was lawfully imported and not illegally procured from Nepal. On that basis, the Tribunal concluded that confiscation was not justified and ordered release of the scrap to the Appellant. [Paras 3, 4, 9]

Confiscation set aside and plastic scrap released to the Appellant.

Redemption fine - payment of applicable customs duty with interest - Treatment of seized plastic granules for which the Appellant sought redemption - HELD THAT: - The Appellant did not initially claim ownership of the granules (2,323 kgs.) but subsequently paid the redemption fine and offered to pay the applicable customs duty. The Tribunal recorded that the Appellant did not dispute the adjudicating authority's order regarding the granules and directed the Appellant to pay the applicable customs duty with interest to close the issue, accepting the voluntary redemption and payment proposal. [Paras 2, 8]

Appellant to pay applicable customs duty with interest; redemption fine of Rs.20,000/- to be appropriated for granules.

Penalty reduction - seizure and confiscation - Appropriateness and quantum of penalty imposed on the Appellant - HELD THAT: - The Tribunal found no case against the Appellant in respect of the plastic scrap (for which confiscation was set aside). Regarding the granules, the Appellant ultimately claimed and redeemed them on payment of redemption fine and duty. Taking both aspects into account, the Tribunal reduced the penalty previously imposed on the Appellant from the original sum to Rs.5,000, observing that the overall conduct and subsequent redemption warranted mitigation. [Paras 10]

Penalty on the Appellant reduced to Rs.5,000.

Appropriation of security deposit - redemption fine - payment of applicable customs duty with interest - Utilisation of the security deposit made by the Appellant - HELD THAT: - The Appellant had deposited a security amount. The Tribunal directed that this security deposit should be appropriated first towards the redemption fine for the granules and the reduced penalty on the Appellant, and the balance be applied against the customs duty and interest payable, thereby finalising financial adjustments in consequence of the orders. [Paras 11]

Security deposit to be appropriated towards redemption fine, penalty and remaining duty and interest.

Final Conclusion: The Tribunal allowed the appeal in part: the confiscation of the plastic scrap was set aside and the scrap ordered released; the Appellant must pay applicable customs duty with interest for the granules and the redemption fine accepted; the penalty on the Appellant was reduced to Rs.5,000 and the security deposit directed to be appropriated accordingly; the appeal disposed of.

Compliance with Section 30(2)(b) of the IBC, 2016 - NIL liquidation value entitling NIL payment to operational creditors - commercial wisdom of the Committee of Creditors is non justiciable - application of Section 53 priority in determining minimum payout to operational creditors - compliance with Section 30(2) r/w Regulation 38 of the CIRP Regulations

Compliance with Section 30(2)(b) of the IBC, 2016 - NIL liquidation value entitling NIL payment to operational creditors - application of Section 53 priority in determining minimum payout to operational creditors - Resolution plan proposing NIL payment to operational creditors is not in violation of Section 30(2)(b) of the IBC, 2016 where liquidation value available for operational creditors is Nil. - HELD THAT: - The Adjudicating Authority found that Section 30(2)(b) requires that payments proposed to operational creditors shall not be less than the amount payable to them in the event of liquidation under Section 53 or the amount distributable under Section 53(1), whichever is higher. The liquidation value disclosed for the corporate debtor left no value for operational creditors; accordingly the minimum statutory entitlement of operational creditors in liquidation was Nil. A resolution plan proposing Nil payment to operational creditors therefore complied with Section 30(2)(b) when the liquidation analysis showed no distributable value for those creditors. The Tribunal agreed with the Adjudicating Authority's reasoning and found no contravention of the Code or the CIRP Regulations in approving a plan that provides Nil to operational creditors where the liquidation outcome would likewise yield Nil to them. [Paras 20, 21, 24, 25, 26]

Objections to the resolution plan on ground of Nil payment to operational creditors were rejected; the plan does not violate Section 30(2)(b).

Commercial wisdom of the Committee of Creditors is non justiciable - compliance with Section 30(2) r/w Regulation 38 of the CIRP Regulations - The commercial decision of the CoC in approving the resolution plan (approved by 100% votes) is not open to judicial interference in the absence of contravention of any provision of law. - HELD THAT: - The Tribunal reiterated that where a resolution plan has been approved by the requisite voting share of the CoC, the CoC's commercial judgment is ordinarily non justiciable unless the plan contravenes statutory mandates. Having concluded that the plan complied with Section 30(2)(b) and related regulatory requirements, the Tribunal held there was no legal basis to interfere with the CoC's unanimous approval. The Tribunal therefore affirmed the Adjudicating Authority's dismissal of the operational creditors' applications challenging the plan. [Paras 20, 22, 26]

The CoC's approval of the resolution plan is not liable to be interfered with; the appeals challenging that approval are dismissed.

Final Conclusion: The appeal is dismissed. The Adjudicating Authority correctly held that the resolution plan did not contravene Section 30(2)(b) of the IBC, 2016 given Nil liquidation value for operational creditors, and there was no occasion to interfere with the CoC's unanimous commercial decision.

Summary order. Prayer for open Court hearing rejected; delay condoned; review petition dismissed for lack of merit; pending applications, if any, disposed of.

Extended period of limitation - suppression and misrepresentation - pure agent exemption - appreciation of documentary evidence - remand for de novo adjudication

Extended period of limitation - suppression and misrepresentation - Whether the extended period of limitation was rightly invoked by the department on the ground of suppression and misrepresentation - HELD THAT: - The Tribunal observed that the show cause notice contained specific allegations regarding discrepancies between the ST-3 returns filed by the assessee and the ST-3 data downloaded from ACES, as reproduced in the notice. The Order-in-Original held the extended period invocable but did not deal with those specific allegations. Given that the appellant has now produced documentary material before the Tribunal and both parties consented to remand, the Tribunal held that the question of invocation of the extended period could not be properly decided without the original adjudicating authority appreciating the relevant returns and related documents. The Tribunal therefore remanded the matter for fresh adjudication, directing the adjudicating authority to examine the alleged suppression and misrepresentation and to give appropriate findings on the applicability of the extended period. [Paras 7, 8]

Remanded to the original adjudicating authority for fresh consideration of the allegations of suppression and misrepresentation and the correctness of invoking the extended period of limitation.

Appreciation of documentary evidence - pure agent exemption - remand for de novo adjudication - Whether the confirmed demand of service tax (the remaining demand) is sustainable on merits in light of additional documents produced by the assessee - HELD THAT: - The Tribunal noted that the confirmed demand (as recorded) was based on documentary material that, according to the assessee, could be supplemented by additional invoices and records presently before the Tribunal. As those documents were not considered by the original adjudicating authority, the Tribunal concluded that merits could not be finally determined at the Tribunal stage. In the interest of comprehensive adjudication, the matter was remitted for de novo consideration so that the original authority may examine the additional documentary evidence, assess the claim of pure agent/exemption and abatement, and pass fresh findings on merits in respect of the demand which was confirmed. [Paras 7, 8]

Remanded to the original adjudicating authority for de novo adjudication of the merits after appreciation of the additional documentary evidence, including issues relating to pure agent treatment and the confirmed demand.

Final Conclusion: Both appeals are allowed by way of remand; the matter is directed back to the original adjudicating authority for de novo adjudication on the allegations of suppression/misrepresentation, the correctness of invoking the extended period of limitation, and on the merits after appreciation of the additional documents, in respect of Financial Year 2010-11 to 2014-15.

Dismissal as not pressed - liberty to file review petition - alternative liberty to file appeal before CESTAT - limitation not to be raised - pending applications disposed of

Dismissal as not pressed - Special Leave Petition dismissed as not pressed. - HELD THAT: - The Court recorded the submission of learned senior counsel for the petitioners that the petitioners do not press the special leave petition and intend to file a review petition before the High Court. On that basis the Court dismissed the special leave petition as not pressed, while placing the submission on record.

SLP dismissed as not pressed.

Liberty to file review petition - Petitioners granted liberty to file a review petition before the High Court. - HELD THAT: - Concomitant to dismissal of the SLP as not pressed, the Court granted the petitioners the liberty to pursue a review petition before the High Court, as expressly recorded in the order.

Liberty granted to file a review petition before the High Court.

Alternative liberty to file appeal before CESTAT - limitation not to be raised - Alternative liberty to file an appeal before CESTAT within one month, with the condition that limitation shall not be urged before the Tribunal if appeal is filed within that period. - HELD THAT: - As an alternative remedy, the Court reserved liberty to the petitioners to file an appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) within one month from the date of the order. The Court further directed that if such an appeal is filed within the stipulated time, the respondents shall not raise the plea of limitation before the Tribunal, thereby precluding limitation as a bar to the adjudication of the appeal filed within the prescribed period.

Liberty to file appeal before CESTAT within one month; limitation shall not be raised if appeal is filed within that period.

Pending applications disposed of - Pending applications, if any, disposed of. - HELD THAT: - The Court disposed of any pending applications consequential to the order, leaving no interlocutory applications outstanding in the matter before the Supreme Court.

Pending applications, if any, disposed of.

Final Conclusion: The SLP is dismissed as not pressed with liberty to file a review petition before the High Court; alternatively the petitioners may file an appeal before CESTAT within one month, in which event limitation shall not be raised; pending applications are disposed of.

Review petition - Open court hearing - Delay and limitation - Dismissal for delay - Review on merits - Summary dismissal

Open court hearing - Review petition - Prayer for open Court hearing of the review petitions - HELD THAT: - The Court refused the request for an open Court hearing. The order records the prayer and expressly rejects it without adverting to any procedural requirement that warranted such hearing in this case.

Prayer for open Court hearing is rejected.

Delay and limitation - Dismissal for delay - Review petition - Maintenance of the review petitions in view of inordinate delay - HELD THAT: - The Court noted an inordinate delay of 389, 390 and 389 days respectively in filing the review petitions and, having considered the petitions and accompanying documents, found no sufficient grounds to condone the delay. The petitions were therefore dismissed on the ground of delay.

Review petitions dismissed on the ground of delay.

Review on merits - Summary dismissal - Review petition - Whether the review petitions warranted interference on merits - HELD THAT: - Independent of the delay, the Court examined the review petitions and the documents enclosed and concluded that there were no good grounds or reasons to review the earlier order dated 11.01.2023. Accordingly, the petitions were dismissed on merits as well.

Review petitions dismissed on merits; no reason to review order dated 11.01.2023.

Final Conclusion: The prayers for open Court hearing were refused and the review petitions were dismissed both for inordinate delay and on merits; pending applications, if any, are disposed of.

Liability of manufacturer after removal - exemption notification for fertilizers - self-assessment and duty payable on removal - recovery of differential duty from manufacturer where subsequent diversion occurs - confiscation and redemption fine in lieu of confiscation - penalty under Rule 25 and Rule 26 of the Central Excise Rules - requirement of fraudulent mis-declaration or involvement for fastening post-removal liability

Liability of manufacturer after removal - exemption notification for fertilizers - requirement of fraudulent mis-declaration or involvement for fastening post-removal liability - Whether differential duty and penalty could be recovered from Manglam Phosphate Limited for diversion of SSP by downstream purchasers after Manglam had cleared the goods marked for agricultural use under the concessional exemption - HELD THAT: - The Tribunal held that excise duty is leviable on removal of excisable goods and is to be self-assessed by the manufacturer based on classification, valuation and applicable exemption at the time of clearance. Fertilizers including SSP indisputably fell under Chapter 31 and qualified for the concessional rate subject to the condition that they be intended for agricultural use; Manglam's packs were expressly marked 'for agricultural use only' and duty was assessed accordingly. The Tribunal found that once Manglam removed and sold the goods to IPL it had no control over subsequent transfers and, absent involvement in fraud or intentional mis-declaration, the manufacturer cannot be held liable for diversion by downstream parties. Consequently, recovery of differential duty and imposition of penalty on Manglam for the downstream diversion were unsustainable. [Paras 16, 18, 19, 20, 21]

Demand and penalty against Manglam set aside; appeal allowed with consequential relief.

Confiscation and redemption fine in lieu of confiscation - penalty under Rule 26 of the Central Excise Rules - recovery of differential duty from manufacturer where subsequent diversion occurs - Whether confiscation of seized SSP, imposition of redemption fine and penalty under Rule 26 upon Hindustan were justified for diversion of subsidised SSP to non agricultural use - HELD THAT: - The Tribunal found that Hindustan alone diverted SSP clearly marked for agricultural use to industrial purposes and that there was no evidence that the SSP purchased was of sub standard quality making it unfit for agriculture. The Fertilizer Control Order requires marking and there was nothing to substantiate Hindustan's plea of sub standard goods. Given Hindustan's conduct in diverting subsidised fertilizer to non agricultural use, the forfeiture/ confiscation and imposition of redemption fine in lieu of confiscation, together with the penalty under Rule 26, were held to be justified and were not interfered with. [Paras 22, 26, 27, 28]

Appeal by Hindustan rejected; confiscation, redemption fine and Rule 26 penalty upheld.

Final Conclusion: The appeal by Manglam Phosphate Limited is allowed and the demand and penalty against it are set aside; the appeal by Hindustan Phosphate Pvt Ltd is dismissed and the confiscation, redemption fine and penalty under Rule 26 are upheld.

Conversion of cubic meter to square meter for irregular marble - option under Chapter Note V of Chapter 25 - self-assessment and post-facto audit scrutiny - presumptive findings - extended period of limitation - suppression of facts requiring fraud, collusion or wilful default - burden on department to prove deliberate omission

Conversion of cubic meter to square meter for irregular marble - option under Chapter Note V of Chapter 25 - presumptive findings - Whether the appellant applied an incorrect formula for converting quantities of rough marble slabs and thereby short-paid duty - HELD THAT: - The Tribunal found that the appellant, a manufacturer converting irregularly shaped marble blocks into slabs, had adopted the option in Chapter Note V treating one cubic meter of marble block as equivalent to 30 square meters of slabs and that this formula is the one specified in the Central Excise Tariff. The department's challenge rested on alleged erroneous conversion from Sq. Ft. to Sq. Mtr., but invoices examined by the department omitted slab thickness and no comparative calculation under Chapter Note V or other evidence was produced to demonstrate misapplication of the tariff formula. Given that slab area varies with thickness (noted standards for different thicknesses were adverted to), the departmental conclusions were held to be presumptive. In absence of evidence showing incorrect application of the tariff-prescribed conversion, the departmental calculation could not be sustained. [Paras 5, 7]

The departmental allegation of wrong calculation is not proved; the formula applied by the appellant cannot be held to be incorrect.

Extended period of limitation - self-assessment and post-facto audit scrutiny - suppression of facts requiring fraud, collusion or wilful default - burden on department to prove deliberate omission - Whether the extended period of limitation was rightly invoked in issuing the show cause notice - HELD THAT: - The Tribunal observed that the appellant had maintained records, filed ER-1 returns and discharged duty by self-assessment using the tariff formula. The department's sole ground for invoking the extended period was that correct quantity was not reflected in ER-1 and that the short-payment came to light only on audit; no evidence was produced to show intent to evade duty. Reliance was placed on authority that 'suppression of facts' in the penal provision must be read with surrounding words like fraud, collusion or wilful default and that mere omission is insufficient to invoke extended limitation. The department failed to prove deliberate concealment or suppression; mere discovery of an alleged short payment during audit does not, without more, establish requisite culpability to extend limitation. [Paras 8, 9, 10]

Extended period of limitation was wrongly invoked; the show cause notice is time-barred.

Final Conclusion: The demand framed in the show cause notice and confirmed in the impugned orders is unsustainable on merits and barred by limitation; the order under challenge is set aside and the appeal is allowed.

Penalty under Rule 26(1) of the Central Excise Rules, 2002 - Abatement of evasion of excise duty - Principles of natural justice - Admissibility of retracted statement and requirement of examination-in-chief under Section 9D of the Central Excise Act, 1944 - Confiscation under Rule 25 of the Central Excise Rules, 2002

Penalty under Rule 26(1) of the Central Excise Rules, 2002 - Principles of natural justice - Admissibility of retracted statement and requirement of examination-in-chief under Section 9D of the Central Excise Act, 1944 - Validity of imposition of penalty under Rule 26(1) in view of appellant's affidavit and absence of examination-in-chief - HELD THAT: - The Tribunal found that the adjudicating authority imposed penalty under Rule 26(1) on the basis of the appellant's earlier statement but did not record any consideration of the appellant's subsequent affidavit dated 07.02.2008 which retracted/explained that statement. The adjudicating authority's order reproduces findings attributing purchase of clandestinely cleared goods to the appellant, but is silent about the affidavit and did not conduct examination-in-chief in terms of Section 9D before relying on the earlier statement as evidence. The Tribunal held that reliance on the prior statement without first addressing the retraction/explanation and without conducting examination-in-chief amounted to a breach of the principles of natural justice and procedural requirement under Section 9D, rendering the penalty imposition vitiated to that extent. Consequently the matter is not finally adjudicated on merits but requires fresh consideration limited to the question of imposition of penalty after giving the appellant an opportunity for compliance with procedural safeguards. [Paras 4, 5]

Impugned order insofar as imposition of penalty under Rule 26(1) is set aside and the matter is remanded to the adjudicating authority for fresh decision after compliance with principles of natural justice and conducting examination-in-chief as required.

Final Conclusion: The Tribunal set aside the penalty of Rs. 5 lakh imposed under Rule 26(1) in respect of the appellant and remanded the matter to the adjudicating authority for fresh consideration limited to the imposition of penalty, directing compliance with principles of natural justice and the procedural requirement of examination-in-chief under Section 9D before relying on the earlier statement.

Valuation of goods captively consumed (CAS-4 / Rule 8 of Valuation Rules) - Valuation on sale to independent buyers (Rule 4 of Valuation Rules) - Binding effect of CBEC Circular dated 13.02.2003 - Extended period of limitation and suppression - Revenue neutrality and availability of Cenvat credit - Maintainability of show-cause notice after finalisation of provisional assessment

Valuation of goods captively consumed (CAS-4 / Rule 8 of Valuation Rules) - Valuation on sale to independent buyers (Rule 4 of Valuation Rules) - Binding effect of CBEC Circular dated 13.02.2003 - Appellant's valuation of Calcined Alumina for inter-unit stock transfer was correctly determined under Rule 8 (CAS-4) and not Rule 4. - HELD THAT: - The Tribunal examined CBEC Circular No.692/8/2003 dated 13.02.2003 which mandates that cost of production for captively consumed goods be determined in accordance with CAS-4 and noted that the appellant had been paying duty on that basis. The Tribunal reviewed earlier decisions of this forum and the Supreme Court confirming that the Circular is binding on the Revenue and that assessees may seek determination under subsequently issued beneficial circulars when earlier instructions are deemed modified. The facts showed that the goods were transferred to the sister unit for captive consumption (use in manufacture of excisable goods) and not as clearances to unrelated buyers. On these facts and the binding circular, Rule 8 (CAS-4) applies and Rule 4 is inapplicable. [Paras 7, 8, 11, 12, 13]

Appellant correctly paid duty under CAS-4 in terms of Rule 8; Rule 4 is not applicable.

Extended period of limitation and suppression - Extended period of limitation could not be invoked against the appellant for April 2009 to November 2013. - HELD THAT: - The Tribunal observed that the appellant had consistently paid duty following the binding precedents and Circular for earlier periods and that provisional assessments for the impugned period had been finalised. There was no finding of suppression of facts by the appellant; they had not concealed the mode of valuation relied upon. Given these circumstances, the issuance of a showcause invoking extended limitation was barred. [Paras 14, 15]

Extended period of limitation is not invokable; show-cause on that ground is barred.

Revenue neutrality and availability of Cenvat credit - The matter is revenue neutral because duty paid on stock transfer to the sister unit would be available as Cenvat credit to the recipient unit. - HELD THAT: - The Tribunal noted that the Calcined Alumina was transferred to the appellant's sister unit which used it in manufacture of aluminium and availed credit of duty paid. Citing consistent authority and previous Tribunal reasoning, the Tribunal held that since any differential duty would be available as credit to the recipient unit, there is no loss to the exchequer and the exercise is revenue neutral. [Paras 16, 17]

The transaction is revenue neutral; no differential duty is exigible on this ground.

Maintainability of show-cause notice after finalisation of provisional assessment - A show-cause notice issued without challenging the final assessment orders of the provisional assessments was not maintainable. - HELD THAT: - The Tribunal recorded that provisional assessments for the impugned period had been finalised and accepted by the Revenue, and that the department did not challenge those final assessment orders prior to issuing the present showcause. In such circumstances the Revenue could not validly proceed by issuing a fresh showcause without first challenging the finalised assessments. [Paras 18, 19]

Show-cause notice was not maintainable in the absence of challenge to the finalised provisional assessments.

Final Conclusion: The appeal is allowed: the appellant's valuation under Rule 8 (CAS-4) is upheld, extended limitation is not invocable, the matter is revenue neutral, the showcause issued without challenging finalised provisional assessments is not maintainable, and the impugned demand and penalty are set aside.

CENVAT credit on supplementary invoices/debit notes - correlation of original invoices with debit notes - provisional assessment and supplementary invoices - Rule 9 of the CENVAT Credit Rules, 2004 - range officer verification and certificate reliance - remand for verification of documents - application of precedential Tribunal order

CENVAT credit on supplementary invoices/debit notes - correlation of original invoices with debit notes - provisional assessment and supplementary invoices - range officer verification and certificate reliance - Rule 9 of the CENVAT Credit Rules, 2004 - Whether the claims of CENVAT credit taken on the basis of debit notes/supplementary invoices issued by M/s. Tata Steel Limited could be allowed or required further verification - HELD THAT: - The Tribunal observed that the authorities below found themselves unable to correlate the debit notes/supplementary invoices with the original invoices and with the provisional assessment records so as to satisfy the conditions for allowing CENVAT credit. Although the appellant produced the debit notes, annexures and a certificate from M/s. Tata Steel and a verification report from the Range Officer, the Commissioner (Appeals) recorded that the provisional assessment order did not mention the appellant or the quantities and differential duty attributable to supplies to the appellant, and the impugned documents were not expressly marked as provisionally assessed. Given the lack of conclusive correlation on the record and the factual nature of the discrepancies identified, the Tribunal did not decide the entitlement to credit on merits but directed a factual verification. The adjudicating authority was ordered to sit with the appellant's representative to correlate the debit notes, invoices and the certificate issued by M/s. Tata Steel, examine whether the debit notes arose from provisional assessments and whether the documents satisfy the requirements of Rule 9 read with the relevant excise rules, and thereafter pass an appropriate speaking order in law following the Tribunal's earlier precedent in the case. The appellant was directed to approach the adjudicating authority within 15 days; the adjudicating authority was directed to complete verification and pass the order within sixty days thereafter. [Paras 6, 7]

The matter is remanded to the adjudicating authority for document-wise verification and correlation of debit notes, invoices and the Tata Steel certificate; the adjudicating authority shall sit with the appellant's representative, verify whether the debit notes arose from provisional assessment and then pass an appropriate order in accordance with law and the Tribunal's precedent within the prescribed timeline.

Final Conclusion: Appeals disposed of by remand: the Tribunal has not adjudicated entitlement to CENVAT credit on merits but has directed factual verification and correlation of documents by the adjudicating authority with specified procedural directions and timelines.

Coming into force of notification under Section 5A of the Central Excise Act, 1944 - publication in the Official Gazette and offer for sale as triggering operation of notification - refund of excess excise duty paid where notification not yet in force - principle of unjust enrichment

Coming into force of notification under Section 5A of the Central Excise Act, 1944 - publication in the Official Gazette and offer for sale as triggering operation of notification - refund of excess excise duty paid where notification not yet in force - Whether Notifications No.22/2014 dated 12.11.2014 and No.24/2014 dated 02.12.2014 were effective from their dates of issue or only from the dates of publication and offer for sale, and whether refund of excess duty paid is admissible where notifications were not yet in force on clearance dates. - HELD THAT: - The Tribunal accepted the appellant's contention that, under the text of Section 5A(5) of the Central Excise Act, 1944, a notification issued under the statute comes into force only when it is published in the Official Gazette and also offered for sale on the date of its issue by the Directorate of Publicity and Public Relations. The appellate order relied upon decisions of other Benches of the Tribunal and the High Court which held that the cited notifications were published on dates later than their dates of issue; accordingly the notifications could not be applied to clearances effected prior to publication. The Tribunal noted that an earlier refund granted by the Assistant Commissioner on identical facts was upheld on appeal up to the High Court of Calcutta, which recorded that the notifications were published on later dates and that the revenue had implemented earlier Tribunal orders by granting refunds. Applying these authorities and the statutory provision, the Tribunal concluded that the notifications were not operative on the dates of clearance and that the appellant was entitled to refund of the excess duty paid. [Paras 10, 11, 12, 13, 15]

Impugned order set aside; appeal allowed and appellant entitled to consequential relief including refund of excess duty paid, in view of notifications coming into force only from date of publication/offer for sale.

Final Conclusion: The appeal is allowed; the impugned order rejecting the refund claim is set aside and consequential relief granted, the Tribunal holding that the notifications became effective only upon publication and offer for sale and thus excess duty paid in respect of clearances prior to publication is refundable.

Voter's right to know - VVPAT verification - return to paper ballot system - integrity of EVM firmware - randomised VVPAT tallying - proviso to Rule 49M(3) - Rule 56D scrutiny of paper trail - Rule 49MA written complaint mechanism - writ jurisdiction under Article 32 - maintainability of writ petitions based on suspicion - res judicata in public interest litigation - directions for post-election verification

Return to paper ballot system - Prayer to revert to the paper ballot system is rejected. - HELD THAT: - The Court held that reverting to paper ballots would be regressive and impractical in the Indian electoral context given the vast electorate, logistical challenges and the documented advantages of EVMs (such as prevention of booth capture, elimination of invalid votes and administrative expediency). The suggestion to return to paper ballots was withdrawn in the course of proceedings and, on merits, is unsustainable. The Court emphasised that improvements to the existing EVM system, rather than reversion, are the appropriate course. [Paras 72]

Prayer for return to paper ballot system dismissed.

VVPAT verification - randomised VVPAT tallying - voter's right to know - Demand for 100% counting of VVPAT slips is rejected; the existing regime of randomized VVPAT verification (as increased to 5 EVMs per assembly constituency) and other safeguards adequately protect the voter's right to know. - HELD THAT: - The Court recognised the voter's fundamental interest in assurance that a vote is recorded and counted but held that the right does not translate into a right to 100% physical tallying or to physical possession of VVPAT slips. The VVPAT display for seven seconds, the beep confirmation, Form 17A/17C reconciliations, Rule 56D recount mechanism, and the N. Chandrababu Naidu direction for counting VVPATs from five polling stations per assembly constituency provide robust checks. Increased 100% manual counting would cause substantial delay, require disproportionate manpower, increase opportunities for human error or manipulation, and is not warranted by the empirical record of near-zero mismatches. [Paras 69, 70, 71]

Prayer for 100% VVPAT slip counting rejected; existing randomized verification scheme upheld.

Proviso to Rule 49M(3) - Rule 49MA written complaint mechanism - Proviso to Rule 49M(3) is satisfied by the present VVPAT practice; Rule 49MA complaint procedure is the proper remedy for alleged mismatches and has not yielded proven mismatches. - HELD THAT: - The Court interpreted Rule 49M(3) to require that the VVPAT slip be momentarily visible to the voter before the slip is cut, which is met by the illuminated transparent (or marginally tinted) window displaying the slip for seven seconds. Marginal tint to preserve secrecy does not violate the Rule. Rule 49MA allows an elector to make a written declaration if he considers a mismatch occurred; empirical data showed only 26 such complaints with no substantiated mismatch. The Court also cautioned against liberal allowance of verification requests during polling as disruptive. [Paras 45, 61, 73, 74]

Current VVPAT display practice conforms to Rule 49M(3); Rule 49MA provides the complaint remedy and has not disclosed any validated mismatch.

Integrity of EVM firmware - directions for post-election verification - EVM architecture and safeguards negate the likelihood of tampering of burnt firmware; nevertheless the Court issued directions for additional post-election verification measures. - HELD THAT: - After detailed examination the Court accepted that the EVMs use one-time programmable (burnt) firmware in microcontrollers, UADM and other physical and procedural safeguards, randomized allocation, multi-stage mock polls and reconciliation protocols which make tampering improbable. Statistical data of extensive VVPAT tallies showed virtually no mismatches. While rejecting speculative reprogramming fears, the Court issued forward-looking directions to further strengthen transparency: sealing and retention of symbol loading units post-1.5.2024 for 45 days, and a mechanism permitting verification of the burnt memory/microcontroller in 5% of EVMs per assembly constituency on written request by candidates placed second or third (with specified timelines, presence rights, certification by engineers and cost recovery/refund rules). [Paras 25, 28, 42, 58, 76]

EVM firmware integrity upheld; Court directed specified post-election verification measures (sealing of symbol loading units and conditional 5% burnt memory checks) as recorded.

Rule 56D scrutiny of paper trail - Rule 56D provides the returning officer's power and procedure to order counting of VVPAT slips; it remains the established statutory mechanism for post-count scrutiny. - HELD THAT: - The Court noted the statutory framework in Rule 56D which permits candidates or their agents to apply for counting of printed paper slips, vests discretion in the returning officer subject to ECI guidelines, requires written reasons for decisions, and prescribes procedures including amendment of Form 20 where discrepancies are found. The rule functions as part of the checks ensuring reconciliation between electronic counts and paper trail where admissible. [Paras 54, 55]

Rule 56D recognised and affirmed as the operative statutory mechanism for scrutiny of paper trail.

Writ jurisdiction under Article 32 - maintainability of writ petitions based on suspicion - Writ petitions based on mere suspicion, absent credible material of mala fides, arbitrariness or imminent breach of rights, are not maintainable; the present petitions did not establish such material but the Court considered directions in public interest. - HELD THAT: - The Court, particularly in the concurring opinion, emphasised that Article 32/226 jurisdiction is extraordinary and ought not be invoked on mere conjecture. Precedents allow prevention of threatened infringements where apprehension is well founded; here the petitioners failed to show prima facie material of malafide or real threat. The Court nevertheless entertained the matter and issued measured directions to strengthen confidence. The opinion reiterates that mere suspicion does not suffice to invoke writ relief. [Paras 21, 22, 23, 27, 28]

Writs grounded on mere suspicion are not maintainable; but in this instance the Court issued directions in public interest despite absence of cogent material of imminent infringement.

Res judicata in public interest litigation - Principles of res judicata apply to writ petitions and repeated challenges lacking new substantial grounds may be barred; the Court warned against re-litigation absent fresh material. - HELD THAT: - The Court recalled precedents establishing applicability of res judicata to writ petitions and explained that petitions re-raising previously adjudicated issues without new substantial grounds cannot normally be entertained. While the doctrine is flexible in matters of substantial public interest, the threshold for re-opening settled litigation requires demonstrable new evidence or grounds; absent that, re-litigation will be resisted. [Paras 30, 31, 32, 33, 34]

Res judicata applies to writ petitions; repeated challenges to EVMs must show new substantial grounds to avoid dismissal.

Final Conclusion: The writ petitions challenging the EVM-VVPAT regime were dismissed insofar as the principal reliefs (return to paper ballots; 100% VVPAT counting; handing VVPAT slips to voters) were refused. The Court upheld the integrity of the existing EVM-VVPAT processes and statutory safeguards, interpreted Rule 49M and Rule 56D as providing adequate remedies, warned against litigation based on mere suspicion, and issued directed measures to further strengthen transparency (sealing and retention of symbol loading units post-01.05.2024 and a limited post-result verification of burnt memory in 5% EVMs per assembly constituency on prescribed conditions).

Survival of cause of action - right to injunction surviving death of plaintiff - impleadment and substitution of legal representative - abatement of suit - trial of rival title and testamentary claims

Right to injunction surviving death of plaintiff - survival of cause of action - Whether the cause of action for a suit seeking injunction survives the death of the plaintiff and can be enforced by the plaintiff's legal representatives. - HELD THAT: - The Court held that the right to injunction does not automatically perish with the death of the plaintiff. Distinguishing the consequences of the death of a defendant from the death of a plaintiff, the Court observed that an injunction operates against defendants and that where the plaintiff's claim is to protect possession of property, the cause of action will survive in favour of the legal representatives who come into possession of the property. Therefore, an injunction suit of the nature filed by the deceased plaintiff does not abate on her death if her legal representatives can enjoy the relief sought on the same cause of action. [Paras 8]

Cause of action for the injunction claimed survives and the right to seek injunction does not die with the plaintiff's death.

Impleadment and substitution of legal representative - trial of rival title and testamentary claims - Whether the appellate court was right in allowing substitution/impleadment of the deceased plaintiff's son as her legal representative and in permitting continuation of the appeal. - HELD THAT: - The appellate court allowed substitution on the basis that if a legal representative can enjoy the relief claimed by the deceased plaintiff, the cause of action survives and substitution is permissible. The High Court found no illegality or material irregularity in that approach. Questions about disinheritance, the validity and effect of the Will, and competing claims to possession are merits to be decided at trial; if the substituted parties prove disinheritance or testamentary entitlement, they would be entitled to injunctive relief. Thus substitution was appropriate to enable adjudication of those merits. [Paras 5, 9, 11]

Substitution/impleadment of the deceased plaintiff's legal representative was correctly allowed to enable adjudication of substantive claims at trial.

Abatement of suit - impleadment and substitution of legal representative - Whether the earlier order of the civil court at Delhi, recording abatement for non-impleadment, precluded the appellate court from considering substitution on merits in the present proceedings. - HELD THAT: - The Court noted that the Delhi court's brief order did not examine the merits of abatement and merely recorded the plaintiff's position and that no application had been filed within 90 days. Those observations in the Delhi order did not bind the appellate court here. The appellate court was entitled to consider the substitution application on its merits and take a different view. [Paras 10]

The Delhi court's order did not preclude the appellate court from allowing substitution on merits in the present matter.

Trial of rival title and testamentary claims - Whether the competing contentions regarding a Will and disinheritance should be decided at the appellate stage when substitution is sought. - HELD THAT: - The Court held that factual and substantive disputes-whether the deceased had disinherited a particular heir, whether a Will in favour of another exists and is the last Will-are matters for trial. The appellate/substitution proceedings were not the forum for final adjudication of these contested merits; the substituted parties and other applicants may seek impleadment and have those claims tried by the appropriate court. [Paras 9]

Contentions about testamentary disposition and disinheritance are to be decided at trial; substitution does not foreclose trial of those issues.

Final Conclusion: Revision petition dismissed; the impugned order allowing substitution of the deceased plaintiff's legal representative is upheld and the matter will proceed to trial on the substantive disputes; applicant seeking impleadment is permitted to move the appropriate court.