TaxTMI Updates e-Newsletter
May 11,2024

Opportunity of hearing - Personal hearing - Adverse assessment order - Section 75(4) of the U.P. GST Act, 2017 - Natural justice - Remand for fresh hearing

Opportunity of hearing - Personal hearing - Section 75(4) of the U.P. GST Act, 2017 - Natural justice - Adverse assessment order - Denial of opportunity of personal hearing before passing an adverse assessment order contrary to Section 75(4) and principles of natural justice - HELD THAT: - The Court examined Section 75(4) which mandates that an opportunity of hearing be granted where a request is received in writing or where any adverse decision is contemplated. Relying on the precedent adopted by a coordinate bench, the Court held that the obligation to afford personal hearing is not dependent on an assessee's request and is mandatory before passing an adverse assessment order. The Assessing Authority's omission to provide a real, minimal opportunity of hearing could not be cured by the assessee's having marked 'No' in an online form; such indication bears no legal consequence where an adverse decision is contemplated. In cases involving substantial civil liability, observance of this minimal hearing opportunity is essential both to meet the requirements of natural justice and to enable the authority to pass an appropriate, reasoned order that can be properly scrutinised on appeal. The absence of a genuine personal hearing rendered the impugned assessment order unsustainable. [Paras 7, 8, 9, 10]

Impugned assessment order set aside for want of opportunity of personal hearing; matter remitted for fresh proceedings.

Remand for fresh hearing - Directions on remand to the Assessing Authority to issue fresh notice and afford hearing - HELD THAT: - In consequence of the finding that a personal hearing was not afforded, the Court directed that a fresh notice be issued to the petitioner within two weeks and that the petitioner shall appear on the next date fixed so that proceedings may be concluded expeditiously. The order emphasises that the authority must grant a real opportunity of hearing and thereafter may accept or reject explanations and create any demand in accordance with law. The remand is for fresh consideration and hearing; the merits are not being decided afresh by this Court. [Paras 11]

Proceedings remitted to the Assistant Commissioner for issuance of fresh notice and conclusion of proceedings after affording personal hearing.

Final Conclusion: Writ petition allowed; the assessment order dated 05.11.2022 is set aside for failure to afford personal hearing as required under Section 75(4) and principles of natural justice. Matter remitted to the Assistant Commissioner to issue fresh notice within two weeks and to afford the petitioner a real opportunity of hearing, with the petitioner undertaking to appear and the proceedings to be completed expeditiously.

Non-filling of Part 'B' of the e-Way Bill - Penalty under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 - Mens rea / intention to evade tax - Technical error versus substantive tax evasion - Return of security on quashing of seizure/penalty order

Non-filling of Part 'B' of the e-Way Bill - Penalty under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 - Mens rea / intention to evade tax - Technical error versus substantive tax evasion - Imposition of penalty under Section 129(3) for non-filling of Part 'B' of the e-Way Bill in absence of any intention to evade tax - HELD THAT: - The Court found that the only disputed act was non-filling of Part 'B' of the e-Way Bill, whereas (i) the invoice contained the truck details, (ii) the goods were not in variance with the invoice, and (iii) the Department failed to demonstrate any intention on the part of the petitioner to evade tax. Reliance was placed on the Court's earlier decisions which establish that omission to fill Part 'B' by itself, particularly where supporting documentation (invoice with vehicle details) exists and there is no discrepancy in the goods, is a technical lapse and does not prima facie disclose mens rea to evade tax. In those circumstances the statutory penal provision could not be sustained as applied to the petitioner. [Paras 3, 4, 6, 7, 8]

Penalty under Section 129(3) cannot be sustained where non-filling of Part 'B' is a technical error and there is no intention to evade tax; the impugned penalty is quashed.

Return of security on quashing of seizure/penalty order - Consequential relief following quashing of the penalty and seizure orders - HELD THAT: - Having quashed the orders levying penalty and dismissing the appeal, the Court granted consequential relief directing the respondents to return the security deposited by the petitioner. The directive fixes a time-bound mechanism for restitution of the security to the petitioner. [Paras 9]

Impugned orders dated December 22, 2021 and January 20, 2022 are quashed and set aside; the respondents are directed to return the security within six weeks and the petition is allowed.

Final Conclusion: The writ petition is allowed: the penalty and appellate orders under Section 129(3) are quashed on the ground that non-filling of Part 'B' of the e Way Bill in the absence of any intention to evade tax was a technical error, and the respondents are directed to return the security within six weeks.

Right to cross-examination - opportunity to rebut evidence - remand for fresh adjudication - onus to prove movement of goods - e-way bills as statutory documents - pre-deposit requirement for statutory appeal - blocking of credit ledger limited to disputed tax

Right to cross-examination - opportunity to rebut evidence - remand for fresh adjudication - Statements/declarations obtained from third parties were not furnished to the appellant and the appellant was not afforded an opportunity to cross-examine those witnesses. - HELD THAT: - The Court found that the adjudicating authority recorded statements/declarations from Mr. Shyam Sundar Tiwari and Mr. Ashoke Kumar Saha which were not furnished to the appellant, and that the appellant's specific request for cross-examination (made in the reply dated 18th December, 2023) was not granted. In view of this denial of an effective opportunity to rebut adverse material, the Court held that the adjudication cannot stand and that the matter must be remitted to the adjudicating authority for a fresh decision. The remand is subject to directions to furnish copies of the statements to the appellant within one week, to permit the appellant to file further explanation and documents, and to allow cross-examination of those persons if requested; the adjudicating authority is directed to complete fresh adjudication expeditiously and preferably within 60 days from date. [Paras 5, 8, 9]

Order of adjudication set aside and matter remanded with directions to furnish the statements, permit further explanation and cross-examination if sought, and decide afresh within the stipulated time.

Onus to prove movement of goods - Whether the appellant bears the onus of proving movement of goods even if the seller's registration was cancelled retrospectively. - HELD THAT: - The Court observed that even assuming the cancellation of the selling dealer's registration operated retrospectively, the appellant retains the burden to establish the movement of goods. The appellant must adduce proper evidence to prove purchases and sales and the physical movement of goods as part of his defense in the adjudication proceedings. [Paras 6, 11]

Appellant is bound to prove movement of goods by proper evidence; responsibility to prove lies on the appellant.

Blocking of credit ledger limited to disputed tax - Whether blocking of the appellant's credit ledger in the meantime would prejudice the appellant and the permissible extent of such blocking. - HELD THAT: - The Court noted that there is presently a negative balance in the appellant's credit ledger, so blocking at present will not cause prejudice. The Court, however, imposed a protective limitation: if funds later flow into the ledger, any blocking shall be restricted to the amount of disputed tax stated in the adjudication (the sum claimed in the order). This direction balances the revenue's interest with protection against excessive restraint on the appellant's future credits. [Paras 10]

Blocking of the credit ledger will not presently prejudice the appellant; if funds flow into the ledger, blocking is limited to the disputed tax amount.

Final Conclusion: Appeal and writ petition allowed; adjudication order dated 1st February, 2024 set aside and remitted for fresh adjudication after furnishing the recorded statements and allowing cross-examination and further explanation, with adjudication preferably within 60 days; appellant must prove movement of goods; blocking of credit ledger restricted as directed.

Opportunity of hearing - principles of natural justice - Section 75(4) obligation to afford hearing - order under Section 73 - appeal under Section 107 not a bar where natural justice violated

Section 75(4) obligation to afford hearing - order under Section 73 - principles of natural justice - Validity of the order dated 29th December, 2023 passed under Section 73 in view of absence of opportunity of personal hearing - HELD THAT: - The Court held that before determining tax or input tax irregularity under Section 73 the proper officer is obliged by Section 75(4) to afford an opportunity of hearing either where a written request is received or where an adverse decision is contemplated. The show-cause notice in this case recorded 'N.A.' in the columns for date, time and venue of personal hearing and no personal hearing was afforded. Since an adverse decision was contemplated, failure to grant an opportunity of hearing amounted to breach of the principles of natural justice. Reliance was placed on the Division Bench decision in Goutam Bhowmik for the proposition that absence of hearing vitiates the parent order. For these reasons the impugned order passed under Section 73 could not be sustained and was set aside. [Paras 7, 8]

The order dated 29th December, 2023 passed under Section 73 is set aside for failure to afford opportunity of hearing.

Appeal under Section 107 not a bar where natural justice violated - principles of natural justice - Whether availability of an appellate remedy under Section 107 precludes writ jurisdiction where natural justice has not been complied with - HELD THAT: - The Court observed that the existence of an alternative remedy by way of appeal under Section 107 does not operate as a bar to exercise of writ jurisdiction when the impugned order is vitiated by failure to comply with principles of natural justice. An appeal is not a substitute for revisiting an order passed without affording a hearing, and therefore the writ jurisdiction was rightly invoked to set aside the order on that ground. [Paras 9]

Availability of appeal under Section 107 did not preclude the Court from setting aside the order passed without affording a hearing.

Opportunity of hearing - order under Section 73 - Direction for fresh disposal of proceedings under Section 73 after affording an opportunity of hearing - HELD THAT: - Having set aside the impugned order for non-compliance with Section 75(4) and principles of natural justice, the Court directed the proper officer to afford the petitioners an opportunity of hearing and to dispose of the proceedings under Section 73 afresh. The Court specified a timeline for disposal to ensure finality and effective remedy, directing completion of the proceedings within six weeks from communication of the order. [Paras 10]

Proceedings under Section 73 are remitted to the proper officer for fresh disposal after affording an opportunity of hearing, to be completed within six weeks from communication of this order.

Final Conclusion: The impugned order under Section 73 dated 29th December, 2023 is set aside for failure to afford an opportunity of hearing in breach of Section 75(4) and principles of natural justice; the availability of an appeal under Section 107 does not preclude this intervention; the matter is remitted to the proper officer to be decided afresh after hearing the petitioners within six weeks of communication of this order.

Budgetary Support Scheme - working out claims on quarterly basis - compliance with prescribed procedure for grant - circulars issued in furtherance of scheme - principles of natural justice - budgetary support as grant and not refund

Budgetary Support Scheme - working out claims on quarterly basis - compliance with prescribed procedure for grant - Whether claims and computation of budgetary support must be filed and worked out on a quarterly basis as mandated by the Budgetary Support Scheme. - HELD THAT: - The Court examined paragraph 5 (notably 5.4) of the Budgetary Support Scheme which expressly mandates that budgetary support shall be worked out on a quarterly basis and that claims shall be filed quarterly. The circular dated 27.11.2017 permitted manual filing for the quarter ending September 2017 and the circular dated 10.01.2019 permitted attachment of month-wise details to the quarterly application to aid verification, but neither circular dispensed with the scheme's mandate of quarterly claims or authorised separate monthly claims. The petitioner filed separate monthly claims for July and August 2017 (omitting September 2017) instead of a single quarterly claim for July-September 2017; when directed to resubmit applications online in the prescribed quarterly format, the petitioner's own quarterly calculation produced a negative budgetary support figure. The scheme requires adherence to the prescribed form and procedure; an applicant cannot unilaterally adopt a different method of computation or filing contrary to the scheme's clear mandate. [Paras 8, 9, 15, 16, 21]

Claims and computation of budgetary support must be filed and worked out on a quarterly basis as mandated by the Budgetary Support Scheme; the circulars do not permit monthly claims in derogation of paragraph 5.4.

Circulars issued in furtherance of scheme - Budgetary Support Scheme - Whether Circular No. 1060/9/2017-CX dated 27.11.2017 is contrary to the Budgetary Support Scheme or is in furtherance of it, and whether the formula therein governs computation of the claim. - HELD THAT: - The Court held that the circular dated 27.11.2017 is not contrary to the Budgetary Support Scheme but is in furtherance thereof. The circular reiterated the quarterly basis for claims, provided for manual registration and processing for the quarter ending September 2017, and supplied a format and formula to be used for calculation. The prescribed formula and order of calculation in the circular - taking into account cash ledger debits and balances of ITC in a specified sequence - governs the computation of budgetary support. Application of that formula to the quarterly data (including September 2017 ITC balances) produced the negative amount reflected in the petitioner's own quarterly application and adopted in the impugned order. [Paras 13, 17, 19, 21]

Circular dated 27.11.2017 is in furtherance of the Budgetary Support Scheme and its formula and sequence of computation govern calculation of claims under the scheme.

Principles of natural justice - compliance with prescribed procedure for grant - Whether rejection of the petitioner's claim for the quarter July-September 2017 violated principles of natural justice by being passed without a personal hearing. - HELD THAT: - The Court noted the petitioner's contention of lack of personal hearing but observed that the petitioner's initial orders of rejection had earlier been set aside and the claims were re-examined. The petitioner was afforded opportunity to resubmit applications in the required format, and ultimately three of the four quarterly claims (October-December 2017, January-March 2018, April-June 2018) were sanctioned. The petitioner did not challenge the circulars or the scheme itself and did not assert that the resubmitted application contained incorrect information or was involuntary. Given the opportunity to resubmit and the acceptance of other quarterly claims, the Court found no breach of natural justice in the handling of the July-September 2017 claim. [Paras 3, 10, 20]

There was no violation of principles of natural justice in the rejection of the July-September 2017 claim.

Budgetary support as grant and not refund - compliance with prescribed procedure for grant - Whether the petitioner is entitled to interest on delayed sanction and whether budgetary support is to be treated as a refund of duty attracting interest. - HELD THAT: - The respondents contended, and the Court accepted, that budgetary support under the scheme is in the nature of a grant and not a tax refund under the taxation statute. The Budgetary Support Scheme does not envisage payment of interest for delay in sanction of budgetary support. Because the scheme creates a discretionary/administrative grant mechanism with its own conditions and procedure, claims for budgetary support cannot be equated with statutory refunds liable to interest under tax law. [Paras 5, 20]

The petitioner is not entitled to interest; budgetary support under the scheme is a grant and not a refund attracting interest under taxation law.

Final Conclusion: The writ petition is dismissed. The Court held that the Budgetary Support Scheme requires quarterly filing and computation of claims, the impugned circulars operate in furtherance of the scheme and its formula governs computation, there was no breach of natural justice, and budgetary support is a grant (not a refund) for which interest is not payable; the impugned order sanctioning zero for July-September 2017 is upheld and parties shall bear their own costs.

Eligibility for composition scheme - works contract - premature issuance of notice under Section 73 - violation of statutory scheme - remand for determination of eligibility

Eligibility for composition scheme - premature issuance of notice under Section 73 - violation of statutory scheme - Issuance of notice under Section 73 prior to determination and rejection of the compounding (composition) application was unsustainable. - HELD THAT: - The respondent issued a show cause notice under Section 73 before passing any order rejecting the petitioner's application for compounding under the composition scheme. The court held that the statutory scheme requires the authority first to determine the applicant's eligibility for the composition scheme and, if necessary, pass an order rejecting the application, before proceeding to determine tax liability under Section 73. Issuing the Section 73 notice in the absence of a prior adjudication on the compounding application amounted to a procedural irregularity and a violation of the statutory scheme, rendering the impugned order unsustainable. [Paras 5, 6, 7, 8]

The impugned order issuing notice under Section 73 prior to adjudication of the compounding application is set aside.

Remand for determination of eligibility - eligibility for composition scheme - Remitted to the assessing authority to first determine the petitioner's eligibility for the composition scheme and thereafter proceed, if necessary, to determine tax liability. - HELD THAT: - The court directed that the matter be remitted to the second respondent to adjudicate the petitioner's application for compounding. The petitioner was granted a limited opportunity to file reply to the show cause notice for rejection of the composition application and to appear before the authority. The authority is to adjudicate that show cause notice after affording a hearing; only upon an order rejecting the composition application may the authority issue a fresh notice under Section 73 and proceed to determine tax liability in accordance with law. The directions include specific timelines for filing reply and appearance before the authority and require fresh proceedings if the authority is not satisfied with the petitioner's response. [Paras 8, 9]

Matter remitted for fresh adjudication on eligibility for the composition scheme; only if rejected may proceedings under Section 73 be initiated afresh after affording opportunity of hearing.

Final Conclusion: The writ petition is allowed to the extent that the impugned order is set aside; the matter is remitted to the assessing authority to first determine the petitioner's eligibility for the composition scheme after affording opportunity of hearing, and only upon rejection may proceedings under Section 73 be initiated afresh in accordance with the directions and timelines given by the court.

Blocking of input tax credit - negative credit in electronic credit ledger - principles of natural justice - Rule 86A of the CGST Rules, 2017 - restriction on debit from the electronic credit ledger - recovery proceedings under Section 73 or Section 74

Blocking of input tax credit - principles of natural justice - Validity of blocking input tax credit without issuance of a show cause notice - HELD THAT: - The Court found on instructions recorded by the Standing Counsel that the respondents had blocked the petitioner's input tax credit without issuing any show cause notice. Such action was held to be per se bad in law and violative of the principles of natural justice. The respondents' own stand that no show cause notice was issued formed the factual basis for quashing the impugned order insofar as it effected the blockage without affording the petitioner an opportunity to be heard. [Paras 2, 3, 5, 8, 9]

The blocking of input tax credit without issuance of a show cause notice is invalid and the impugned order is set aside to that extent.

Negative credit in electronic credit ledger - Rule 86A of the CGST Rules, 2017 - restriction on debit from the electronic credit ledger - Whether the authorities could create a negative balance in the electronic credit ledger under Rule 86A - HELD THAT: - Relying on the reasoning in the Division Bench decision of the Gujarat High Court and this Court's earlier order in W.P. No. 31039 of 2023, the Court held that Rule 86A presupposes the existence of credit in the electronic credit ledger and empowers restriction of debits to the extent of available credit (an amount equivalent to the allegedly ineligible credit). The rule does not confer power to insert a negative balance for credits not yet available or to block future credits. Consequently, the respondents' act of making a negative credit in the petitioner's electronic credit ledger was contrary to Rule 86A and not permissible. [Paras 3, 5, 6, 7, 8]

Creation of a negative balance in the electronic credit ledger is impermissible under Rule 86A; only blocking of existing available credit (by preventing debit up to the available amount) is permissible.

Recovery proceedings under Section 73 or Section 74 - blocking of input tax credit - Appropriate remedy where input tax credit is alleged to have been wrongly or fraudulently availed - HELD THAT: - The Court observed that where input tax credit is alleged to have been wrongly or fraudulently availed and there is no available credit in the ledger, the appropriate course for the revenue is to initiate recovery or assessment proceedings under the statutory provisions (such as Section 73 or Section 74) rather than invoking Rule 86A to create a negative balance or to block non-existent future credits. The Court noted that other statutory remedies (including cancellation of registration or provisional attachment) remain available to the revenue in appropriate cases. [Paras 5, 7, 8]

Revenue should pursue statutory recovery or assessment proceedings where credit is alleged to be wrongly or fraudulently availed; Rule 86A cannot be used to block non-existent future credits.

Final Conclusion: The writ petition is allowed: the impugned order effecting a negative credit/blockage of the petitioner's electronic credit ledger for the period 01.02.2024 to 13.02.2024 is quashed; the respondents are directed to recall the block forthwith, subject to their right to take appropriate action in accordance with law by following statutory procedure.

Judicial review of administrative action - direction to decide representation - opportunity of hearing - reasoned and speaking order - delay in filing writ petition

Direction to decide representation - opportunity of hearing - reasoned and speaking order - Respondent authority to consider the petitioner's representation against blocking of input tax credit and to pass a reasoned, speaking order after hearing within a stipulated period. - HELD THAT: - The Court noted that the petitioner challenged the blocking of ITC by an order dated 5th September, 2023 and filed the writ petition on 11th January, 2024. The petitioner submitted a representation to the authority on 2nd January, 2024 and approached the Court after nine days, without allowing the authority sufficient time to decide the representation. In view of these facts and the need for administrative adjudication, the Court disposed of the petition by directing the respondent authority to consider the representation in accordance with law, to afford the petitioner or its authorised representatives an opportunity of hearing, and to pass a reasoned and speaking order within two weeks from communication of the Court's order. [Paras 2, 3, 4]

Writ petition disposed by directing the respondent authority to decide the petitioner's representation after hearing and to pass a reasoned and speaking order within two weeks.

Final Conclusion: The writ petition is disposed of by mandating the respondent authority to decide the representation dated 2nd January, 2024 in accordance with law, after giving an opportunity of hearing, and to pass a reasoned and speaking order within two weeks of communication of this order.

Territorial jurisdiction of High Court over faceless assessment - mapping of PAN to jurisdictional assessing authority - part cause of action within territorial jurisdiction - faceless assessment and geographical irrelevance of assessing officer's location - show cause notice and requirement that assessment order conform to notice - inadvertent error in assessment exceeding show cause notice - remand for fresh consideration in place of quashing where mistake goes to root - alternative remedy and amendment to Section 251 limiting remand powers

Territorial jurisdiction of High Court over faceless assessment - mapping of PAN to jurisdictional assessing authority - part cause of action within territorial jurisdiction - faceless assessment and geographical irrelevance of assessing officer's location - Whether the High Court has territorial jurisdiction to entertain writ challenge to a faceless assessment order where the assessee's PAN remains mapped to an assessing authority within the State of U.P. - HELD THAT: - The Court held that territorial jurisdiction is determined by the assessee's PAN registration and the jurisdictional assessing authority under which the assessee continues to be mapped. In the faceless assessment scheme the physical location of the Faceless Assessment Centre does not render the geographical connection irrelevant for jurisdictional purposes; a Faceless Assessment Centre may be amenable to the writ jurisdiction of different High Courts for different assessees. Since it was undisputed that the petitioner's PAN remained mapped to I.T.O. Ward 4(1)(1), Aligarh (within U.P.), a vital part of the cause of action arose within the State and the preliminary objection as to territorial jurisdiction was rejected. [Paras 5, 6, 7]

The High Court has territorial jurisdiction to entertain the petition.

Show cause notice and requirement that assessment order conform to notice - inadvertent error in assessment exceeding show cause notice - remand for fresh consideration in place of quashing where mistake goes to root - alternative remedy and amendment to Section 251 limiting remand powers - Whether the assessment order dated 27.03.2024 can be sustained where the additions in the order exceed the proposals in the show cause notice, and what relief is appropriate. - HELD THAT: - The Court found that the assessment order departed from the show cause notice: the proposed additions as per the notice did not match the additions made in the order and, in particular, an erroneous calculation was used (proposed disallowance was wrongly calculated on cash purchases instead of total purchases). The mistake was held to be inadvertent and to go to the root of the matter. In view of the error and given that amendment to Section 251 limits remand powers of appellate fora, the Court declined to remit the petitioner to alternative remedies and instead set aside the impugned assessment order. The Court directed that the adverse findings in the impugned order be treated as points on which the assessee may show cause, permitted the assessee to file a further/final reply within three weeks, and ordered that an appropriate date for personal hearing be fixed with at least 15 days' advance notice, after which an appropriate order shall be passed. [Paras 8, 9, 10, 11, 12]

Impugned assessment order set aside; matter remanded to assessing authority for fresh consideration limited to treating adverse findings as show cause points, with directions for reply, personal hearing and fresh decision.

Final Conclusion: The petition was allowed: the High Court entertained the challenge to the faceless assessment order for A.Y. 2022-23 on territorial jurisdiction grounds and, on merits, set aside the assessment order because the additions exceeded the show cause notice due to an inadvertent calculation error; the matter is remitted to the assessing authority for fresh consideration in accordance with the directions given.

Transfer of case under Section 127 (administrative transfer for public interest and administrative convenience) - jurisdictional error for assessment by non jurisdictional Assessing Officer - centralization and decentralization of assessments - concurrent jurisdiction and territorial nexus in assessment proceedings - interaction of directions under Section 120/CBDT notifications with Section 127 transfer requirement

Transfer of case under Section 127 (administrative transfer for public interest and administrative convenience) - jurisdictional error for assessment by non jurisdictional Assessing Officer - centralization and decentralization of assessments - interaction of directions under Section 120/CBDT notifications with Section 127 transfer requirement - Validity of assessment proceedings conducted by a non jurisdictional AO in the absence of a transfer/decentralization order under Section 127 of the Act - HELD THAT: - The Court examined the statutory scheme of Sections 120, 124 and 127 and the Explanation to Section 127, together with authoritative decisions, to determine that Section 127 is a machinery provision enacted for public interest and administrative convenience and that where a case has been centralized to a particular Assessing Officer, transfer of that case to another Assessing Officer requires a transfer or decentralization order under Section 127. The Court rejected the Revenue's contention that standing directions under Section 120 or CBDT notifications (including the ACIT order dated 15.11.2014 and the CBDT notification dated 22.10.2014) confer inherent jurisdiction on another AO to proceed with assessment notwithstanding the absence of a Section 127 transfer, holding that acceptance of such a position would permit simultaneous or duplicative proceedings and defeat the purpose of the transfer mechanism. The Court noted that the purported transfer order said to be uploaded on ITBA was not produced and not traceable. Applying the authorities cited, the Court concluded that without a valid transfer/decentralization under Section 127, the non jurisdictional AO had no jurisdiction to pass the assessment orders impugned and such orders are therefore vitiated by jurisdictional error. [Paras 27, 28, 30, 31, 32]

Impugned assessment orders dated 31.12.2017 and 30.09.2021 quashed and set aside for want of a transfer/decentralization under Section 127; the ITAT order dated 09.08.2019 is also set aside. Revenue is at liberty to take fresh steps through jurisdictional authorities in accordance with law.

Final Conclusion: Writ petition allowed: assessments made by a non jurisdictional AO without a transfer/decentralization order under Section 127 are jurisdictionally invalid; impugned orders and the ITAT order are set aside, subject to the Revenue's right to proceed afresh lawfully.

Violation of principles of natural justice - opportunity of hearing - recording of satisfaction for initiation of proceedings under section 153C - reasonableness of delay in initiating proceedings under section 153C - assessment under section 153C and addition as unexplained money under section 69A - writ jurisdiction under Article 226 and availability of alternate efficacious remedy

Opportunity of hearing - assessment under section 153C and addition as unexplained money under section 69A - Whether an opportunity of hearing was given to the assessee and whether the Assessing Officer duly considered the assessee's reply before passing the impugned order - HELD THAT: - The Court identified the solitary determinative question as whether the assessee was afforded an opportunity to be heard and whether the AO considered her submissions. The record shows notices dated 04.03.2021 and a show-cause dated 06.04.2021 seeking explanation for the cash payment; a satisfaction note and annexures were provided to the assessee on 19.04.2021; the assessee filed replies on 14.04.2021 and 21.04.2021; and the assessment order dated 22.04.2021 records consideration of the assessee's objections and explains the reasons for rejecting them, treating the cash receipt as unexplained money under the relevant provisions. On this basis the Court concluded that an opportunity of hearing was afforded and that the AO applied his mind to the assessee's reply before making the addition. [Paras 11, 15]

An opportunity of hearing was given and the AO duly considered the assessee's reply before passing the impugned order.

Recording of satisfaction for initiation of proceedings under section 153C - reasonableness of delay in initiating proceedings under section 153C - Whether the delay of about four years between the search and initiation of Section 153C proceedings rendered the satisfaction or notice invalid - HELD THAT: - The Court examined the contention of inordinate delay and considered authorities addressing the temporal proximity required for issuance of notices after recording satisfaction. It observed that the jurisprudence treats the requirement of action "immediately after" as governed by the principle of unreasonable or inordinate delay rather than a fixed literal timeframe; whether delay is inordinate is a question of fact dependent on circumstances. In the present case the Court found that satisfaction was recorded and the satisfaction note was supplied to the assessee, and therefore the precedents relied upon by the assessee were distinguishable. The Court was not persuaded that the delay in initiating proceedings was such as to vitiate the assessment. [Paras 16, 17]

The delay did not warrant quashing of the proceedings; the satisfaction and initiation of proceedings were not invalidated on the ground of delay.

Writ jurisdiction under Article 226 and availability of alternate efficacious remedy - violation of principles of natural justice - Whether the High Court should exercise writ jurisdiction in presence of alternate efficacious statutory remedy - HELD THAT: - The Court reviewed the established principles governing exercise of writ jurisdiction where alternate remedies exist, noting recognized exceptions (fundamental rights, breach of natural justice, lack of jurisdiction, challenge to vires). Applying those principles, the Court found no failure of natural justice, no lack of jurisdiction and no challenge to the vires of the statute; given that the AO had afforded hearing and applied his mind, the circumstances did not call for exercise of extraordinary writ jurisdiction. The assessee is therefore directed to pursue available statutory remedies. [Paras 19, 20]

Writ jurisdiction is declined; the petition is not maintainable in view of the availability of alternate efficacious remedies and absence of any exception justifying Article 226 relief.

Final Conclusion: The writ petition is dismissed: the Court held that the assessee was given opportunity of hearing and the AO considered her replies; the delay in initiating section 153C proceedings did not vitiate the assessment; and the High Court will not exercise Article 226 jurisdiction in the presence of alternate remedies.

Protective assessment order - re-assessment under Section 147 - scope of decision under Section 148A(d) - availability of departmental appeal remedy - penalty proceedings under Section 271AAC - prohibition on imposition of final penalty prior to final assessment

Scope of decision under Section 148A(d) - availability of departmental appeal remedy - re-assessment under Section 147 - Whether impugned notice dated 15.03.2023 under Section 148A(d) and the order dated 27.03.2023 for Assessment Year 2019-20 warrant interference in writ jurisdiction or are matters to be adjudicated in appeal arising from re-assessment proceedings. - HELD THAT: - The Court held that the contents of the show cause notice under Section 148A(d) and the order thereon for AY 2019-20 fall within the scope of re-assessment proceedings and the departmental remedy by way of appeal is available. Matters relating to existence of information suggesting escapement of income, and the correctness of the assessing authority's view at the 148A(d) stage, can be agitated during the re-assessment proceedings and in appeal under the relevant statutory provision. Consequently, the impugned notice and the order for AY 2019-20 are not fit for determination under Article 226 at this stage and may be examined in the pending appeal before the Commissioner of Income Tax and in the re-assessment process. [Paras 12, 15]

The challenge to the 148A(d) notice and order for AY 2019-20 is to be pursued in the re-assessment and appellate proceedings; no interference is warranted in writ jurisdiction at this stage.

Protective assessment order - penalty proceedings under Section 271AAC - prohibition on imposition of final penalty prior to final assessment - Whether the show cause notice for penalty issued on 18.04.2024 for AY 2019-20 can be proceeded to finality before conclusion of the assessment and exhaustion of the appellate remedy. - HELD THAT: - Relying on the reasoning reflected in the Gujarat Division Bench authority, the Court recognized that although a protective assessment order may be passed, issuance of a final penalty under Section 271AAC requires that the income be finally determined against the assessee. A protective assessment does not supply the finality necessary to sustain imposition of a penalty; therefore, no final penalty order should be passed pending disposal of the appeal against the assessment. The Court noted that the show cause notice invited submission of any appeal/objections but observed that the time for reply had expired and the petitioner had not responded due to challenge to jurisdiction; nonetheless, no final penalty has been shown to have been imposed as of the hearing. [Paras 16, 18]

No final order imposing penalty under Section 271AAC shall be passed until the petitioner's appeal against the assessment is decided; the petitioner remains at liberty to file a detailed reply to the penalty notice before the Assessing Officer.

Final Conclusion: The writ petition is disposed of by directing that challenges to the notices/orders under Section 148A(d) and re-assessment for AY 2019-20 are to be considered in the pending re-assessment and appeal proceedings; further, no final penalty under Section 271AAC shall be imposed until the petitioner's appeal against the assessment is adjudicated, and the petitioner may file a detailed reply to the penalty show cause notice.

Deduction under Section 80-O - Requirement of information concerning commercial knowledge and experience - Approval of agreement by the Chief Commissioner - Assessing Officer's power to verify implementation of approved agreement - Burden of proof on the assessee to produce supporting material

Deduction under Section 80-O - Requirement of information concerning commercial knowledge and experience - Burden of proof on the assessee to produce supporting material - Claim for deduction under Section 80-O was not allowable to the assessee for the relevant assessment year. - HELD THAT: - The assessee received fees from a foreign enterprise and sought deduction under Section 80-O, relying on an agreement and prior approval by the Chief Commissioner. The Court examined the nature of information actually furnished and the material placed before the Assessing Officer. The approval by the Chief Commissioner was shown to have been granted on the basis of the assessee's representations that information would be collected from user departments and analysis would be furnished at quarterly meetings. In assessment proceedings the assessee produced only newspaper cuttings and no records (minutes, reports, correspondence or other evidence) to substantiate that the analysis or assessments, as represented to the Chief Commissioner, were in fact supplied to the foreign enterprise. Newspapers or cuttings by themselves did not amount to the commercial expertise or information contemplated by Section 80-O. Consistently with authorities cited, the onus lay on the assessee to place on record material supporting the claim and the approvals obtained; mere assertions or letters without production of the substantive material were insufficient. On these facts the Tribunal and lower authorities were justified in rejecting the claim for deduction. [Paras 14, 16, 24, 25]

Deduction under Section 80-O in respect of the sums claimed for AY 1995-96 was rejected.

Approval of agreement by the Chief Commissioner - Assessing Officer's power to verify implementation of approved agreement - Approval by the Chief Commissioner did not preclude the Assessing Officer from examining whether the assessee acted in accordance with the representations on the basis of which approval was granted, nor did it automatically entitle the assessee to the claimed deduction without factual verification. - HELD THAT: - The approval letter itself qualified that the amount eligible for deduction would be determined by the Assessing Officer and that the grant of deduction was subject to fulfilment of other conditions in the Act. The Court construed the earlier decisions of higher courts and the Board's clarifications to hold that, even where prior approval exists, the Assessing Officer retains the function of verifying (i) that amounts claimed as deductible are arrived at in accordance with the basis on which approval was granted, (ii) that the deduction claimed in the relevant assessment year relates to items for which approval was granted, and (iii) that requisite receipts and documentation exist in the prescribed manner. Thus the AO was entitled to call for and examine records to test the veracity of the assessee's claim and the implementation of the approved agreement; the present case demonstrated a failure by the assessee to produce such evidence. [Paras 15, 16, 18, 21, 22]

The Assessing Officer was competent to verify and determine the extent of deduction under Section 80-O despite prior approval by the Chief Commissioner; the AO's enquiry in this case was within jurisdiction.

Final Conclusion: The Tribunal's dismissal of the assessee's claim for deduction under Section 80-O for AY 1995-96 is upheld; the Chief Commissioner's approval was qualified and did not bar the Assessing Officer from verifying the assessee's compliance with the representations on which approval was based. The appeal is dismissed with parties to bear their own costs.

Condonation of delay under Section 119(2)(b) of the Income-tax Act - genuine hardship - filing of revised return based on recasted books of account - finality of restated financial statements under Section 130(2) of the Companies Act, 2013 - assessment based on revised returns - effect of ongoing investigations on acceptance of recast accounts - commencement of limitation under Section 149

Condonation of delay under Section 119(2)(b) of the Income-tax Act - genuine hardship - filing of revised return based on recasted books of account - Validity of CBDT's rejection of petitioner's application for condonation of delay in filing revised returns for A.Y. 2015-16 to 2020-21 and the entitlement to file revised returns based on recasted accounts - HELD THAT: - The Court found the CBDT's rejection of the condonation applications unsustainable. It held that the CBDT failed to address the petitioner's case of "genuine hardship" as required by Section 119(2)(b) and the authorities below had recommended condonation. Given the NCLT's orders under Section 130 accepting restated financial statements and the administrative record showing recasted accounts taken on record, the petitioner must be permitted to file physical revised returns based on those recasted accounts for A.Y. 2015-16 to 2020-21. The Court emphasised that only after such revised returns are filed can the Income-tax authorities examine tax implications and that refusal to condone the delay had resulted from an unduly restrictive approach by the CBDT. [Paras 13, 14, 15, 24, 25]

Impugned order dated 29.02.2024 is quashed; petitioner permitted to file revised returns based on recasted accounts for A.Y. 2015-16 to 2020-21 and to submit physical returns within 30 days; Assessing Officer to frame assessments in accordance with law by 28.02.2025.

Finality of restated financial statements under Section 130(2) of the Companies Act, 2013 - effect of ongoing investigations on acceptance of recast accounts - Whether proceedings pending before SFIO/ED/CBI or appeals before NCLAT negate the acceptance of restated financials for income tax purposes - HELD THAT: - The Court observed that the NCLT ordered reopening and recasting of accounts under Section 130 and subsequently took the restated financial statements on record; the fact that investigations or appeals remain pending does not preclude permitting filing of revised returns based on the recasted accounts. The Tribunal's orders preserved the rights of investigative agencies, but that preservation does not justify refusal to condone delay in filing revised returns. The Income tax Department can, after revised returns are filed, examine veracity and implications; accepting revised returns for assessment does not absolve any person from actions arising from ongoing investigations. [Paras 6, 9, 11, 12, 27]

Pending investigations or appeals do not by themselves justify denial of condonation; revised returns based on recasted accounts are to be accepted for assessment while preserving the rights of investigative agencies.

Assessment based on revised returns - commencement of limitation under Section 149 - Consequences for earlier assessment orders and limitation where revised returns based on recasted accounts are accepted - HELD THAT: - The Court held that any assessment order already passed under Section 143(3) or Section 144C for the years for which recasted/revised accounts are filed will not survive. It clarified that accepting returns on recasted accounts will not preclude actions arising from prior investigations and that, if the recasted accounts require re examination after investigation, the company cannot raise limitation objections for three years from the date of the assessment order. Further, given the peculiar facts, the period for calculating time under Section 149 will commence from the date assessment orders are passed for each of the affected five assessment years. [Paras 26, 27, 28]

Prior assessment orders for the affected years will not survive; investigations remain reserved; limitation for reopening (Section 149) will begin from the date assessment orders are passed for each year, and a three year protection against limitation objections is provided where re examination follows investigation.

Filing of revised return based on recasted books of account - Interim treatment of assessment proceedings for subsequent years pending completion of assessments for the recasted years - HELD THAT: - To ensure coherent adjudication, the Court directed that pending assessment proceedings for A.Y. 2021-22 and A.Y. 2022-23 shall not proceed until assessments are completed for A.Y. 2015-16 to A.Y. 2020-21 (specifically noting completion for A.Y. 2020-21 and 2021-22 as sequenced in the order). This preserves orderly assessment and prevents prejudicial preemption before earlier years are reassessed on recasted accounts. [Paras 30]

Assessment proceedings for A.Y. 2021-22 and A.Y. 2022-23 are stayed until assessments for the earlier recasted years are concluded.

Final Conclusion: Writ petition allowed: the CBDT's order rejecting condonation is quashed; petitioner is permitted to file physical revised returns based on NCLT restated accounts for A.Y. 2015-16 to 2020-21 within 30 days, assessments to be framed by the Assessing Officer by 28.02.2025; prior assessment orders for those years will not survive; acceptance of revised returns does not bar investigations and limitation provisions are adjusted as directed; assessments for A.Y. 2021-22 and 2022-23 are stayed until earlier years are assessed.

Substantial question of law - Section 260A of the Income Tax Act, 1961 - deletion of addition under Section 68 - exemption under Section 10(38) - reliance on investigation report - principles of natural justice - adequacy of evidence for tax additions

Condonation of delay - Applications for condonation of delay in filing the appeals - HELD THAT: - The applications for condonation of delay filed in the listed appeals were considered on the grounds set out in the interlocutory applications. Having regard to the reasons advanced, the Court allowed the applications and condoned the delay in filing the appeals, thereby admitting the matters for consideration of admission on merits. [Paras 1]

Delay in filing the appeals is condoned.

Substantial question of law - Section 260A of the Income Tax Act, 1961 - deletion of addition under Section 68 - exemption under Section 10(38) - reliance on investigation report - principles of natural justice - adequacy of evidence for tax additions - Whether the appeals raise any substantial question of law under Section 260A warranting admission, in relation to ITAT's deletion of addition of purported Long Term Capital Gain treated under Section 68 and claimed exemption under Section 10(38) - HELD THAT: - The Court examined the ITAT's findings and the factual matrix recorded below, including that the assessees had purchased listed shares through proper channels, paid STT and that the ITAT found no involvement of the assessees in manipulation of share prices. The Court noted that SEBI/Investigation Wing reports relied upon by Revenue did not name the assessees and that the investigation report relied upon was not placed before the assessees for confrontation. Applying the statutory threshold for admission under Section 260A, the Court concluded that no arguable substantial question of law arises from the ITAT order; the matters disclosed factual determinations and appreciation of evidence which did not reveal any legal question of sufficient substance for this Court's consideration. Reliance on precedents and rival contentions as to penny stock character of the issuing company were considered but found insufficient to establish a substantial question of law arising from the ITAT order. [Paras 14, 15]

No substantial question of law arises; the appeals are without merit and are dismissed.

Final Conclusion: The interlocutory applications for condonation of delay are allowed. On merits, the High Court finds no substantial question of law arising from the ITAT's orders concerning deletion of additions treated under Section 68 and claimed exemption under Section 10(38); the bunch of appeals are dismissed for lack of merit.

Section 144C as a machinery provision governing faceless assessment of an eligible assessee including NRI - applicability of faceless assessment procedure to assessments initiated after inclusion of NRI within "eligible assessee" w.e.f. 01.04.2020 - limitation for completion of assessment and applicability of statutory extension under TOLA and Notification S.O. 2580(E) - requirement of raising objection before the assessing authority as a procedural defence

Section 144C as a machinery provision governing faceless assessment of an eligible assessee including NRI - applicability of faceless assessment procedure to assessments initiated after inclusion of NRI within "eligible assessee" w.e.f. 01.04.2020 - requirement of raising objection before the assessing authority as a procedural defence - Validity of completing assessment proceedings under Section 144C in respect of the petitioner who is an NRI for assessment year 2018-19. - HELD THAT: - The Court held that Section 144C is a machinery provision introduced for faceless assessment and that the inclusion of Non-Resident Indians within the definition of "eligible assessee" w.e.f. 01.04.2020 brings assessments of NRIs within the procedural scheme. The provision is not substantive or prejudicial to an NRI; rather it is beneficial and prescribes the procedure for finalisation. The petitioner did not raise the objection before the assessing authority that Section 144C should not apply; the Court found no merit in the contention that proceedings under Section 144C were without jurisdiction in the circumstances of this case and upheld the validity of finalising the assessment under Section 144C. [Paras 6]

Assessment under Section 144C in respect of the NRI for AY 2018-19 was valid and not void for lack of jurisdiction.

Limitation for completion of assessment and applicability of statutory extension under TOLA and Notification S.O. 2580(E) - Section 144C timeline for draft assessment, referral to Dispute Resolution Board and finalisation - Whether the final assessment order dated 22.07.2022 for AY 2018-19 was barred by limitation. - HELD THAT: - The Court examined the timeline of events and accepted the Revenue's account that the draft assessment under Section 144C was passed within the extended limitation period and that the matter was referred to the Dispute Resolution Board which acted within the period prescribed by Section 144C. The Taxation and Other Laws (Amendment) Act extension notified by S.O. 2580(E) (25.06.2021) extended the limitation for AY 2018-19, and the departmental procedure culminating in the final order complied with the timelines under Section 144C and the statutory extension. Consequently, the general limitation provisions (Section 153/153B) did not render the final order time-barred. [Paras 7]

The assessment order dated 22.07.2022 was not barred by limitation and was validly finalised in accordance with Section 144C and the applicable statutory extension.

Final Conclusion: The writ petition was dismissed; the Court upheld the validity of the assessment finalised under Section 144C in respect of the petitioner (an NRI) for AY 2018-19 and held the assessment not to be time-barred.

Taxability of receipts from Vodafone Idea Limited - application of Division Bench precedent in ITA No.160/2015 - stay of coercive recovery pending appellate decision - liberty to seek refund of deposited amount

Taxability of receipts from Vodafone Idea Limited - application of Division Bench precedent in ITA No.160/2015 - Appeals against assessment orders for 2009-10, 2010-11 and 2011-12 to be decided by CIT(A)-12 in the light of the Division Bench's decision in ITA No.160/2015 - HELD THAT: - The Court observed that the determinative question in the appeals is whether amounts received by the petitioner from M/s. Vodafone Idea Limited are chargeable to tax. The Division Bench's decision in ITA No.160/2015 holds that such receipts would not be chargeable to tax; accordingly, the Commissioner of Income Tax (Appeals)-12 is directed to consider and decide the petitioner's appeals expeditiously in the light of that Division Bench precedent. The Court recorded that the merits of the assessment orders must be examined having regard to the Division Bench's ruling, subject to the outcome of any proceedings the Revenue may pursue against that decision.

CIT(A)-12 to consider and decide the appeals expeditiously in light of the Division Bench's order in ITA No.160/2015.

Stay of coercive recovery pending appellate decision - liberty to seek refund of deposited amount - Respondents restrained from taking coercive measures to recover the demands pending consideration of the appeals; petitioner permitted to seek refund of the deposited amount - HELD THAT: - The Court noted that the petitioner has deposited 20% of the demand and, given the Division Bench's decision, there should be no precipitation in recovery. Consequently, the respondents are directed not to take any coercive measures to enforce the subject demands until the appeals are considered. The petitioner is granted liberty to request expeditious disposal of the appeals and, upon decision, to seek refund of the 20% deposit subject to the outcome of those appeals. The Court also recorded a uniform practice of disposing writ petitions challenging such assessment orders by reference to the Division Bench's order while preserving the Revenue's right to pursue further remedies before the Supreme Court.

No coercive recovery to be taken until the appeals are disposed; petitioner may seek refund of the deposited 20% subject to appellate outcome.

Final Conclusion: Writ petition disposed with directions that the appeals against the assessment orders for AYs 2009-10, 2010-11 and 2011-12 be expeditiously considered by CIT(A)-12 in the light of the Division Bench's order in ITA No.160/2015; respondents restrained from taking coercive steps for recovery meanwhile, and petitioner granted liberty to seek refund of the 20% deposit subject to the appellate outcome.

Exemption under section 10(23C)(iiiad) - aggregate annual receipts test for educational institutions - separate entity doctrine for educational institutions - registration and approval requirements for charitable educational institutions

Exemption under section 10(23C)(iiiad) - aggregate annual receipts test for educational institutions - separate entity doctrine for educational institutions - Entitlement to exemption under section 10(23C)(iiiad) for A.Y. 2017-18 by the assessee society running multiple educational institutions. - HELD THAT: - The Tribunal found that the assessee society runs distinct educational institutions (degree and junior college) whose individual gross receipts did not exceed the Rs. 1 crore threshold. The AO had treated the total receipts of the society as exceeding the limit and denied exemption, but the Tribunal noted that certain receipts pertained to an earlier financial year (F.Y.2015-16) and, if excluded, the receipts relevant to the assessment year fall below the threshold. Relying on a coordinate-bench decision and the reasoning of the Hon'ble Karnataka High Court, the Tribunal applied the principle that Section 10(23C)(iiiad) contemplates the aggregate annual receipts of each educational institution (viewing each institution as a separate entity) rather than aggregating receipts of all institutions run by the same person for the purpose of denial. Applying that test to the facts, the Tribunal concluded the receipts of each institution did not exceed Rs. 1 crore and therefore the income was eligible for exemption under section 10(23C)(iiiad). The Tribunal accordingly set aside the orders of the lower authorities and allowed the appeal. [Paras 9, 10]

Assessee entitled to exemption under section 10(23C)(iiiad) for A.Y. 2017-18; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the assessee society is entitled to exemption under section 10(23C)(iiiad) for A.Y. 2017-18 because the aggregate receipts of each educational institution did not exceed the prescribed threshold; the orders of the lower authorities were set aside.

Deduction under Chapter VI-A - deduction under Section 80GGA read with Section 35AC - non-claim of benefit under Section 11/12 - incorrect claim in intimation under Section 143(1)(a)(ii) - principle of consistency - verification of donations by assessing officer - remand for verification

Deduction under Chapter VI-A - deduction under Section 80GGA read with Section 35AC - non-claim of benefit under Section 11/12 - principle of consistency - incorrect claim in intimation under Section 143(1)(a)(ii) - Entitlement of the assessee to deduction under Chapter VI-A (Section 80G/80GGA read with Section 35AC) where the assessee did not claim benefit under Section 11/12. - HELD THAT: - The Tribunal found that the assessee did not claim benefit under Sections 11 and 12 for the year under consideration, as reflected in the intimation issued under Section 143(1). The assessee has historically been allowed the claimed deduction since Assessment Year 1993-94 and in the scrutiny assessment for Assessment Year 2013-14, and placed on record details of donations (page 33). The Revenue did not produce evidence contradicting the factual claim of the assessee at hearing. In these circumstances, and having regard to the prior consistent treatment and absence of contrary proof, the Tribunal held that the assessee is prima facie entitled to the deduction under Chapter VI-A (Section 80G/80GGA read with Section 35AC), notwithstanding the AO's treatment under Section 143(1)(a)(ii) where the claim was treated as incorrect on account of apparent inconsistency in the return. [Paras 12]

The assessee is prima facie entitled to deduction under Chapter VI-A (Section 80G/80GGA read with Section 35AC) subject to verification of the donations.

Verification of donations by assessing officer - remand for verification - Scope and direction for verification of donations relied upon for the claimed deduction. - HELD THAT: - The Tribunal noted that the veracity of the donations shown at page 33 of the paper book was not examined by the authorities below. Rather than deciding the matter finally on the materials before it, the Tribunal directed the Assessing Officer to verify the details of the donations and, upon such verification, to grant relief in accordance with the observations made. The order therefore remands the factual verification to the AO for examination and consequential action. [Paras 12, 13]

Matter remanded to the Assessing Officer to verify the donations and grant relief in accordance with the Tribunal's observations.

Final Conclusion: Appeal allowed for statistical purposes; the Tribunal held that the assessee is prima facie entitled to deduction under Section 80G/80GGA read with Section 35AC (having not claimed Sections 11/12), and directed the Assessing Officer to verify the donations recorded in the paper book and grant relief as appropriate.

Penalty under Section 271(1)(c) for concealment of income and furnishing inaccurate particulars - penalty under Section 271D for acceptance of deposits otherwise than by cheque or bank draft in contravention of Section 269SS - penalty under Section 271E for repayment of deposits in contravention of Section 269T

Penalty under Section 271(1)(c) for concealment of income and furnishing inaccurate particulars - Validity of restriction of penalty under Section 271(1)(c) by the CIT(A) - HELD THAT: - Tribunal examined the additions sustained by the assessing officer and the relief granted by the Tribunal in its order dated 13.01.2022. The Tribunal noted that large part of the additions (Rs. 3,96,31,306/-) were deleted by the Tribunal itself and that the assessee had disclosed relevant material before the assessing officer, such that the element of concealment or furnishing of inaccurate particulars did not subsist in respect of those deleted items. One remaining addition (disallowance of interest on unsecured loan) was sustained because the assessee had not pressed that ground; that sustained item could not be treated as concealment. In view of these findings, the Tribunal concluded that the CIT(A)'s partial relief was justified and declined to interfere with the CIT(A)'s reduction of the penalty. [Paras 8]

Revenue appeal against restriction of penalty under Section 271(1)(c) dismissed; CIT(A)'s partial grant of relief upheld.

Penalty under Section 271D for acceptance of deposits otherwise than by cheque or bank draft in contravention of Section 269SS - Whether penalty under Section 271D was maintainable in view of the Tribunal's deletions and the assessee's explanations regarding cash loans/deposits - HELD THAT: - The Tribunal observed that the CIT(A) confirmed a substantial portion of the penalty under Section 271D but relied on findings that cash loans from directors and others were accepted to enable expenditure and investment, and that seized documents showed loan and repayment. However, the Tribunal highlighted that the primary additions underpinning those findings had been deleted by the Tribunal's own earlier order and that the assessing officer had not properly segregated findings explaining how Section 269SS was contravened in the separate 271D proceedings. Given the deletions by the Tribunal and the absence of independent, segregated findings linking the accepted cash receipts to a willful contravention attractable under Section 271D, the Tribunal allowed the assessee's appeal against the penalty. [Paras 11]

Assessee's appeal against penalty under Section 271D allowed; CIT(A)'s confirmation of penalty set aside to the extent indicated by the Tribunal.

Penalty under Section 271E for repayment of deposits in contravention of Section 269T - Whether penalty under Section 271E was sustainable where the assessee had explained repayments and the Tribunal had accepted those explanations - HELD THAT: - The Tribunal recorded that the assessee had furnished explanations before the assessing officer regarding repayment of loans and that the Tribunal's earlier order dated 13.01.2022 had accepted those explanations. The Tribunal found that the repayments in question had been explained and established on record, undermining the basis for imposing penalty under Section 271E. On that basis, the Tribunal held that the imposition of penalty under Section 271E would not stand. [Paras 14]

Assessee's appeal against penalty under Section 271E allowed; penalty set aside.

Appeal by Revenue against partial relief granted in penalty under Section 271D - Whether Revenue's challenge to CIT(A)'s partial relief in Section 271D penalty succeeds in view of the Tribunal's findings - HELD THAT: - The Tribunal applied its reasoning from the assessee's appeal concerning Section 271D, noting that the same defects and deletions which led to setting aside the penalty in the assessee's appeal equally undermined the Revenue's contention. Consequently, the Tribunal found no merit in the Revenue's appeal seeking restoration of the full penalty and dismissed the appeal. [Paras 15]

Revenue's appeal against partial relief in Section 271D dismissed.

Final Conclusion: Both appeals filed by the Revenue are dismissed and both appeals filed by the assessee are allowed for Assessment Year 2014-15.

Registration under section 80G(5) - Section 80G(5B) non-obstante clause - Religious versus charitable expenditure - Requirement of show cause notice - Interpretation of amendment to Section 80G to mitigate effect of Upper Gange

Registration under section 80G(5) - Section 80G(5B) non-obstante clause - Religious versus charitable expenditure - Interpretation of amendment to Section 80G to mitigate effect of Upper Gange - Assessee trust entitled to registration under section 80G(5) where audited accounts for the relevant years show no expenditure of a religious nature and section 80G(5B) applies to trusts predominantly engaged in charitable activities. - HELD THAT: - The Tribunal examined the trust deed, objects and the audited Income & Expenditure accounts for FY 2019-20, FY 2020-21 and FY 2021-22 and found no expenditure on religious activities (paras 3.2, 7.1). The Tribunal noted that section 80G(5B) is a non-obstante provision enacted to ensure that institutions which are predominantly charitable but incur religious expenditure up to five per cent of their income are not denied the benefit of section 80G (para 7.2). The Tribunal observed that the Supreme Court decision in Upper Gange Sugar Mills Ltd. was rendered prior to insertion of section 80G(5B) (para 7.4) and that CBDT Circular No.779/14.09.1999 explains the legislative intent to mitigate hardship to predominantly charitable institutions (paras 7.5-7.6). Having regard to the financials showing absence of religious expenditure and the statutory/non-obstante protection afforded by section 80G(5B) and the explanatory circular, the Tribunal held that the conclusion in the CIT(E)'s order excluding the trust from section 80G was incorrect (paras 7.1-7.6, 7.8). [Paras 7]

Order rejecting registration under section 80G(5) set aside and assessee held eligible for approval under section 80G(5).

Requirement of show cause notice - Rejection of the application under section 80G(5) without issuing a show cause notice was procedurally improper. - HELD THAT: - The Tribunal recorded that no show cause notice was issued by the CIT(E) before passing the rejection order and emphasized the significance of the show cause notice in income-tax proceedings as essential to procedural fairness (para 5.3, 7.7). The absence of such notice was taken into account in concluding that the CIT(E)'s order was bad in law (para 7.7-7.8). [Paras 5, 7]

Rejection order vitiated for failure to issue show cause notice; grounds of appeal allowed on procedural ground.

Final Conclusion: Appeal allowed; order dated 27.03.2023 rejecting the application for registration under section 80G(5) is set aside and the matter is directed to grant approval to the assessee trust under section 80G(5) in accordance with law.

Amortisation of preliminary/pre-operative expenditure under Section 35D(2) - deductibility of employee provident fund contribution under Section 43B - determination of Arm's Length Price and selection of Most Appropriate Method (MAM) in transfer pricing - comparability adjustments and accounting practice differences affecting Cost Plus Method (CPM) - application of Comparable Uncontrolled Price (CUP) method and consistency in method selection - application of Transactional Net Margin Method (TNMM) at entity level and OP/OC profit margin indicator - remand for fresh adjudication to fora of original decision-makers (CIT(A) / TPO) following principles of natural justice

Amortisation of preliminary/pre-operative expenditure under Section 35D(2) - remand for fresh adjudication to fora of original decision-makers (CIT(A) / TPO) following principles of natural justice - Whether the CIT(A) adjudicated the assessee's alternative claim regarding capitalization/amortisation under Section 35D(2) and whether the matter requires fresh consideration. - HELD THAT: - The Tribunal found that the CIT(A) did not consider or adjudicate the assessee's alternative plea concerning the portion of expenses eligible under Section 35D(2). Because no independent finding was recorded by the CIT(A) on the alternative contention, the Tribunal concluded that the matter has not been properly decided on merits. The Tribunal directed that the entire issue be remanded to the file of the CIT(A) for proper adjudication in consonance with the assessee's plea and the Income Tax statute, with opportunity of hearing in accordance with principles of natural justice. [Paras 6, 8]

Issue remanded to the CIT(A) for fresh adjudication.

Deductibility of employee provident fund contribution under Section 43B - Whether employees' contribution to provident fund, deposited after the statutory due date, is allowable. - HELD THAT: - The Tribunal recorded the assessee's concession in light of the Apex Court decision in Checkmate Services (P.) Ltd. v. CIT-1 and accordingly treated the ground as against the assessee. The Tribunal therefore maintained the disallowance of the employees' provident fund contribution which was deposited after the statutory due date. [Paras 5]

Ground dismissed; disallowance sustained.

Determination of Arm's Length Price and selection of Most Appropriate Method (MAM) in transfer pricing - application of Comparable Uncontrolled Price (CUP) method and consistency in method selection - comparability adjustments and accounting practice differences affecting Cost Plus Method (CPM) - application of Transactional Net Margin Method (TNMM) at entity level and OP/OC profit margin indicator - remand for fresh adjudication to fora of original decision-makers (CIT(A) / TPO) following principles of natural justice - Whether the TPO and CIT(A) were justified in rejecting the methods (CUP/CPM/TNMM) relied upon by the assessee and in making upward transfer pricing adjustment. - HELD THAT: - The Tribunal examined the record and observed deficiencies in the approach of the TPO and the CIT(A). It noted that (i) the TPO selected only one unit while both units had used the same CPM; (ii) the CIT(A) failed to consider profit margins and the assessee's submissions on comparables and required adjustments (including capacity utilisation and accounting treatment differences); and (iii) the assessee's manufacturing-for-AE relationship, contractual terms and allocation of risk were not adequately addressed. Given these lacunae the Tribunal held that the TPO and CIT(A) had not properly adjudicated the transfer pricing issues. Consequently, the Tribunal remanded the matter to the TPO for fresh adjudication with directions to consider the assessee's contentions, comparability adjustments and principles of consistency, and to afford the assessee a hearing. [Paras 9, 10, 11]

Issues remanded to the TPO for fresh adjudication; grounds 3 to 10 partly allowed for statistical purpose.

Final Conclusion: The appeal is partly allowed for statistical purposes: the disallowance under Section 43B is sustained, while the questions concerning capitalization/amortisation under Section 35D(2) and the transfer pricing additions (grounds 3-10) are remanded for fresh consideration by the CIT(A) and the TPO respectively, with opportunities of hearing in accordance with principles of natural justice.

Revisionary jurisdiction under section 263 - Erroneous assessment insofar as prejudicial to the interests of revenue - Inquiry or verification which ought to have been made - Opportunity of being heard / principles of natural justice - Assessment under section 143(3) - Exemption claimed under section 10(38)

Revisionary jurisdiction under section 263 - Erroneous assessment insofar as prejudicial to the interests of revenue - Inquiry or verification which ought to have been made - Assessment under section 143(3) - Exemption claimed under section 10(38) - Ld. PCIT rightly invoked jurisdiction under section 263 and set aside the assessment order passed under section 143(3) for fresh adjudication - HELD THAT: - The Tribunal upheld the PCIT's conclusion that the AO had finalised the assessment without adequate examination or verification of the real nature and genuineness of the share transactions and the claimed exemption under section 10(38). The PCIT recorded specific material indicating suspicious accommodation-entry trading in the scrip (statements in investigation, abnormal price movement, suspension of trading, lack of genuine buyers) and noted that enquiries into purchasers were left open. The Tribunal accepted the legal import of Explanation 2(a) to section 263 that empowers revision where inquiry/verification which ought to have been made was not done, and found that PCIT applied his mind to the record and exercised discretion reasonably. In view of these findings, the order under section 143(3) was held to be erroneous insofar as prejudicial to the revenue and liable to be set aside for fresh assessment after proper enquiries and opportunities to the assessee. [Paras 3, 6, 7]

Order under section 263 setting aside the assessment and directing fresh assessment after proper enquiry is sustained

Opportunity of being heard / principles of natural justice - Revisionary jurisdiction under section 263 - PCIT did not violate principles of natural justice in passing the section 263 order - HELD THAT: - The Tribunal noted that the assessee was served a show cause notice and filed written submissions; following administrative changes a fresh opportunity was granted by the PCIT and the assessee did not seek further adjournment or file additional replies. The Tribunal further observed that the PCIT considered the assessee's submissions and distinguished relied judicial precedent; on these facts it found no breach of natural justice in assuming revisionary jurisdiction and passing the order under section 263. [Paras 3, 6]

Allegation of violation of natural justice is rejected

Final Conclusion: The appeal is dismissed; the PCIT's order under section 263 setting aside the assessment for AY 2015-16 and directing fresh assessment after appropriate enquiry and opportunities to the assessee is affirmed.

Instructions under Section 151A of the Customs Act, 1962 - Proviso to Section 151A - protection of quasi judicial discretion - Manufacture and other operations in relation to goods in a warehouse (Section 65) - Period for which goods may remain warehoused (Section 61) - Validity and scope of MOOWR Regulations (Manufacture and other Operations in Warehouse Regulations, 2019) - Cancellation of warehouse licence - Section 58B - Meaning of 'in relation to' in statutory provisions - Doctrine against acting under dictation / surrender of statutory discretion

Instructions under Section 151A of the Customs Act, 1962 - Proviso to Section 151A - protection of quasi judicial discretion - Doctrine against acting under dictation / surrender of statutory discretion - Validity of the Board's Instruction dated 09 July 2022 insofar as it directed review and follow up action on licences granted under the MOOWR Regulations - HELD THAT: - The Board issued Instruction No.13/2022 (09.07.2022) concluding that permissions for warehousing solar power generation units under MOOWR 2019 were not in accordance with law and directing immediate review and follow up action. Section 151A empowers the Board to issue instructions for uniformity but the proviso forbids issuing directions that require an officer to make a particular assessment or dispose a particular case in a particular manner or interfere with quasi judicial discretion. The Instruction went beyond general guidance by mandating review and essentially compelling licensing authorities to cancel or re examine licences on the basis of the Board's definitive conclusion that solar generation falls outside MOOWR. That amounted to directing subordinate quasi judicial officers and thereby risked abdicating their independent decision making role. Established authorities and authorities under pari materia provisions prohibit circulars or instructions that control a quasi judicial determination. For these reasons the Court held the impugned part of the Instruction (the mandate to review and take follow up action) to be ultra vires Section 151A and quashed it. [Paras 110, 113, 116, 117, 120]

Impugned Instruction quashed insofar as it mandates review of existing licences and follow up action; Board cannot direct licensing authorities to dispose particular cases in a particular manner.

Manufacture and other operations in relation to goods in a warehouse (Section 65) - Period for which goods may remain warehoused (Section 61) - Meaning of 'in relation to' in statutory provisions - Validity and scope of MOOWR Regulations (Manufacture and other Operations in Warehouse Regulations, 2019) - Whether generation of electricity by solar power projects undertaken using imported capital goods housed in a licensed warehouse can fall within Section 65 and the MOOWR Regulations - HELD THAT: - Sections 61 and 65 read together permit warehousing of capital and non capital goods and the carrying on of 'any manufacturing process or other operations in the warehouse in relation to such goods.' Post 2016 amendments Section 61 allows capital goods to remain in warehouse until clearance for home consumption. The phrase 'in relation to' is broadly inclusive and denotes association/connection with the warehoused goods; it does not require that the imported capital goods themselves be transformed or subsumed into the resultant product. Contemporaneous material (MOOWR regs, Circular, FAQs, Invest India material) consistently treated capital goods and inputs as eligible for duty deferment without a time limit and contemplated removal/assessment mechanics on ex bonding. The fact that electricity is intangible or that input output norms may be inapplicable does not, by itself, exclude an activity from Section 65. Construing Sections 61 and 65 to exclude generation of electricity would impose a restrictive gloss not supported by statutory text or contemporaneous materials, and would frustrate the statutory scheme of duty deferment for capital goods used in manufacturing or other operations. Accordingly, the Court held that solar electricity generation using imported capital goods housed in a licensed warehouse can fall within Section 65 / MOOWR where the activity is 'in relation to' the warehoused goods. [Paras 126, 129, 136, 140, 141]

Section 65 and MOOWR Regulations are not, on their text or contemporaneous materials, inapplicable to solar power generation carried out with imported capital goods housed in a licensed warehouse; such activity can qualify as manufacture/other operations 'in relation to' warehoused goods.

Cancellation of warehouse licence - Section 58B - Instructions under Section 151A of the Customs Act, 1962 - Doctrine against acting under dictation / surrender of statutory discretion - Validity of Show Cause Notices and the cancellation order(s) issued pursuant to the impugned Instruction (including W.P.(C) 10838/2022) - HELD THAT: - Section 58B empowers the Principal Commissioner/Commissioner to cancel a warehouse licence for contravention of the Act, rules or licence conditions but requires reasonable opportunity of hearing. The impugned SCNs and the cancellation dated 19.07.2022 proceeded on the basis of the Board's Instruction that solar generation fell outside MOOWR; licensing authorities treated the Instruction as binding and initiated cancellation without independent adjudication of contravention by the licensees. The Court found no material that the petitioners had breached licence conditions or concealed material facts; moreover the Board could not lawfully direct licensors to cancel licences. Consequently, SCNs dated 13.07.2022 (as listed) and the cancellation order of 19.07.2022 were quashed for being founded on the ultra vires Instruction and for impermissibly fettering the quasi judicial exercise of cancellation power. [Paras 110, 111, 112, 120, 179]

SCNs (13.07.2022 and specified others) and the licence cancellation order dated 19.07.2022 quashed; petition in which licence was cancelled (W.P.(C)10838/2022) allowed.

Purposive interpretation and limits thereof - Policy considerations (level playing field, domestic manufacturing incentives) - Validity and scope of MOOWR Regulations (Manufacture and other Operations in Warehouse Regulations, 2019) - Whether the Court should construe Sections 61/65 and MOOWR purposively to exclude solar generation because of policy concerns (distortion of level playing field / encouragement of domestic manufacture) - HELD THAT: - Respondents urged that permitting MOOWR for solar generation would frustrate government policy to incentivize domestic PV manufacturing and distort competition. The Court acknowledged the policy objectives (PLI, tariff changes, Project Imports amendments) but reiterated the limited judicial role: statutory text is primary, purposive interpretation is available only where language is ambiguous or literal construction leads to absurdity or repugnancy. Sections 61/65 and contemporaneous material were clear and unambiguous and did not show legislative intent to exclude solar generation. Policy considerations, however weighty, do not permit the Court to read into the statute disqualifying conditions absent in the text; remediable measures rest with the executive/legislature. Thus the Court declined to construe the statute to exclude solar projects on policy grounds. [Paras 52, 162, 166, 175, 176]

Court will not rewrite or narrow Sections 61/65/MOOWR on policy grounds; remedies for perceived policy distortion lie with the executive/legislature, not by judicial construction.

Final Conclusion: Writ petitions allowed. The Board's Instruction dated 09.07.2022 is quashed to the extent it mandates review and follow up action compelling licensing authorities to treat previously granted MOOWR permissions for solar generation as invalid. Specified SCNs and the cancellation order dated 19.07.2022 are quashed; the Court holds that Sections 61 and 65 and the MOOWR Regulations can encompass solar power generation undertaken with imported capital goods housed in licensed warehouses, and declines to narrow those provisions on policy grounds; parties remain free to act further in accordance with law.

Confiscation of goods - imposition of penalty - mandatory show cause notice - waiver of show cause notice - re-determination of assessable value - classification and valuation of imported goods - storage in warehouse pending clearance

Confiscation of goods - mandatory show cause notice - imposition of penalty - Validity of not confiscating the imported goods and not imposing penalty where no prior notice under section 124 was issued. - HELD THAT: - The Tribunal held that issuance of a notice informing the owner of the goods of the grounds on which confiscation and penalty are proposed, and affording an opportunity to make representation and be heard, is a mandatory pre-requisite to any order of confiscation or penalty. The only statutory latitude is that the notice and the representation may be oral at the request of the person concerned, but there is no provision for dispensing with the requirement of informing the person of the intent to confiscate or penalise. The adjudicating authority's omission to issue such notice and the absence of any record that the respondent was placed on oral notice precluded invocation of confiscation under the provisions relied upon and barred imposition of penalty without compliance with the mandatory procedure. The Tribunal noted the adjudicating authority's own finding that there was no deliberate attempt to evade duty, and that the importer had sought first check; having regard to both the procedural deficiency and the factual finding, refusal to confiscate or penalise was upheld. [Paras 6, 7, 8]

No confiscation or penalty could lawfully be imposed in the absence of the mandatory notice; the adjudicating authority correctly refrained from imposing confiscation or penalty.

Waiver of show cause notice - re-determination of assessable value - classification and valuation of imported goods - storage in warehouse pending clearance - Effect of the importer's waiver of a show cause notice for re-determination of duty while goods remained in warehouse, and whether such waiver amounted to waiver of the mandatory notice for confiscation/penalty. - HELD THAT: - The Tribunal observed that the goods were re-assessed while stored in warehouse and that re-determination of duty was effected without issuance of a show cause notice because the importer had expressly requested waiver of the show cause notice for assessment purposes. That waiver, however, did not amount to a communication of intent to confiscate or to impose penalty as required by law. There is no indication on record that the importer was informed of any proposal to confiscate or penalise, nor that the importer requested that such notice (if given) be oral in the sense contemplated by the statute. The appeal did not demonstrate that the adjudicating authority's exercise of discretion in not confiscating or penalising was improper; nor did it contend that every revision in classification and valuation must necessarily be followed by confiscation or penalty. Thus the limited waiver for assessment could not be treated as satisfying the statutory prerequisite for confiscation or penalty. [Paras 5, 6, 8]

Waiver of a show cause notice for re-assessment did not operate as waiver of the mandatory notice required for confiscation or imposition of penalty; the adjudicating authority's approach was lawful.

Final Conclusion: The appeal is dismissed; in the absence of the mandatory notice informing the importer of a proposal to confiscate or penalise, confiscation under the relevant provision and imposition of penalty could not lawfully be ordered, and the adjudicating authority's decision to refrain from confiscation and penalty is upheld.

Re-determination of retail sale price / MRP for levy of Countervailing Duty (CVD) - absence of statutory machinery in Section 3(2) of the Customs Tariff Act, 1975 to re-determine MRP - applicability (or non-applicability) of Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 to CVD assessment under Section 3 of CTA - limitations on best judgment assessment under Rule 6 of the RSP Rules - invocation of extended period of limitation for assessment - power to impose interest, penalty, confiscation and redemption fine in relation to CVD under the Customs Tariff Act

Re-determination of retail sale price / MRP for levy of Countervailing Duty (CVD) - absence of statutory machinery in Section 3(2) of the Customs Tariff Act, 1975 to re-determine MRP - applicability (or non-applicability) of Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 to CVD assessment under Section 3 of CTA - Validity of the adjudicating authority's rejection of the MRP declared at import and redetermination of MRP for computing CVD under Section 3 of the Customs Tariff Act, 1975 - HELD THAT: - The Tribunal held that Section 3 of the Customs Tariff Act, 1975, though it deems value to be the RSP declared on the imported article (less abatement), does not itself provide the machinery for re-determination of RSP. Sub-section (4) of Section 4A of the Central Excise Act prescribes that RSP shall be ascertained in the prescribed manner, and the Central Excise Rules framed in 2008 (RSP Rules) supply that machinery. Those Rules cannot be read into Section 3(2) of the CTA to empower re-determination of RSP for imports where CTA contains no equivalent procedural provision. Applying precedents (including ABB Ltd. and subsequent Tribunal decisions and the Larger Bench reasoning), the Tribunal concluded that in absence of enabling provisions in CTA, the departmental re-determination of MRP for assessing CVD was without authority of law and therefore unsustainable. [Paras 23, 24, 26]

Redetermination of the MRP declared at import and the resulting differential CVD demand set aside as contrary to law

Limitations on best judgment assessment under Rule 6 of the RSP Rules - deductive methodology for composite supply (deduction of bag price from composite purchase order) - Sustainability of the methodology adopted by the Department (deducting negotiated purchase price of locally procured bags from the composite purchase order/quoted price) to arrive at redetermined MRP - HELD THAT: - The Tribunal examined the method applied by the adjudicating authority which deducted the negotiated purchase price of the backpacks (Rs.225) from the composite quoted/purchase order price to determine the laptop's MRP. It held that even if Rule 6 (best judgment) were applicable, the best judgment method must be exercised consistent with the principles and provisions of the valuation rules and cannot permit arbitrary or imaginative deductions. The departmental approach effectively re determined the MRP of the composite supply and the MRP of the bag contrary to the statutory scheme; no market enquiries or permissible valuation steps under the Rules were followed. Consequently the particular methodology adopted was arbitrary and not sustainable. [Paras 4, 27]

Methodology of redetermination (deducting the negotiated purchase price of bags from the composite price) rejected as arbitrary and not in accordance with valuation principles

Invocation of extended period of limitation for assessment - suppression versus interpretative dispute on valuation - Whether the Department could invoke the extended period of limitation for issuance of the Show Cause Notice dated 08.08.2017 - HELD THAT: - The Tribunal found that the Department had knowledge of the material facts well before issuance of the SCN: officers inspected and seized goods in July 2013, statements and documents regarding procurement of bags and composite supply to ELCOT were recorded in 2013. The controversy over determination of MRP in a composite supply context was essentially legal and interpretative rather than an instance of concealment of facts. Applying precedents (including Essel Propack and related decisions), the Tribunal concluded there were no grounds to invoke the extended limitation period and held the SCN time barred. [Paras 7, 29]

Extended period of limitation cannot be invoked; show cause notice held time barred

Power to impose interest, penalty, confiscation and redemption fine in relation to CVD under the Customs Tariff Act - borrowing of procedural and substantive provisions from the Customs Act - Validity of imposition of interest, penalties, confiscation and redemption fine in relation to the differential CVD demand under Section 3 of CTA - HELD THAT: - The Tribunal noted that the Customs Tariff Act contains limited machinery and borrows, 'so far as may be', provisions of the Customs Act for application to duties charged under Section 3. However, substantive provisions authorising recovery of interest, imposition of penalties, confiscation and redemption fines are not expressly borrowed. Relying on recent High Court and Supreme Court pronouncements (including Mahindra & Mahindra and its affirmation), and an earlier Tribunal decision, the Tribunal held that interest, penalty, confiscation and redemption fine could not be validly imposed in relation to CVD where CTA does not provide for such measures. Consequently, those consequential measures could not be sustained. [Paras 8, 30]

Interest, penalties, confiscation and redemption fine in relation to the differential CVD set aside as without authority of law

Final Conclusion: The adjudicating authority's order rejecting the declared MRP, redetermining MRP and demanding differential CVD (with interest) and imposing confiscation, redemption fine and penalties was set aside; the appeal is allowed with consequential relief. The departmental methodology for redetermination, the invocation of extended limitation and the imposition of interest, penalties and confiscation were held unsustainable.

Provisional release of seized goods - Prima facie correlation between seized goods and purchase documents - Requirement of a reasoned/speaking order and consideration of documentary evidence - Security conditions for provisional release (bond and bank guarantee) - Onus on person from whom seizure was effected to establish lawful purchase

Prima facie correlation between seized goods and purchase documents - Onus on person from whom seizure was effected to establish lawful purchase - Whether the appellant has prima facie established that the 4 gold bars seized on 11.10.2023 are the same gold bars purchased from M/s. HDFC Bank Ltd and therefore entitled to provisional release - HELD THAT: - The Tribunal found that the appellant purchased 14 one kilogramme gold bars from M/s. HDFC Bank Ltd and that a separate invoice covered the 4 bars in question (paragraphs 7, 7.1). A packing list issued by M/s. Brinks India Pvt. Ltd. recorded marks and numbers for the bars. The appellant produced a serially numbered series of challans, including Gate Pass No. RM/2023-24/KOL/222 dated 11.10.2023, and the bench verified preceding and succeeding challans (paragraph 8). The signatures on consecutive challans tallied and the challan described the bars by mark/numbers "4400493-96", which matched the packing list (paragraph 8). On this basis the Tribunal held that the appellant had prima facie established correlation between the seized bars and the bars purchased from HDFC (paragraph 8.1). The Tribunal expressly limited its finding to a prima facie conclusion for the purpose of provisional release and refrained from adjudicating the merits, noting that the burden to prove lawful purchase is for the person from whom seizure was effected and that final adjudication remains for the adjudicating authority (paragraphs 7.1, 9). [Paras 7, 8, 9]

Appellant has prima facie established correlation between the seized 4 gold bars and the bars purchased from M/s. HDFC Bank Ltd; entitlement to provisional release subject to conditions

Provisional release of seized goods - Security conditions for provisional release (bond and bank guarantee) - Requirement of a reasoned/speaking order and consideration of documentary evidence - Whether the seized gold bars should be released provisionally and on what conditions - HELD THAT: - Following the prima facie finding of correlation, the Tribunal recalled its earlier order dated 20.02.2024 and considered the High Court's direction that documentary evidence be examined and a speaking order rendered (paragraphs 2.1, 3). The Tribunal concluded that provisional release was appropriate in the interest of justice but subject to safeguards for the revenue. The conditions previously prescribed - execution of a bond for the full value of the seized gold supported by a Bank Guarantee to the extent of 25% of the value - were found reasonable and were reiterated as the terms for release (paragraphs 2.1, 9). The Tribunal clarified that this provisional order would not prejudice the normal adjudication proceedings on merit which remain open to the revenue (paragraph 2.1, 9). [Paras 2, 3, 9]

Seized gold bars ordered released provisionally on condition that appellant furnishes a bond for full value supported by a bank guarantee of 25% of value; provisional release without expressing any opinion on merits

Final Conclusion: The Tribunal, after fresh hearing and consideration of documents as directed by the High Court, held that the appellant has prima facie established correlation between the seized 4 gold bars and the bars purchased from M/s. HDFC Bank Ltd and ordered their provisional release on production of a bond for the full value supported by a bank guarantee for 25% of the value; the question of merits is reserved for adjudication by the competent authority.

Certificate of Origin - Retroactive verification under Rule 9 of Customs Tariff (Determination of Origin of Goods under the Preferential Trade Agreement between the Government of Republic of India and Malaysia) Rules, 2011 - Direct consignment - Recognition of issuing authority's certificate - Antidumping duty liability for mis declared country of origin - Penalty under Sections 114A and 114AA of the Customs Act, 1962 - Confiscation under Section 111(m) of the Customs Act, 1962

Certificate of Origin - Retroactive verification under Rule 9 of Customs Tariff (Determination of Origin of Goods under the Preferential Trade Agreement between the Government of Republic of India and Malaysia) Rules, 2011 - Recognition of issuing authority's certificate - Validity of the certificate of origin issued by the Malaysian authority and the requirement of Rule 9 verification before discarding such certificate - HELD THAT: - The Tribunal held that the certificate of origin issued by the designated Malaysian authority on its face declared the goods to be produced in Malaysia and was not shown to be false, forged or cancelled. Where reasonable doubt as to authenticity arises, the prescribed procedure under Rule 9 of the Malaysia preferential origin Rules requires retroactive verification with the issuing authority and examination of conditions of direct consignment. The investigating/customs authorities had not complied with that Rule; instead they relied on bill of lading and statements to infer China as origin. Consistent precedents were examined holding that, absent compliance with the verification procedure or cancellation/revocation by the issuing authority, an origin certificate issued by the competent foreign authority cannot be discarded by domestic authorities. Consequently, merely relying on indigenous materials without pursuing Rule 9 verification is impermissible and vitiates the proceeding. [Paras 4, 5]

The certificate of origin issued by Malaysian authority could not be rejected without carrying out the Rule 9 verification; the proceeding was vitiated for failure to follow that procedure.

Antidumping duty liability for mis declared country of origin - Penalty under Sections 114A and 114AA of the Customs Act, 1962 - Confiscation under Section 111(m) of the Customs Act, 1962 - Sustainability of demand for anti dumping/differential duty, interest, appropriation and penalty where origin certificate was not subjected to required verification - HELD THAT: - The Tribunal found that the adjudicating authorities' demand for anti dumping duty, differential customs duty, interest and imposition of penalties rested on the conclusion that the goods were of Chinese origin, a conclusion drawn without following the mandatory verification under Rule 9 and without proof that the Malaysian certificate was fraudulent or cancelled. Reliance solely on bill of lading and statements, in the face of an unchallenged certificate of origin issued by the competent foreign authority, was held insufficient to sustain confiscation, duty demand or penalties. Precedents were cited to the effect that authorities cannot supplant or sit in judgment over a certificate issued by the designated foreign authority unless the certificate is shown to be invalid or the prescribed inter authority verification and cancellation procedures are invoked. [Paras 4, 5]

The demand for anti dumping/differential duty, interest and the penalties and confiscation based on the alleged China origin were held unsustainable; the impugned order was set aside.

Final Conclusion: The impugned order of the Commissioner (Appeals) confirming duty, interest, appropriation and penalties was set aside for failure to comply with the Rule 9 verification procedure in relation to the Malaysian certificate of origin; appeal allowed with consequential relief in accordance with law.

Eligibility for concessional import duty under exemption notification - threshold eligibility vis-a -vis continuing eligibility - post-importation conditions and 'lock-in' period - confiscation for non-compliance with post-importation conditions under section 111(o) of Customs Act, 1962 - recovery of duty and interest for breach of notification conditions - restoration of seized goods and setting aside of confiscation and adjudication - remand to proper officer for determination of entitlement to depreciation on termination

Eligibility for concessional import duty under exemption notification - threshold eligibility vis-a -vis continuing eligibility - Threshold entitlement to the benefit of the exemption notification cannot be denied retrospectively by reason of subsequent termination of the contract or failure to deploy the goods. - HELD THAT: - The Tribunal held that entitlement at the threshold arises from compliance with the prescribed pre import conditions (contractual engagement with the designated authority) and that such threshold eligibility is distinct from the continuing obligation to retain and utilise the goods during the lock in period. The adjudicating authority had not controverted the genuineness of the contract evidencing entitlement at import; subsequent breakdown of the engagement does not, by itself, retrospectively disentitle the importer from the concession earned at the threshold. The scheme of the notification contemplates separate enforcement of threshold eligibility and post import conditions, and, absent evidence of diversion or use for ineligible activity, threshold entitlement must be presumed to have been complied with. [Paras 6, 7, 12]

Threshold eligibility was held to be satisfied and could not be denied merely because the contract later terminated or the imported goods were not deployed on the intended project.

Post-importation conditions and 'lock-in' period - confiscation for non-compliance with post-importation conditions under section 111(o) of Customs Act, 1962 - restoration of seized goods and setting aside of confiscation and adjudication - Seizure, confiscation, and recovery of duty based on non deployment were set aside where there was no evidence of diversion and the seizure prematurely truncated the lock in period. - HELD THAT: - The Tribunal found that while the goods were admittedly not used on the intended project, there was no finding that the goods were diverted for ineligible use. The customs authorities had seized the goods during the lock in period, effectively truncating the period of retention by administrative action; that forced debarment weighed against sustaining confiscation and recovery. In absence of proof of diversion or use for ineligible activity, the adjudicating authority's recovery of duty, confiscation under section 111(o) and related show cause proceedings could not be sustained. Consequently the seizure, confiscation, recovery and consequential detriments were set aside and the goods were restored to the importer for compliance with the notification. [Paras 8, 9]

Recovery of duty, confiscation and consequential detriments were set aside; the seized goods were restored to the appellant for compliance with the post importation condition.

Recovery of duty and interest for breach of notification conditions - remand to proper officer for determination of entitlement to depreciation on termination - Determination of entitlement to depreciation and any liability on formal termination is to be made by the proper officer; quantification and assessment on termination are left to the jurisdictional customs authority. - HELD THAT: - The Tribunal directed that, if the importer is unable to comply with the post importation condition owing to changed circumstances and seeks termination of the deferment under the notification, the jurisdictional customs authority (the proper officer) shall determine eligibility for depreciation and assess any liability arising on such termination. The order therefore removes the adjudicating authority's earlier computation and leaves assessment of depreciation and consequential duty/interest to the competent officer upon any formal termination procedure under the notification. [Paras 9]

Matters of entitlement to depreciation and assessment of liability on termination are remitted to the proper officer for determination.

Final Conclusion: The Tribunal concluded that threshold entitlement to the exemption could not be retrospectively denied by subsequent contract termination; the seizure, confiscation and recovery were set aside and the goods restored for compliance with the notification; and determination of depreciation entitlement and any liability on termination is remitted to the proper officer for assessment.

Confiscation under Section 111(d) of the Customs Act, 1962 - prohibited goods - smuggling - red channel declaration requirement - bona fide baggage - penalty for knowingly dealing with goods liable to confiscation under Section 112(b) - penalty for failure to declare under Section 114AA

Confiscation under Section 111(d) of the Customs Act, 1962 - prohibited goods - smuggling - red channel declaration requirement - bona fide baggage - Imported gold bars carried by the appellant are liable to absolute confiscation. - HELD THAT: - The Tribunal accepted the material on record, including voluntary statements, travel-agent records, call details and seized documents, showing that the appellant carried undeclared gold bars into India at the direction of another person and evaded the Red Channel. The appellant admitted omission to declare the baggage contents and the goods were concealed in passenger baggage for onward delivery to third parties. Violation of the conditions and restrictions applicable to import of gold converts the consignment into 'prohibited goods' and, falling within the statutory definition of 'smuggling', renders the goods liable to confiscation. The Tribunal accordingly concurred with the findings of the adjudicating authority and the Commissioner (Appeals) that absolute confiscation under Section 111(d) was justified on these facts. [Paras 3, 4]

Confiscation of the five gold bars affirmed.

Penalty for knowingly dealing with goods liable to confiscation under Section 112(b) - penalty for failure to declare under Section 114AA - Appellant is liable to penalties under Section 112(b) and Section 114AA of the Customs Act, 1962. - HELD THAT: - The Tribunal found from the record that the appellant knowingly concerned himself with goods which he knew were liable to confiscation and therefore attracted penal liability under Section 112(b). Further, by not declaring the gold in the prescribed manner on arrival and by concealing the same, the appellant breached the statutory declaration requirement, rendering him liable to penalty under Section 114AA. The Tribunal endorsed the conclusions reached by the lower authorities on these statutory penal provisions. [Paras 5]

Penalties under Section 112(b) and Section 114AA upheld.

Final Conclusion: The appeal is dismissed; the appellate order of the Commissioner (Customs Appeals) confirming confiscation and penalties is upheld.

Export obligation - retrospective extension of permission - premature adjudication pending grant of extension - confiscation and redemption fine - demand of duty and interest - penalty under Section 112(a) of the Customs Act, 1962

Export obligation - retrospective extension of permission - premature adjudication pending grant of extension - demand of duty and interest - confiscation and redemption fine - penalty under Section 112(a) of the Customs Act, 1962 - Whether the adjudicating authority's confirmation of duty, confiscation, redemption fine and penalty is sustainable in view of the Development Commissioner's retrospective extension of the unit's period to fulfil export obligation. - HELD THAT: - The appellant obtained STPI permission and commenced commercial production on 5 May 2003 but did not fulfil the export obligation within the initial five-year period. The appellant applied to the Development Commissioner for extension, and the Development Commissioner granted an extension retrospectively by order dated 12.03.2010, giving the unit a further five years from 5 May 2008 to meet its export obligations. The adjudicating authority passed the impugned order on 30.04.2010, confirming demands, confiscation and imposing penalty without awaiting the Development Commissioner's decision. Because the extension was granted with retrospective effect before the appellate determination, the Tribunal held the departmental adjudication to be premature and the confirmed demands and confiscation could not be sustained. Consequentially, redemption fine and penalty tied to the unsustainable confiscation and demand also fell away. [Paras 10, 11]

Impugned order set aside; appeal allowed and the confirmed demand, confiscation, redemption fine and penalty quashed as not sustainable in view of the retrospective extension.

Final Conclusion: The appeal is allowed; the Tribunal set aside the adjudicating authority's order of 30.04.2010 as premature in light of the retrospective extension granted by the Development Commissioner, and consequently the demands, confiscation, redemption fine and penalty confirmed therein were quashed.

Classification of CKD goods under GIR Rule 2(a) - Essential character test for incomplete or unassembled articles - Customs valuation procedure and CVR-2007 - Principles of natural justice in valuation and rejection of transaction value - Confiscation and penalty for mis-declaration under the Customs Act, 1962

Classification of CKD goods under GIR Rule 2(a) - Essential character test for incomplete or unassembled articles - Whether the imported consignments of parts are to be classified as complete e-rickshaws in CKD condition or as spare parts - HELD THAT: - The Tribunal examined whether the imported items, though comprising motor, axle, chassis, tyre and transmission, possessed the "essential character" of a complete e-rickshaw so as to be classifiable as a CKD vehicle under GIR 2(a). It found that the essential characteristic of the three wheeled electric vehicle, as reflected in tariff descriptions and explanatory notes, requires propulsion by battery powered electric motors and a T shaped vehicle mounted on a chassis; the consignments lacked batteries and therefore could not perform the basic function of propulsion. The adjudicating authority's literal application of GIR 2(a) to classify the goods as complete vehicles was held to be incorrect and the appellate authority's purposive interpretation-that the imported parts did not amount to a fully finished e rickshaw-was upheld. [Paras 6]

The goods are not complete e rickshaws in CKD condition and are correctly held to be spare parts; classification as finished e rickshaws is not sustainable.

Customs valuation procedure and CVR-2007 - Principles of natural justice in valuation and rejection of transaction value - Whether the assessing authority validly rejected the declared transaction value and enhanced the assessable value without following valuation rules and procedures - HELD THAT: - The Tribunal agreed with the Commissioner (Appeals) that the assessing officer rejected the respondent's declared transaction value without application of the Customs Valuation Rules, 2007 and without recording the requisite reasons or providing evidence to the respondent. The enhancement was not shown to have proceeded in accordance with the statutory procedure or CVR 2007 and deprived the importer of the opportunity to meet the case against the declared value. Consequently, the enhancement was held to be unsupported and violative of principles of natural justice. [Paras 2, 6]

The enhancement of value is unsustainable for failure to follow CVR 2007 and principles of natural justice; the declared transaction value cannot be rejected on the basis shown by the lower authority.

Confiscation and penalty for mis-declaration under the Customs Act, 1962 - Whether confiscation, redemption fine and penalty for alleged mis declaration were justified - HELD THAT: - Confiscation and penal consequences were predicated on mis declaration of description, classification and value. Having held that the goods did not qualify as complete e rickshaws and that the value enhancement was invalid for want of due process, the Tribunal concluded that mis declaration was not established. In absence of proved mis declaration on the material before it, the appellate authority rightly set aside the confiscation, redemption fine and penalty imposed under the Customs Act. [Paras 2, 6]

Confiscation, redemption fine and penalty imposed are not sustainable and were correctly set aside by the Commissioner (Appeals).

Final Conclusion: The appeal by the Department is rejected: the imported items are spare parts not classifiable as complete e rickshaws in CKD condition; the assessment value enhancement was invalid for non compliance with CVR 2007 and natural justice; and confiscation and penalties based on the alleged mis declaration are therefore not sustainable.

Onus of proof - foreign origin of goods - smuggling - confiscation under the Customs Act - penalty under Section 112(a) and 112(b) of the Customs Act - evidentiary value of ARDF report

Foreign origin of goods - evidentiary value of ARDF report - onus of proof - Whether the Revenue proved that the seized betel nut and black pepper were of foreign origin and smuggled into India - HELD THAT: - The Tribunal found that the material relied upon by the Revenue did not conclusively establish foreign origin; the ARDF, Mangalore report expressed an opinion that the goods might be of Indonesian origin but did not amount to conclusive proof. The court emphasised that the burden lay on the Revenue to establish foreign origin and clandestine importation through cogent and corroborative evidence. The appellants produced GST-related documentation showing source of procurement and payment of GST, and therefore the Revenue failed to discharge the onus to show that the goods were smuggled and of foreign origin. [Paras 6, 7]

Revenue failed to establish that the goods were of foreign origin or smuggled; the onus was not discharged.

Penalty under Section 112(a) and 112(b) of the Customs Act - confiscation under the Customs Act - Whether the penalties imposed on the appellants were sustainable - HELD THAT: - Having held that the Revenue did not prove the smuggled nature or foreign origin of the seized goods and that the appellants produced evidence of lawful procurement with GST paid, the Tribunal concluded that the foundational facts necessary to sustain confiscation or to impose penalties under the cited provisions were not established. In consequence, penalties predicated on the allegation of smuggling could not be sustained. [Paras 7, 8, 9]

Penalties imposed on the appellants are not imposable and are set aside; appeals are allowed.

Final Conclusion: The Tribunal allowed the appeals, holding that the Revenue failed to prove foreign origin and smuggling of the goods and consequently set aside the penalties imposed on the appellants.

Resubmission of resolution plan to the Committee of Creditors - consideration of claims in the corporate insolvency resolution process - status and treatment of a secured creditor in the resolution plan - compliance of a resolution plan with Section 30(2) and Regulations 37 & 38 of the CIRP Regulations - role of the Adjudicating Authority in remitting a resolution plan for re-submission - inclusion of belated or record-reflected homebuyer claims in the Information Memorandum

Resubmission of resolution plan to the Committee of Creditors - consideration of claims in the corporate insolvency resolution process - inclusion of belated or record-reflected homebuyer claims in the Information Memorandum - Effect of the Adjudicating Authority's order dated 05.03.2024 on the ability of appellants to seek consideration of their pending claims and the procedure for resubmission of the Resolution Plan. - HELD THAT: - The Tribunal recorded that the Adjudicating Authority's order sending the Resolution Plan back to the CoC for resubmission meant that the earlier approval by the CoC dated 03.03.2020 no longer operated and that the SRA would have to resubmit the Plan. However, the Tribunal declined to decide the merits of the pending IAs filed by various claimants, noting that those Applications (including applications for acceptance of belated claims) remained pending before the Adjudicating Authority. In consequence, the Tribunal held that resubmission of the Plan by the SRA should await disposal of those Applications so that the Adjudicating Authority may determine whether such claims are to be included in the Information Memorandum and/or in the resubmitted Plan. The Tribunal expressly refrained from expressing any opinion on the merits of the pending claims and directed that the Adjudicating Authority consider and dispose of the listed Applications at an early date. The SRA/RP were directed to incorporate the Adjudicating Authority's directions when resubmitting the Plan to the CoC. [Paras 13, 15, 16, 21]

The order dated 05.03.2024 is not interfered with; the Adjudicating Authority shall consider and dispose of the Applications listed in that order at an early date, and the SRA shall await those decisions before resubmitting the Resolution Plan to the CoC.

Status and treatment of a secured creditor in the resolution plan - compliance of a resolution plan with Section 30(2) and Regulations 37 & 38 of the CIRP Regulations - role of the Adjudicating Authority in remitting a resolution plan for re-submission - Effect of the Supreme Court's findings in Greater Noida on the validity of the Resolution Plan and the obligation to treat NOIDA as a secured creditor in the resubmitted Plan. - HELD THAT: - The Tribunal noted the Supreme Court's conclusion that the impugned Resolution Plan did not satisfy the requirements of Section 30(2) read with Regulations 37 and 38 because, inter alia, the plan failed to acknowledge and correctly classify the Greater Noida Authority's claim and did not demonstrate necessary approvals and feasibility where third-party statutory land was to be utilised. The Adjudicating Authority relied on paragraphs 54(b) and (c) of the Supreme Court's judgment and directed that the Plan be sent back to the CoC for resubmission after satisfying the parameters set out by the Code. The Tribunal observed that there was no doubt that the claim of NOIDA must be considered as a secured creditor pursuant to the Supreme Court's findings and that the resubmitted Plan must address those deficiencies identified by the Supreme Court. [Paras 11, 12, 13]

The Supreme Court's findings render the earlier approval ineffectual for present purposes; the Plan is to be resubmitted to the CoC addressing the Supreme Court's observations, including treating NOIDA as a secured creditor.

Final Conclusion: All appeals are disposed of: the NCLT order dated 05.03.2024 is upheld; the Adjudicating Authority is directed to decide the listed pending Applications at an early date; the SRA/RP shall await those decisions and incorporate the Adjudicating Authority's directions when resubmitting the Resolution Plan to the CoC; no order as to costs.

Personal guarantor liability after approval of a resolution plan - effect of assignment of corporate debtor's debt on guarantees excluded from assignment - enforcement of excluded guarantees by financial creditor - admission of proceedings under Section 95 of the Insolvency and Bankruptcy Code, 2016

Personal guarantor liability after approval of a resolution plan - effect of assignment of corporate debtor's debt on guarantees excluded from assignment - admission of proceedings under Section 95 of the Insolvency and Bankruptcy Code, 2016 - Validity of admission of Section 95 applications where the resolution plan assigned the corporate debtor's debt to an acquisition SPV but expressly excluded guarantees from assignment - HELD THAT: - The Tribunal examined whether approval of a resolution plan and assignment of the corporate debtor's debt to the Successful Resolution Applicant (Acquisition SPV) operated to discharge the personal guarantors where the plan and subsequent assignment expressly excluded guarantees. The approved Resolution Plan (Clause 36/7.1) and the assignment agreement excluded guarantees from the assignment, leaving the guarantees with the secured financial creditors. The Adjudicating Authority found (as recorded in the impugned order) that although the entire debt was acquired by the SRA, the guarantees were not assigned and therefore the personal guarantors were not discharged. The Tribunal relied on the binding precedent of the Supreme Court in Lalit Kumar Jain, which holds that approval of a resolution plan does not ipso facto discharge liabilities of personal guarantors, and on this basis held that the Financial Creditor retained the right to invoke excluded guarantees. The Tribunal considered but did not accept reliance on the Delhi High Court's prima facie observations in Vineet Saraf, which left substantive adjudication to the competent tribunal, and found the Australian decision (Hutchens) inapplicable to the statutory scheme under the IBC. The Adjudicating Authority also recorded that the Section 95 petitions were within limitation. Applying these legal principles to the admitted facts - the text of the Resolution Plan excluding guarantees, the assignment to the SPV, and the RP's clarification on amounts received - the Tribunal found no error in admission of the Section 95 applications. [Paras 17, 18]

The admission of the Section 95 applications was upheld and the appeals were dismissed.

Final Conclusion: The Tribunal affirmed the Adjudicating Authority's admission of the Section 95 applications, holding that approval of the Resolution Plan and assignment of the corporate debtor's debt did not discharge personal guarantors where the guarantees were expressly excluded from assignment; the appeals are dismissed.

Scheduled offence - proceeds of crime - offence under Section 3 of the PMLA - complaint under Section 44(1)(b) of the PMLA - Special Court's power under Sections 200 to 204 of the CrPC - conspiracy under Section 120B IPC as scheduled offence

Scheduled offence - conspiracy under Section 120B IPC as scheduled offence - Whether the offences alleged in the complaint constitute scheduled offences within the meaning of the PMLA - HELD THAT: - The Court recorded that, apart from an alleged offence under Section 120B IPC, the other offences relied upon in the complaint are not scheduled offences. Following Pavana Dibbur, Section 120B becomes a scheduled offence only if the conspiracy alleged is to commit an offence that is specifically included in the Schedule to the PMLA. Since the complaint does not allege a conspiracy to commit any offence that is included in the Schedule, the offences mentioned in the complaint do not qualify as scheduled offences under clause (y) of sub section (1) of Section 2 of the PMLA. [Paras 2, 3, 4]

The offences in the complaint are not scheduled offences under the PMLA.

Proceeds of crime - offence under Section 3 of the PMLA - Whether, in the absence of a scheduled offence, there can be proceeds of crime and therefore an offence under Section 3 of the PMLA - HELD THAT: - Relying on the principle that the existence of proceeds of crime is a condition precedent for the applicability of Section 3 of the PMLA, the Court held that if no scheduled offence is made out, there cannot be proceeds of crime within the meaning of clause (u) of sub section (1) of Section 2. Consequently, an offence under Section 3 of the PMLA is not made out where the foundational scheduled offence is absent. [Paras 4]

In the absence of a scheduled offence, there are no proceeds of crime and Section 3 of the PMLA is not attracted.

Complaint under Section 44(1)(b) of the PMLA - Special Court's power under Sections 200 to 204 of the CrPC - Whether the Special Court must apply the CrPC provisions (Sections 200-204) to a complaint under Section 44(1)(b) of the PMLA and whether the complaint should be quashed - HELD THAT: - The Court noted that, subject to specific deviations in the PMLA, Section 46(1) renders the CrPC applicable to proceedings before the Special Court and therefore the court must apply its mind under Sections 200-204 CrPC to a complaint filed under Section 44(1)(b). However, because the complaint does not disclose any scheduled offence and hence no offence under Section 3 of the PMLA, requiring the Special Court to proceed with the CrPC mandated prima facie scrutiny would be a formal exercise of no consequence. Applying these conclusions, the Court quashed the complaint insofar as it related to certain petitioners and disposed of the connected writ petitions accordingly. [Paras 6, 7, 9]

While the Special Court must ordinarily apply Sections 200-204 CrPC to such complaints, the present complaint is quashed as it does not disclose a scheduled offence or an offence under Section 3 of the PMLA.

Final Conclusion: The Court quashed the complaint based on ECIR/RPZO/11/2022 insofar as it related to specified petitioners, holding that the offences alleged are not scheduled offences, that no proceeds of crime exist and therefore Section 3 of the PMLA is not attracted; the Special Court would normally apply Sections 200-204 CrPC to such complaints but, in the present circumstances, proceeding further would be futile. Interim protection granted earlier is continued for three weeks.

Adjudicatory powers of the Assessing Authority - powers of the Appellate Authority - clarification in the nature of adjudication - stay of operation of administrative circular

Adjudicatory powers of the Assessing Authority - powers of the Appellate Authority - clarification in the nature of adjudication - Whether Item No. 2 of the Circular dated 27.10.2023 impinges upon the adjudicatory powers of the Assessing Authority and the powers of the Appellate Authority, thereby warranting interim relief. - HELD THAT: - Learned counsel submitted that the impugned clarification (Item No. 2) seeks to remove or curtail the adjudicatory role of the Assessing Authority and directly affects the jurisdiction and function of the Appellate Authority, negating the purpose of statutory appeals. Reliance was placed on the decision in Union of India v. Karvy Stock Broking Ltd. and on an interim order of the High Court of Delhi in Sterlite Power Transmission Ltd. The Court, while recording those submissions and noting the contention that the clarification is in the nature of adjudication and directly impinges upon appellate jurisdiction, granted interim protection. Consequential operation and effect of Item No. 2 of the Circular dated 27.10.2023 are stayed so that the Appellate Authority is free to decide the petitioner's appeal on its merits without being influenced by the Clarification. [Paras 1, 2, 5]

Operation and effect of Item No. 2 of the Circular dated 27.10.2023 shall remain stayed; the Appellate Authority shall decide the petitioner's case uninfluenced by the Clarification.

Final Conclusion: Interim stay granted as to Item No. 2 of the impugned Circular dated 27.10.2023; Appellate Authority shall be free to decide the petitioner's appeal on merits without being influenced by that Clarification.

Exemption of legal services to advocates under Notification No. 25/2012 ST - reverse charge mechanism - liability of recipient for services of individual advocates or firm of advocates - liability for services of Senior Advocates rests on recipient - entertainability of writ petition where proceedings are wholly without jurisdiction despite existence of alternate statutory remedy

Exemption of legal services to advocates under Notification No. 25/2012 ST - reverse charge mechanism - liability of recipient for services of individual advocates or firm of advocates - Validity of show cause notices/orders seeking service tax from practicing advocates or their firms - HELD THAT: - The Court held that services rendered by individual advocates or partnership firms of advocates fall within the exemption carved out by Notification No. 25/2012 ST dated 20.06.2012 and, where such services fall outside that exemption, Notification No. 30/2012 ST makes the recipient liable under the reverse charge mechanism. The Service Tax Rules identify the person liable for payment; for ordinary advocates or advocate firms the law and the notifications operate so that the recipient rather than the service provider bears the liability. Applying that legal position to the factual material and the memos filed by the petitioners (stating that their income is from legal practice except in one instance from sale of books, which is sale of goods and not a taxable service), the impugned notices and orders demanding service tax from the advocates are without jurisdiction. The Court therefore set aside or quashed the specified show cause notices, orders in original and recovery notices against the petitioners on this ground. [Paras 11, 12, 13, 16, 17]

Impugned notices, orders in original and recovery notices in the petitions are without jurisdiction and are quashed or set aside.

Liability for services of Senior Advocates rests on recipient - Whether Senior Advocates are personally liable to pay service tax - HELD THAT: - The Court noted that Rule 2 of the Service Tax Rules and the relevant clause dealing with senior advocates (Clause (DD)) make clear that where services are provided by a senior advocate by way of representational services to a business entity, the recipient (the business entity litigant) is the person liable to pay service tax. Consequently, a Senior Advocate engaged to provide such representational services does not bear the obligation to pay service tax; liability is on the recipient under the reverse charge mechanism. [Paras 9, 10, 12]

Senior Advocates are not personally liable; the recipient of representational services is liable to pay service tax.

Entertainability of writ petition where proceedings are wholly without jurisdiction despite existence of alternate statutory remedy - Maintainability of writ petitions challenging tax proceedings when statutory remedy exists - HELD THAT: - The Court observed that the existence of an alternative statutory remedy is not an absolute bar to writ jurisdiction. Where the impugned proceedings are wholly without jurisdiction, a High Court may entertain a writ petition despite availability of alternative remedies. Applying this principle, and having found the impugned proceedings to be without jurisdiction on the legal position of exemption and reverse charge, the Court held that relegation to statutory remedies would be futile and refused to dismiss the writs on the ground of alternate remedy. [Paras 12, 13, 14, 17]

Writ petitions are maintainable and entertainable notwithstanding alternative statutory remedies because the impugned proceedings are wholly without jurisdiction.

Final Conclusion: The High Court quashed or set aside the specified show cause notices, orders in original and recovery notices against the petitioners on the ground that services of practising advocates (and where applicable their firms) are covered by the exemption or attract liability on the recipient under the reverse charge mechanism; the writ petitions were entertained as the proceedings were held to be wholly without jurisdiction.

C&F agent service - valuation of services - includability of reimbursable expenses in assessable value - reimbursement versus pure agent doctrine - pre-determined/lump sum reimbursements treated as service consideration - extended period of limitation and requirement of mens rea for invocation - penalty for suppression-necessity of positive evidence of intention to evade

C&F agent service - includability of reimbursable expenses in assessable value - reimbursement versus pure agent doctrine - pre-determined/lump sum reimbursements treated as service consideration - Reimbursable amounts paid to the appellant pursuant to the work order are includable in the gross value for levy of Service Tax on C&F agent service. - HELD THAT: - The work order shows reimbursable amounts were fixed at specified rates rather than varying with actual expenditure. Reimbursement on an actual basis is inconsistent with a pre-determined lump sum; where amounts are fixed and recoverable as part of the agreed charge they operate as remuneration for the service rather than true reimbursements paid on behalf of the principal. The Tribunal applied the Larger Bench reasoning in M/s. Sri Bhagavathy Traders that only amounts genuinely paid on behalf of the service recipient, where the recipient was under the obligation to pay the third party, qualify as reimbursements excludable from assessable value. Given the contractual scope of work and the fixed pre-determined reimbursements, the sums collected for activities like loading/unloading and godown charges are part of the consideration for the C&F service and therefore includable in the assessable value. [Paras 12]

The reimbursable expenses received by the appellant are not pure reimbursements and are includable in the assessable value for Service Tax on C&F agent service.

Extended period of limitation and requirement of mens rea for invocation - valuation of services - Demand by invoking the extended period of limitation is unsustainable in absence of positive evidence of intent to evade; demand restricted to the normal period of limitation. - HELD THAT: - Although Service Tax on C&F agent service was a newly introduced levy and there was confusion on valuation, the record contains no positive evidence establishing wilful mis statement or suppression with intent to evade tax. The Show Cause Notice invoked the extended period, but invocation of extended limitation requires proof of deliberate suppression or intent. The appellant promptly registered and paid tax on commission and filed returns upon being informed of liability. In absence of evidence of mens rea, the Tribunal held the extended period inapplicable and confined the demand to the normal limitation period, permitting appropriation of any Service Tax already paid for that normal period. [Paras 13]

Extended period of limitation cannot be invoked; demand sustained only for the normal period of limitation.

Penalty for suppression-necessity of positive evidence of intention to evade - Penalties imposed under the impugned order are set aside as there is no established suppression with intent to evade tax. - HELD THAT: - Penalty liability under the relevant provisions depends on a finding of suppression or wilful mis statement with intent to evade payment. The Tribunal found no positive evidence on record proving such mens rea. Since the demand itself has been confined to the normal limitation period and intent to evade was not established, the imposition of penalty is not sustainable in the facts and circumstances of the case. [Paras 14]

Penalty imposed on the appellant is set aside.

Final Conclusion: The Tribunal confirms the Service Tax demand on C&F agent services for the normal period of limitation, holding that fixed reimbursable charges are includable in the assessable value; the extended period invocation and the penalties are set aside for lack of evidence of intentional suppression, and any Service Tax already paid for the normal period may be appropriated against the liability.

Services by way of construction, erection, commissioning, or installation of original works - exemption under Notification No.25/2012-ST (Serial No.14) - definition of 'original works' for service tax exemption - original works means all new constructions - beneficiary's certification of work as new construction

Services by way of construction, erection, commissioning, or installation of original works - original works means all new constructions - beneficiary's certification of work as new construction - exemption under Notification No.25/2012-ST (Serial No.14) - Whether the appellant's services in construction of new railway lines are covered by the exemption in Serial No.14 of Notification No.25/2012-ST dated 20.06.2012 - HELD THAT: - The Tribunal examined Serial No.14 of Notification No.25/2012-ST and the Explanation to Rule 2A(ii) which defines 'original works' to include 'all new constructions'. The appellant produced certificates issued by the Railways certifying that the work undertaken constituted construction of new railway lines. Distinguishing the Tribunal's earlier decision in PCM Cement Concrete Pvt. Ltd. (where the services were welding, joining and ancillary works held not to be 'original works'), the present activity was certified by the beneficiary as new construction and thus falls within the statutory definition of 'original works'. On that basis the appellant is eligible for the exemption under Serial No.14 and is not liable to pay service tax or attract penalty for the services involved. [Paras 9, 10]

The appellant's services in construction of new railway lines are covered by the exemption in Serial No.14 of Notification No.25/2012-ST and the impugned demand and penalty are set aside.

Final Conclusion: The appeal is allowed; the appellant is entitled to exemption under Serial No.14 of Notification No.25/2012-ST for construction of new railway lines certified by the Railways, no service tax or penalty is payable and the impugned order is set aside with consequential reliefs, if any.

Meaning of "gross amount" under Works Contract (Composition Scheme) - Non inclusion of free of cost supplies in gross value for works contracts executed before 07.07.2009 - Prospective operation of Explanation to Rule 3(1) of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 - CBEC Circular No.150/1/2012 S.T. clarifying scope of Explanation to Rule 3(1) - Liability to pay service tax on composition basis for works contract - Waiver of penalty where demand is set aside

Meaning of "gross amount" under Works Contract (Composition Scheme) - Non inclusion of free of cost supplies in gross value for works contracts executed before 07.07.2009 - CBEC Circular No.150/1/2012 S.T. clarifying scope of Explanation to Rule 3(1) - Value of goods supplied under Contract I is not includible in the gross value of Contract II for determination of service tax under the Works Contract composition scheme. - HELD THAT: - The Tribunal applied CBEC Circular No.150/1/2012 S.T., which explains that the Explanation to Rule 3(1) (added with effect from 07.07.2009) operates prospectively and does not require inclusion of free of cost supplies in the gross amount where execution of the works contract commenced, or payments (other than by credit/debit) were made, on or before 07.07.2009. The contracts between the appellant and the service recipients were entered before 07.07.2009 and execution/invoicing and payments in respect of the contracts had commenced prior to that date. On that legal foundation and by analogy to earlier Tribunal decisions dealing with identical facts, the Tribunal held that the value of goods under the supply contract (Contract I) cannot be added to the gross value of the works contract (Contract II) for charging service tax under the composition scheme, and that the appellant properly discharged service tax liability on the gross value of Contract II alone. [Paras 7]

Demand for service tax by including the value of Contract I in the gross value of Contract II is set aside.

Waiver of penalty where demand is set aside - Penalties levied on the appellants are not sustainable once the impugned demand is set aside. - HELD THAT: - Having quashed the demand for service tax on the ground that the value of the supply contract is not includible in the gross value of the works contract for the period in question, the Tribunal concluded that penalties predicated on that demand cannot be sustained. Consequent to setting aside the tax demand, the penalties imposed on the appellants are also waived. [Paras 8]

Penalties imposed on the appellants are set aside.

Final Conclusion: Appeals allowed; impugned demand for service tax (for June 2013 to March 2016) set aside because the Explanation to Rule 3(1) does not apply to contracts executed and payments made on or before 07.07.2009, and consequential penalties are waived.

Exemption for construction of roads and bridges for public use - Exemption for sub-contractor services in works contracts - Negative list - trading of goods under clause (e) of Section 66D - Reliance on Form 26AS for initiation of demand - Extended period of limitation and suppression - Requirement of registration, late fee and penalty where no tax liability exists

Exemption for construction of roads and bridges for public use - Exemption for sub-contractor services in works contracts - Whether the services rendered by the appellant in construction of roads and bridges for the use of public, including services rendered as a sub-contractor, were exempt from service tax - HELD THAT: - The Tribunal found that the appellant rendered services to the Border Roads Organization by way of construction of roads and bridges for public use during October 2014 to June 2017. Those services fall within the exemption under Sl. No. 13(a) of Exemption Notification No. 25/2012 - ST. Further, services rendered by the appellant as a sub-contractor for construction of roads were covered by Sl. No. 29(h) read with Sl. No. 13(a) of the same Notification. Applying these exemption provisions to the material facts, the Tribunal concluded that no service tax was payable on the said services and therefore the demand confirmed in the impugned order was unsustainable on merits. [Paras 6]

The demand of service tax insofar as it relates to construction services and sub-contractor services is set aside.

Negative list - trading of goods under clause (e) of Section 66D - Whether supplies of goods by the appellant to BRO constituted taxable services or were trading of goods covered by the negative list - HELD THAT: - The Tribunal observed that goods supplied by the appellant to the BRO can be considered trading of goods and accordingly fall within the negative list under clause (e) of Section 66D of the Finance Act, 1994. On that basis, such supplies do not attract service tax. The conclusion on this legal characterization was applied to set aside the portion of the demand premised on those supplies. [Paras 6]

No service tax is payable on the supplies of goods which are trading of goods covered by the negative list; the demand on that score is set aside.

Reliance on Form 26AS for initiation of demand - Extended period of limitation and suppression - Whether the demand confirmed solely on the basis of information in Form 26AS is sustainable and whether extended limitation could be invoked for alleged suppression - HELD THAT: - The Tribunal noted that the Department had sought and received copies of income-tax returns, balance sheet, bank statements, Form 26AS, work orders/agreements and service tax returns from the appellant in response to a communication dated 12-08-2016, and the appellant furnished the information on 14-12-2016. Despite being aware of the appellant's activities from 2016, the Department did not initiate proceedings within the normal period. The Tribunal held that the demand based solely on Form 26AS was not a basis to invoke extended limitation in the absence of established suppression. Applying the limitation principle, the allegation of suppression was rejected and the demand was held to be time-barred. [Paras 7, 8]

The demand founded on Form 26AS is unsustainable and barred by limitation as suppression is not established.

Requirement of registration, late fee and penalty where no tax liability exists - Whether registration, late fees and penalty could be sustained where the Tribunal held there was no service tax liability - HELD THAT: - Having held that the appellant's activities did not attract service tax, the Tribunal reasoned that there was no requirement for the appellant to obtain registration and consequently the imposition of late fees and penalty for delayed returns had no foundation. The Tribunal therefore set aside the late fee and penalty imposed in the impugned order. [Paras 8]

Registration was not required and the late fee and penalty are set aside.

Final Conclusion: The impugned order confirming service tax, interest, late fees and penalty is set aside: the construction and sub-contractor services were held exempt, supplies of goods were treated as trading of goods under the negative list, the demand based on Form 26AS was time barred for lack of suppression, and consequential registration, late fee and penalty were quashed; the appeal is allowed.

Willful disobedience of court order - disbursement of informer reward - final reward payable only after conclusion of adjudication/appeal proceedings - interim reward - liberty to revive contempt petition

Willful disobedience of court order - disbursement of informer reward - The respondents have not willfully and deliberately disobeyed the order dated 16.07.2019. - HELD THAT: - The Court examined the earlier directions and the subsequent steps taken by the Department. Having regard to the respondents' adherence to the reward Scheme's requirement that final rewards be sanctioned only after conclusion of adjudication/appeal proceedings, and in light of ongoing proceedings concerning the assessee-company, the Court found no deliberate refusal to comply. The Court therefore discharged the notice of contempt and closed the contempt petition while recording that the respondents have undertaken procedural steps and have not, in law, willfully contravened the earlier order. [Paras 18, 19]

No contempt established; contempt petition closed and notice discharged.

Final reward payable only after conclusion of adjudication/appeal proceedings - disbursement of informer reward - Final reward cannot be sanctioned and disbursed until conclusion and closure of the adjudication/appeal proceedings against the assessee-company. - HELD THAT: - The Court relied on the respondents' Scheme (para 7.1) which conditions sanction and disbursement of final rewards upon conclusion of adjudication/appeal/revision proceedings and closure of related matters. The Court noted that the assessee-company's liabilities and related proceedings (including W.P.(C) 9311/2022 challenging demands and entitlement under an amnesty/resolution scheme) remained pending, and that the respondents' additional affidavit expressly tied final reward disbursement to closure of those proceedings. Consequently, the respondents were correct in withholding final disbursement until the proceedings are finally determined. [Paras 13, 15, 16]

Final reward must await finalization/closure of the proceedings against the assessee-company; it cannot be released at this stage.

Interim reward - liberty to revive contempt petition - Petitioners may claim the sanctioned interim reward and have liberty to revive the contempt petition if respondents fail to comply after finalization of the assessee's proceedings. - HELD THAT: - The Court recorded that an interim reward of Rs. 5,00,000/- had been sanctioned and observed that petitioners remained at liberty to collect that interim amount from the relevant office without prejudice to other contentions. The Court also granted express liberty to revive the contempt petition in the event of non compliance by the respondents after finalization of the assessee-company's proceedings, thereby preserving the petitioners' future remedy. [Paras 6, 20, 21]

Petitioners may collect the sanctioned interim reward; they are granted liberty to revive contempt proceedings if non-compliance occurs after finalization of the assessee's matters.

Final Conclusion: The contempt petition was dismissed on merits: there was no willful disobedience as the respondents acted in accordance with their reward Scheme which requires closure of adjudication/appeal proceedings before sanctioning final reward; petitioners may collect the sanctioned interim reward and may revive the contempt petition if the respondents fail to disburse the final reward after finalization of the assessee's proceedings.

Manufacture under Section 2(f) of the Central Excise Act, 1944 - separation of constituent components not amounting to manufacture - new product / change of character test - burden of proof on Revenue - deeming provision in tariff entry must expressly state process amounts to manufacture

Manufacture under Section 2(f) of the Central Excise Act, 1944 - separation of constituent components not amounting to manufacture - new product / change of character test - deeming provision in tariff entry must expressly state process amounts to manufacture - burden of proof on Revenue - Whether the processes of tilting, draining and limited hydraulic pressing undertaken on imported slack wax and residue wax amount to 'manufacture' within the meaning of Section 2(f) of the Central Excise Act, 1944. - HELD THAT: - The Tribunal accepted the factual finding that the respondent imported slack wax and residue wax and merely separated oil by tilting the drums (removing about 90% of oil) and by limited squeezing with a hydraulic press (about 10% oil). It held that these operations did not produce any new product: foot oil, pressed wax and paraffin wax were parts or descriptions of the imported material rather than goods of a new character. The Tribunal agreed with the Commissioner (Appeals) that the mechanical separation did not alter the essential character of the material and that no distinct marketable commodity, different in name, character and use, emerged after the process. Reliance was placed on the principle in the authorities cited in the impugned order (including Shyam Oil Cake Ltd. ) that mere processing or removal of non constituent matter does not amount to manufacture and that the burden to prove manufacture lies on Revenue. Further, the Tribunal noted that for a deeming provision to apply the Section/Chapter note or tariff entry must expressly state that a specified process amounts to manufacture; mere listing or classification in tariff does not suffice. On these grounds the Tribunal concluded that the activities undertaken were physical separation and not manufacture within Section 2(f). [Paras 9, 11]

The processes of tilting, draining and limited pressing did not amount to manufacture under Section 2(f) of the Central Excise Act, 1944; the impugned order setting aside the demand is upheld.

Final Conclusion: The appeal filed by the Revenue is rejected and the Commissioner (Appeals) order setting aside the demand is upheld, on the ground that the processes applied to imported slack and residue wax did not amount to manufacture as defined in Section 2(f) of the Central Excise Act, 1944.

Applicability of Rule 6(3) of Cenvat Credit Rules to by-products - By-product characterisation in manufacture of final goods - Follow-on effect of earlier orders in the assessee's own case

Applicability of Rule 6(3) of Cenvat Credit Rules to by-products - By-product characterisation in manufacture of final goods - Follow-on effect of earlier orders in the assessee's own case - Whether demand under Rule 6(3) of the Cenvat Credit Rules is leviable in respect of Ammonium Sulphate which arises as a by-product during manufacture of Potassium Cyanide and Sodium Cyanide. - HELD THAT: - The Tribunal examined the question in light of earlier decisions in the appellant's own case, where it was held that Ammonium Sulphate is a by-product arising in the course of manufacture of the finished goods and, accordingly, Rule 6(3) does not apply to its clearance. The appellant produced technical certificates/opinions establishing that Ammonium Sulphate emerges as a by-product and the Revenue did not produce any contrary material. Having regard to the consistent view taken by the Tribunal in the appellant's own proceedings, the same principle was applied to the present appeals. On that basis the demand framed under Rule 6(3) was held to be unsustainable and the impugned orders were set aside.

Demand under Rule 6(3) in respect of Ammonium Sulphate as a by-product is not sustainable; impugned orders set aside and appeals allowed.

Final Conclusion: The appeals are allowed; the orders imposing liability under Rule 6(3) in respect of Ammonium Sulphate (a by-product) are set aside following the Tribunal's earlier decisions in the assessee's own case.

Limitation only bars remedy and does not extinguish debt - Distinct statutory power of recovery separate from right of action - Recovery as arrears of land revenue - Enlargement of rights by recovery statutes - Preservation of defences available in ordinary proceedings - Referral to a larger bench for authoritative pronouncement

Limitation only bars remedy and does not extinguish debt - Enlargement of rights by recovery statutes - Whether recovery proceedings under the Recovery of Dues Act (and analogous provisions under the State Financial Corporations Act) are barred where the underlying debt is time barred under the Limitation Act - HELD THAT: - The Court examined the competing authorities, including V.R. Kalliyanikutty (which held that a revenue recovery statute did not enlarge rights and therefore time barred debts could not be recovered) and Bombay Dyeing (which reiterated that limitation bars remedy but not the subsisting debt). The Bench analysed the scheme and objects of the State Financial Corporations Act and the Recovery of Dues Act (noting Section 32 G and the statutory power to recover amounts as arrears of land revenue) and observed that those provisions confer a distinct statutory power of recovery, separate from the ordinary right of action. However, having considered these aspects and the divergent authority, the Court did not pronounce a final, authoritative conclusion on whether time barred debts can be recovered under the Recovery of Dues Act; it recorded that the question requires comprehensive consideration by a larger Bench. [Paras 16, 17, 18, 21, 32]

Question left open for authoritative determination by a larger Bench; matter referred for constitution of an appropriate three Judge Bench.

Distinct statutory power of recovery separate from right of action - Recovery as arrears of land revenue - Whether Section 32 G of the State Financial Corporations Act and the Recovery of Dues Act create a separate mode of enforcement which may operate notwithstanding bar of limitation to ordinary civil remedies - HELD THAT: - The Court analysed Section 32 G and Sections 2(c) and 3 of the Recovery of Dues Act, and, drawing on jurisprudence and doctrinal distinction between a debt (right) and a right of action (power), observed that the statutory machinery confers a distinct statutory power to recovery as arrears of land revenue. The Bench noted that this power may continue even where civil suit remedies are time barred and that the subject statutes were enacted to provide special privileges and an alternative, expeditious mode of recovery. Nevertheless, because earlier decisions (notably V.R. Kalliyanikutty) took a contrasting view and relevant precedents require reconciliation, the Court refrained from delivering a final ruling and directed constitution of a larger Bench to address the issue authoritatively. [Paras 17, 18, 19, 21, 32]

Issue identified as requiring authoritative determination by a larger Bench; case placed before the Chief Justice for constituting a three Judge Bench.

Enlargement of rights by recovery statutes - Preservation of defences available in ordinary proceedings - Whether a recovery statute that provides a summary/coercive remedy necessarily enlarges the creditor's substantive right so as to permit recovery of claims otherwise barred by limitation, and whether protections available to debtors (for example, suit for refund) are determinative - HELD THAT: - The Court reviewed V.R. Kalliyanikutty's reasoning that a revenue recovery statute does not create new substantive rights and therefore does not permit recovery of time barred claims, including its reliance on Hansraj Gupta and related authorities. It contrasted that approach with decisions (including Bombay Dyeing and KGU Trust) recognising that limitation may only bar remedy, leaving the subsisting debt intact and susceptible to recovery by alternate statutory methods. The Bench observed that presence of debtor protections (such as rights to sue for refund after payment under protest) in one statute is not dispositive of the general question when other statutory schemes confer independent recovery powers. Given the doctrinal conflict and importance of the point, the Court declined to resolve the matter finally and directed reference to a larger Bench. [Paras 18, 20, 30, 31, 32]

Conflicting principles identified; issue to be authoritatively decided by a larger Bench and thus referred to the Chief Justice.

Final Conclusion: Leave granted. Because the questions involve divergent precedents and require an authoritative pronouncement on whether recovery under the Recovery of Dues Act/State Financial Corporations Act can proceed in respect of debts time barred under the Limitation Act, the matters are placed before the Chief Justice for constitution of an appropriate three Judge Bench for final determination.

Vicarious liability of company directors under Section 141 of the Negotiable Instruments Act - liability of whole-time/executive director as Key Managerial Personnel - presumption of being in-charge and responsible for company's business - components of the offence under Section 138 of the Negotiable Instruments Act - scope of High Court's power under Section 482 of the Cr.P.C. to quash complaints

Vicarious liability of company directors under Section 141 of the Negotiable Instruments Act - liability of whole-time/executive director as Key Managerial Personnel - presumption of being in-charge and responsible for company's business - Summons to the petitioner, an Executive Director and Promoter, in complaints under Section 138 read with Section 141 of the NI Act cannot be quashed at this stage. - HELD THAT: - The Court found on the record (SPICE form) that the petitioner was an Executive Director and Promoter of the respondent company, a position which, by statutory definition and judicial precedent, brings him within the category of a whole-time director/Key Managerial Personnel. Such status gives rise to the legal presumption that the person is in charge of and responsible for the conduct of the company's business for the purposes of Section 141. The Court reiterated that at the stage of issuance of process the Magistrate need only be prima facie satisfied on the complaint and supporting evidence and must not enter into a detailed merit-based inquiry. Reliance was placed on authorities holding that managing/whole-time/executive directors may be proceeded against without additional averments that they were in charge of the business, and that complaints should be quashed under Section 482 Cr.P.C. only in rare cases where unimpeachable evidence shows no case against the director. Applying these principles, the Court held that the Trial Court did not err in issuing summons to the petitioner. [Paras 21, 22, 30, 34, 35]

Petitioner's challenge to the summons was rejected; no quashing of the complaint on this ground.

Components of the offence under Section 138 of the Negotiable Instruments Act - scope of High Court's power under Section 482 of the Cr.P.C. to quash complaints - Contentions that petitioner's resignation, residence outside the jurisdiction, non-signature of cheque, or non-receipt of demand notice absolve him from proceedings are matters for trial and do not warrant quashing at the prima facie stage. - HELD THAT: - The Court observed that the offence under Section 138 consists of a sequence of acts (drawing, presentation, dishonour, notice, failure to pay) and that different persons may be in charge of the company at different stages; therefore resignation or subsequent events do not automatically negate liability at the relevant time. Allegations about lack of control, non-signature, non-service of notice, or that another director acted as signatory pertain to factual inquiries requiring appreciation of evidence. The High Court will exercise its extraordinary power under Section 482 sparingly and may quash only in presence of unimpeachable, incontrovertible evidence showing no case against the director; such evidence was not shown here. [Paras 29, 30, 31, 34, 35]

Petitioner's factual/contention-based pleas were left open for trial; they do not justify quashing the complaints at this stage.

Final Conclusion: Petitions under Section 482 Cr.P.C. seeking quashing of complaints under Section 138 read with Section 141 of the NI Act were dismissed; the Trial Court's summons to the petitioner is upheld and all factual contentions are left to be adjudicated at trial.