TaxTMI Updates e-Newsletter
May 06,2024

Requirement to consider taxpayer's reply on merits before forming opinion - cryptic order - re-adjudication on merits - opportunity for personal hearing under Section 75(4) - time-limit for re-adjudication under Section 75(3) - withdrawal of punitive actions including blocking of credit ledger and provisional attachment

Requirement to consider taxpayer's reply on merits before forming opinion - cryptic order - Validity of the impugned order dated 29.12.2023 in light of the taxpayer's detailed reply dated 23.12.2023 - HELD THAT: - The Court found that the Proper Officer recorded that no satisfactory reply or substantial documents were submitted, despite the petitioner having filed a detailed reply with supporting documents. The impugned order's brief conclusion that the taxpayer had nothing to say indicates that the Proper Officer did not apply his mind to the reply. The observation that the reply was unsatisfactory, without consideration on merits or specific requests for further information, renders the order cryptic and unsustainable. For these reasons the impugned order was set aside. [Paras 3, 5, 6]

Impugned order dated 29.12.2023 set aside for failure to consider the taxpayer's reply on merits

Re-adjudication on merits - opportunity for personal hearing under Section 75(4) - time-limit for re-adjudication under Section 75(3) - withdrawal of punitive actions including blocking of credit ledger and provisional attachment - Relief and procedural course directed following setting aside of the impugned order - HELD THAT: - The Show Cause Notice is remitted to the Proper Officer for fresh adjudication. The Proper Officer is directed to withdraw punitive actions taken pursuant to the impugned order, including blocking of the credit ledger and any provisional attachment of property or bank accounts. The petitioner is permitted to file a further reply within 30 days. Thereafter the Proper Officer must afford an opportunity of personal hearing and pass a fresh speaking order in accordance with law within the period prescribed under Section 75(3). The Court expressly did not consider the merits of the dispute and reserved rights of the parties. [Paras 8, 9, 10]

Show Cause Notice remitted for re-adjudication; punitive measures to be withdrawn; petitioner permitted to file further reply and Proper Officer to re-adjudicate after personal hearing within statutory time

Final Conclusion: Impugned order set aside for being cryptic and not considering the petitioner's detailed reply; matter remitted for fresh adjudication with directions to withdraw punitive measures, allow further reply, afford personal hearing and pass a fresh speaking order within the statutory period; merits left open.

Requirement to consider reply on merits - speaking order requirement - application of mind by adjudicating authority - opportunity of personal hearing - opportunity to furnish documents and seek specific clarification - remand for re-adjudication - order under Section 73 of the Central Goods and Services Tax Act, 2017 - fresh speaking order within the period prescribed under Section 75(3) of the Act

Requirement to consider reply on merits - application of mind by adjudicating authority - speaking order requirement - Impugned adjudication set aside as non-speaking and not reflecting consideration of the detailed replies filed by the petitioner. - HELD THAT: - The Show Cause Notice received detailed replies with supporting documents on multiple dates. The impugned order records a bald conclusion that the reply was "incomplete, not duly supported by adequate documents and unable to clarify the issue" without engaging with the contents of the replies. Such a conclusion ex facie demonstrates that the Proper Officer did not apply his mind to the petitioner's submissions. If the authority considered additional particulars necessary, it was incumbent to specify those requirements and afford the petitioner an opportunity to furnish them. The absence of any such specific requisition or recorded consideration renders the order cryptic and legally unsustainable. [Paras 5, 6, 7]

Impugned order set aside for being non-speaking and for failure to consider replies on merits.

Remand for re-adjudication - opportunity of personal hearing - opportunity to furnish documents and seek specific clarification - fresh speaking order within the period prescribed under Section 75(3) of the Act - Show Cause Notice remitted for fresh adjudication with directions to permit further reply, provide personal hearing and pass a fresh speaking order within the statutory period. - HELD THAT: - In view of the inadequacy of the impugned order, the matter is remitted to the Proper Officer for re-adjudication. The petitioner is permitted to file an additional reply within 30 days. Thereafter the Proper Officer must re-adjudicate after granting an opportunity of personal hearing, and there must be a fresh speaking order dealing with the petitioner's submissions in accordance with law and within the timeframe prescribed by Section 75(3) of the Act. The Court expressly refrained from expressing any view on the merits of the tax demand. [Paras 8, 9, 10]

Show Cause Notice remitted for re-adjudication with directions to allow further reply, afford personal hearing and pass a fresh speaking order within the statutory period.

Final Conclusion: Impugned order dated 30.12.2023 set aside for failure to consider the petitioner's detailed replies and for being non speaking; matter remitted for de novo re adjudication after allowing further reply (30 days), affording personal hearing and issuance of a fresh speaking order within the period prescribed under Section 75(3) of the Act; merits left open.

Demand under adjudication cannot exceed demand specified in show-cause notice - violation of statutory limitation on adjudicated demand - reasonable opportunity of personal hearing - breach of principles of natural justice vitiating adjudication - remand for fresh adjudication with opportunity to be heard and reasoned decision

Demand under adjudication cannot exceed demand specified in show-cause notice - violation of statutory limitation on adjudicated demand - Adjudication order creating demand in excess of the demand proposed in the show-cause notice is impermissible and vitiates the order. - HELD THAT: - The Court found that the adjudicating authority, while issuing a show-cause notice proposing a specified demand, proceeded to pass an adjudication order creating a larger demand. The Act contains a mandatory prohibition against adjudicating a demand greater than that for which the show-cause notice was issued. Where the adjudication departs from the scope of the notice by enhancing the demand, the order is procedurally defective and cannot be sustained. Given these undisputed facts, the Court concluded that no useful purpose would be served by further affidavit exchange or relegation to the appellate forum and set aside the impugned order to enable fresh consideration within the limits of the notice. [Paras 2, 4]

Order set aside insofar as it creates demand in excess of the show-cause notice; matter remanded for fresh adjudication within the scope of the notice.

Reasonable opportunity of personal hearing - breach of principles of natural justice vitiating adjudication - Failure to grant a reasonable opportunity of personal hearing (hearing date same as date for filing reply) violated the rules of natural justice and vitiated the adjudication order. - HELD THAT: - The Court observed that the date fixed for personal hearing coincided with the last date for filing the reply, thereby depriving the petitioner of a genuine opportunity to be heard. Principles of natural justice require that the person affected be given adequate time and notice to prepare for and attend a personal hearing. In the absence of such reasonable opportunity, the adjudication is procedurally flawed. The undisputed nature of these facts warranted setting aside the order and directing a fresh hearing with sufficient notice so the petitioner can present all jurisdictional and merit points. [Paras 3, 4]

Order set aside for breach of natural justice; petitioner granted opportunity to file further reply and to be heard afresh.

Final Conclusion: Impugned adjudication order dated 28.12.2023 set aside. The petitioner may treat that order as final notice, file further reply within three weeks, and the adjudicating authority shall afford a personal hearing with at least 15 days' notice and thereafter pass an appropriate reasoned order.

Classification under Harmonized System of Nomenclature (HSN) - residuary tariff entry - interpretation of rate notifications in light of GST Council recommendations - clarificatory versus substantive amendment of rate notifications - applicability of notified GST rates

Classification under Harmonized System of Nomenclature (HSN) - residuary tariff entry - interpretation of rate notifications in light of GST Council recommendations - classification of 'mango pulp' for GST purposes - HELD THAT: - The Court held that 'mango pulp' falls within the third category of mangoes under HSN 0804 - namely 'mangoes (other than mangoes sliced, dried)' - and is not to be taxed under the residuary Entry No. 453. The Court examined the sequence of notifications and GST Council minutes, noting that Entry No. 30A expressly covers only 'mangoes sliced, dried' and that 'mango pulp' was not included therein. The GST Council's subsequent clarification (47th meeting) and Notification No. 6/2022 were treated as elucidating the intended classification under Schedule II rather than creating a new, different classification. Consequently, the respondents' contention that 'mango pulp' attracts the residuary 18% rate was rejected and the product was held to be classifiable within the Schedule II entry for mangoes other than sliced, dried. [Paras 31, 34, 35, 45]

Mango pulp is classifiable as 'mangoes (other than mangoes sliced, dried)' under HSN 0804 and does not fall under the residuary Entry No. 453.

Clarificatory versus substantive amendment of rate notifications - applicability of notified GST rates - interpretation of rate notifications in light of GST Council recommendations - nature and temporal effect of Notification No. 6/2022 and CBIC circular dated 3.8.2022 - HELD THAT: - The Court concluded that Notification No. 6/2022 and the CBIC circular are clarificatory of the rates and classification as intended by earlier notifications and GST Council recommendations, and not a substantive amendment operating only prospectively. Having regard to the legislative scheme, the chronology of the GST Council decisions and the wording of the Notifications, the Court held that the clarification makes clear that all mangoes other than 'mangoes sliced, dried' were intended to attract 12% GST from the inception of the rate schedule. The Court therefore rejected the petitioners' contention that the later notification could only operate prospectively and also rejected the respondents' attempt to apply the residuary 18% rate. [Paras 33, 39, 41, 43]

Notification No. 6/2022 and the CBIC circular are clarificatory and operate to show that the 12% rate applied to 'mangoes (other than mangoes sliced, dried)' from 1st July 2017.

Final Conclusion: Both petitions are partly allowed: the impugned show cause notice is quashed and set aside; the petitioners are liable to pay GST at 12% on 'mango pulp' for the period 01.07.2017 to 18.07.2022 and not at 5% or 18% for that period.

Local authority - governmental authority - exemption under Notification No. 12/2017 (Serial No. 3) - pure services - functions entrusted to a Municipality under Article 243W - institution of self-government under Article 243Q/Article 243P - principles of natural justice - scope of judicial review of advance rulings and appellate orders

Local authority - governmental authority - exemption under Notification No. 12/2017 (Serial No. 3) - institution of self-government under Article 243Q/Article 243P - functions entrusted to a Municipality under Article 243W - Whether the Notified Area Authority, Vapi is a 'local authority' or a 'governmental authority' so as to attract exemption under Serial No. 3 of Notification No. 12/2017. - HELD THAT: - The Court applied constitutional definitions in Articles 243, 243P, 243Q and 243W and the precedents treating industrial/area development authorities. An industrially constituted notified area under the Gujarat Industrial Development Act (and rules vesting managerial functions in a Board and Chief Officer) does not amount to an institution of self-government constituted under Article 243Q and therefore is not a 'Municipality' or other category enumerated in the statutory definition of 'local authority'. The Court relied on the reasoning in New Okhla Industrial Development Authority and related authorities to hold that notification under the proviso to Article 243Q creating or specifying an industrial township does not equate the body with a constitutionally constituted Municipality. For similar reasons and in light of subsequent amendments and Notifications relating to the definition of 'governmental authority' / 'government entity', the Notified Area Authority, Vapi cannot be treated as a 'governmental authority' within the meaning of Serial No. 3. Consequently the Notified Area Authority, Vapi is neither a 'local authority' nor a 'governmental authority' for the purpose of claiming the exemption under Serial No. 3 of Notification No. 12/2017. [Paras 24, 39, 44]

Notified Area Authority, Vapi is neither a 'local authority' nor a 'governmental authority'; exemption under Serial No. 3 of Notification No. 12/2017 is not available.

Pure services - principles of natural justice - scope of judicial review of advance rulings and appellate orders - Whether the Appellate Authority committed a breach of natural justice by deciding issues not determined by the Advance Ruling Authority and thereby vitiating the decision-making process. - HELD THAT: - The Court recorded that it was not in dispute that the petitioner provided 'pure services'. The Appellate Authority, having accepted that finding, proceeded to examine the other two conditions of the exemption which were not decided by the Advance Ruling Authority. The Court examined the authorities on the limited scope of writ review in advance-ruling matters and the requirements of natural justice where 'new grounds' are relied upon. On the facts of this case the petitioners had been afforded opportunity before the Appellate Authority to address the remaining conditions; therefore there was no failure of the principles of natural justice and no jurisdictional infirmity requiring interference. [Paras 24, 43]

No breach of natural justice by the Appellate Authority; its consideration of the other conditions was permissible and did not vitiate the decision-making process.

Final Conclusion: Having concluded that the Notified Area Authority, Vapi is neither a 'local authority' nor a 'governmental authority' for the purposes of Serial No. 3 of Notification No. 12/2017 and that no breach of natural justice occurred, the petition is dismissed and the Rule is discharged.

Interest on delayed payment of tax - Electronic Cash Ledger and Electronic Credit Ledger - Furnishing of return as condition precedent to payment - Proviso to Section 50(1) - scope and purpose - Monitoring Committee directions and administrative instructions

Interest on delayed payment of tax - Electronic Cash Ledger and Electronic Credit Ledger - Furnishing of return as condition precedent to payment - Proviso to Section 50(1) - scope and purpose - Whether interest is payable on delayed returns where tax is discharged by debiting the Electronic Credit Ledger or the Electronic Cash Ledger - HELD THAT: - The Court held that payment of tax under the GST scheme occurs only on furnishing of the return and the simultaneous debit from the Electronic Cash Ledger or the Electronic Credit Ledger. Section 39 requires tax to be paid by the last date for furnishing the return; Section 49 describes the ledgers; Section 41 makes clear that input tax credit accrues on self-assessment in return. Consequently, a delay in furnishing returns delays the crystallisation of payment whether the eventual debit is from the cash or credit ledger. The proviso to Section 50(1) was intended to dispel any notion that mere deposits to the Electronic Cash Ledger constitute payment as of the date of deposit; it does not exempt debits from the Electronic Credit Ledger from interest liability. Thus interest under Section 50(1) is automatic on delayed furnishing of return and applies equally where payment is effected by debiting either ledger. [Paras 16, 19, 20, 21, 22]

Interest is payable on delayed returns irrespective of whether tax is paid by debit to the Electronic Credit Ledger or Electronic Cash Ledger; the proviso to Section 50(1) does not absolve debits from the credit ledger from interest liability.

Monitoring Committee directions and administrative instructions - Delegatus non potest delegari - Whether directions of the Monitoring Committee are binding on the Proper Officer so as to compel recovery - HELD THAT: - The Court observed that while the Board (Central Board of Indirect Taxes and Customs) has power under Section 168 to issue instructions and directions, the Monitoring Committee cannot constitute a separate hierarchy that binds the Proper Officer to follow its decisions mechanically. The Proper Officer retains the statutory duty to consider objections and make independent assessment and recovery decisions; departmental instructions do not displace that adjudicatory function and cannot operate as binding delegated orders. [Paras 5, 25, 26]

Monitoring Committee directions are not per se binding orders that can oust the Proper Officer's statutory duty to adjudicate; the Proper Officer must independently consider and decide recovery.

Interest on delayed payment of tax - Electronic Cash Ledger and Electronic Credit Ledger - Whether remand to the Proper Officer for the assessment years 2017-18 and 2018-19 is necessary - HELD THAT: - On the facts recorded in the audit report, the Court found that for 2017-18 the debit was from the Electronic Cash Ledger and for 2018-19 the GST liabilities were offset only upon filing (debiting) on a later date; under the legal interpretation adopted interest liability arises in both years. Given that the legal position establishes automatic interest on delayed returns irrespective of the ledger debited, remanding the matters to the Proper Officer for reconsideration would be futile. The Court therefore declined to remit the issues for fresh consideration. [Paras 23, 27, 28]

Remand would be a useless formality for both 2017-18 and 2018-19; the demand and recovery may be sustained under the adopted legal view.

Final Conclusion: The writ petition is dismissed. The Court affirms that interest under Section 50(1) is automatically attracted on delayed furnishing of returns and applies whether the debit for payment is from the Electronic Cash Ledger or the Electronic Credit Ledger; Monitoring Committee directions do not bind the Proper Officer to foreclose his statutory adjudicatory function; remand in respect of the stated assessment years would be futile. Parties to bear their respective costs.

Advance ruling - rejection of application under first proviso to Section 98(2) - show cause notice - maintainability of challenge to Authority for Advance Ruling after initiation of adjudication - alternate remedy under Section 107(2) - appeal to the Appellate Commissioner

Advance ruling - maintainability of challenge to Authority for Advance Ruling after initiation of adjudication - show cause notice - Challenge to the order passed by the Authority for Advance Ruling dated 26.02.2024 cannot be sustained. - HELD THAT: - The petitioner filed an application for an advance ruling on 05.07.2023 after issuance of a show cause notice dated 30.06.2023 and after initiation of investigation (noted from 12.11.2020). The Authority rejected the application by reference to the first proviso to Section 98(2). The High Court observed that the subject-matter of the show cause notice was the same matter for which the petitioner sought an advance ruling; having been filed after initiation of adjudication proceedings, the challenge to the Authority's order disposing of that application cannot be entertained.

Petition challenging the AAR order dated 26.02.2024 dismissed.

Alternate remedy under Section 107(2) - appeal to the Appellate Commissioner - Challenge to the adjudicating authority's Order in Original No.24/2023-24 dated 14.02.2024 is not maintainable by writ because an alternate remedy exists under Section 107(2). - HELD THAT: - The impugned adjudication order confirming demands and imposing penalties relates to specified periods and issues raised in the show cause notice. The High Court noted that the petitioner has an alternate statutory remedy: the Commissioner may, under Section 107(2), call for the record and direct an appeal to the Appellate Commissioner within six months from communication of the order. In view of the availability of this alternative statutory remedy, the writ petition against the adjudication order was refused.

Writ petition dismissed and petitioner directed to file an appeal before the Appellate Commissioner within the period of limitation prescribed under Section 107(2).

Final Conclusion: Writ petition dismissed; challenge to AAR order rejected as not maintainable after initiation of adjudication, and challenge to the adjudication order refused on the ground of an alternate remedy under Section 107(2); petitioner directed to pursue remedy before the Appellate Commissioner within the prescribed period.

Failure to consider reply to notice - opportunity to contest tax demand on merits - remand on conditions - payment as condition for relief - discrepancy between GSTR-1 and GSTR-3B - personal hearing

Failure to consider reply to notice - discrepancy between GSTR-1 and GSTR-3B - The petitioner's reply to the Form GST ASMT-10 notice was not taken into consideration before passing the impugned order confirming tax demand arising from discrepancy between GSTR-1 and GSTR-3B. - HELD THAT: - The Court observed that the petitioner submitted a reply to the ASMT-10 notice on 19.07.2023 but did not respond to the subsequent show cause notice dated 17.08.2023. The impugned order confirms a tax demand premised on the discrepancy between the petitioner's GSTR-1 and GSTR-3B returns. On perusal, the Court found that the earlier reply in Form ASMT-10 had not been considered by the assessing authority and that no documents were placed on record in support of that reply. Given that the assessment proceeded without taking the petitioner's written submissions into account, the Court concluded that the respondent had not afforded the petitioner the opportunity to have that reply considered before confirming the demand. [Paras 2, 4]

Findings in the impugned order that confirmed the demand were vitiated by non-consideration of the petitioner's reply to Form ASMT-10.

Remand on conditions - payment as condition for relief - opportunity to contest tax demand on merits - personal hearing - The appropriate remedy is to set aside the impugned order and remand the matter to the assessing authority, subject to the petitioner remitting 10% of the disputed tax demand and being given an opportunity to be heard. - HELD THAT: - Balancing the lapse in procedure with the need for finality, the Court exercised its supervisory jurisdiction to set aside the order dated 25.09.2023 and directed a remand. The petitioner agreed to remit 10% of the disputed demand as a condition of relief. The Court directed that, within two weeks of receipt of the order, the petitioner must remit the agreed 10% and may submit a reply to the show cause notice. Upon receipt and verification of the remittance and the reply, the respondent must provide a reasonable opportunity including a personal hearing and thereafter pass a fresh order within two months from receipt of the petitioner's reply. [Paras 5]

Impugned order set aside and matter remanded on the stated conditions; fresh decision to be taken after hearing within two months.

Final Conclusion: The writ petition is allowed by setting aside the assessment order dated 25.09.2023; the petitioner must remit 10% of the disputed tax demand within two weeks and may file a reply to the show cause notice, after which the assessing authority shall grant a hearing including personal hearing and pass a fresh order within two months. No costs.

Right to be heard - opportunity to contest tax demand - confirmation of tax demand for belated filing - remand subject to deposit condition

Right to be heard - opportunity to contest tax demand - confirmation of tax demand for belated filing - remand subject to deposit condition - Whether the order confirming the tax demand dated 03.03.2023, passed without the petitioner's participation and resting on belated filing of returns, should be set aside and the matter remanded for fresh consideration subject to conditions. - HELD THAT: - The Court found that the impugned order was issued solely on the basis that returns were filed belatedly and that the petitioner did not participate in the proceedings, resulting in confirmation of the tax demand for failure to reply. In view of the petitioner's lack of opportunity to contest the demand on merits, interference was warranted to afford a fair hearing. The Court set aside the impugned order but conditioned the remand on the petitioner remitting 10% of the disputed tax demand within two weeks from receipt of the order and permitted the petitioner to file a reply to the show cause notice within that period. Upon receipt of the petitioner's reply and verification that the 10% deposit has been made, the respondent authority is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and to pass a fresh order after considering the petitioner's submissions within two months from receipt of the reply. [Paras 5, 6]

Impugned order dated 03.03.2023 set aside and matter remanded for fresh consideration on the conditions that the petitioner deposits 10% of the disputed demand within two weeks and is allowed to file a reply, after which the authority shall grant a hearing and pass a fresh order within two months.

Final Conclusion: Writ petition disposed by setting aside the order dated 03.03.2023 and remanding the matter for fresh adjudication on the stated deposit and procedural conditions; connected matters closed; no costs.

Reasonable opportunity to be heard - personal hearing - remand for fresh consideration - assessment order set aside - bank attachment raised - voluntary deposit as condition for remand - orders based on GSTR-1 and GSTR-3B mismatch

Reasonable opportunity to be heard - orders based on GSTR-1 and GSTR-3B mismatch - assessment order set aside - Assessment order passed on the basis of mismatch between GSTR-1 and GSTR-3B without affording the petitioner an opportunity to be heard was liable to be set aside and reconsidered. - HELD THAT: - The Court found that the tax liability was imposed solely on the basis of a mismatch between GSTR-1 and GSTR-3B and that the impugned orders were issued without affording the petitioner a hearing. The petitioner stated he was unaware of the show cause notice and related orders because they were uploaded under the "View Additional Notices and Orders" tab on the GST portal, and thus lacked a reasonable opportunity to contest the demand on merits. In view of the absence of a hearing and the need to afford the petitioner a fair opportunity to contest the case, the assessment order was set aside and the matter remanded for fresh consideration. The Court directed the assessing officer, upon receipt of the petitioner's reply and satisfaction that the specified deposit was made, to provide a reasonable opportunity to the petitioner including a personal hearing and thereafter pass a fresh order within two months from receipt of the reply.

Assessment order set aside and remanded for fresh consideration with directions to afford a reasonable opportunity of hearing and to pass a fresh order within two months after receipt of the petitioner's reply.

Voluntary deposit as condition for remand - remand for fresh consideration - bank attachment raised - personal hearing - Remand was ordered on terms including the petitioner making a deposit of 10% of the disputed tax demand and being permitted to submit a reply, with consequential directions regarding bank attachment. - HELD THAT: - As a condition of remand, the petitioner agreed to remit 10% of the disputed tax demand. The Court imposed this condition and permitted the petitioner two weeks from receipt of the order to remit the deposit and to file a reply to the show cause notice. The assessing officer was directed, after being satisfied that the deposit was received, to provide the petitioner a reasonable opportunity including a personal hearing, and to pass a fresh order within two months from receipt of the petitioner's reply. Because the assessment order was set aside, the bank attachment effected consequentially was ordered to be raised.

Matter remanded on condition that the petitioner deposits 10% of the disputed demand within two weeks and files a reply; upon receipt of deposit and reply, assessing officer to grant a personal hearing and pass a fresh order within two months; bank attachment vacated.

Final Conclusion: The assessment order and consequential bank attachment were set aside; the matter is remanded for fresh consideration on the petitioner depositing 10% of the disputed demand and filing a reply, after which the assessing officer shall afford a personal hearing and pass a fresh order within two months.

Principles of natural justice - opportunity to be heard - personal hearing - reversal of Input Tax Credit - remand for fresh consideration - interim monetary deposit as condition for remand

Principles of natural justice - opportunity to be heard - personal hearing - Assessment order set aside for breach of principles of natural justice and failure adequately to consider the petitioner's reply and documents - HELD THAT: - The petitioner had replied to the show cause notice on 27.10.2023 and uploaded the reply on the portal indicating that outward supplies gave no tax liability after setting off ITC and that supporting bills and documents were available. A personal hearing was fixed for 13.12.2023 which the petitioner could not attend due to cyclone Michaung. The impugned order proceeded to impose tax and reverse ITC apparently because the reply did not annex documents and without giving an effective opportunity to place documents and be heard. In these circumstances the court found that it was just to set aside the assessment order and to permit the petitioner to contest the tax demand on merits, subject to conditions to protect the revenue. [Paras 2, 5, 6]

Impugned order dated 29.12.2023 set aside and matter remitted for fresh consideration after affording opportunity to be heard.

Reversal of Input Tax Credit - remand for fresh consideration - interim monetary deposit as condition for remand - Fresh adjudication directed on the disputed tax liability and reversal of ITC, on terms including deposit and submission of documents - HELD THAT: - Although the merits of the tax demand and the genuineness of the ITC were not decided on the merits, the court directed remand for fresh consideration. The petitioner agreed to remit an interim sum as a condition for remand and was permitted to file additional documents within three weeks. The respondent was directed, subject to satisfaction of receipt of the interim payment, to provide a reasonable opportunity including a personal hearing and thereafter pass a fresh order within two months from receipt of the additional documents. [Paras 6]

Matter remitted for fresh adjudication on condition that the petitioner remits the specified interim amount within three weeks and files additional documents; fresh order to be passed within two months after receipt of documents.

Final Conclusion: The assessment order is set aside and the matter is remitted for fresh consideration of the disputed tax demand and reversal of ITC; remand is conditional on the petitioner depositing the specified interim amount and filing additional documents, following which the authority must afford a hearing and pass a fresh order within the prescribed time.

Limitation for filing appeal under Section 107(1) of the CGST Act - communication of order for computation of limitation - extension of limitation by executive notification as a remedial/facilitative measure - read down and constitutional challenge under Article 14 - inadmissibility of appeals under notification in respect of a demand not involving tax

Limitation for filing appeal under Section 107(1) of the CGST Act - communication of order for computation of limitation - Validity of the Joint Commissioner (Appeals) order dated 05.12.2023 dismissing the petitioner's appeals as barred by limitation - HELD THAT: - The Court examined the impugned appellate order which dismissed the petitioner's appeals on the ground of inordinate delay in filing appeals under Section 107(1) of the CGST Act. The petitions challenged that the orders rejecting refund were not 'communicated' until physical certified copies were obtained in August 2023 and therefore limitation should run from that date. On the material before it the Court found that the appeals were filed long after the prescribed period and that no cogent reason had been shown to impeach the finding of delay. The Court did not find merit in the contention that the appellate order erred in law or procedure, and accordingly upheld the order of the Joint Commissioner (Appeals) dismissing the appeals for delay. [Paras 22]

The impugned order dated 05.12.2023 dismissing the appeals as barred by limitation is upheld; no interference is warranted.

Extension of limitation by executive notification as a remedial/facilitative measure - inadmissibility of appeals under notification in respect of a demand not involving tax - read down and constitutional challenge under Article 14 - Challenge to Clause 5 of Notification No. 53/2023-whether Clause 5 is ultra vires or discriminatory and whether it entitles the petitioner to benefit of extended filing period - HELD THAT: - The Court construed Clause 5 of Notification No. 53/2023 which provides that 'No appeal under this notification shall be admissible in respect of a demand not involving tax.' The petitioner argued that this classification is arbitrary and violative of Article 14 because similarly situated persons who had not filed appeals could be treated differently. The Court held that a plain reading of Clause 5 excludes from the notification's benefit cases where there is no demand involving tax. In the present matters the petitioner had filed refund claims (i.e., claims relating to tax/refund) and the appeals were barred by limitation; the Court found no persuasive basis to declare Clause 5 ultra vires or to read it down. No cogent reason was shown to establish hostile discrimination or constitutional invalidity of Clause 5. [Paras 23]

The challenge to Clause 5 of Notification No. 53/2023 is dismissed; Clause 5 is not struck down or read down and does not afford the petitioner the claimed relief.

Final Conclusion: All writ petitions are dismissed. The petitioner remains at liberty to approach the Appellate Tribunal or, in view of its non existence, to seek relief before the Single Judge as advised.

Classification of mixed spices - stare decisis - binding effect of prior adjudicatory order on co-ordinate authorities - essential character test - penalties under section 73(9) of the Act - judicial discipline

Classification of mixed spices - stare decisis - binding effect of prior adjudicatory order on co-ordinate authorities - Impugned adjudication by the Additional Commissioner in respect of classification of the petitioner's spice mixes and failure to follow the prior order of the Principal Commissioner - HELD THAT: - The High Court recorded that the Principal Commissioner had earlier adjudicated identical products as spice mixes classifiable under heading 09109100 and applied those findings to the present subject matter (paras 1 and quoted excerpts). The Court held that the Additional Commissioner, despite being expressly pointed to that prior order, treated the matter differently and advanced findings (including reliance on the essential character test) which the Court regarded as ex facie perverse. The Court emphasised the principle of stare decisis and judicial discipline, noting that consistent classification on identical facts is required and that lower/adjudicating authorities should follow precedent unless set aside by a superior forum (paras 1 and quoted material). While the Court did not finally adjudicate the dispute on merits, it concluded that there is prima facie substance in the petitioner's contention that the Additional Commissioner's approach was improper (para 5). [Paras 1, 5]

Prima facie finding that the Additional Commissioner's divergence from the Principal Commissioner's classification was perverse and that the petitioner's grievance merits further consideration.

Essential character test - classification of mixed spices - Validity of the Additional Commissioner's reliance on compositional proportions and essential character test to reclassify the goods under chapter heading 2103 - HELD THAT: - The Court recorded the Additional Commissioner's reasoning that ingredients from chapters other than chapter 09 exceed 75% and thus the products lose the 'essential character' of spices and ought to be classified under chapter 2103 (quoted at para 2). The High Court observed that this approach departs from the earlier Principal Commissioner finding that the products are spice mixes under heading 09109100 and treated the Additional Commissioner's reasoning as not sustaining the requirement of uniformity in classification on identical facts. The Court did not finally decide the competing legal correctness of the essential character test application in this case, but treated the Additional Commissioner's conclusions as infirm for not following the prior adjudication. [Paras 2, 3]

The Additional Commissioner's reliance on compositional proportions and the essential character test to reclassify the goods is prima facie unsustainable in view of the prior Principal Commissioner determination and requires further consideration.

Penalties under section 73(9) of the Act - Interim relief against coercive action under the impugned order and procedural directions to the revenue - HELD THAT: - The Court directed that respondent no. 5 may file an appropriate reply affidavit and placed the matter for further hearing on the adjourned date. Meanwhile, the High Court restrained any coercive action under the impugned order until the next hearing (paras 5-7). The order reflects the Court's exercise of interim jurisdiction to preserve the petitioner's position pending fuller consideration, while allowing the revenue an opportunity to respond. [Paras 5, 6, 7]

Respondent permitted to file reply affidavit by the adjourned date; no coercive action to be taken under the impugned order until the adjourned date.

Final Conclusion: The High Court found prima facie merit in the petitioner's contention that the Additional Commissioner's order was improper for failing to follow the Principal Commissioner's earlier classification of the spice mixes; the Court granted the revenue an opportunity to file a reply and restrained coercive action under the impugned order until the adjourned hearing (matter listed 15th April 2024).

Vouchers as actionable claims - inclusion of actionable claims within definition of goods under GST - requirement of a speaking and reasoned order - remand for fresh consideration with personal hearing

Vouchers as actionable claims - inclusion of actionable claims within definition of goods under GST - requirement of a speaking and reasoned order - Validity of the assessment order insofar as it imposed GST on vouchers - HELD THAT: - The assessing officer recorded the petitioner's contentions and then broadly concluded that the arguments lacked validity, stating that vouchers are in the nature of actionable claims and therefore fall within the definition of goods under the CGST Act. The impugned order, however, does not contain any reasons explaining why the petitioner's specific contentions were rejected or how the conclusion that vouchers are taxable was reached. For that reason the Court found the order to be unreasoned and unsustainable. The Court did not decide the substantive question of whether vouchers are taxable on merits; instead it set aside the assessment only for lack of reasons and remanded the matter for fresh consideration. The respondent is directed to give the petitioner a reasonable opportunity, including a personal hearing, and to pass a fresh speaking order dealing with each contention within two months of receipt of this order.

Assessment order set aside insofar as it relates to imposition of GST on vouchers and remitted for fresh consideration with directions to afford opportunity of personal hearing and to pass a fresh speaking order within two months.

Final Conclusion: The writ petition is allowed to the extent indicated: the impugned assessment order is quashed only insofar as it applies GST to vouchers for being unreasoned, and the matter is remanded for fresh, reasoned consideration after affording the petitioner a personal hearing within the time directed.

Writ jurisdiction under Article 226 - Statutory appeal under Section 107 of the CGST Act, 2017 - Condonation of delay in filing appeal - Pre-deposit requirement under Section 107 - Limitation and applicability of TNVAT Act, 2006 - Challenge to assessment order and imposition of penalty under Section 74 read with Section 122(2)(b)

Writ jurisdiction under Article 226 - Statutory appeal under Section 107 of the CGST Act, 2017 - Maintainability of writ petition challenging the assessment order dated 17.01.2024 for the assessment years 2017-2018 to 2019-2020 - HELD THAT: - The High Court held that the challenge to the impugned assessment order did not warrant interference under Article 226. The Court observed that the petitioner has an alternate statutory remedy by way of appeal under Section 107 of the CGST Act, 2017 and that disputed questions of fact and law raised in the petition are to be canvassed before the appellate authority. Accordingly, the writ petition could not be sustained as a substitute for the statutory appeal route. The Court therefore dismissed the writ petition while affording the petitioner the statutory remedy of appeal.

Writ petition dismissed; petitioner permitted to file a statutory appeal under Section 107 within 30 days (delay condoned)

Limitation and applicability of TNVAT Act, 2006 - Challenge to assessment order and imposition of penalty under Section 74 read with Section 122(2)(b) - Condonation of delay in filing appeal - Pre-deposit requirement under Section 107 - Disposition of substantive controversies (including whether the demand for 2017-2018 relates to the TNVAT regime and the correctness of 100% penalty for 2018-2019 and 2019-2020) - HELD THAT: - The Court declined to decide the merits of whether the demand for 2017-2018 fell under the TNVAT Act, 2006 (in force up to 30.06.2017) and whether the assessed demand was time-barred under CGST provisions, noting that if the liability properly falls within the VAT regime the question of limitation and issuance of demand under Section 27 of the TNVAT Act would arise. Similarly, the correctness of imposition of 100% penalty for the later years involves disputed questions of fact. These aspects were left to be examined and adjudicated by the Appellate Commissioner on merits and in accordance with law. The Court also addressed procedural relief by condoning the delay in filing the statutory appeal and directing compliance with the pre-deposit requirement so that the appeal may be entertained.

Substantive issues remanded to the Appellate Commissioner for fresh consideration on merits; delay in filing appeal condoned and petitioner directed to make required pre-deposit for admission of the appeal

Final Conclusion: The writ petition is dismissed. The petitioner is granted liberty to file a statutory appeal under Section 107 of the CGST Act, 2017 within 30 days (delay condoned); the petitioner must pre-deposit the amount required under Section 107, upon which the Appellate Commissioner shall entertain and decide the appeal on merits and in accordance with law without reference to limitation.

Deduction u/s 80-IA(4) - condonation of delay in filing return - finality of earlier High Court order - settlement commission's factual findings - scope of infrastructural development deduction for works contractors

HELD THAT:- We are not inclined to interfere with the impugned judgment passed by the High Court [2019 (7) TMI 2019 - MADHYA PRADESH HIGH COURT]. Hence, the Special Leave Petition is dismissed.

Scope of interference by High Court on findings of fact - perversity standard for tribunal findings - identity, genuineness and creditworthiness of shareholders under section 68 - treatment of unexplained investment under section 69 - role of seized material and requirement of corroboration - shifting of assessment under section 132(4A)

Identity, genuineness and creditworthiness of shareholders under section 68 - scope of interference by High Court on findings of fact - Deletion of additions made under section 68 in respect of alleged bogus share application money for AY 2006-07 is upheld. - HELD THAT: - The ITAT affirmed the CIT(A)'s satisfaction on identity, genuineness and creditworthiness of share applicants based on confirmations, addresses, cheque particulars and PAN and examined bank ledgers, refunds and adjustments. The High Court found that the ITAT had examined the material reasons for deletion and there was no basis to treat the amounts as accommodation entries in the face of refunds, adjustments and documentary corroboration. As the findings are factual and not ex facie perverse, interference is not justified. [Paras 13, 14, 23]

The deletion of additions under section 68 was sustained and no substantial question of law arises.

Role of seized material and requirement of corroboration - scope of interference by High Court on findings of fact - The finding that receipts from M/s Arha Buildcon Pvt. Ltd. constituted genuine direct finance arrangements was upheld (AY 2006-07). - HELD THAT: - The ITAT examined bank statements, an agreement for booking of flats, an indemnity bond seized during search, and refund/payment entries, concluding the AO's assertion of missing cheque details was factually incorrect. The High Court accepted that the ITAT's conclusion was based on record evidence showing receipts and payments and that no perverse inference could be drawn to sustain the AO's addition. [Paras 15, 16, 17]

The addition relating to M/s Arha Buildcon Pvt. Ltd. was deleted and no substantial question of law arises.

Role of seized material and requirement of corroboration - scope of interference by High Court on findings of fact - The deletion of addition alleging receipts of Rs.4 lakhs from each of 48 flats of Bhagwanti CGHS (AY 2006-07) was upheld. - HELD THAT: - The ITAT found the AO's addition rested on theoretical premises and presumptions without evidence of payment to the assessee; society records, AGM approvals and statements did not support the AO's case. The High Court held these to be findings of fact properly reached by the ITAT and not perverse, therefore not amenable to interference. [Paras 18, 19, 20]

The deletion of the addition in respect of Bhagwanti CGHS stands; no substantial question of law arises.

Treatment of unexplained investment under section 69 - role of seized material and requirement of corroboration - The ITAT's deletion of additions on account of alleged cash component in purchase of Dehradun land was affirmed (AY 2007-08). - HELD THAT: - The ITAT compared seized estimates and sale deed payments, finding the seized figures to be estimates and observing that cheque payments recorded in sale deeds matched the actual paid amounts; there was no material to show Rs.3.01 crore or larger sums were paid in cash as alleged by the AO. The High Court agreed that the AO's subtraction of seized estimated totals from cheque payments lacked corroboration and was a factual determination not warranting interference. [Paras 16, 17]

The additions for unexplained cash component in Dehradun land purchases were deleted; no substantial question of law arises.

Treatment of unexplained investment under section 69 - role of seized material and requirement of corroboration - The ITAT's dismissal of the AO's addition regarding unexplained investment in Kashipur land (GTM Kashipur-II) was upheld (AY 2007-08). - HELD THAT: - The Tribunal found the addition rested on presumptive inferences from seized notes mentioning rates and acres without evidence of cash payment; the land was reflected in Sargam Estate Pvt. Ltd.'s balance sheet and there was no material to show cash component attributable to the assessee. The High Court held these to be fact findings and not perverse. [Paras 18, 19]

The Kashipur addition was deleted; no substantial question of law arises.

Role of seized material and requirement of corroboration - scope of interference by High Court on findings of fact - Additions relating to receipts from Haryana CGHS and consideration for Wings CGHS were deleted and those factual findings were affirmed (AY 2007-08 and related appeals). - HELD THAT: - The ITAT examined survey and seized material, statements and society records and concluded there was no evidence of cash payments to the assessee or its director and no link making the societies benami. As to the MoU concerning Wings CGHS, the Tribunal found it unsigned and not executed and no evidence of cash payment. The High Court treated these conclusions as fact-based and not perverse, declining to interfere. [Paras 7, 20, 21, 22, 23]

Deletions concerning Haryana CGHS and Wings CGHS were upheld; no substantial question of law arises.

Role of seized material and requirement of corroboration - shifting of assessment under section 132(4A) - The ITAT's deletion of additions for unexplained investment in M/s Sargam Estate Pvt. Ltd., unexplained advertisement expenditure, and undisclosed jewellery stock was affirmed (AY 2007-08). - HELD THAT: - The Tribunal reviewed balance sheets and accounting entries for Sargam Estate, found refundable share application money explanations and no basis for AO's addition; advertisement expenses were supported by account-payee cheques and properly recorded; jewellery stock was attributable to a separate incorporated entity (GTM Jewellery Mart Pvt. Ltd.), inventory quantities matched books and valuation differences explained, and Section 132(4A) requirements for shifting assessment were not complied with. The High Court accepted these fact-findings and legal application as non-perverse. [Paras 24, 25, 26, 51, 52]

Deletions on these grounds stand; no substantial question of law arises.

Perversity standard for tribunal findings - scope of interference by High Court on findings of fact - The common legal conclusion that the High Court will not interfere with ITAT factual findings absent perversity was applied to all challenged additions. - HELD THAT: - Relying on the settled principle that ITAT is the final fact-finding authority and that the High Court may only entertain factual findings if shown to be perverse (could not reasonably be arrived at on the material), the Court held the Revenue's challenges were factual in nature and did not demonstrate perversity. Therefore no substantial question of law arose across the appeals. [Paras 20, 21, 22]

All appeals dismissed as no substantial question of law arises from the ITAT's fact-based conclusions.

Final Conclusion: The High Court dismissed the Revenue's appeals for AY 2006-07 and AY 2007-08, holding that the ITAT's detailed factual findings and conclusions - including deletions of additions under provisions dealing with unexplained share capital and investments, reliance on seized material, and applicability of Section 132(4A) - were not perverse and did not raise any substantial question of law warranting interference.

Rejection of books of account - application of gross profit rate based on preceding years - disallowance under Section 40-A(3) for cash payments exceeding Rs. 20,000 - ad hoc disallowance for unverified consignment sale expenses - appellate tribunal as last fact-finding authority - assessing officer cannot substitute his own inference for accepted books of account

Rejection of books of account - application of gross profit rate based on preceding years - assessing officer cannot substitute his own inference for accepted books of account - Addition by adopting average gross profit rate of last three assessment years and rejecting disclosed gross profit as a consequence of alleged rejection of books. - HELD THAT: - The Tribunal's finding that the Assessing Officer's disturbance of the disclosed gross profit rate was premised upon specific findings of unreliability of books was examined. The court noted that, aside from two limited disallowances, no material remained which cast general doubt on the credibility, correctness or completeness of the books. The CIT(A) and the Tribunal found vouchers and evidence showing the cash expenses were vouched and thus the basis for wholesale rejection of books (and consequent adoption of an inflated gross profit rate relying on prior years) was not sustainable. The court reiterated the settled principle that an Assessing Officer cannot, in effect, step into the assessee's shoes to infer greater profit where the books are accepted and there is no intrinsic evidence to justify enhancing the gross profit rate. [Paras 5, 6, 9, 10, 11]

Tribunal's confirmation of CIT(A)'s deletion of the addition and rejection of the Assessing Officer's enhancement of gross profit rate upheld.

Disallowance under Section 40-A(3) for cash payments exceeding Rs. 20,000 - appellate tribunal as last fact-finding authority - Deletion of additions under Section 40-A(3) in respect of cash payments alleged to exceed Rs. 20,000 each and alleged lack of vouchers. - HELD THAT: - The Tribunal and CIT(A) examined the vouchers and written submissions; except for two minor items (mess expenses and travelling expenses of directors) totaling less than the threshold noted, the cash expenditures were found to be duly vouched. The Tribunal's finding that the Assessing Officer's disallowance under Section 40-A(3) was not justified is a factual conclusion based on material on record and was not shown to be perverse or patently erroneous. Since those vouchers were accepted, the primary basis for impugned additions fell away. [Paras 4, 6, 8, 11]

Tribunal rightly deleted the additions under Section 40-A(3); its factual finding upheld.

Ad hoc disallowance for unverified consignment sale expenses - appellate tribunal as last fact-finding authority - Validity of the ad hoc disallowance of 10% of consignment sale expenses where the Assessing Officer recorded an ad hoc addition but did not give effect to it in final computation. - HELD THAT: - The Tribunal found the ad hoc disallowance to be academic because, although mentioned in the assessment order, no addition was reflected in the final computation and no rectification was carried out by the Assessing Officer; accordingly the assessment had attained finality on that point. The High Court agreed that in absence of any operative addition in assessment, the matter did not survive as a disputed expenditure. [Paras 4, 7, 8, 11]

Tribunal correctly treated the ad hoc disallowance as academic and did not reverse the appellate findings.

Final Conclusion: The High Court found no substantial question of law; the Tribunal's factual findings upholding deletion of the additions and rejecting the Assessing Officer's enhancement of gross profit rate were based on material on record and are affirmed. The revenue's appeal is dismissed.

Validity of reassessment proceedings and notice under Section 148 - Compliance with procedural safeguards of Section 148A - Application of mind in grant of sanction under Section 151 - Quashing of reassessment order and notice for want of jurisdiction

Validity of reassessment proceedings and notice under Section 148 - Compliance with procedural safeguards of Section 148A - Application of mind in grant of sanction under Section 151 - Impugned order dated 20th April 2023 under Section 148A(d) and the notice dated 20th April 2023 under Section 148 were without application of mind and are liable to be quashed. - HELD THAT: - The Court found that the Assessing Officer raised certain alleged discrepancies (contractual receipts and interest on securities) for the first time in the order dated 20th April 2023 and that the assessee had, prior to that order, furnished detailed replies and documentary explanations in response to notices issued under Section 148A(b). The AO did not explain why those explanations were inadequate; instead a bald finding was recorded that the assessee had failed to demonstrate disclosure in the merged entity. The Court held that the impugned order manifests a lack of application of mind. Similarly, the sanction under Section 151 was issued without having regard to the file and the earlier correspondence, and thus also lacked application of mind. For these reasons the reassessment initiation and the consequential notice could not be sustained and were quashed. [Paras 9, 10, 11]

Impugned order under Section 148A(d) dated 20th April 2023 and the notice under Section 148 of the same date are quashed and set aside for want of application of mind; sanction under Section 151 is also vitiated.

Final Conclusion: Writ petition allowed; impugned order dated 20th April 2023 under Section 148A(d), the notice dated 20th April 2023 under Section 148 and the reassessment proceedings for AY 2019-20 are quashed and set aside; rule made absolute in terms of prayer (a).

Condonation of delay - limitation period - exclusion of limitation on account of Covid-19 - infructuous appeal - negligence of Government department in prosecuting appeals

Condonation of delay - limitation period - Application for condonation of delay in refiling the appeal was dismissed. - HELD THAT: - The appellant filed the present appeal on 12.10.2022, seeking to challenge the ITAT order dated 11.10.2019, but the statutory period of 120 days for filing an appeal under Section 260-A expired on 08.02.2020. Because limitation had already expired prior to 15.03.2020, the appellant could not avail the benefit of the Supreme Court's directions in Re: Cognizance for Extension of Limitation which excluded the period 15.03.2020 to 28.02.2022 and provided a fresh 90-day window from 01.03.2022. The date on which an earlier appeal was declared infructuous (28.06.2022) was held to be irrelevant for reckoning limitation since the orders impugned in the two appeals were different. The Court found no plausible explanation for the 224 days' delay after 28.02.2022 and concluded that there was negligence in prosecuting the matter. Reliance was placed on precedents holding that absence of a plausible explanation and lack of diligence disentitles the Government or its departments to automatic condonation of delay. [Paras 12, 13, 14, 15, 16]

Application under Section 5 of the Limitation Act was dismissed for want of sufficient explanation and due diligence.

Infructuous appeal - exclusion of limitation on account of Covid-19 - negligence of Government department in prosecuting appeals - Appeal was dismissed consequent to refusal to condone delay. - HELD THAT: - The earlier Income Tax Appeal No. 10/2019 was declared infructuous on 28.06.2022 because the ITAT modified its earlier order by a fresh order dated 11.10.2019. The appellant nonetheless had to file a fresh appeal against the 11.10.2019 order within the prescribed period. Having found the delay in filing the fresh appeal unexplained and attributable to negligence rather than unavoidable circumstances, the Court declined to exercise its discretion to condone the delay and thereby refused to entertain the appeal on merits. The Court applied the principle that Government departments are required to act with diligence and cannot claim indulgence absent plausible explanations. [Paras 8, 11, 15, 16, 17]

The appeal was dismissed as the delay in filing it was not condoned.

Final Conclusion: The application for condonation of delay was refused and, consequently, the appeal challenging the ITAT order dated 11.10.2019 (relating to assessment year 2012-2013) was dismissed for want of a plausible explanation and due diligence.

Relationship of principal and agent - principal-to-principal relationship - commission or brokerage - deduction of tax at source - Explanation (i) to Section 194-H - franchisee/distributor as independent contractor - doctrine of presumption against doubtful penalisation

Relationship of principal and agent - principal-to-principal relationship - franchisee/distributor as independent contractor - Legal characterisation of the contractual relationship between the appellant and its franchisees/distributors - HELD THAT: - The Court accepted the decision of the Honourable Supreme Court which examined the franchisee/distributor agreements and concluded that the contractual relationship is to be regarded as principal-to-principal (independent contractor) rather than one of principal and agent. The Supreme Court analysed the detailed terms of the agreements (including control of pricing, ownership of prepaid cards, indemnities, obligations to maintain premises and staff, restrictions, and termination clauses) and observed that despite regulatory mandates and close regulation, the franchisees/distributors acquire products on their account and determine their resale price and profit; they are not paid or credited by the appellant with the income/profit earned from resale, nor do they act as fiduciaries who create legal relations on behalf of the appellant. On this basis the contractual relationship was held not to attract the legal incidents of agency for the purpose of withholding obligations under the tax statute. [Paras 3, 7]

The relationship is principal-to-principal; franchisees/distributors are not agents for the purpose of the withholding obligation.

Commission or brokerage - deduction of tax at source - Explanation (i) to Section 194-H - doctrine of presumption against doubtful penalisation - Whether the discount given by the appellant to franchisees/distributors is in the nature of commission/brokerage attracting deduction under Section 194-H - HELD THAT: - Relying on the Supreme Court's reasoning, the Court held that the discounted sale price paid by the franchisees/distributors is not commission or brokerage payable by the appellant to the franchisee/distributor and therefore Section 194-H does not apply. The Supreme Court observed that the income of the franchisee/distributor arises only when the latter sells to retailers or end-users and is neither paid nor credited by the appellant; Explanation (i) to Section 194-H cannot be stretched to impose a withholding obligation where the statutory conditions are not met. The decision distinguished prior authority (Singapore Airlines) on its facts and emphasised that withholding provisions must be construed realistically and not extended beyond their statutory ambit; where doubt exists, the doctrine against doubtful penalisation applies. [Paras 3, 7]

The discount is not commission or brokerage payable by the appellant and Section 194-H is not attracted; no withholding obligation arises on the appellant.

Final Conclusion: The appeal is allowed in terms of the Honourable Supreme Court's decision: the contractual relationship between the appellant and its franchisees/distributors is principal-to-principal and the discounts given do not constitute commission attracting deduction under Section 194-H, accordingly the appellant is not liable to deduct tax at source on that account.

Reopening of assessment - reason to believe - change of opinion - disallowance under Section 14A read with Rule 8D - proviso to section 147 regarding disclosure of material facts - reopening after four years

Reopening of assessment - change of opinion - reason to believe - disallowance under Section 14A read with Rule 8D - proviso to section 147 regarding disclosure of material facts - reopening after four years - Validity of notice dated 30th March 2021 under Section 148 for Assessment Year 2014-15 - HELD THAT: - The court found that the matter of disallowance under Section 14A read with Rule 8D had been specifically and thoroughly considered during the original assessment proceedings: the Assessing Officer had called for details, issued show-cause notices and received replies addressing why no disallowance was required. The reasons recorded for reopening rely on facts and material that were already on the record at the time of the original assessment (investment in unquoted shares, interest and administrative expenses) and do not disclose any fresh tangible material discovered thereafter. Reopening the assessment more than four years after the end of the assessment year on that basis amounts to a mere change of opinion of the Assessing Officer and is not a permissible basis for invoking Section 147/148. Applying the proviso to Section 147, where the assessee has truly and fully disclosed all material facts in the original proceedings, a notice under Section 148 cannot be sustained. The court applied the principle in Kelvinator of India that 'reason to believe' must be founded on tangible material having a live link to formation of belief and cannot be a cloak for review or change of opinion. [Paras 12, 13, 15]

Impugned notice dated 30th March 2021 under Section 148 for AY 2014-15 quashed as unjustified reopening based on change of opinion and absence of fresh tangible material; objection rejection set aside.

Final Conclusion: The petition is allowed; the notice under Section 148 dated 30th March 2021 (AY 2014-15) and the order rejecting the petitioner's objections are quashed and set aside on the ground that reopening amounted to a change of opinion and no fresh tangible material justified reassessment under the proviso to Section 147.

Reopening of assessment under Section 147/notice under Section 148 - "reason to believe" vis-a -vis change of opinion - Survey under Section 133A as source of fresh material - Borrowed satisfaction and absence of fresh tangible material - Application of Kelvinator principle - in-built test against reopening based on mere change of opinion

Reopening of assessment under Section 147/notice under Section 148 - "reason to believe" vis-a -vis change of opinion - Survey under Section 133A as source of fresh material - Borrowed satisfaction and absence of fresh tangible material - Application of Kelvinator principle - in-built test against reopening based on mere change of opinion - Validity of the notices dated 30th March, 2021 issued under Section 148 for A.Y. 2016-17 and A.Y. 2017-18 - HELD THAT: - The Court examined the reasons recorded which relied on remittance data obtained from a survey u/s. 133A of Jammu & Kashmir Bank and the Bank's own explanation that differences arose from application of a notional rate in remittance sheets and actual settlement/exchange rate in bank statements. The assessee had produced detailed bank statements, reconciliation, Form 15CA and related material during the original assessment proceeding which the Assessing Officer had accepted when passing the assessment order u/s. 143(3). The reasons recorded therefore did not furnish fresh tangible material demonstrating that income had escaped assessment; rather they proceeded on a prima facie conclusion by taking the entire remittance amount as escapement without reconciling the bank's explanation and the documents already on record. On these facts the Court held that the re-opening amounted to a change of opinion or a "borrowed satisfaction" because the AO failed to apply independent mind to the material already filed and to the bank's clarification. The Court applied the principle in Kelvinator that post-amendment reopening must be schematically read so as to prevent arbitrary re-openings based on mere change of opinion, and concluded that the statutory precondition of a bona fide reason to believe was not met here. [Paras 10, 11, 12, 13, 14]

The notices under Section 148 for A.Y. 2016-17 and A.Y. 2017-18 are quashed as based on change of opinion / borrowed satisfaction and lacking fresh tangible material to form a reasonable belief that income had escaped assessment.

Final Conclusion: Petitions allowed; impugned notices under Section 148 quashed and set aside for A.Y. 2016-17 and A.Y. 2017-18; rule made absolute; no order as to costs.

Principle of natural justice - opportunity of hearing - show-cause notice - adjournment request - quash and remand - de novo assessment

Principle of natural justice - opportunity of hearing - show-cause notice - adjournment request - quash and remand - de novo assessment - Whether the impugned assessment order should be quashed and remanded for fresh consideration because the Assessing Officer did not grant opportunity of hearing after the petitioner sought an adjournment in response to the show-cause notice. - HELD THAT: - The petitioner, a trader in shares and securities, received a digitally issued show-cause notice dated 16th February, 2024 calling for a reply by 19th February, 2024. The petitioner made an online adjournment request on 19th February, 2024 and placed before the Court a screenshot of the portal recording that request and a contemporaneous personal meeting with the Assessing Officer seeking time to collect materials. The Assessing Officer passed the assessment order on 29th February, 2024 without recording any adjournment on the order-sheet or granting hearing, and the Assessing Officer's affidavit does not refer to the adjournment request. Given the undisputed portal record of the adjournment request and the absence of any hearing or reference thereto in the impugned order, the Court found a breach of the principle of natural justice. The Court did not examine the merits of the proposed addition but held that the appropriate remedy is to quash the order and remit the matter to the Assessing Officer to pass a fresh order after affording the petitioner an opportunity of hearing from the show-cause notice stage. The Court directed completion of the exercise within 12 weeks of receipt of the order, and clarified that the decision is confined to the procedural breach. [Paras 6, 7, 8]

Impugned assessment order quashed and set aside; matter remitted to the Assessing Officer to pass a fresh de novo assessment order after giving opportunity of hearing to the petitioner from the show-cause notice stage, to be completed within 12 weeks.

Final Conclusion: The writ petition is allowed to the extent that the assessment order dated 29th February, 2024 is quashed for failure to afford the petitioner an opportunity of hearing; the matter is remanded for fresh consideration after hearing, to be completed within 12 weeks; no order as to costs.

Reopening of assessment under Section 148 - reason to believe - change of opinion - reasons recorded - reopening based on audit objection - escaped assessment - no fresh tangible material

Reopening of assessment under Section 148 - reason to believe - change of opinion - no fresh tangible material - reopening based on audit objection - Validity of the notice issued under Section 148 for reopening assessment of Assessment Year 2017-18 - HELD THAT: - The Court examined the reasons recorded for reopening and the material on the file. The Assessing Officer's recorded reason relied on the presentation in the assessee's annual report of a guarantee commission and the claim made in the return; however, the very same matter had been specifically raised and considered during the original assessment proceedings by issue of notice under Section 142(1) and in the assessment order. The reasons recorded thus proceeded from the same material already available on record and from an audit party objection; there was no fresh tangible material placed before the Assessing Officer which could give rise to a valid reason to believe that income had escaped assessment. The Court applied the settled principle that reopening cannot be based on mere change of opinion or solely on audit objections without new material. In absence of any new material or independent basis in the reasons recorded, jurisdiction to reopen the assessment under Section 148 was not validly invoked.

The notice under Section 148 for Assessment Year 2017-18 was without jurisdiction and is quashed and set aside.

Final Conclusion: The petition is allowed to the extent that the notice dated 21.3.2021 under Section 148 for Assessment Year 2017-18 is quashed and set aside; rule is made absolute to that extent.

Mistake apparent from record - rectification of mistake apparent from record under section 254(2) of the Income Tax Act - interest on staff loans and advances treated as business income - binding precedent of the jurisdictional High Court and coordinate Bench - obligation of inferior tribunals to follow High Court decisions - remand for fresh consideration by the Appellate Tribunal

Mistake apparent from record - interest on staff loans and advances treated as business income - binding precedent of the jurisdictional High Court and coordinate Bench - rectification of mistake apparent from record under section 254(2) of the Income Tax Act - Whether the Tribunal committed a mistake apparent on the face of the record by not following the binding decision of the jurisdictional High Court and the coordinate Bench that interest on staff loans and advances is to be treated as business income, and whether the Miscellaneous Application under section 254(2) should have been allowed to rectify that mistake. - HELD THAT: - The High Court found that the petitioner relied on this Court's decision in Gujarat Urja Vikas Nigam Ltd (Tax Appeal No. 63/2020) and on the Coordinate Bench decision in Gujarat Energy Transmission Corporation Ltd, both holding that interest on staff loans and advances is part of business income. Those decisions were on identical facts and therefore binding on the Tribunal. The Tribunal, in the order dated 24.08.2022, distinguished earlier decisions (including the jurisdictional High Court and Coordinate Bench) by reference to factual distinctions which the Court held were not tenable on the material before it. As a result, the Tribunal's conclusion that there was no mistake apparent from record and its dismissal of the Miscellaneous Application under section 254(2) amounted to ignoring binding precedent. A subordinate Tribunal is obliged to follow the law declared by the High Court and a contrary conclusion on identical facts constitutes a mistake apparent on the face of the record. The High Court therefore held that the impugned Tribunal orders showed a mistake apparent on record and required exercise of rectification power; accordingly the impugned orders were quashed and the matter remanded to the Tribunal to pass fresh orders in the Miscellaneous Application in light of the binding decisions. [Paras 12, 14, 15]

Impugned orders quashed and set aside; matter remanded to the Tribunal to pass fresh orders in the Miscellaneous Application after considering the binding decisions treating interest on staff loans as business income.

Final Conclusion: The High Court allowed the petitions to the extent of quashing the impugned Tribunal orders for failing to follow binding jurisdictional and coordinate Bench decisions on treatment of interest on staff loans as business income, and remitted the matter to the Tribunal for fresh disposal of the Miscellaneous Application under section 254(2) of the Income Tax Act. No order as to costs.

Reopening assessment under section 148A(b) and section 148A(d) of the Income tax Act, 1961 - effect of amalgamation on notices and successor liability - requirement of application of mind by assessing authority before issuing reassessment notice - information suggesting escapement of income - principles of natural justice in reassessment proceedings - notices addressed to non existent/amalgamating companies

Reopening assessment under section 148A(b) and section 148A(d) of the Income tax Act, 1961 - effect of amalgamation on notices and successor liability - requirement of application of mind by assessing authority before issuing reassessment notice - information suggesting escapement of income - principles of natural justice in reassessment proceedings - Validity of the show cause notice dated 15.03.2023 and the order dated 28.03.2023 under section 148A(b) and 148A(d) in relation to AY 2016 17 - HELD THAT: - The Court held that the solitary basis for issuance of the show cause notice was the non filing of an ITR by the amalgamating entity and information on the portal of a sale of immovable property. The petitioner had informed the Revenue of the amalgamation and filed an ITR on 08.09.2016 for the amalgamated entity (Suridhi Commercial Infra Pvt. Ltd.) which expressly disclosed the transaction and corresponding TDS attributable to the amalgamating entity. The assessing officer failed to consider the ITR and issued the notice and passed the order mechanically without due application of mind to the material on record. Notices earlier addressed to the merged (non existent) entities were not sustainable as a ground to proceed against the petitioner without proper consideration of successor status and available returns. The Court emphasised that under the amended reassessment scheme the authority must form a prima facie opinion after considering material before it and adhere to principles of fairness before invoking reassessment powers; mere classification of existing material as "information" does not permit reopening where escapement is not established on the material. On these findings the impugned show cause notice and order were set aside. [Paras 17, 18, 23, 24, 26]

The show cause notice dated 15.03.2023 and the order dated 28.03.2023 under section 148A(b) and 148A(d) are set aside for AY 2016 17.

Remittal for fresh consideration - leave to take fresh steps if permissible in law - Whether the matter should be remitted to the Assessing Officer for fresh consideration - HELD THAT: - Though the Revenue sought remand, the Court declined to remit the matter because the foundational reason for issuance of the notice was found to be unsupported by the material on record and the AO had not applied mind to the ITR already filed. The Court, however, left the Revenue free to take appropriate fresh steps if permissible in law on any other ground, but did not direct or authorise any remand. [Paras 25]

Matter not remitted; Revenue may take fresh steps if permissible in law.

Final Conclusion: Writ petition allowed; the reassessment show cause notice dated 15.03.2023 and the order dated 28.03.2023 are set aside in respect of AY 2016 17; no remand ordered though Revenue is free to take lawful steps afresh.

Variation in the income or loss returned - Section 144C - scope of draft assessment requiring variation - assessment barred by limitation where no variation in returned income - benefit under DTAA (Article 11) and its effect on tax rate - pre- and post Finance Act, 2020 textual distinction in Section 144C

Variation in the income or loss returned - Section 144C - scope of draft assessment requiring variation - pre- and post Finance Act, 2020 textual distinction in Section 144C - Scope of Section 144C as it stood prior to Finance Act, 2020 and whether a Draft Assessment Order could be framed absent any variation in the income returned - HELD THAT: - The Court accepted the ITAT's construction of Section 144C as it existed at the relevant time, observing that the pre-2020 provision applied only where there was "any variation in the income or loss returned." The later recasting (Finance Act, 2020) introduced the broader phrase "any variation which is prejudicial to the interest of such assessee," but that amendment was not operative for the years in question. On the facts, the Assessing Officer's change affected only the rate at which the returned income was taxed (by rejecting the assessee's claim under Article 11 of the India Cyprus DTAA) without altering the total income declared; therefore no variation in income or loss returned was made out and Section 144C(1) (as then worded) was not attracted. [Paras 7, 8, 9]

Section 144C (pre Finance Act, 2020) did not empower the AO to frame a Draft Assessment Order where there was no variation in the income or loss returned; the ITAT was correct in so holding.

Benefit under DTAA (Article 11) and its effect on tax rate - assessment barred by limitation where no variation in returned income - Whether the ITAT erred in allowing the assessee's appeals without adjudicating the merits of entitlement to DTAA benefits and whether the Final Assessment Orders were barred by limitation - HELD THAT: - The Tribunal's conclusion was founded on the threshold statutory point that, in the absence of any variation in returned income or loss, the draft order procedure under Section 144C was not triggered; accordingly the final assessments were time barred insofar as that procedure was concerned. Although the Assessing Officer rejected the assessee's claim under Article 11 of the DTAA, that rejection altered only the rate of taxation applied to the unchanged returned income. Given the statutory requirement then in force, the ITAT legitimately disposed of the appeals on that legal ground without undertaking fresh determination of the DTAA entitlement. [Paras 4, 5, 6, 8]

The ITAT did not err in allowing the appeals on the statutory ground that Section 144C was not attracted; the final assessment orders were therefore barred by limitation in the circumstances.

Final Conclusion: The appeals raise no substantial question of law; the ITAT correctly held that, for AY 2014-15 and AY 2015-16, the pre-2020 wording of Section 144C applied only to variations in the income or loss returned and, as no such variation was made out, the Tribunal's decision is upheld and the appeals are dismissed.

Penalty for concealment of income or furnishing inaccurate particulars of income under section 271(1)(c) - ad hoc estimation of additions based on alleged bogus purchases - deletion of penalty where addition is founded on an ad hoc estimate - reliance on coordinate bench precedent - condonation of delay for sufficient cause

Penalty for concealment of income or furnishing inaccurate particulars of income under section 271(1)(c) - ad hoc estimation of additions based on alleged bogus purchases - deletion of penalty where addition is founded on an ad hoc estimate - reliance on coordinate bench precedent - Deletion of penalty under section 271(1)(c) upheld where the addition was based on an ad hoc estimate of bogus purchases. - HELD THAT: - The Assessing Officer treated certain purchases as non-genuine and made an ad hoc addition of 12.5% of those purchases in the assessment. Penalty proceedings under section 271(1)(c) were thereafter initiated and a penalty was levied. The learned CIT(A) deleted the penalty on the basis that the addition was made on an estimated/ad hoc basis. The Tribunal noted a coordinate-bench decision holding that an ad hoc gross-profit rate applied to alleged bogus purchases to estimate suppression of gross profit cannot be the basis for levying penalty under section 271(1)(c) where the books show payment through account-payee cheques, corresponding sales and quantitative details, and the satisfaction recorded by the AO is vague. Applying that reasoning, the Tribunal held that the CIT(A)'s deletion of the penalty was justified and accordingly upheld the deletion, dismissing the Revenue's grounds. [Paras 5, 8]

Penalty levied under section 271(1)(c) deleted; deletion upheld and Revenue's appeal dismissed.

Final Conclusion: The Tribunal condoned the delay in filing the appeal and dismissed the Revenue's appeal, upholding the deletion of the penalty under section 271(1)(c) because the impugned addition was founded on an ad hoc estimate of alleged bogus purchases and the deletion was in conformity with coordinate-bench precedent.

Advance tax liability - admission of appeal under section 249(4)(b) - deduction under section 80P - requirement to claim deduction in a return under section 80A(5)

Advance tax liability - admission of appeal under section 249(4)(b) - deduction under section 80P - requirement to claim deduction in a return under section 80A(5) - NFAC's dismissal of the appeal under section 249(4)(b) for non-payment of advance tax upheld where the assessee did not claim the section 80P deduction in its return. - HELD THAT: - The Tribunal accepted the Revenue's contention that the assessee's asserted exemption under section 80P could not be treated as eliminating advance tax liability because such deduction is required to be claimed in a return. Reliance was placed on the mandatory character of the requirement in section 80A(5) (as applied in earlier authority cited in the judgment). There is no material on the file showing that the assessee had claimed the section 80P deduction in its return; consequently the condition precedent for treating the income as non-assessable was not satisfied. In the absence of a claim in the return, default in payment of advance tax stands and the statutory bar to admission of the appeal under section 249(4)(b) was correctly applied by NFAC. [Paras 5]

Assessee's challenge to dismissal of its appeal under section 249(4)(b) rejected; NFAC's order upheld.

Final Conclusion: The appeal is dismissed; NFAC correctly refused admission under section 249(4)(b) as the assessee failed to establish that the section 80P deduction had been claimed in its return and therefore could not negate advance tax liability.

Jurisdiction of the Tribunal - exclusive remedy of revision under Section 129(DD) of the Customs Act, 1962 - consent, waiver or acquiescence cannot confer jurisdiction on a forum lacking statutory power - opportunity to file revision and protection from dismissal on limitation grounds

Jurisdiction of the Tribunal - consent, waiver or acquiescence cannot confer jurisdiction on a forum lacking statutory power - The Tribunal had no jurisdiction to entertain the appeal against the Order-in-Appeal where the statute prescribes revision as the exclusive remedy. - HELD THAT: - The Court accepted that Section 129(DD) of the Customs Act, 1962 prescribes revision to the Central Government as the remedy against the Order-in-Appeal and that an appeal to the Tribunal was not maintainable. Reliance was placed upon the principle that an order rendered by a forum lacking subject matter jurisdiction is a nullity and that neither consent nor failure to object at earlier stages can confer jurisdiction on such a forum. Consequently, the Tribunal's order allowing the appeal was set aside for want of jurisdiction. [Paras 4, 5, 6]

Tribunal's order set aside for lack of jurisdiction; appeal under Section 129(DD) is not maintainable before the Tribunal.

Exclusive remedy of revision under Section 129(DD) of the Customs Act, 1962 - opportunity to file revision and protection from dismissal on limitation grounds - Whether the respondent should be afforded an opportunity to file the statutory revision despite not having done so earlier and whether such revision may be considered on merits notwithstanding limitation. - HELD THAT: - Although the respondent conceded that revision was the proper remedy, it was submitted that the objection to jurisdiction was not taken earlier and that revision could not then be filed within the statutory time. The Court granted relief in equity by setting aside the impugned order and permitting the respondent to prefer a Revision under Section 129(DD) of the Act against the Order-in-Appeal within two months. The Court directed that if such revision is filed within the stipulated period, the Competent Authority shall decide it on merits and shall not dismiss it on the ground of limitation. [Paras 5, 6, 7]

Respondent permitted two months to file Revision under Section 129(DD); Competent Authority to decide it on merits and not to dismiss on limitation grounds.

Final Conclusion: Impugned Tribunal order of 25.05.2023 set aside for want of jurisdiction; respondent granted two months to file a Revision under Section 129(DD) of the Customs Act, 1962 against the Order-in-Appeal dated 14.10.2022, which the Competent Authority shall decide on merits and not dismiss on limitation grounds.

Power to prescribe measures for facilitation of trade and expedite release of goods - Suspension of operations or revocation of registration of an authorised carrier - Commissioner of Customs' non-intervention in private contractual or commercial disputes - Balance between customs control and facilitation of legitimate trade

Power to prescribe measures for facilitation of trade and expedite release of goods - Balance between customs control and facilitation of legitimate trade - Whether the Commissioner of Customs was required to exercise powers to facilitate release of the petitioner's cargo or waive detention charges under the facilitation measures relied upon by the petitioner. - HELD THAT: - The Court examined the scope of measures available for facilitation of trade and the specific powers contemplated for expediting clearance or release of goods. Section 143AA confers power on the Board to prescribe measures or procedures for classes of importers, categories of goods or modes of transport to maintain transparency, expedite clearance, reduce transaction costs and balance customs control and facilitation. The petitioner sought intervention by the Commissioner to direct release of the original bill of lading, issue delivery orders and grant waiver of detention charges. The Court held that the power under Section 143AA is vested in the Board to frame measures for facilitation generally and does not, on the facts before the Court, impose an obligation on the Commissioner to resolve an internal commercial dispute between the importer and the carrier or agent. The Court further noted that the reliefs sought - compelling release of the original bill of lading and waiver of detention - arose from a private dispute between the petitioner and Respondent No.3 and thus did not attract exercise of the statutory facilitation power by the Commissioner. [Paras 6, 8, 9]

Relief seeking compulsion of the Commissioner to secure release of the original bill of lading, issuance of delivery order or waiver of detention charges was rejected; no duty on the Commissioner to intervene in the private dispute.

Suspension of operations or revocation of registration of an authorised carrier - Commissioner of Customs' non-intervention in private contractual or commercial disputes - Whether the grounds in the Sea Cargo Manifest and Transshipment Regulations (regulation 11(2)) for suspension or revocation of an authorised carrier's registration were attracted so as to justify action by the Commissioner. - HELD THAT: - The Court considered regulation 11(2), which permits the Commissioner to suspend operations of an authorised carrier for specified grounds such as failure to comply with regulations, bond conditions, misconduct, insolvency, unsoundness of mind or conviction for offences involving moral turpitude. The petitioner invoked this provision seeking action against the carrier. The Court found that none of the statutory conditions or grounds specified in regulation 11(2) were shown to be present on the material before the Court. Consequently, there was no basis to direct the Commissioner to act under regulation 11(2) in the circumstances of a commercial dispute over release of the original bill of lading. [Paras 7, 9]

No satisfaction of the statutory grounds under regulation 11(2) was made out; therefore no action under that regulation by the Commissioner was warranted.

Final Conclusion: The petition seeking writs to compel the Commissioner to intervene with directions for release of the original bill of lading, issuance of delivery order, waiver of detention charges or acceptance of fresh bill of entry was dismissed: the statutory facilitation power relied upon is for the Board to prescribe measures, and the Commissioner was not required to resolve the private commercial dispute or to act under regulation 11(2) on the facts presented.

Alternative efficacious statutory remedy - Violation of principles of natural justice - denial of relied upon documents and cross examination - Relegation to statutory appeal under section 129A of the Customs Act - Discretion of quasi judicial authority on allowing cross examination

Alternative efficacious statutory remedy - Relegation to statutory appeal under section 129A of the Customs Act - Whether the writ petitions are maintainable in view of the availability of an alternative statutory remedy of appeal under section 129A. - HELD THAT: - The Court found that the adjudicating authority's Order in Original is amenable to challenge before the statutory appellate forum and that an alternative efficacious remedy exists. The High Court refrained from entering into the merits of the adjudication and observed that the appellate authority is competent to consider all contentions raised by the petitioners, including alleged procedural infirmities. The Court noted that, in the facts of the case, remanding the matter to the adjudicating authority would be an empty formality because the adjudicating authority had already recorded its decision rejecting the request for cross examination; any review of that action is more appropriately undertaken by the appellate authority which can, if necessary, call for a remand report. The petitioners were given liberty to file appeals in accordance with law and the time spent in approaching the High Court was to be treated as bona fide by the appellate forum if appeals were filed within the prescribed extension granted by the Court. [Paras 63, 64, 65]

Petitions not entertained on merits; petitioners relegated to pursue appeals under the statutory remedy, with liberty to file within four weeks and assurance that time spent before the High Court will be treated as bona fide.

Violation of principles of natural justice - denial of relied upon documents and cross examination - Discretion of quasi judicial authority on allowing cross examination - Whether the alleged breach of natural justice by non supply of relied upon documents and refusal to permit cross examination warranted quashing of the adjudication order by the High Court. - HELD THAT: - The Court recorded the petitioners' grievance that relied upon documents (data recovered from a pen drive) were not supplied and that requests to cross examine co noticees were not granted prior to issuance of the Order in Original. Without deciding the merits, the Court observed that the adjudicating authority had considered the requests and had recorded reasons for refusal; given the availability of the appellate remedy and the factual matrix showing involvement of multiple co noticees and extensive material, the High Court concluded that it should not entertain the writ petitions as a forum to retry those contentions. The Court emphasised that whether non supply or denial of cross examination caused prejudice is a matter that the appellate authority can and should examine; remanding to the original authority was, in the circumstances, likely to be futile. [Paras 59, 60, 63]

Allegations of breach of natural justice not adjudicated by this Court; petitioners directed to raise these contentions before the appellate authority which may examine prejudice and procedural compliance.

Final Conclusion: Writ petitions dismissed without adjudication on merits and petitioners relegated to file appeals under the statutory remedy; petitions disposed with liberty to file appeals within the period permitted by the Court (four weeks), and interim relief granted earlier was continued for the limited period specified.

Transaction value - admissibility of revised sale price under the transaction value method - genuineness and necessity of reduction in price - relevance of Light Displacement Tonnage (LDT) in assessable value - lump-sum price versus per unit (LDT linked) price - application of Section 14 of the Customs Act

Transaction value - admissibility of revised sale price under the transaction value method - genuineness and necessity of reduction in price - application of Section 14 of the Customs Act - relevance of Light Displacement Tonnage (LDT) in assessable value - Acceptance of the revised MOA price (reduced on account of lower LDT found at import) as the transaction value for customs assessment. - HELD THAT: - The Tribunal found that the original Memorandum of Agreement (MOA) was entered on the belief that the ship's LDT was 10,386 MT but on arrival survey the LDT was 10,200 MT, leading the parties to execute revised MOAs with a correspondingly reduced price and actual payment reflecting the reduced price. Applying the principle in Chaudhary Ship Breakers that actual payment under an addendum cannot be ignored while determining value under Section 14, the Tribunal held the reduced price was admissible unless the reduction's genuineness and necessity are successfully impugned. The Tribunal further relied on precedents (including Hussain Sheth Ispat and J.R.D. Industries) which explain that where the contract price is a lump sum not linked to LDT, LDT is irrelevant for valuation and the declared transaction value must be accepted in absence of evidence of extra consideration or non genuineness. In the present case, the reduction arose from an admitted shortfall in LDT and was reflected in documentary amendments and the actual amount paid; revenue did not show any extraneous payment or other reason to treat the revised MOA as not genuine. Consequently, the impugned enhancement ignoring the revised MOAs and reverting to the original declared price was unsustainable.

The revised MOA price, reflecting the reduced LDT and actual payment, is to be accepted as the transaction value; the demand based on the original MOA price is set aside and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the assessable value must be determined on the basis of the revised MOAs and actual payment reflecting the reduced LDT; the order enhancing value on the basis of the original MOA is set aside.

Rejection of declared value of import - contemporaneous imports as basis for valuation - obligation of Revenue to produce material relied upon for valuation - opportunity to dispute comparability of import transactions - failure to produce evidence resulting in allowance of appeal

Rejection of declared value of import - contemporaneous imports as basis for valuation - obligation of Revenue to produce material relied upon for valuation - opportunity to dispute comparability of import transactions - Whether the Revenue could sustain rejection of the appellant's declared import value in the absence of production of contemporaneous import documents relied upon for comparability and valuation. - HELD THAT: - The Tribunal applied the direction of the Apex Court that where the Revenue relies on alleged contemporaneous imports (for example, an alleged computer printout) to reject an assessee's declared value, the Revenue must produce the material relied upon so that the assessee has a reasonable opportunity to dispute the comparability of those transactions. The Revenue was repeatedly directed to produce bill(s) of entry and legible contemporaneous import lists but failed to do so despite multiple listings and reminders. In the absence of any material establishing comparable imports at higher values, the mere assertion of existence of such printouts or records is insufficient to sustain the rejection of the declared value. Because the Revenue did not produce the requisite evidence of contemporaneous imports and thereby denied the appellant the opportunity to challenge comparability, the Tribunal concluded that the basis for revising the declared value was not proved. [Paras 4, 5]

The rejection of the declared value could not be sustained for want of production of contemporaneous import evidence; the appeal is allowed with consequential relief.

Final Conclusion: In view of the Revenue's failure to produce contemporaneous import documents ordered by the Tribunal and required by the Apex Court's reasoning, the impugned rejection of declared value cannot be sustained and the appeal is allowed with consequential relief.

Mandatory duty to deregister under Rule 30(7) of the Aircraft Rules - IDERA and priority search report as triggering documents for deregistration - limited scope of NCLT/NCLAT jurisdiction under Section 60(5) of the IBC versus writ jurisdiction under Article 226 - effect of moratorium under Section 14 of the IBC on third party assets held under contract - retrospective operation of executive notification under Section 14(3) of the IBC (MCA Notification S.O. 4321(E) dated 03.10.2023) - interaction between Cape Town Convention/Protocol remedies and domestic insolvency moratorium - judicial review and writ of mandamus to compel performance of statutory public law duties

Mandatory duty to deregister under Rule 30(7) of the Aircraft Rules - IDERA and priority search report as triggering documents for deregistration - judicial review and writ of mandamus to compel performance of statutory public law duties - Respondent/DGCA was mandatorily obliged to process and cancel registration under Rule 30(7) on receipt of IDERA and priority search report and could not keep the deregistration applications in abeyance - HELD THAT: - A combined reading of Rule 5 and Rule 30 shows an aircraft cannot be lawfully flown without valid registration and that Rule 30(7), inserted pursuant to the Cape Town Protocol, prescribes a mandatory process: upon receipt of an IDERA recorded with the Director General and a priority search report, the Central Government (through DGCA) shall cancel registration within five working days without seeking operator consent. The Coordinate Bench decision in Awas was followed and applied; the use of 'shall' in Rule 30(7) indicates mandatory obligation and removes DGCA discretion once prescribed documentary conditions are met. The Court found no record of communicated deficiencies in the petitioners' applications and concluded DGCA's failure to deregister was contrary to its statutory duty. As a result, DGCA's communications declining to process the applications were set aside and DGCA was directed to process deregistration within five working days subject only to rectification of any bona fide documentary deficiencies. [Paras 21, 22, 23, 40, 44]

DGCA's refusal to process deregistration was set aside and DGCA ordered to process and cancel registration of the specified aircraft under Rule 30(7) within five working days

Limited scope of NCLT/NCLAT jurisdiction under Section 60(5) of the IBC versus writ jurisdiction under Article 226 - limited reach of Section 60(5) where decision is in the realm of public law - High Court had jurisdiction under Article 226 to adjudicate the writ petitions seeking mandamus against DGCA despite concurrent insolvency proceedings before NCLT/NCLAT - HELD THAT: - The Court analysed Section 60(5) of the IBC and the authorities on the delineation between NCLT jurisdiction and writ/judicial review jurisdiction (noting Embassy and subsequent decisions). While Section 60(5) gives NCLT broad jurisdiction over matters 'arising out of or in relation to' insolvency, that provision does not oust a High Court's power of judicial review where the challenge is to the exercise/failure of a statutory public law function by a government authority. The petitions challenged DGCA's public law action/inaction under the Aircraft Act and Rules (a public law regulatory function) and therefore fall within the writ jurisdiction; NCLT/NCLAT do not possess plenary supervisory power to displace Article 226 jurisdiction in such matters. The Court further noted that NCLT's limited statutory jurisdiction cannot be extended to assume all public law review. [Paras 24, 25, 26, 27]

Writ jurisdiction under Article 226 is available and this Court may adjudicate the petitions seeking DGCA to perform its statutory duty

Effect of moratorium under Section 14 of the IBC on third party assets held under contract - Explanation (a) to Section 18 excluding third party assets held under contractual arrangements from 'assets' of corporate debtor - The moratorium under Section 14(1) did not protect or prevent action in respect of the aircraft because the lease agreements had been validly terminated and the aircraft ceased to be in the corporate debtor's possession prior to the moratorium - HELD THAT: - Explanation (a) to Section 18 excludes from the corporate debtor's 'assets' property owned by a third party but held under contract. The lease agreements were terminated and deregisration applications were filed before the NCLT's Insolvency Commencement Order dated 10.05.2023; thus, the aircraft had ceased to be in lawful possession of the corporate debtor prior to moratorium. The Court distinguished cases where termination arose solely from insolvency; here the proximate cause for termination was antecedent breaches (non payment), not the insolvency declaration. Accordingly, Section 14(1)(d) could not be used to prevent deregistration of aircraft already the subject of valid termination and IDERA applications filed before the moratorium. [Paras 12, 29, 30, 41, 44]

Possession argument under Section 14(1)(d) fails where lease termination and IDERA filings preceded the moratorium; DGCA may act on deregistration requests

Retrospective operation of executive notification under Section 14(3) of the IBC (MCA Notification S.O. 4321(E) dated 03.10.2023) - interaction between Cape Town Convention/Protocol remedies and domestic insolvency moratorium - The MCA Notification dated 03.10.2023, issued under Section 14(3) of the IBC excluding aircraft, aircraft engines and airframes from the moratorium, is to be given retrospective effect - HELD THAT: - The MCA Notification expressly references India's accession to the Cape Town Convention/Protocol and implements the treaty based regime governing aircraft objects and insolvency remedies (Article XI Alternative A). Considering the treaty obligations, the historical context of India's accession (2008), the remedial purpose of the notification to cure prior uncertainty and the precedents recognising retrospective effect for procedural notifications that are necessary adjuncts to a statutory regime, the Court held the notification to be clarificatory and retrospective. The Court observed that giving retrospective effect restores the intended operation of Cape Town Protocol remedies and removes inconsistency between the moratorium and the Protocol. The notification therefore removes the moratorium's application to aircraft objects for purposes relevant to these petitions. [Paras 33, 34, 35, 38, 39]

MCA Notification is retrospective; aircraft and related objects are excluded from the moratorium for the purposes of these proceedings

Impleadment of Committee of Creditors (CoC) - representation of CoC interests by Resolution Professional - Application to implead the CoC was dismissed as unnecessary because the Resolution Professional represents the corporate debtor and the CoC's interests in these proceedings - HELD THAT: - The Court noted the statutory framework under Sections 17, 23 and 25 of the IBC which vests management and representation of the corporate debtor with the IRP/RP. The RP, already a party to the writ petitions, is bound to represent the corporate debtor and the CoC's interests. Given that the CoC's contentions were advanced through the RP and were otherwise addressed, the Court exercised discretion and declined to add CoC as a party, dismissing its impleadment applications. [Paras 17]

Applications for impleadment of the CoC are dismissed

Protective and ancillary directions concerning maintenance, access, export and restraint - export under Rule 32A and administrative cooperation from DGCA and AAI - Interim and final ancillary directions were issued: set aside DGCA letters; DGCA to process deregistration within five working days; petitioners/lessors allowed access and to undertake maintenance until deregistration/export; RP and Go Air restrained from operating or removing aircraft parts; DGCA/AAI to facilitate export and communicate dues - HELD THAT: - In addition to declaring DGCA's communications invalid, the Court issued detailed practical directions to protect the aircraft and give effect to the deregistration/export process: (a) DGCA to process deregistration under Rule 30(7) within five working days for the listed aircraft; (b) petitioners or their authorised representatives may undertake maintenance and are to be given access by DGCA and AAI; (c) RP/Go Air and agents restrained from operating, flying or removing parts from the identified aircraft; (d) RP to supply up to date records within 14 days; (e) certain petitioners granted liberty to export subject to statutory compliance and DGCA/AAI to provide export/ferry and airworthiness certifications and to notify any pending airport dues. These directions give effect to the legal conclusions on deregistration, moratorium and treaty obligations while preserving regulatory and safety compliance. [Paras 4, 44, 45, 46]

Detailed directions issued: DGCA to process deregistration; access and maintenance by lessors; restraints on RP/Go Air; facilitation of export by DGCA/AAI subject to compliance

Final Conclusion: The writ petitions were allowed in part: DGCA's communications refusing to process deregistration were set aside; DGCA was directed to process and cancel registration of the listed aircraft under Rule 30(7) within five working days (subject to any bona fide documentary deficiencies), petitioners/lessors were granted access and maintenance rights pending deregistration/export, RP/Go Air were restrained from operating or cannibalising the aircraft, the CoC's impleadment applications were dismissed, and the Ministry's notification excluding aircraft objects from the IBC moratorium was held to apply retrospectively and to support the petitioners' entitlement to deregistration and related remedies.

Escrow of disputed resolution-plan proceeds - interim preservation of assets pending appeal - protection of dissenting financial creditors' entitlement - plan approval proceedings subject to outcome of appeal - fair play and good conscience as basis for interim relief

Escrow of disputed resolution-plan proceeds - interim preservation of assets pending appeal - protection of dissenting financial creditors' entitlement - Direction to deposit the differential amount claimed by the appellants into an escrow account pending final determination of the main appeal - HELD THAT: - The Tribunal considered the appellants' plea that distribution of proceeds under the approved resolution plan, if effected while the main appeal remains pending, may render any favourable outcome in the appeal ineffectual by extinguishing the appellants' claimed entitlement. The Tribunal noted the earlier interim observations made in its order dated 21.11.2023 that plan approval proceedings before the Adjudicating Authority would be subject to the final outcome of the appeal. In the exercise of its supervisory powers and to safeguard the appellants' rights pending final adjudication, the Tribunal found it appropriate, on grounds of fair play and good conscience, to direct preservation of the disputed sum. Having regard to the submissions and the potential for prejudice if distribution proceeded unrestrained, the Tribunal ordered that the amount equivalent to the differential claimed by the appellants be placed in an Escrow Account until the main appeal is finally disposed of. The Tribunal observed this measure would avoid complications and wider ramifications and would protect the subject matter of the appeal without finally adjudicating the merits of the entitlement claim.

IA disposed of by directing that Rs.543.28 Crores, being the claimed differential amount, be placed in an Escrow Account until final determination of Comp. App (AT)(CH)(INS) No. 400 of 2023.

Final Conclusion: The interim application is allowed and the disputed differential amount shall be preserved in an escrow account pending final decision of the main appeal; no costs.

Recovery Certificate gives rise to a fresh cause of action - liability arising out of a Recovery Certificate is a financial debt under section 5(8) of the IBC - holder of a Recovery Certificate is a financial creditor under section 5(7) of the IBC - limitation under section 238A of the Insolvency and Bankruptcy Code r/w Article 137 of the Limitation Act, 1963 - finality of decree not affected by pendency of set-aside proceedings - use of IBC for recovery does not ipso facto constitute abuse of process where statutory tests are satisfied

Liability arising out of a Recovery Certificate is a financial debt under section 5(8) of the IBC - holder of a Recovery Certificate is a financial creditor under section 5(7) of the IBC - Recovery Certificate gives rise to a fresh cause of action - Liability under the DRT decree and the consequent Recovery Certificate constitutes a financial debt and the Recovery Certificate holder qualifies as a financial creditor entitled to invoke section 7 IBC. - HELD THAT: - The Tribunal applied the principle affirmed by the Supreme Court that a claim arising out of a Recovery Certificate gives rise to a fresh cause of action and therefore falls within the definition of financial debt and its holder within financial creditor. The NCLT's conclusion was grounded on the binding precedents culminating in Kotak Mahindra Bank Ltd. which upheld Dena Bank and held that a Recovery Certificate creates a fresh cause of action and the certificate-holder may initiate CIRP under section 7 if within the prescribed period. Applying that ratio to the facts, the decree-holder (Respondent) is a financial creditor for the purposes of the Code and entitled to proceed under section 7. [Paras 15, 19]

The NCLT was correct in treating the DRT decree and Recovery Certificate as giving rise to a financial debt and in holding the Respondent to be a financial creditor entitled to file under section 7.

Recovery Certificate gives rise to a fresh cause of action - limitation under section 238A of the Insolvency and Bankruptcy Code r/w Article 137 of the Limitation Act, 1963 - The section 7 application filed on 24.10.2021 is not barred by limitation as it was filed within three years of the decree and Recovery Certificate. - HELD THAT: - The Tribunal reviewed the law on limitation and applied the Supreme Court rulings that a decree and the subsequent Recovery Certificate give rise to a fresh cause of action for initiation of CIRP. Under the consolidated precedent (Dena Bank affirmed by Kotak Mahindra Bank Ltd.), the three-year limitation runs from the date of the Recovery Certificate (and related decree) and not from the date on which the loan was classified as NPA. On the facts, the section 7 filing dated 24.10.2021 falls within three years of the decree/Recovery Certificate and therefore is within limitation. [Paras 16, 19]

The section 7 application was within limitation and not barred under section 238A IBC read with Article 137.

Finality of decree not affected by pendency of set-aside proceedings - Pendency of a set-aside petition against the DRT decree does not nullify the decree as a basis for filing section 7 proceedings. - HELD THAT: - The Tribunal observed that mere pendency of proceedings to set aside the decree does not negate the operative effect of the decree or the Recovery Certificate as giving rise to a fresh cause of action for the decree-holder. The appropriate remedy to challenge the decree is in the forum where the decree was passed, and the pendency of such challenge does not deprive the decree-holder of the statutory right to initiate CIRP under the Code. [Paras 17, 19]

Pendency of set-aside proceedings did not render the decree or Recovery Certificate devoid of merits for the purpose of initiating CIRP.

Use of IBC for recovery does not ipso facto constitute abuse of process where statutory tests are satisfied - The Adjudicating Authority did not err in finding there was no abuse of the provisions of the IBC by the decree-holder in seeking initiation of CIRP. - HELD THAT: - The Tribunal rejected the contention that filing under section 7 by a decree-holder necessarily amounted to misuse of the Code for recovery. Relying on the Supreme Court ratio, the fact that a decree-holder moves under section 7 does not mean the CIRP will simply serve as a recovery mechanism at the claimant's behest; the Code provides a comprehensive resolution process with safeguards and mechanisms to protect the corporate debtor and other stakeholders. Absent specific evidence of mala fide or procedural abuse, the initiation of CIRP by a decree-holder satisfying the statutory definition of financial creditor cannot be set aside on that ground alone. [Paras 18, 19]

There was no failure by the NCLT to appreciate that the Respondent's section 7 petition sought resolution and did not amount to an abuse of the IBC.

Final Conclusion: The Appeal is dismissed. The NCLT order admitting the section 7 petition and initiating CIRP dated 11.04.2022 is affirmed as legally sustainable; connected applications, if any, are closed. No costs.

Offence under Section 3 of the Prevention of Money Laundering Act being dependent on commission of a scheduled offence - proceeds of crime as property derived or obtained from criminal activity relating to a scheduled offence - release of properties attached under the PMLA upon acquittal/discharge in the predicate offence - pending appeal against acquittal not precluding release of attached property

Offence under Section 3 of the Prevention of Money Laundering Act being dependent on commission of a scheduled offence - proceeds of crime as property derived or obtained from criminal activity relating to a scheduled offence - Whether proceedings under the PMLA can be continued after the accused are acquitted/discharged in the predicate (scheduled) offence - HELD THAT: - The Court held that the foundation of a charge under Section 3 of the PMLA is the existence of property which qualifies as "proceeds of crime", meaning property "derived or obtained" as a result of criminal activity relating to a scheduled offence. Relying on the reasoning in Vijay Madanlal Choudhry (as reiterated in Parvathi Kollur and Pavana Dibbur ), if the person accused of the scheduled offence is finally discharged or acquitted, there can be no money laundering offence in respect of property linked to that scheduled offence because the predicate criminal activity is held not to have occurred. The Court applied these principles and concluded that once the respondents were acquitted in the predicate FIR, the PMLA proceedings against them could not be sustained as there would be no proceeds of crime to constitute money laundering. The Court further noted consistent decisions of this Court and other benches reaching the same conclusion. The Special Judge's discharge order was therefore held to be correct. [Paras 28, 32]

Proceedings under the PMLA could not be continued after the acquittal/discharge of the respondents in the predicate offence; the Special Judge rightly discharged the respondents.

Release of properties attached under the PMLA upon acquittal/discharge in the predicate offence - pending appeal against acquittal not precluding release of attached property - Whether attached bank accounts and immovable properties must be released notwithstanding the pendency of an appeal against the predicate offence acquittal - HELD THAT: - The Court observed that Section 8(6) of the PMLA requires the Special Court to order release of property where, on conclusion of trial under the Act, the Special Court finds that money laundering has not taken place or the property is not involved in money laundering. Applying the principle that acquittal in the scheduled offence negates the existence of proceeds of crime (see Vijay Madanlal Choudhry , Nik Nish Retail Ltd. and Parvathi Kollur ), the Court held that the Special Judge was obliged to release attached properties once the respondents were acquitted. The Court rejected the contention that mere pendency of an appeal against the acquittal amounts to continuation of trial or prevents release; until an appellate court reverses the acquittal, the effects of the acquittal operate and the attached properties cannot be retained as proceeds of crime. The Court noted that if the acquittal is later reversed on appeal, the ED can revive PMLA proceedings. [Paras 29, 32]

The Special Judge correctly ordered release/defreezing of the attached immovable properties and bank accounts; pendency of an appeal against acquittal does not bar such release.

Final Conclusion: The petition is dismissed. The High Court upheld the Special Judge's discharge of the respondents from PMLA offences and the orders directing release/defreezing of attached properties and bank accounts; pendency of an appeal against the predicate acquittal does not prevent release, and, if the acquittal is reversed on appeal, the ED may revive proceedings.

Jurisdiction to issue show-cause notice - insufficiency of information from Income Tax returns and Form 26AS to sustain a show-cause notice - exemption for goods transport agency (GTA) services - exercise of writ jurisdiction under Article 226 - extended limitation under the Proviso to Section 73(1) of the Finance Act, 1994 - quashing of ex-parte order and consequential proceedings

Jurisdiction to issue show-cause notice - insufficiency of information from Income Tax returns and Form 26AS to sustain a show-cause notice - exemption for goods transport agency (GTA) services - exercise of writ jurisdiction under Article 226 - Validity of the show-cause notice issued relying solely on information from Income Tax returns and Form 26AS for F.Y. 2015-16 and F.Y. 2016-17 and related consequential proceedings. - HELD THAT: - The show-cause notice was issued only on the basis of details obtained from the Income Tax Department, including Income Tax returns and Form No. 26AS, without any independent inquiry or verification as to the nature of services rendered by the petitioner. The record shows no effective service of the notice on the petitioner and no further enquiries were made by the respondent before issuing the notice. The petitioner had been rendering goods transport agency services, which attract the exemption and do not, on the material placed before this Court, support a demand of service tax by the respondent. While appellate delay ordinarily could not be condoned in view of binding precedent, the Court, exercising jurisdiction under Article 226, is entitled to examine whether the issuing authority had jurisdiction to issue the impugned show-cause notice. Because the notice rested on mere information from Income Tax records without verification and failed to disclose the factual basis for liability, the assumption of jurisdiction by the respondent was unfounded.

The show-cause notice dated 21st July, 2020 and the consequential ex-parte order and proceedings are quashed and set aside.

Final Conclusion: The show-cause notice issued on the basis of Income Tax returns and Form 26AS without independent verification, and the consequential ex-parte order, are quashed; the petitions are allowed and all consequential proceedings are set aside.

Chargeability of service tax on aviation income - distinction between chartering (supply of tangible goods) and dry lease (deemed sale under Article 366(29A)) - exclusion from service tax for deemed sale - obligation to consider documentary bifurcation and CA certificate - territorial jurisdiction of commissionerate to issue show cause notice - extended period of limitation / time-barred demand

Distinction between chartering (supply of tangible goods) and dry lease (deemed sale under Article 366(29A)) - exclusion from service tax for deemed sale - Income received from dry leasing of aircraft, involving transfer of possession and effective control to the lessee, is not chargeable to service tax but is a deemed sale excluded from service tax. - HELD THAT: - The Tribunal found on the material on record (including the dry lease agreement dated 02.01.2006 and particulars filed by the appellant) that the dry lease arrangements transferred possession and effective control of the aircraft to the lessee. Such transfer constitutes a transfer of the right to use goods amounting to a deemed sale under Article 366(29A) and therefore falls outside the service tax net. The consolidated balance sheet recorded both chartering receipts and dry lease receipts as 'aviation income', but the dry lease component was not a taxable service. The adjudicating authority had not established that the amounts taken from the consolidated balance sheet related exclusively to chartering services subject to service tax. On these findings the Tribunal held the dry lease receipts were not chargeable to service tax during the relevant period.

Dry lease receipts involving transfer of possession and control are deemed sale and are not taxable as service; the confirmed demand cannot stand insofar as it includes such receipts.

Obligation to consider documentary bifurcation and CA certificate - chargeability of service tax on aviation income - The authorities erred in ignoring the appellant's documentary bifurcation of aviation income and the C.A. certificate; those materials establish that the impugned consolidated amount included non-taxable dry lease receipts and were sufficient to rebut the department's presumption. - HELD THAT: - The Tribunal noted that the appellant had filed Annexures (including Annexure 7 showing breakup of aviation income, Annexure 6 ST 3 returns of the Delhi unit, Annexure 5 invoices for chartering and Annexure 8 the dry lease agreement) and later a C.A. certificate. The adjudicating authority and audit team failed to accept or adequately examine that bifurcation and the certificate, instead relying on a consolidated balance sheet figure. In absence of contrary evidence from the department demonstrating that the consolidated amount pertained to taxable chartering services provided by the Raigarh unit, the presumption of undisclosed taxable income could not be sustained. The Tribunal held that the authorities were bound to take into account the documentary evidence provided by the appellant.

Failure to consider the appellant's documentary bifurcation and C.A. certificate was erroneous and undermined the confirmed demand.

Territorial jurisdiction of commissionerate to issue show cause notice - jurisdiction to issue show cause notice - The Principal Commissioner, Raipur lacked territorial jurisdiction to confirm a demand in respect of services performed by the Delhi unit and the demand confirmed against the Raigarh unit on income attributable to the Delhi unit is unsustainable. - HELD THAT: - Relying on the material showing that the services in question were rendered by the Delhi unit (which had separate registration and had discharged tax), and on the Tribunal's precedent that a commissionerate cannot proceed where services were rendered outside its territorial jurisdiction and tax has been or ought to be discharged in the concerned commissionerate, the Tribunal concluded there was no jurisdictional basis for the Raipur commissionerate to issue the show cause notice and confirm the demand relating to the Delhi unit's activities.

Demand confirmed by Principal Commissioner, Raipur in respect of income attributable to the Delhi unit is without territorial jurisdiction and unsustainable.

Extended period of limitation / time-barred demand - time-barred demand - The invocation of the extended period of limitation was erroneous and the demand for the period April 2010 to March 2013 is time-barred. - HELD THAT: - The Tribunal found that the amounts in question were either discharged by the Delhi unit or were non-taxable (dry lease). There was no evidence of suppression or evasion by the appellant that would permit invocation of the extended period. The appellant had filed returns and maintained records; absent evidence to the contrary, the extended period could not be invoked. Consequently, the entire period of demand is hit by limitation.

Invocation of the extended period was improper; the demand for April 2010 to March 2013 is barred by limitation.

Final Conclusion: The order in original confirming service tax demand is set aside: the Tribunal held that dry lease receipts were not taxable services, the adjudicating authority wrongly ignored the appellant's documentary bifurcation and C.A. certificate, the Raipur commissionerate lacked territorial jurisdiction to confirm demand in respect of the Delhi unit, and the extended period was incorrectly invoked; accordingly the appeal is allowed and the demand is quashed.

Unjust enrichment - doctrine of mutuality - refund of service tax - club or association services - passing on of tax incidence

Unjust enrichment - doctrine of mutuality - refund of service tax - club or association services - Whether the refund claim of service tax paid under 'club or association services' is barred by the doctrine of unjust enrichment. - HELD THAT: - The Tribunal accepted the respondent's submission that the service tax paid by the association was held not payable because, under the doctrine of mutuality, no service exists between the club/association and its members since they are not two distinct persons. The Tribunal agreed with the Commissioner (Appeals) that the question of unjust enrichment arises only where transactions occur between distinctly separate parties. Where the club deals with its members on the principle of mutuality, the club and its members are not separate entities and therefore any tax paid (if at all) would have moved within the same entity and cannot be said to have been passed on to separate persons. The Tribunal relied on the reasoning of the lower authority and supporting precedents to hold that, on this principle, unjust enrichment is not attracted to bar the refund claim of service tax paid on club or association services. [Paras 4, 5]

Unjust enrichment does not apply and the refund claim is maintainable because the doctrine of mutuality prevents treating the club and its members as distinct parties for the purpose of passing on tax.

Final Conclusion: The impugned orders allowing the refund claim were upheld; the Revenue's appeal is dismissed as the Tribunal found that, by virtue of the doctrine of mutuality, unjust enrichment does not operate to deny the refund of service tax paid in respect of club or association services.

Service tax on works contract - construction of residential complexes - taxability prior to 01.06.2007 - personal use exclusion for residential complexes - approval by statutory authority as determinative of taxability - application of Supreme Court precedents on works contract and service tax

Taxability prior to 01.06.2007 - service tax on works contract - application of Supreme Court precedents on works contract and service tax - Service tax is not leviable on the appellant's works contract activity for the period prior to 01.06.2007. - HELD THAT: - The Tribunal applied binding Supreme Court authority which held that the statutory definition of 'works contract' was introduced by the Finance Act, 2007 and that the service element of works contracts became taxable only w.e.f. 1st June, 2007. Consequently, service tax could not be imposed on works contract activity for periods before that amendment because there was no concept of 'works contract' under the Act prior to 01.06.2007. Reliance was placed on Larsen & Toubro Ltd. and Total Environment Building Systems Pvt. Ltd. as establishing this legal position and on related jurisprudence confirming that the amendment was not clarificatory but substantive, making pre-amendment demand unsustainable. [Paras 12, 13]

Demand for service tax in respect of works contract for the period prior to 01.06.2007 set aside.

Construction of residential complexes - personal use exclusion for residential complexes - approval by statutory authority as determinative of taxability - Construction of residential complexes for Defence personnel by the appellant is not liable to service tax for the period 01.06.2007 to 31.05.2010. - HELD THAT: - The Tribunal found that the projects were constructed for the personal use of Defence personnel and that the layout did not require approval by any statutory authority, bringing the activity within the exclusion contemplated by the Government's clarification (Ministry of Finance letter dated 05.07.2006) and subsequent CBEC/TRU guidance. The Tribunal also relied on earlier tribunal and High Court decisions holding that constructions for army personnel (DGMAP/MAP) which do not require statutory approval are not taxable as 'construction of residential complexes'. On these grounds the adjudicated demand for the post 2007 period was held unsustainable. [Paras 10, 11, 13]

Demand for service tax in respect of construction of residential complexes for Defence personnel for the period 01.06.2007 to 31.05.2010 set aside.

Final Conclusion: The impugned order confirming service tax, interest and penalties for the period 16.06.2005 to 31.05.2010 is set aside; the appeal is allowed with consequential relief in accordance with law.

Extended period of limitation - Suppression - Classification of service as cargo handling service versus business auxiliary service - Bar of limitation where prior proceedings were dropped - Reliance on precedent: Nizam Sugar Factory

Extended period of limitation - Classification of service as cargo handling service versus business auxiliary service - Suppression - Extended period of limitation could not be invoked where Revenue previously initiated and then dropped proceedings classifying the same activity differently, and therefore suppression could not be alleged against the appellant. - HELD THAT: - The Tribunal found that the Revenue had earlier issued a Show Cause Notice seeking to tax the identical activity as cargo handling service, and those proceedings were subsequently dropped by the High Court as barred by limitation. Thereafter, Revenue issued a fresh Show Cause Notice re classifying the same activity as business auxiliary service and invoked the extended period of limitation. The Tribunal held that such prior inconsistent action by Revenue demonstrated confusion as to the proper classification of the service, and in those circumstances the element of suppression necessary to invoke the extended period could not be fairly imputed to the appellant. The Tribunal applied the legal principle that extended limitation applies only where requisite mens rea or suppression is established, and prior prosecutorial inconsistency undermines any allegation of suppression by the assessee. [Paras 7]

Extended period of limitation not invokable and suppression could not be alleged.

Bar of limitation where prior proceedings were dropped - Reliance on precedent: Nizam Sugar Factory - Whole of the demand was held to be barred by limitation and the impugned proceedings were set aside. - HELD THAT: - Relying on the decision in Nizam Sugar Factory and the Tribunal's earlier decision in Ganesh Trading Company, the Tribunal concluded that because Revenue had earlier prosecuted the same activity under a different classification and those proceedings were dropped as time barred, the present demand based on a reclassification could not be sustained. The Tribunal therefore held that the demand for the period in question was barred by limitation and allowed the appeal, setting aside the impugned proceedings. [Paras 8]

Demand held barred by limitation; impugned proceedings set aside.

Final Conclusion: Appeal allowed; impugned demand for the period 01st October, 2006 to 31st August, 2010 set aside as barred by limitation.

Exemption from service tax for management, maintenance or repair of roads - construction/repair services excluded from taxable services - interpretation of exemption not limited to public roads - retrospective amendment by Section 97 (Finance Act, 2012)

Exemption from service tax for management, maintenance or repair of roads - interpretation of exemption not limited to public roads - Demand of service tax on road construction/maintenance services rendered to Neyveli Lignite Corporation for the year 2008 6 is unsustainable as the services fall under the exemption notification. - HELD THAT: - The Tribunal found that the appellant rendered road construction and maintenance services in the private commercial premises of Neyveli Lignite Corporation and claimed benefit of Notification No.24/2009-ST (exemption for management, maintenance or repair of roads). The Tribunal observed that neither Notification No.24/2009-ST nor the subsequent amendment Notification No.54/2010-ST, nor the retrospective amendment effected by Section 97 of the Finance Act, 2012, confines the exemption to public utility roads. Relying on co-ordinate decisions (noting the ratio in Rajendra Singh Bhamboo and NMC Industries Pvt. Ltd.), the Tribunal held that the definition/exclusion of construction or maintenance of roads from taxable services does not specify the nature of the road (public or private) and therefore the exemption applies irrespective of whether the road is for public utility or for use of a private/commercial entity. Applying that principle, the Tribunal concluded that the service tax demand confirmed by the lower authorities could not be sustained and set aside the impugned order, allowing the appeal with consequential benefits. [Paras 8, 9, 10, 11]

Impugned order confirming the service tax demand is set aside and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that road construction/maintenance services rendered to Neyveli Lignite Corporation for 2008 6 are covered by the exemption and that the confirmed service tax demand cannot be sustained; the impugned order is set aside with consequential relief.

Extended period of limitation under section 73(1) of the Finance Act, 1994 - suppression of facts - fraud, collusion or wilful mis-statement - self-assessment does not ipso facto amount to suppression - time-barred demand

Extended period of limitation under section 73(1) of the Finance Act, 1994 - suppression of facts - self-assessment does not ipso facto amount to suppression - time-barred demand - Invocation of the extended five-year limitation under section 73(1) to sustain service-tax demand - HELD THAT: - The Tribunal examined the issuance of the show cause notice dated 1-12-2015 invoking the extended five-year period under section 73(1) in respect of service-tax liabilities alleged for April 2007 to March 2012. The adjudicating authority did not produce evidence to establish fraud, collusion, wilful mis-statement or suppression of facts with intent to evade payment of service tax. The appellant's transactions were recorded in books and ST-3 returns were regularly filed; the Department had earlier audited the appellant and was aware of its activities. The Tribunal relied on the principle that mere operation under self-assessment or the fact that an issue was discovered during audit does not by itself establish suppression or mala fide intent to invoke the extended period. In absence of proof of the disqualifying ingredients specified in section 73(1), invocation of the extended limitation was legally unsustainable. Consequently the demand for the period April 2007 to March 2012 was held to be barred by limitation and the impugned order-in-original was set aside without adjudicating the merits. [Paras 4, 5]

Extended period under section 73(1) could not be invoked; the show cause notice and impugned order are time-barred and set aside.

Final Conclusion: The appeal is allowed: the departmental demand for service tax covering April 2007 to March 2012 (issued by notice dated 1-12-2015 invoking section 73(1)) is time-barred in absence of proof of fraud, collusion, wilful mis-statement or suppression, and the impugned adjudication is set aside.

Territorial jurisdiction to sanction refund - jurisdiction determined by location of factory and payment of duty - finality of tribunal order - endorsement does not confer jurisdiction - registration surrender and its effect on jurisdiction

Territorial jurisdiction to sanction refund - jurisdiction determined by location of factory and payment of duty - finality of tribunal order - Assistant Commissioner, Ghaziabad had territorial jurisdiction to sanction the cash refund of duty paid in respect of clearances from the factory located in Ghaziabad. - HELD THAT: - The Tribunal's earlier Final Orders culminating in sanction of cash refund attained finality and the payments related to clearances made from the assessee's factory situated in Ghaziabad. Territorial jurisdiction of the Assistant Commissioner of the Division is determined by the location of the factory and the place where duty was paid; hence the Assistant Commissioner, Ghaziabad was the competent authority to deal with the refund claims arising from clearances in Ghaziabad. The fact that the appellant's registration was later surrendered on merger, and that a merged entity obtained registration at Noida for different premises, does not confer jurisdiction over refunds relating to the Ghaziabad factory at the Noida authorities. Revenue did not challenge jurisdiction before the Tribunal when that forum decided and dismissed its appeal, and the Tribunal's final order confirming cash refund has not been stayed or appealed to a superior court. On these bases the Tribunal concluded that the refund was rightly sanctioned by the jurisdictional Assistant Commissioner, Ghaziabad and that the impugned order setting aside that sanction was unsustainable. [Paras 6, 7]

Refund sanctioned by the Assistant Commissioner, Ghaziabad was valid; impugned order setting aside that sanction is set aside and the Order In Original dated 21.05.2018 is upheld.

Endorsement does not confer jurisdiction - registration surrender and its effect on jurisdiction - Erroneous endorsement of an appellate order to CGST Noida did not confer jurisdiction on Noida authorities to grant refund pertaining to Ghaziabad clearances. - HELD THAT: - The Commissioner (Appeals) Noida's endorsement of the Order in Appeal to CGST Noida was a procedural mistake and cannot alter or confer territorial jurisdiction which is determined by statutory or administrative allocation tied to the factory location and payment of duty. Reliance on the registration of the merged entity at Noida is misplaced where such registration did not relate to the Ghaziabad premises at the relevant time and where the registration relied upon had been surrendered. Consequently, wrong endorsement and post factum registration of a merged entity do not oust the jurisdiction of the Assistant Commissioner, Ghaziabad over refunds arising from Ghaziabad clearances. [Paras 7]

Wrong endorsement cannot conquer jurisdiction; Noida authorities had no territorial competence to deal with the Ghaziabad refund.

Final Conclusion: The appeal is allowed; the impugned order of the Commissioner (Appeals), CGST, Meerut is set aside and Order In Original No.R 24/Asstt. Commissioner/GZB VII/2018 19 dated 21.05.2018 passed by the Assistant Commissioner, Central GST, Division VII Ghaziabad is upheld, leaving the cash refund already sanctioned to the assessee final.

Eligibility of Cenvat credit on input services used in setting up of factory - interpretation of input service definition post-amendment effective 01-04-2011 - exclusion of works contract/construction services from input services - time-bar and invocation of extended period in absence of suppression

Eligibility of Cenvat credit on input services used in setting up of factory - interpretation of input service definition post-amendment effective 01-04-2011 - Cenvat credit taken on input services utilized during the period when the factory was being set up is allowable. - HELD THAT: - The Tribunal found no dispute that the appellant manufactures goods liable to excise once cleared from the factory and had taken Cenvat credit on various input services used before commencement of manufacturing. Relying on earlier Bench decisions, the Court held that the substantive test for entitlement remains that the service be used by the manufacturer, whether directly or indirectly, in relation to the manufacture of the final product. The amendment effective 01-04-2011 introduced specific exclusions (for certain works contract and construction services) but did not alter the main inclusive limb which covers services used in relation to manufacture. Therefore, a narrow interpretation that denies credit merely because the word "setting up" is not mentioned in the inclusive part post-amendment would be incorrect. Services used for setting up the factory remain covered as input services unless they fall within the specifically enumerated exclusions; on the facts the ratio of the cited precedents squarely applied and the appeal was allowed on merits. [Paras 6, 9]

Allowed on merits; Cenvat credit on input services used in setting up the factory is admissible subject to the specific exclusions in the definition.

Time-bar and invocation of extended period in absence of suppression - The demand confirmed by invoking the extended period is time barred because there was no suppression by the appellant; the credits were disclosed in ER-1 returns. - HELD THAT: - The Tribunal accepted the appellant's submission that Cenvat credits for the relevant period were regularly reflected in ER-1 returns filed with the Central Excise Department and that the Department was aware that manufacturing and clearances had not commenced until September 2015. In these circumstances the appellant could not be held to have suppressed facts warranting invocation of the extended period. Having found absence of suppression and that the Department had knowledge of the credits, the Tribunal held the determination for the extended period to be barred by limitation and allowed the appeal on that ground as well. [Paras 10]

Confirmed demand challenged by invocation of extended period set aside as time-barred for lack of suppression.

Final Conclusion: The appeal is allowed: (a) on merits, Cenvat credit on input services used in setting up the factory is admissible unless specifically excluded; and (b) the demand raised by invoking the extended period is time barred for lack of suppression. Consequential relief, if any, to follow as per law.

Includability of freight and insurance in assessable value - place of removal - ex-factory (ex-works) sale - transaction value and exclusion of transportation cost under Valuation Rules - transfer of property under the Sale of Goods Act, 1875 (Section 19)

Includability of freight and insurance in assessable value - ex-factory (ex-works) sale - place of removal - transaction value and exclusion of transportation cost under Valuation Rules - Freight and/or insurance charges shown separately in the invoice in an ex-factory (ex-works) sale are includable in the assessable value of excisable goods. - HELD THAT: - The Tribunal found on the facts that the sale was on an ex-factory (ex-works) basis and freight and/or insurance were charged separately in the invoice. Applying the reasoning of earlier decisions (including Ispat Industries Ltd. and subsequent Tribunal and Supreme Court authorities) and the Valuation Rules, the place of removal in such cases is the factory gate and not the buyer's premises. The concept of transaction value and Rule 5 (and its subsequent iterations) exclude the actual cost of transportation from the place of removal to the place of delivery from the transaction value where such cost is charged to the buyer in addition to the price and shown separately in the invoice. The Tribunal observed that insurance or freight borne or arranged by the seller cannot be the sole criterion to infer retention of ownership or an extended place of removal; where the parties have agreed an ex-factory price and freight/insurance are shown separately, those amounts are excluded from the assessable value. The decision of the Tribunal in Gujarat Fluorochemicals Ltd. (following Ispat and related precedents) was held applicable on identical facts; Revenue authorities' contrary conclusion treating the buyer's premises as place of removal was rejected. As the demand of duty on freight/insurance cannot be sustained on these facts, consequential interest and penalty demands also fall away.

Freight and/or insurance charged separately in an ex-factory sale are not includable in the assessable value; the impugned demand is set aside and the appeals are allowed.

Final Conclusion: On the facts the sale was ex-factory and freight/insurance were invoiced separately; following the Tribunal's earlier decision (and Supreme Court precedents and valuation rules) such charges do not form part of the assessable value. The impugned order is set aside and the appeals are allowed.

Reversal of Cenvat credit under Rule 6 of the Cenvat Credit Rules, 2004 - Classification of Bagasse and Press Mud as exempted goods versus non-excisable goods - Applicability of departmental Circular No.1027/15/2016-CX dated 25-4-2016 - Principle that Rule 6 applies only where there is manufacture of final or exempted products

Reversal of Cenvat credit under Rule 6 of the Cenvat Credit Rules, 2004 - Classification of Bagasse and Press Mud as exempted goods versus non-excisable goods - Applicability of departmental Circular No.1027/15/2016-CX dated 25-4-2016 - Whether the appellant was liable to reverse Cenvat credit (pay duty equal to prescribed percentage) on Bagasse and Press Mud for the periods covered by the show cause notices - HELD THAT: - The Tribunal held that Bagasse is not a manufactured final product but an agricultural waste/residue and has been covered under the relevant tariff heading attracting NIL rate; accordingly it falls within the definition of "exempted goods" for the purposes of the Cenvat Credit Rules. Rule 6 applies only when there is manufacture of final products or exempted products; in absence of Bagasse being a manufactured final product, the obligation to reverse Cenvat credit under Rule 6(1) is not attracted. The departmental Circular dated 25-4-2016 to the extent that it treats Bagasse as a non-excisable good and brings it within the purview of reversal under Rule 6 is erroneous. Press Mud (filter cake) is of similar character to Bagasse as a waste product arising from the manufacturing process and is likewise not subject to reversal under Rule 6. Relying on the Tribunal's earlier decision in the appellant's case and the reasoning of the High Court and Supreme Court authorities cited therein, the impugned demand based on reversal for Bagasse and Press Mud cannot be sustained.

The demands for reversal of Cenvat credit/duty on Bagasse and Press Mud are set aside and the appeal is allowed.

Final Conclusion: The impugned order confirming demands for reversal of Cenvat credit in respect of Bagasse and Press Mud for the periods notified in the show cause notices is set aside and the appeal is allowed with consequential relief as per law.

Refund of Cenvat credit of Education Cess and Secondary and Higher Education Cess - cenvat credit - transitional credit under Section 140 and Section 142(3) of the CGST Act, 2017 - exclusion of cesses from 'eligible duties and taxes' - refund mechanism under Section 11B of the Central Excise Act, 1944 - restricted utilisation of cenvat credit of cesses under Cenvat Credit Rules, 2004 - principles of natural justice - time bar

Refund of Cenvat credit of Education Cess and Secondary and Higher Education Cess - transitional credit under Section 140 and Section 142(3) of the CGST Act, 2017 - exclusion of cesses from 'eligible duties and taxes' - refund mechanism under Section 11B of the Central Excise Act, 1944 - Refund of cenvat credit of Education Cess and Secondary and Higher Education Cess carried forward as on the appointed day is not admissible. - HELD THAT: - The Tribunal held that although cesses were part of excise duty when levied, the Explanation to Section 140 of the CGST Act (as amended with retrospective effect from 01.07.2017) excludes cesses from the definition of 'eligible duties and taxes' for transition. Section 142(3) of the CGST Act requires refund claims of amounts under the existing law to be disposed of in accordance with the existing law, and Section 11B of the Central Excise Act governs when such amounts may be paid in cash. The provisions do not entitle refund of cesses which stood omitted and were carried forward in electronic records under TRAN 1/ER 1 on the appointed day. Consequently, mere accounting transition of such balances does not create a vested right to cash refund, and refund was correctly denied in view of Section 142(3) read with Section 11B and the exclusion under Section 140. [Paras 5, 6]

Refund claim of the carried forward cenvat credit of Education Cess and Secondary and Higher Education Cess is not allowable and was rightly rejected.

Cenvat credit - restricted utilisation of cenvat credit of cesses under Cenvat Credit Rules, 2004 - Whether Education Cess and Secondary and Higher Education Cess were cenvatable and the extent of their utilisation. - HELD THAT: - The Tribunal noted Rule 3(1)(vi) and (via) of the Cenvat Credit Rules, 2004 expressly permitted taking Cenvat credit of Education Cess and Secondary and Higher Education Cess. However, the Rules also restricted utilisation, providing that such cenvat credit could be used only towards payment of the corresponding education cesses on output and not against normal excise duty or service tax liabilities. Cross utilisation against other duties was not permitted, and that statutory restriction is material to the admissibility and use of such credit. [Paras 5]

Cesses were cenvatable under the Cenvat Credit Rules but their utilisation was statutorily restricted and did not permit cross utilisation against normal duty liabilities.

Principles of natural justice - Allegation of violation of principles of natural justice in passing the impugned orders is not upheld. - HELD THAT: - The Tribunal examined the procedural record and observed that the appellant had filed written submissions before the original adjudicating authority, attended personal hearing, and that the Commissioner (Appeals) had issued hearing notices and considered the appellant's reply and grounds of appeal. On the material, the Tribunal found no breach of natural justice that vitiated the orders impugned. [Paras 7]

The plea of violation of principles of natural justice is rejected.

Time bar - The findings on limitation/time bar in the impugned order are affirmed. - HELD THAT: - The Tribunal reviewed the impugned order's conclusions on time limits and found no error in the approach or findings. The appellant's challenge to the computation of limitation was not accepted, and the Tribunal declined to interfere with the impugned decision on this ground. [Paras 8]

The impugned order's findings on time bar are upheld and no relief is granted on this ground.

Final Conclusion: Appeal dismissed: the Tribunal affirms that (i) carried forward balances of Education Cess and Secondary and Higher Education Cess recorded on the appointed day are not entitled to cash refund in view of the transitional provisions and applicable refund law, (ii) such cesses were cenvatable but with restricted utilisation under the Cenvat Credit Rules, and (iii) allegations of breach of natural justice and time bar grounds do not warrant interference.

Claim for refund of duty - Relevant date - Time bar under Section 11B - One year limitation for refund claims - Interpretation of "may" vis-a -vis "shall" - Provisional assessment

Time bar under Section 11B - One year limitation for refund claims - Relevant date - Interpretation of "may" vis-a -vis "shall" - Refund claim dismissed as time-barred under Section 11B and the one year limit is to be applied; the use of the word "may" in Section 11B does not render the one year period directory. - HELD THAT: - The Tribunal held that Section 11B requires an application for refund to be made before the expiry of one year from the "relevant date" and that, in the present case, the relevant date is the date of payment of duty. The Tribunal accepted the finding that duty was paid on 5th April 2010 and that the one year period therefore expired on 4th May 2011. A refund application filed on 07/07/2011 was consequently barred by time. The contention that the word "may" in Section 11B permits discretionary late filing was rejected: the Tribunal observed that the statutory use of "may" is to be read in its context and that treating "may" as permissive would render the one year limitation otiose. No precedential authority was cited to support the permissive construction urged by the appellant, and the Tribunal declined to adopt that interpretation, upholding the lower authorities' time bar decision. [Paras 8, 9, 10, 11, 12]

Refund claim held time barred and appeal dismissed on merits for that reason.

Provisional assessment - Claim for refund of duty - Reference to the Larger Bench on provisional assessment did not require this appeal to be kept pending because the refund denial rested solely on time bar grounds. - HELD THAT: - The Tribunal noted that although the question whether a refund can be claimed without opting for provisional assessment had been referred to a Larger Bench in an unrelated matter, the show cause notice and orders in the present case rejected the refund solely on account of delayed filing. Since the determinative ground here was temporal (Section 11B), the appeal was taken up and decided without awaiting the Larger Bench outcome. [Paras 2]

Appeal proceeded to final disposal notwithstanding the Larger Bench reference and was decided on the time bar issue.

Final Conclusion: The appeal is dismissed; the refund claim was held to be time barred under Section 11B (one year limitation from the relevant date), and the Tribunal declined the appellant's submission that the statutory use of "may" permits filing beyond one year. The reference to the Larger Bench concerning provisional assessment did not preclude final disposal since the rejection was founded solely on time bar grounds.

Refund of CVD and SAD under Section 11B of the Central Excise Act, 1944 - refund under Section 142(3) of the CGST Act, 2017 where Cenvat credit cannot be availed post-GST - eligibility for refund where duty was cenvatable at the time it was payable - conflicting Tribunal precedents and the principle that a later decision departs from an earlier one - precedential value of tribunal decisions - later decision prevailing over earlier contrary decision

Refund of CVD and SAD under Section 11B of the Central Excise Act, 1944 - refund under Section 142(3) of the CGST Act, 2017 where Cenvat credit cannot be availed post-GST - eligibility for refund where duty was cenvatable at the time it was payable - Whether the assessee is entitled to refund of CVD and SAD paid (relating to period when Cenvat Credit Rules were in force) though payment was made after commencement of GST regime and Cenvat credit could not be availed thereafter. - HELD THAT: - The Tribunal held that the duties (CVD and SAD) were paid in respect of a period prior to 01.07.2017 when Cenvat Credit Rules existed and, therefore, those duties were cenvatable at the time they were payable. Where an assessee is unable to avail or utilise Cenvat credit due to the advent of the GST regime, Section 142(3) of the CGST Act, 2017 provides for refund in such situations and a refund claim under Section 11B of the Central Excise Act, 1944 is accordingly maintainable. The Revenue's sole ground - that because Cenvat credit could not be availed at the time of actual payment after GST there can be no refund - was rejected because the entitlement is determined by law as applicable to the period when the duty was leviable. The Tribunal further observed that earlier contrary authority (Sarvo Packaging Ltd.) has been departed from by later Tribunal decisions and applied the principle that a later decision overruling or departing from an earlier contrary Bench prevails. In view of these legal conclusions, the Commissioner (Appeals) rightly allowed the refund claim and there was no infirmity in that order.

Refund of the CVD and SAD paid (which were cenvatable at the time payable) allowed under Section 11B read with Section 142(3) of the CGST Act, 2017; Revenue's appeal dismissed.

Final Conclusion: The Tribunal upheld the Commissioner (Appeals) order allowing refund of CVD/SAD which were cenvatable at the time of levy though paid after commencement of GST, holding such amounts refundable under Section 11B read with Section 142(3) CGST Act; Revenue's appeal was dismissed.

Cenvat Credit Rules, 2004 - Rule 6(6)(i) retrospective operation - 10% value charge under Rule 6(3)(i) - Special Economic Zones Act, 2005 - Section 151 overriding effect - ARE-1 clearances and re-warehousing evidence

Cenvat Credit Rules, 2004 - Rule 6(6)(i) retrospective operation - 10% value charge under Rule 6(3)(i) - Special Economic Zones Act, 2005 - Section 151 overriding effect - ARE-1 clearances and re-warehousing evidence - Appellant not liable to pay 10% under Rule 6(3)(i) for excisable goods cleared to a SEZ developer for the period 21.05.2007 to 30.12.2008. - HELD THAT: - The Tribunal held that the applicability of Rule 6 of the Cenvat Credit Rules, 2004 to clearances made to SEZ developers is governed by the Karnataka High Court's interpretation in CCE & ST, Bangalore v. Fosroc Chemicals (and subsequent High Court decisions) which construed Notification No.50/2008-CE(NT) dated 31.12.2008 as clarificatory and retrospective. The SEZ Act, 2005 (notably the deeming of SEZ territory and the overriding provision in Section 151) treats supplies from the Domestic Tariff Area to SEZ units or developers as exports for authorised operations, thereby rendering the post-amendment wording to be read as if words in favour of developers were present from inception. The appellant's clearances were made against ARE-1 with proper invoices and re-warehousing certificates; there was no stay on the relevant High Court rulings relied upon. In view of the retrospective clarification and the overriding effect of the SEZ Act, the demand founded on levy of 10% under Rule 6(3)(i) for the disputed period was unsustainable. Having followed the jurisdictional High Court precedents, the Tribunal set aside the adjudicating authority's demand and allowed the appeal. [Paras 6, 7, 9]

Impugned order set aside; appeal allowed with consequential relief.

Final Conclusion: The Tribunal held that supplies made to the SEZ developer during 21.05.2007 to 30.12.2008 were covered by the retrospective clarification to Rule 6 and the overriding provisions of the SEZ Act, 2005; accordingly the demand of 10% under Rule 6(3)(i) was set aside and the appeal allowed.

Priority of secured creditors under Chapter IVA of the SARFAESI Act - registration of security interest with CERSAI determines priority - priority of payment under Section 26-E of the SARFAESI Act over other charges - statutory first charge under the MVAT Act - auction purchaser entitled to free and marketable title upon enforcement by secured creditor

Priority of secured creditors under Chapter IVA of the SARFAESI Act - registration of security interest with CERSAI determines priority - priority of payment under Section 26-E of the SARFAESI Act over other charges - statutory first charge under the MVAT Act - auction purchaser entitled to free and marketable title upon enforcement by secured creditor - Whether the auction purchaser under SARFAESI obtains a free and marketable title to the Walkeshwar Flat in face of competing claims by the DCST - HELD THAT: - The Court held that Chapter IVA of the SARFAESI Act (brought into force on 24 January 2020) and the scheme of registration with CERSAI resolve conflicts between secured creditors and tax authorities. Where a security interest is registered with CERSAI prior in time, the sequence of such registration governs priority under Section 26-C(2) and Section 26-E, which gives secured creditors priority of payment over taxes and other claims notwithstanding other laws. The Full Bench decision in Jalgaon Janta establishes that an earlier attachment by the tax authorities, without registration with CERSAI and without a proclamation of sale, does not defeat the priority of a secured creditor whose interest is registered. In the present facts the Lender Bank registered the mortgage with CERSAI on 2 January 2020 and had undertaken enforcement steps earlier; the DCST had not registered its attachment with CERSAI nor issued a proclamation of sale. Accordingly, Encore ARC, as assignee of the Lender Bank, enjoyed priority and the enforcement auction conducted by it conferred on the petitioner the benefit of free and marketable title to the Walkeshwar Flat, free of the encumbrance claimed by the DCST. [Paras 6, 15, 16, 20, 21]

The petitioner, as auction purchaser, is entitled to a clear and marketable title to the Walkeshwar Flat; the priority of Encore ARC (derived from the Lender Bank) prevails over the DCST's claimed charge in respect of that asset.

Registration of security interest with CERSAI determines priority - statutory first charge under the MVAT Act - auction purchaser entitled to free and marketable title upon enforcement by secured creditor - Reliefs and incidental consequences flowing from the priority determination between Encore ARC and the DCST - HELD THAT: - The Court declared that attachment orders issued by the DCST in respect of the Walkeshwar Flat are without effect to the extent they seek priority over the secured creditor, since the DCST did not register with CERSAI nor issue a proclamation of sale. Consequentially, the impugned attachments in respect of value added tax and central sales tax liabilities so far as they relate to the Walkeshwar Flat are quashed and set aside, and the petitioner is entitled to have the property registered in his name without objection by the DCST. The DCST retains a claim to any residual proceeds after discharge of dues to Encore ARC to the extent of the legal heir's share of the late mortgagor's estate; accordingly, Encore ARC is directed to provide a statement of accounts and appropriation of sale proceeds to the DCST. The Court also clarified that the DCST remains free to pursue other assets of the tax defaulter subject to any superior security interests registered under Chapter IVA. [Paras 21, 22, 23, 26]

Attachments by the DCST in relation to the Walkeshwar Flat are quashed insofar as they claim priority over Encore ARC; the petitioner shall be entitled to registration of the Flat in his name, Encore ARC shall furnish account statements to the DCST for appropriation of sale proceeds, and the DCST may claim residual proceeds commensurate with the legal heir's entitlement.

Final Conclusion: The Writ Petition is allowed: the priority of the secured creditor registered with CERSAI (the Lender Bank, and thence Encore ARC) prevails over the DCST in respect of the Walkeshwar Flat; the petitioner's title as auction purchaser is free and marketable and attachments by the DCST over that asset are quashed, subject to the DCST's entitlement to any residual proceeds after discharge of the secured creditor and subject to its right to pursue other assets.

Rebuttable presumption under Section 139 of the Negotiable Instruments Act - legally enforceable debt under Section 138 - requirement of legal recoverability - standard of proof to rebut presumption - preponderance of probabilities - probable defence and financial capacity of the complainant - effect of issuance of blank signed cheque - mandatory examination of complainant under Section 200 CrPC

Mandatory examination of complainant under Section 200 CrPC - Lawfulness of recording the complainant's statement on affidavit in lieu of oral examination under Section 200 CrPC - HELD THAT: - The Court found that the learned Magistrate erred in accepting the Solemn Affirmation of the complainant on affidavit instead of examining him on oath and reducing the substance of his examination to writing as mandated by Section 200 CrPC. That practice was characterised as contrary to law and amounted to a grave illegality in procedure. The observation is recorded from the trial record and noted by the High Court, although this procedural defect did not form the basis for overturning the acquittal by the Appellate Court. [Paras 15]

Recording of the complainant's statement on affidavit was contrary to law.

Rebuttable presumption under Section 139 of the Negotiable Instruments Act - standard of proof to rebut presumption - preponderance of probabilities - probable defence and financial capacity of the complainant - effect of issuance of blank signed cheque - Whether the presumption under Section 139 stood rebutted and whether the Appellate Court erred in acquitting the accused - HELD THAT: - Applying settled principles, the Court observed that the presumption under Section 139 is rebuttable and the accused need only raise a probable defence on the preponderance of probabilities. The High Court examined the evidence including the complainant's own admissions (that he advanced multiple loans, obtained blank signed cheques from several women, conducted lending without ITR disclosures, and had pending criminal complaints instituted by others against him) and the defence witnesses who consistently testified that the accused had taken only a small loan (Rs. 20,000) and had returned it with interest. The collective effect of these materials and the circumstances was held sufficient to rebut the statutory presumption regarding existence of a legally enforceable debt. The Court concluded that the Appellate Court committed no illegality in holding that the complainant lacked the financial capacity to have advanced the pleaded loan and in acquitting the accused. [Paras 31, 32, 44, 45]

Presumption under Section 139 was rebutted on preponderance of probabilities and the Appellate Court rightly acquitted the accused; no interference warranted.

Final Conclusion: The Criminal Revision is dismissed. The High Court upheld the appellate court's acquittal, holding that (i) the trial court's acceptance of the complainant's statement on affidavit was procedurally erroneous, and (ii) on the evidence and settled law the presumption under Section 139 N.I. Act was rebutted and the acquittal of the accused was sustainable.