TaxTMI Updates e-Newsletter
May 22,2024

Eligibility for input tax credit - Section 16(2) - receipt of goods as condition for ITC - fraudulent claim of input tax credit / paper transactions - Rule 36 - documentary requirements for claiming ITC - no estoppel against recovery where benefit availed by fraud

Section 16(2) - receipt of goods as condition for ITC - fraudulent claim of input tax credit / paper transactions - Rule 36 - documentary requirements for claiming ITC - Entitlement to input tax credit where alleged inward supplies emanate from non-existent or bogus suppliers and the transactions are shown only on paper. - HELD THAT: - The Court applied the statutory eligibility conditions for ITC and held that actual receipt of goods is a pre-condition under Section 16(2)(b). Where an enquiry establishes that transactions were paper transactions with non-existent suppliers, mere possession of invoices, GRs, e-way bills, bank statements or other documentary entries does not satisfy the requirement of actual receipt of goods. The Special Investigation Branch's findings that the supplier firms were non-existent, that goods receipts/bilties were inconsistent in format, that the GSTIN on the transport documents was invalid and that the phone number on the bilties did not belong to a transport company furnished sufficient material to conclude there was no real supply. In view of Rule 36's documentary requirements and Section 16(2), the adjudicating authority was justified in denying ITC, recovering the wrongly availed credit, and imposing interest and penalty where fraud was established. [Paras 17, 18, 20, 22, 23]

ITC denied and recovery with penalty and interest upheld where inward supplies were found to be from non-existent firms and transactions were paper-only.

Eligibility for input tax credit - no estoppel against recovery where benefit availed by fraud - Effect of supplier's contemporaneous GST registration or subsequent cancellation on recipient's entitlement to ITC when supplier is found to be non-existent. - HELD THAT: - The Court rejected the contention that validity of supplier's GST registration at the time of transaction or subsequent cancellation precludes recovery of wrongly availed ITC. Where the investigation shows the supplier to be non-existent and incapable of making actual supplies, registration alone cannot confer an indefeasible right to ITC. Fraud vitiates the benefit and there is no estoppel against the revenue to recover credits wrongly availed as a result of fraud. The appellate authority correctly considered the material and declined interference. [Paras 19, 21, 23]

Recipient cannot retain ITC merely because supplier was registered at the time; recovery permitted where supplier is established to be non-existent and the credit was availed by fraud.

Final Conclusion: The High Court dismissed the writ petition; the adjudicating and appellate orders denying ITC, recovering the credit and imposing penalty and interest were held to be lawful on the facts establishing paper transactions and non-existent suppliers.

Show cause notice - opportunity of personal hearing - adjournment request - re-adjudication - remand for fresh adjudication - speaking order - Section 75(3) of the Central Goods and Services Tax Act, 2017

Show cause notice - adjournment request - opportunity of personal hearing - remand for fresh adjudication - Validity of the impugned order dated 18.04.2024 in view of alleged non-grant of opportunity to file reply/attend personal hearing and earlier adjournment request. - HELD THAT: - The Court examined the impugned order which recorded that an adjournment had been sought but found no contemporaneous record of a personal hearing notice having been issued after the Show Cause Notice. In these circumstances and having regard to the petitioner's claim that an extension was requested on medical grounds and no communication was received before the adjudicating order was passed, the Court held that it would be in the interest of justice to grant the petitioner an opportunity to respond. Consequently the impugned adjudication was set aside and the matter remitted to the Proper Officer for fresh consideration of the Show Cause Notice. [Paras 5, 6, 7]

Impugned order set aside and Show Cause Notice restored to file for re-adjudication by Proper Officer.

Re-adjudication - speaking order - Section 75(3) of the Central Goods and Services Tax Act, 2017 - opportunity of personal hearing - Procedural directions for re-adjudication including timeline for filing reply and requirement of a fresh speaking order. - HELD THAT: - The Court directed that the petitioner shall file a reply to the Show Cause Notice within thirty days. Thereafter the Proper Officer is directed to afford an opportunity of personal hearing and to re-adjudicate the Show Cause Notice, passing a fresh speaking order in accordance with law and within the time prescribed under Section 75(3) of the Act. The Court expressly refrained from adjudicating the merits of the dispute and preserved the parties' rights. [Paras 7, 8, 9]

Petitioner to file reply within 30 days; Proper Officer to grant personal hearing and pass fresh speaking order within period under Section 75(3).

Challenge to Notification No. 9 of 2023 - Status of the petitioner's challenge to Notification No. 9 of 2023. - HELD THAT: - The Court did not adjudicate the challenge to Notification No. 9 of 2023 and left that challenge open for determination on its own merits. No decision was reached on the validity or effect of the Notification in the present proceedings. [Paras 10]

Challenge to Notification No. 9 of 2023 left open.

Final Conclusion: Impugned order dated 18.04.2024 set aside and matter remitted for fresh adjudication of the Show Cause Notice for Financial Year 2018-19; petitioner to file reply within 30 days, Proper Officer to grant personal hearing and pass a fresh speaking order within the period prescribed by Section 75(3) of the Act; merits not decided and challenge to Notification No. 9 of 2023 left open.

Service of notice by uploading on GST portal under Section 169 CGST - non-receipt of notice due to placement under 'Additional Notices' on portal - right to be heard / opportunity of personal hearing before adjudication - setting aside adjudication for want of effective service and re adjudication

Service of notice by uploading on GST portal under Section 169 CGST - non-receipt of notice due to placement under 'Additional Notices' on portal - Validity of service of the Show Cause Notice dated 08.12.2023 which was uploaded in the portal category 'Additional Notices' and the legal consequences of the petitioner's non-receipt thereof. - HELD THAT: - The Court rejected the respondent's contention that mere uploading on the portal satisfies service in all circumstances, noting authorities from the Madras High Court which recognised that notices may be hosted under separate headings ('View Notices and Orders' and 'View Additional Notices and Orders') and that the portal architecture had caused users to miss notices placed in the latter category. The petitioner has established that it did not receive the Show Cause Notice because it was uploaded in a section not readily accessible to the petitioner. In those circumstances the impugned adjudication records non reply and non appearance by the taxpayer, and the Court held that effective service was not established so as to sustain the order passed without giving the petitioner an opportunity to respond. [Paras 5, 6, 8, 9]

Service by uploading in the inaccessible 'Additional Notices' category did not amount to effective notice; the petitioner missed the notice and the resultant adjudication cannot stand.

Right to be heard / opportunity of personal hearing - setting aside adjudication for want of effective service and re adjudication - Relief to be granted in view of non-receipt - whether the impugned order should be set aside and the Show Cause Notice re adjudicated with opportunity to file response and personal hearing. - HELD THAT: - Having found that the petitioner did not receive the notice and consequently did not participate in proceedings, the Court exercised its supervisory jurisdiction to set aside the impugned order dated 13.03.2024. The Court directed the respondent to open the portal to enable filing of a response to the Show Cause Notice within 30 days, to afford the petitioner a personal hearing, and to adjudicate the Show Cause Notice within four weeks thereafter. The directions are remedial and limited to ensuring the petitioner is given an opportunity of hearing before fresh adjudication. [Paras 9, 10, 11]

Impugned order set aside; respondent directed to permit filing of response within 30 days, grant personal hearing, and complete re adjudication within four weeks thereafter.

Final Conclusion: The challenge to the order dated 13.03.2024 succeeds on the ground of non receipt of the Show Cause Notice uploaded under an inaccessible portal category; the order is set aside and the matter is remitted for re adjudication after the petitioner is permitted to file a response and given a personal hearing within the timelines directed by the Court.

Challenge to assessment/order by writ under Article 226 - maintainability of writ petition when statutory appeal not pursued within limitation - remedy of appeal as a creature of statute - condonation of delay in filing appeal - proceedings under Section 74 of the Rajasthan Goods and Services Tax Act, 2017 / the Central Goods and Services Tax Act, 2017

Maintainability of writ petition when statutory appeal not pursued within limitation - remedy of appeal as a creature of statute - condonation of delay in filing appeal - Whether a writ petition under Article 226 is maintainable where the assessee did not avail the statutory remedy of appeal against an order passed in proceedings under Section 74 of the RGST Act/CGST Act and allowed the appeal period and any statutory condonation period to lapse. - HELD THAT: - The Court applied the principle in Glaxo Smith Kline Consumer Health Care Limited that where an assessee has not availed the statutory appellate remedy within the prescribed period and the appellate remedy stands foreclosed on grounds of limitation or failed condonation, the High Court should not ordinarily entertain a writ petition under Article 226 to challenge the assessment order. The present petitioner received notice and an opportunity of hearing and did not prefer an appeal under Section 107 of the RGST/CGST Acts; no plausible explanation was offered for forgoing the statutory remedy. This is not a case of denial of opportunity or of jurisdictional defect in the assessment proceedings warranting exercise of writ jurisdiction. In those circumstances, and having regard to the statutory character of the remedy of appeal and the precedent cited, the writ petition was held to be not maintainable. [Paras 6, 7, 8]

Writ petition dismissed as not maintainable for failure to avail the statutory appellate remedy within the prescribed/condonable period.

Final Conclusion: The High Court dismissed the petition challenging the order passed in proceedings under Section 74 of the RGST Act/CGST Act for financial year 2018-19, holding the writ not maintainable because the petitioner did not pursue the statutory appeal and allowed the appellate limitation/condonation period to lapse.

Imposition of interest and penalty under Section 74(9) of the TNGST Act, 2017 - Reduction of penalty on payment of entire interest within 30 days under Section 74(11) of the GST Act, 2017 - Right to file statutory appeal subject to deposit under Section 107 of the TNGST Act, 2017 - Opportunity of hearing before the appellate authority and adjudication on merits

Imposition of interest and penalty under Section 74(9) of the TNGST Act, 2017 - Validity of levying interest and penalty for the period 2020-21 was not adjudicated on merits and was remitted for appellate consideration - HELD THAT: - The impugned order levied interest and penalty under Section 74(9) for the tax period 2020-21. The High Court did not examine the substantive correctness of the imposition but noted that there is no tax dues as on date and that the petitioner had not participated in earlier proceedings. Rather than deciding the correctness of the levy, the Court afforded the petitioner a statutory route of redress. Consequently the question of validity of the interest and penalty was left to the statutory appellate authority for fresh consideration on merits. [Paras 2, 6, 7]

Remitted to the Deputy Commissioner of State Taxes (GST Appeals), Madurai, for fresh consideration on merits; the Court did not decide the substantive validity of the levy.

Right to file statutory appeal subject to deposit under Section 107 of the TNGST Act, 2017 - Opportunity of hearing before the appellate authority and adjudication on merits - Reduction of penalty on payment of entire interest within 30 days under Section 74(11) of the GST Act, 2017 - Procedure and relief granted to the petitioner for challenging the impugned order - HELD THAT: - Considering there is no outstanding tax liability and that the dispute relates to interest and penalty, the Court granted the petitioner liberty to file a statutory appeal before the Deputy Commissioner (GST Appeals), Madurai, within 30 days from receipt of the order. This liberty is expressly subject to compliance with the deposit requirement under Section 107 of the TNGST Act, 2017. The appellate authority is directed to consider the appeal on merits, hear the petitioner, and pass appropriate orders in accordance with law. The impugned order itself also records the statutory consequence under Section 74(11) that payment of the entire interest within 30 days of communication of the order attracts reduction of penalty to 50%. [Paras 6, 7]

Petitioner permitted to file statutory appeal within 30 days subject to deposit under Section 107; appellate authority to hear and decide the appeal on merits; statutory benefit under Section 74(11) noted.

Final Conclusion: Writ petition disposed by granting petitioner liberty to file a statutory appeal within 30 days (subject to the deposit required under Section 107), with the appellate authority directed to hear the petitioner and decide the matter on merits; the Court remitted the question of validity of the interest and penalty for fresh adjudication, noting the statutory reduction of penalty on timely payment of interest.

Condonation of delay - maintainability of statutory appeal - exercise of equitable discretion to admit time barred appeal subject to conditions - conditional deposit as pre condition for grant of relief - direction to entertain and dispose of appeal on merits without reference to limitation

Condonation of delay - maintainability of statutory appeal - exercise of equitable discretion to admit time barred appeal subject to conditions - Whether the appeal filed beyond the condonable period could be admitted despite being time barred - HELD THAT: - The first respondent rejected the appeal as beyond the condonable period after expiry of the statutory 90 days and the further 30 day condonable period. The petitioner relied on ill health as the cause of delay but the explanation filed before the first respondent was found to be bereft of details. Notwithstanding the first respondent's finding, the High Court exercised its equitable discretion to permit admission of the appeal subject to a condition to secure the revenue. The Court directed that the petitioner shall deposit 25% of the disputed tax within 30 days from receipt of the order; on compliance, the appeal shall be entertained notwithstanding limitation. The Court noted that the first respondent could not be faulted for rejecting the appeal on limitation alone, but discretion in favour of the petitioner was appropriate on the specified conditional terms. [Paras 5, 6, 8]

Appeal admitted conditionally on deposit of 25% of the disputed tax within 30 days; admission permitted notwithstanding limitation.

Direction to entertain and dispose of appeal on merits without reference to limitation - remand for adjudication on merits - Whether the appeal, if admitted on the stated condition, should be disposed of on merits by the first respondent - HELD THAT: - The Court directed that upon the petitioner complying with the deposit condition, the appeal shall be entertained and disposed of by the first respondent on merits and in accordance with law. The disposal is to proceed without reference to the limitation that had earlier rendered the appeal not maintainable. The instruction effectively remits the matter to the first respondent for fresh adjudication on the merits subject to the stated condition, and requires expeditious disposal. [Paras 8]

On compliance with the deposit condition, the first respondent to entertain and dispose of the appeal on merits without reference to limitation.

Final Conclusion: Writ petition disposed by directing conditional admission of the appeal: petitioner to deposit 25% of the disputed tax within 30 days, and upon such compliance the first respondent shall entertain and expeditiously dispose of the appeal on merits without reference to limitation; no costs.

Show cause notice - ex-parte order - service by uploading on GST portal - opportunity of personal hearing - natural justice - re-adjudication - remand for fresh adjudication - order under Section 73 of the Central Goods and Services Tax Act, 2017 - time-limit under Section 75(3)

Show cause notice - service by uploading on GST portal - ex-parte order - opportunity of personal hearing - natural justice - re-adjudication - remand for fresh adjudication - order under Section 73 of the Central Goods and Services Tax Act, 2017 - time-limit under Section 75(3) - Impugned ex-parte order passed under Section 73 setting up demand in consequence of non-filing of reply where the show cause notice was uploaded only on the portal and the petitioner had closed business and did not access the portal - HELD THAT: - The court recorded that the petitioner closed business in 2020 and, as a result, did not check the GST portal and was unaware of the show cause notice which had been uploaded only on the portal. The adjudicating authority recorded non-filing of reply and non-attendance and relied on reminders issued through the portal to create demand ex-parte. Since the sole basis for the impugned order was absence of any reply and non-appearance, and the petitioner demonstrated that he did not access the portal due to closure of business, the matter was liable to be remitted for fresh consideration to afford the petitioner an opportunity to be heard. The court set aside the impugned order, restored the show cause notice to the record, directed the petitioner to file a further reply within two weeks, and required the Proper Officer to re-adjudicate after giving an opportunity of personal hearing and to pass a fresh speaking order in accordance with law within the period prescribed by Section 75(3) of the Act. The court expressly refrained from expressing any view on the merits and reserved all rights and contentions of the parties.

Impugned order set aside; show cause notice restored; petitioner to file reply within two weeks; Proper Officer to re-adjudicate after personal hearing and pass a fresh speaking order within the period under Section 75(3).

Final Conclusion: The ex-parte demand order dated 21.12.2023 passed under Section 73 is set aside and the show cause notice is restored for re-adjudication after giving the petitioner a further opportunity to reply and a personal hearing; the court did not consider the merits and reserved parties' rights.

Quashing of assessment order and remand for fresh adjudication - opportunity of being heard / fresh personal hearing - treatment of impugned order as corrigendum to show cause notices - alternative remedy before the original authority

Quashing of assessment order and remand for fresh adjudication - opportunity of being heard / fresh personal hearing - Impugned order dated 25.04.2023 quashed and matter remitted for fresh decision on merits - HELD THAT: - The Court observed that the petitioner had not responded to notices which were uploaded on the portal and therefore did not contest the proceedings before the Original Authority. While the respondent was not found at fault for passing the impugned order, the Court considered that the petitioner has an alternate remedy and ought to be given an opportunity to produce documents and explain the claimed position to the Original Authority. The Court noted that partial recoveries had already been made from the petitioner and, in the interest of deciding the matter on merits, directed that the impugned order be set aside and the matter remitted for fresh adjudication. The Court provided specified timelines for the respondent to pass fresh orders and for the petitioner to respond to the notices, and directed that the impugned order shall be treated as a corrigendum to the earlier notices. [Paras 10, 11, 12]

Impugned order quashed; matter remitted to respondent to pass fresh orders on merits within 60 days; impugned order to be treated as corrigendum to earlier notices and petitioner to respond within 30 days.

Final Conclusion: Writ petition allowed: impugned order dated 25.04.2023 quashed and matter remitted for fresh adjudication on merits with specified timelines; no costs.

Pre-deposit of disputed amount - denial of input tax credit - electronic credit ledger - electronic cash ledger - restoration of appeal - hearing on merits

Pre-deposit of disputed amount - denial of input tax credit - restoration of appeal - Pre-deposit requirement and restoration of appeal subject to compliance - HELD THAT: - The Court noted that the dispute arises from denial of input tax credit and that the appeal against the Order-in-Original was rejected by the first respondent. The Court held that the petitioner is required to make a pre-deposit of 10% of the disputed amount. Conditional upon such pre-deposit, the impugned order is quashed and the appeal is restored to the file of the first respondent for adjudication on merits. The restored appeal must be decided on merits within six weeks and the petitioner shall be heard. [Paras 2, 3, 4]

Petitioner directed to pre-deposit 10% of the disputed amount; on compliance the impugned order is quashed and the appeal is restored for fresh disposal on merits.

Electronic credit ledger - electronic cash ledger - Source from which the pre-deposit may be made - HELD THAT: - The Court observed that because the controversy relates to denial of input tax credit, the petitioner cannot utilize amounts lying in its electronic credit ledger for pre-deposit as contemplated for deposits under the statutory scheme. The Court nevertheless granted liberty to the petitioner to make the required deposit under Section 105 through cash or through its electronic credit ledger within thirty days of receipt of the order, and conditioned restoration of the appeal on such compliance. (The judgment contains both the statement that electronic credit ledger cannot be used for pre-deposit and an operative liberty permitting deposit through cash or electronic credit ledger.) [Paras 3, 4]

Court recorded that electronic credit ledger is not ordinarily available for pre-deposit of disputed ITC but granted liberty to deposit the required amount through cash or electronic credit ledger within 30 days.

Final Conclusion: Writ petition dismissed, with liberty to the petitioner to make the prescribed pre-deposit within 30 days; on such compliance the impugned order is quashed and the appeal is restored for decision on merits within six weeks.

Right to be heard - natural justice - ex-parte order - service of notice - opportunity of hearing - setting aside of order for non-compliance of procedure - re-adjudication

Right to be heard - service of notice - ex-parte order - setting aside of order for non-compliance of procedure - re-adjudication - Impugned ex-parte order set aside for failure to afford the petitioner an opportunity of being heard and for absence of proof of service; matter remitted for fresh adjudication. - HELD THAT: - The Court found that the departmental records did not contain documents establishing service of notice on the petitioner and it was not disputed that the impugned orders were passed without granting the petitioner an opportunity to submit documents or to be heard (see paras 3 and 4). On the Revenue's concession and having regard to the requirements of procedural fairness and the right to be heard, the Court set aside the impugned ex-parte order and directed that the Deputy Commissioner of Central Tax (GST), Division-III, shall follow a fresh procedure. The Deputy Commissioner is directed to serve a notice on the petitioner within ten days, the petitioner shall file its reply and produce documents within seven days thereafter, and the Deputy Commissioner shall fix a date for personal hearing and thereafter pass appropriate orders within fifteen days (para 5). The Court expressly kept all contentions of the parties open for fresh consideration (para 6). [Paras 3, 4, 5, 6]

Impugned ex-parte order quashed; matter remitted for fresh adjudication with directions to serve notice within ten days, allow reply within seven days, hold a personal hearing and pass a fresh order within fifteen days; all contentions kept open; no costs.

Final Conclusion: The petition is disposed of by setting aside the impugned ex-parte order and directing fresh adjudication in accordance with the timeline provided; all issues reserved for fresh consideration and no costs ordered.

Best judgment assessment - condonation of delay in filing returns - limitation for withdrawal of assessment - extension of limitation by amendment

Condonation of delay in filing returns - best judgment assessment - Liberty granted to the petitioner to file an application to condone delay in filing April-2023 returns and direction to the respondent to consider that application sympathetically. - HELD THAT: - The Court noted that the petitioner failed to file the April-2023 return within the prescribed time but subsequently filed GSTR-1 and GSTR-3B in August/September 2023 and paid the tax belatedly. The Court observed that although a system-generated best of judgment assessment under Section 62 was passed on 12.06.2023, the petitioner did not have notice of it and contended that the best judgment assessment exceeds the actual tax liability. In view of the petitioner's belated compliance and the earlier orders of this Court permitting taxpayers in similar circumstances to seek condonation, the Court allowed the petitioner liberty to file an application for condonation of delay and directed the respondent to consider that application sympathetically, in the light of the Court's order in W.P.(MD) Nos. 34770, 34774 and 34777 of 2023 dated 14.12.2023. [Paras 10, 11]

Petitioner permitted to file application for condonation of delay; respondent directed to consider it sympathetically.

Extension of limitation by amendment - limitation for withdrawal of assessment - Effect of statutory amendment increasing the withdrawal period was noted but not applied retrospectively to confer automatic benefit to taxpayers whose cases arose before the amendment. - HELD THAT: - The Court recorded that Section 62(2) originally prescribed a 30-day limitation for withdrawal of a best judgment assessment and that Parliament subsequently extended that period up to 120 days effective 01.10.2023. The Court observed that traders whose assessments arose prior to the amendment may not be eligible for the extended period. The observation was made to contextualise the petitioner's inability to avail the extended withdrawal period and to inform the discretionary consideration to be given by the respondent to any condonation application; the Court did not direct retrospective application of the amendment. [Paras 10]

Amendment extending the withdrawal period to 120 days (effective 01.10.2023) noted; extension not held to automatically benefit taxpayers whose assessments arose before that date.

Final Conclusion: Writ petition disposed by permitting the petitioner to file an application for condonation of delay in respect of April-2023 returns and directing the respondent to consider the same sympathetically in light of this Court's earlier order; no costs.

Cancellation of registration for fraud, wilful misstatement or suppression of facts - Mandamus against registering authority for cancellation of GST registration - Related party transactions and requirement of Board resolution - Remedy under Section 241 of the Companies Act, 2013 for oppression/mismanagement - Inability of writ court to preside over disputed internal corporate acts without company/tribunal proceedings

Cancellation of registration for fraud, wilful misstatement or suppression of facts - Mandamus against registering authority for cancellation of GST registration - Whether the High Court may direct the Registering Authority to cancel a GST registration on the petitioner's allegation of fraud, wilful misstatement or suppression of facts without independent proceedings before the proper officer or proof of fraud - HELD THAT: - The Court held that cancellation under Section 29(2)(e) of the Central GST Act, 2017 is a power vested in the proper officer who may act on his own motion or after relevant proceedings; allegations that registration was obtained by fraud or suppression constitute a bundle of facts requiring proof in separate proceedings and cannot be the basis for a writ directing cancellation on the basis of prima facie statements in the petition. The High Court declined to entertain a mandamus to the registering authority in the absence of any prior action by the company or of adjudicatory proceedings by the proper officer, and refused to presume that fraud had been committed merely because the petitioner so alleged. [Paras 6, 7]

Prayer for mandamus directing cancellation of the GST registration was declined and writ petition dismissed for want of a prima facie adjudication of fraud before the proper officer.

Related party transactions and requirement of Board resolution - Remedy under Section 241 of the Companies Act, 2013 for oppression/mismanagement - Inability of writ court to preside over disputed internal corporate acts without company/tribunal proceedings - Whether the dispute between company directors regarding an alleged unauthorised lease/transaction should be decided by this Court in the writ petition or by invoking statutory company remedies - HELD THAT: - The Court observed that disputes between directors concerning related party transactions fall within the scope of Section 188 of the Companies Act, 2013 and that appropriate reliefs including rescission, indemnity or proceedings for oppression/mismanagement are available under the Companies Act (including Section 241 and related provisions). Since the company had not initiated the statutory remedies nor had the petitioner proceeded before the Tribunal or competent company forum, the High Court declined to entertain the substantive corporate dispute in the writ petition and held that it would be inappropriate to substitute judicial review for the statutory company/tribunal processes. [Paras 2, 3, 4, 6]

The Court declined to adjudicate the internal corporate dispute and directed that appropriate remedies under the Companies Act, rather than a writ for cancellation under the GST statute, are the proper course; consequently the writ petition was dismissed.

Final Conclusion: Writ petition seeking a mandamus to cancel the GST registration on allegations of fraud by a company director is dismissed: cancellation under Section 29(2)(e) requires adjudication by the proper officer and allegations of related party impropriety should be pursued through the statutory company remedies (including Section 188 and Section 241) rather than by writ intervention.

Summary order. Respondents granted three weeks to obtain instructions and, if the petitioner's factual assertion is correct, to take necessary corrective steps regarding the provisional attachment alleged to have been issued despite no outstanding demand; matter listed on 18th April, 2024.

Charitable purpose vs. business activity - proviso to Section 2(15) of the Income Tax Act, 1961 - exemption under Section 11 of the Income Tax Act, 1961 - profit motive - rule of consistency - appellate interference with concurrent findings of fact - Delay filling SLP

High Court [2022 (7) TMI 903 - DELHI HIGH COURT] upholds the finding that the assessee's activities are charitable (proviso to Section 2(15) not attracted) and that there is no substantial question of law to warrant interference with the concurrent factual conclusions, thereby leaving the exemption u/s 11 intact - HELD THAT:- No reason to condone the inordinate delay in filing the Special Leave Petition(s) as the explanation sought to be provided, does not constitute sufficient cause.

Hence, petition(s) stands dismissed on the ground of delay.

Reopening of assessment - limitation for issuing notice under Section 148 - proviso to amended Section 149 and vested rights - exclusive application of Covid-period exclusion under TOLA - Article 142 cannot supplant substantive statutory rights

Reopening of assessment - limitation for issuing notice under Section 148 - proviso to amended Section 149 and vested rights - Article 142 cannot supplant substantive statutory rights - Validity of notices under Section 148 issued for Assessment Year 2014-2015 in view of limitation and the Finance Act, 2021 amendment - HELD THAT: - The Court held that the impugned notices issued after the amendment to the Finance Act (w.e.f. 01.04.2021) but invoking the pre-amendment provisions for Assessment Year 2014-2015 are barred by limitation. Relying on the Principal Seat's decision in The New India Assurance Company Limited and the subsequent decision in Godrej Industries Limited, the Court observed that the limitation for issuing a notice under Section 148 for the relevant year had expired (as extended, if applicable, by TOLA) and that a vested right had accrued which could not be taken away by subsequent legislation or by treating later notices as within time. The Court rejected the Revenue's contentions that (i) TOLA's exclusion of the Covid period or notifications extending time could be read so as to revive or relate back the right to reopen beyond the statutory cut-off, and (ii) the Supreme Court's exercise of powers under Article 142 in Ashish Agarwal should be construed to override the proviso to amended Section 149 so as to permit reopening beyond the limitation. The Court emphasised that Article 142 cannot be used to obliterate substantive statutory defenses and that taxation statutes must be strictly construed; accordingly, reopening notices issued beyond the statutory period are without jurisdiction and invalid. Since the decision was confined to the limitation point, other grounds raised were left open for the petitioner to agitate in other proceedings. [Paras 6, 7]

The notices under Section 148 for AY 2014-2015 are quashed and set aside as barred by limitation; the order is confined to the point of limitation.

Final Conclusion: Writ petition allowed; impugned reopening notices for Assessment Year 2014-2015 quashed on the ground of limitation, the order being restricted to that point.

Penalty under Section 271D - prohibition on acceptance of loans or deposits otherwise than by account payee cheque or bank draft under Section 269SS - pawning as a pledge/deposit within the ambit of Section 269SS - search and seizure disclosure treated as undisclosed income for assessment

Pawning as a pledge/deposit within the ambit of Section 269SS - prohibition on acceptance of loans or deposits otherwise than by account payee cheque or bank draft under Section 269SS - penalty under Section 271D - Whether amounts shown as realised from pawning constituted loans/deposits within the meaning of Section 269SS and, consequent upon non-compliance, whether penalty under Section 271D was rightly levied. - HELD THAT: - The court accepted the characterisation of the transactions as pawning: a pawn is a pledge of personal property as security for a loan and, in modern usage, denotes pledging jewels to pawnbrokers as security for a small loan. Where such pawning results in amounts received as loans or deposits and the statutory requirements of Section 269SS (prohibiting acceptance of loans/deposits of Rs.20,000 or more otherwise than by account payee cheque or bank draft) are not complied with, the statutory scheme makes a penalty under Section 271D the logical consequence. The Assessing Officer's treatment of the amounts disclosed during search as additional income arising from pawning and his imposition of penalty under Section 271D were therefore held to be legally tenable. The court answered the legal question in favour of the Revenue and upheld the impugned order. [Paras 9, 10]

Amounts realised by pawning were within Section 269SS and non-compliance justified imposition of penalty under Section 271D; the Tribunal's allowance for the Revenue is upheld.

Final Conclusion: The appeals are dismissed; the Income Tax Appellate Tribunal's order upholding the levy of penalty under Section 271D in relation to amounts received by way of pawning (found to fall within Section 269SS) is affirmed.

Assumption of jurisdiction to reopen assessment under Section 147/148 - Quashing of reassessment for lack of jurisdiction - Transfer of assessment file and validity of successor Assessing Officer - Reasons for reopening must be recorded by the officer issuing notice under Section 148

Assumption of jurisdiction to reopen assessment under Section 147/148 - Reasons for reopening must be recorded by the officer issuing notice under Section 148 - Quashing of reassessment for lack of jurisdiction - Validity of reopening of assessment where notice under Section 148 was issued by an Assessing Officer who did not have jurisdiction over the assessee. - HELD THAT: - The Tribunal found that the notice dated 30.03.2018 under Section 148 was issued by ITO, Ward 69(1), New Delhi, who did not have jurisdiction over the assessee at the time the reasons for reopening were recorded. The file was thereafter transferred to the jurisdictional officer, ITO, Ward 4(1), Gurgaon, who completed the reassessment without having recorded the reasons for reopening. Applying precedent, the Tribunal held that reasons for reopening recorded by a non-jurisdictional officer cannot validate a notice issued by a successor jurisdictional officer; the officer who records the reasons must be the same officer who issues the notice under Section 148. On these facts the assumption of jurisdiction was illegal and the reassessment framed pursuant to that notice was liable to be quashed. As the reassessment was quashed on this jurisdictional/legal ground, the Tribunal did not adjudicate the remaining grounds which thus remain academic. [Paras 5, 7]

Assumption of jurisdiction by ITO, Ward 69(1), New Delhi was invalid; reassessment completed by ITO, Ward 4(1), Gurgaon on that basis is quashed and grounds 5 and 6 are allowed.

Final Conclusion: The reassessment pursuant to the notice under Section 148 issued by a non-jurisdictional Assessing Officer is quashed; appeal is partly allowed on that ground and other grounds are left undecided as academic.

Taxability of Bandwidth charges as royalty - definition of 'royalty' under section 9(1)(vi) and Article 12(3) of India-Singapore DTAA - precedential application of Tribunal orders - claim for credit of tax deducted at source

Taxability of Bandwidth charges as royalty - definition of 'royalty' under section 9(1)(vi) and Article 12(3) of India-Singapore DTAA - precedential application of Tribunal orders - Receipts from Bandwidth charges are not taxable as royalty income for the assessment year 2021-22. - HELD THAT: - The Tribunal noted that the controversy whether Bandwidth charges constitute 'royalty' is a recurring issue between the parties and that there is no factual distinction in the impugned year from prior years. It relied on the Tribunal's consistent decisions in the assessee's earlier assessment years, which held that Bandwidth charges do not fall within the scope of 'royalty' as contemplated by section 9(1)(vi) of the Act or Article 12(3) of the India-Singapore DTAA. In the absence of any material factual variation, the Tribunal followed its earlier reasoned holdings and directed deletion of the addition made by the Assessing Officer pursuant to the Dispute Resolution Panel's directions. [Paras 6, 7, 8]

The receipts from Bandwidth charges are not taxable as royalty income; the addition is deleted.

Claim for credit of tax deducted at source - The Assessing Officer must verify and grant the assessee's claim for credit of TDS on interest on income-tax refund in accordance with law. - HELD THAT: - The assessee contended that though it offered to tax interest on the income-tax refund, the corresponding TDS credit was not allowed in computing final tax liability. The Tribunal, after hearing the parties and perusing record, directed the Assessing Officer to factually verify the assessee's claim and to grant TDS credit if established, leaving the quantification and factual verification to the Assessing Officer in accordance with law. [Paras 9, 10]

Assessing Officer to verify the claim and grant TDS credit as per law.

Final Conclusion: Partly allowed: the addition treating Bandwidth charges as royalty is deleted; the Assessing Officer is directed to verify and grant the claimed TDS credit in accordance with law.

Disallowance under section 14A - Rule 8D computation - Requirement of AO's satisfaction under section 14A(2) - Objective recording of reasons for rejecting assessee's apportionment - Apportionment principle in relation to exempt income

Disallowance under section 14A - Rule 8D computation - Requirement of AO's satisfaction under section 14A(2) - Objective recording of reasons for rejecting assessee's apportionment - Whether the Commissioner (Appeals) was justified in restricting/deleting the disallowance made under section 14A read with Rule 8D in the facts of the case for AY 2013-14 - HELD THAT: - The Tribunal held that the Assessing Officer invoked the computation mechanism of Rule 8D without recording the requisite objective satisfaction, having regard to the assessee's accounts, that the assessee's suo moto apportionment was incorrect as mandated by section 14A(2). Reliance was placed on the language and scheme of section 14A(2) read with Rule 8D which requires the AO, before applying apportionment under Rule 8D, to record satisfaction with cogent reasons linking the accounts and the expenditures to investment activity. The Tribunal noted that identical observations by the AO had been considered in the assessee's earlier year and deleted by the Tribunal for lack of such recorded satisfaction; since the facts for AY 2013-14 were identical, the same reasoning applied mutatis mutandis. Consequently, in absence of the AO's recorded satisfaction in the instant assessment, the Tribunal declined to interfere with the CIT(A)'s restriction/deletion of the disallowance. [Paras 7, 8, 11]

The disallowance under section 14A read with Rule 8D is deleted/restricted as the AO did not record the necessary objective satisfaction before invoking Rule 8D.

Final Conclusion: The appeal is allowed: the Tribunal upheld the CIT(A)'s restriction/deletion of the section 14A disallowance for AY 2013-14 as the Assessing Officer failed to record the requisite objective satisfaction before applying Rule 8D.

Dividend distribution tax - accounting in the relevant assessment year - timing of DDT payment under section 115-O(3) - rectification under section 154 of the Income Tax Act

Timing of DDT payment under section 115-O(3) - accounting in the relevant assessment year - DDT paid on 27/08/2014 is to be accounted for in the return for the financial year in which it was actually paid, i.e., A.Y. 2015-16, notwithstanding that the dividend related to the year ended 31/03/2014. - HELD THAT: - The tribunal found as an admitted fact that dividend was declared on 25/08/2014 and DDT was paid on 27/08/2014. Section 115-O(3) requires payment of DDT within 14 days from the earliest of declaration, distribution or payment of dividend. Where the tax was in fact paid in the financial year 2014-15, it could not be accounted for in an earlier assessment year. The determinative legal principle applied is that DDT must be accounted for in the assessment year relevant to the financial year in which the payment was made. The Revenue's contention that the dividend pertained to A.Y. 2014-15 was rejected because the relevant act of payment occurred in the subsequent financial year and thus the credit belongs to A.Y. 2015-16. [Paras 6]

Credit for DDT of Rs. 6,79,800/- paid on 27/08/2014 to be allowed in A.Y. 2015-16 and not in A.Y. 2014-15.

Rectification under section 154 of the Income Tax Act - revised Form 3CD / return amendment - The assessee's rectification to move the DDT credit from A.Y. 2014-15 to A.Y. 2015-16 (through revised Form 3CD filed after the assessment year) is to be given effect to despite the CIT(A)'s rejection on timeliness grounds. - HELD THAT: - The tribunal noted that the assessee was not making a new claim but correcting an inadvertent accounting mistake and had filed revised Form 3CDs to reflect the correct year. The CIT(A) had rejected the revised filings as not made within the relevant assessment year. However, because the DDT was in fact paid in the financial year relevant to A.Y. 2015-16, the rectification to reflect the payment in that year is appropriate. The tribunal directed the department to allow the credit in A.Y. 2015-16 and to withdraw the credit claimed in A.Y. 2014-15, thereby giving practical effect to rectification despite the delay in filing revised statements. [Paras 7, 8]

The rectification is to be given effect by transferring the DDT credit to A.Y. 2015-16 and withdrawing the credit in A.Y. 2014-15.

Final Conclusion: The appeal is allowed: the DDT paid on 27/08/2014 shall be accounted for in A.Y. 2015-16 and the credit claimed in A.Y. 2014-15 shall be withdrawn; the department is directed to give effect to this adjustment.

Adjustment of seized assets towards self-assessment tax - Application of Explanation 2 to section 132B-advance tax exclusion - Rectification under section 154-limitation left open where relief granted on merits - Recomputation of interest under section 234B after giving credit

Adjustment of seized assets towards self-assessment tax - Application of Explanation 2 to section 132B-advance tax exclusion - Recomputation of interest under section 234B after giving credit - Entitlement of the assessee to have seized fixed deposit receipts adjusted as payment of self-assessment tax and consequential recomputation of interest. - HELD THAT: - The Tribunal held that Explanation 2 to section 132B excludes only adjustment of seized assets against advance tax and does not prohibit adjustment against self-assessment tax. The assessee had requested on 11.04.2012 that the seized fixed deposit receipts be adjusted towards its tax liability; such a request made after the end of the financial year is to be construed as seeking adjustment towards self-assessment tax irrespective of the belated filing of the return. The Assessing Officer and the CIT(A) had not recorded any finding on the claim and had declined relief by applying Explanation 2 to section 132B as if it barred adjustment against self-assessment tax. Relying on a coordinate-bench decision (Manish Uppal [cited in the order]) and other precedents noted therein, the Tribunal concluded there is no legal bar to treat the seized fixed deposit receipts as credit for self-assessment tax. The Tribunal therefore directed the Assessing Officer to adjust the fixed deposit receipts as self-assessment tax with effect from 11.04.2012, to remove any prior adjustment made towards regular tax, and to recompute interest under section 234B accordingly. [Paras 6, 7]

Seized fixed deposit receipts to be adjusted as self-assessment tax w.e.f. 11.04.2012; prior adjustment towards regular tax to be removed; interest under section 234B to be recomputed.

Final Conclusion: The appeal is allowed on merits: the Tribunal directs adjustment of the seized fixed deposit receipts as self-assessment tax from 11.04.2012, removal of earlier adjustment to regular tax, and recomputation of interest under section 234B; the limitation point in the rectification petition is left open.

Section 68 - cash credits - identity, creditworthiness and genuineness of the creditor - burden shifting in Section 68 - ad-hoc disallowance - requirement of specific rationale and evidential infirmity - Deduction under Section 80IA for infrastructure undertaking owned by Indian company/consortium

Section 68 - cash credits - identity, creditworthiness and genuineness of the creditor - burden shifting in Section 68 - Deletion of addition of unsecured loan of Rs. 77,00,000/- made under Section 68 - HELD THAT: - The Tribunal examined whether the assessee discharged the primary onus under Section 68 by proving identity, creditworthiness and genuineness of the unsecured loan from M/s Pradik Impex Pvt. Ltd. The assessee produced the creditor's PAN, address, ledger entries, bank statements showing receipt of funds from third parties, confirmations and ITR acknowledgments of parties from whom funds were received, and filings on MCA evidencing change of registered office. The Assessing Officer's adverse conclusion rested on summons served at incorrect addresses and on a flawed field enquiry which did not negate the documentary evidence furnished by the assessee. Having found that the three conditions underlying the assessee's initial burden were met, the onus shifted to the AO to prove non-genuineness; the AO failed to do so. The Tribunal therefore upheld the CIT(A)'s deletion of the addition under Section 68. [Paras 23, 24]

Addition under Section 68 deleted; revenue appeal dismissed on this ground.

Ad-hoc disallowance - requirement of specific rationale and evidential infirmity - Deletion of ad-hoc disallowance of Rs. 10,00,000/- made against expenses debited to P&L - HELD THAT: - The Assessing Officer disallowed an ad-hoc sum on the ground that complete bills/vouchers were not produced. The assessee, however, furnished ledger accounts, bank payment evidence and specific supporting documents for sub-contractor payments, power and fuel, insurance, VAT payments and material purchases before the authorities. The CIT(A) found no specific infirmity in the claimed expenses nor any articulated rationale for the particular quantum of ad-hoc disallowance; in absence of pointed defects in the evidence, the ad-hoc adjustment was unjustified. The Tribunal concurs with the appellate finding and declines to interfere. [Paras 29, 30]

Ad-hoc disallowance set aside; revenue appeal dismissed on this ground.

Deduction under Section 80IA for infrastructure undertaking owned by Indian company/consortium - Allowability of deduction claimed under Section 80IA - HELD THAT: - The Tribunal noted that the CIT(A) allowed the deduction after applying settled precedents concerning eligibility of an undertaking for deduction under Section 80IA. Having regard to the authorities relied upon by the lower appellate authority and the reasoning adopted, the Tribunal found no error in the allowance of the claim by the CIT(A). [Paras 31]

Deduction under Section 80IA upheld; revenue appeal dismissed on this ground.

Final Conclusion: All grounds raised by the Revenue were decided against it: the addition under Section 68 in respect of unsecured loan was deleted, the ad-hoc disallowance of expenses was set aside for lack of specific infirmity or rationale, and the claim of deduction under Section 80IA was sustained; accordingly the revenue's appeal is dismissed.

Taxability on accrual versus receipt - hypothetical income versus real income - real income theory - application of income in the year of actual receipt under Explanation (2)(i)(a) of section 11(1) - certainty of realization as prerequisite for accrual - precedential weight of earlier Tribunal and High Court findings

Taxability on accrual versus receipt - hypothetical income versus real income - certainty of realization as prerequisite for accrual - application of income in the year of actual receipt under Explanation (2)(i)(a) of section 11(1) - Whether the 54% share of interest on FDRs could be taxed in the assessee's hands before receipt or crystallisation or should be taxed only on receipt/when certainty as to entitlement is reached - HELD THAT: - The Tribunal found that although a notification apportioned assets between the States, the UP Forest Corporation had not physically parted with the principal or interest and had disputed its liability; proceedings and litigation (including affidavit admissions and subsequent High Court proceedings) showed absence of certainty of realization. Applying the principle that income tax is a levy on real income, not hypothetical entries, and relying on the real-income doctrine and precedent quoted in the judgment, the Tribunal held that taxability requires either actual receipt or a real accrual accompanied by a corresponding liability of the other party. In the factual matrix, the interest remained unrealized and not crystallized between the parties; therefore the 54% share could not be treated as income in the hands of the assessee for the years under appeal. The Tribunal accordingly directed taxation only on receipt or when certainty regarding the interest was reached between the parties, whichever occurred earlier, and deleted the additions made by the Assessing Officer and sustained that approach over the CIT(A)'s contrary view. [Paras 18, 19, 20, 21, 22]

Addition of interest assessed in the assessee's hands deleted; interest to be taxed on receipt or upon crystallisation/certainty of entitlement

Precedential weight of earlier Tribunal and High Court findings - estoppel by prior litigation positions - Effect of earlier Tribunal and High Court decisions and subsequent change of stance by UP Forest Corporation on the question of taxation - HELD THAT: - The Tribunal noted prior Tribunal and High Court decisions had earlier apportioned interest in the ratio of 46:54 and those findings were binding in earlier years; however, the UP Forest Corporation subsequently disputed liability and sought to withhold funds pending resolution of tax liabilities, creating factual uncertainty. The Tribunal held that notwithstanding earlier precedents, the factual absence of payment or crystallisation and the change of position by the UP Forest Corporation meant that the legal entitlement to interest had not attained the requisite certainty for taxation in the assessed years. The Tribunal therefore applied the real-income principle to the present facts rather than mechanically applying prior awards of ratio where realization had not occurred. [Paras 10, 11, 12, 13, 21]

Earlier apportionment decisions do not mandate taxation in the assessed years where entitlement and payment remained disputed and unrealised

Condonation of delay - Whether delay in filing the appeals should be condoned - HELD THAT: - The assessee had delayed filing the appeals while awaiting the outcome of an application under section 154 and clarification regarding treatment of the income; the Tribunal, after hearing objections from the Departmental Representative, accepted the reasons furnished and exercised its discretion to condone the delay in filing the appeals. [Paras 5]

Delay in filing the appeals condoned

Final Conclusion: The Tribunal allowed the appeals for Assessment Years 2008-09, 2011-12, 2012-13 and 2013-14 by deleting the additions of the notional 54% share of interest, holding that such interest could be taxed only on receipt or when entitlement attained certainty; the delays in filing the appeals were condoned.

Deduction of tax at source under section 195 - disallowance under section 40(a)(i) - fee for technical services - taxability of income accruing or received in India - business connection / accrual under section 9(1)(i) - noscitur a sociis

Deduction of tax at source under section 195 - disallowance under section 40(a)(i) - fee for technical services - taxability of income accruing or received in India - noscitur a sociis - Validity of deletion of disallowance under section 40(a)(i) for non-deduction of tax under section 195 in respect of shipment clearing and forwarding charges for AY 2017-18 - HELD THAT: - The Tribunal upheld the CIT(A)'s factual and legal conclusion that payments to overseas logistics providers were for execution of freight and logistics services performed outside India and did not constitute managerial, technical or consultancy services falling within the definition of "fees for technical services". Applying the principle of noscitur a sociis, the Bench held that the words "managerial, technical or consultancy" import direct human involvement in planning, supervision or advisory activity and that routine executional activities (transport, customs clearance, handling, delivery) could not be recast as consultancy or technical services merely because information or tariff-related updates were supplied. Since the amounts were neither received nor deemed to be received, nor found to accrue or arise in India under section 9(1)(vii) or section 9(1)(i), they were not chargeable to tax in India; consequently section 195 was not attracted and invocation of section 40(a)(i) by the Assessing Officer was unsustainable. The Tribunal also noted binding coordinate authority to similar effect and that Revenue did not place contrary material or binding precedent to displace the conclusion reached by the CIT(A). [Paras 5, 11, 12]

The deletion of the disallowance under section 40(a)(i) for AY 2017-18 is affirmed and the Revenue's appeal is dismissed.

Deduction of tax at source under section 195 - disallowance under section 40(a)(i) - fee for technical services - taxability of income accruing or received in India - Applicability of the same conclusion to shipment clearing and forwarding charges for AY 2018-19 - HELD THAT: - Facts and legal questions for AY 2018-19 were identical to AY 2017-18. The Tribunal applied the reasoning and findings recorded in the AY 2017-18 disposal mutatis mutandis, observing that the services were performed outside India and the payments were not chargeable to tax in India; therefore section 195 did not apply and the consequential disallowance under section 40(a)(i) could not be sustained. No distinct or contrary material was advanced by the Revenue for AY 2018-19 to warrant a different conclusion. [Paras 15, 16]

The Revenue's appeal for AY 2018-19 is dismissed, applying the decision in the AY 2017-18 appeal.

Final Conclusion: Both appeals filed by the Revenue for Assessment Years 2017-18 and 2018-19 are dismissed; the Tribunal affirms the CIT(A)'s finding that payments for overseas freight and logistics services were not chargeable to tax in India and therefore were not subject to withholding under section 195 nor liable to disallowance under section 40(a)(i).

Beneficial owner - benefit of DTAA (Article 11 - interest) - tax residency certificate as evidence of residence and entitlement to treaty benefit - treaty concessional rate prevailing over domestic rate where conditions satisfied - delay condonation

Beneficial owner - benefit of DTAA (Article 11 - interest) - tax residency certificate as evidence of residence and entitlement to treaty benefit - treaty concessional rate prevailing over domestic rate where conditions satisfied - Assessee held to be the beneficial owner of interest on CCDs and entitled to taxability at 10% under Article 11 of India Cyprus DTAA instead of taxation at domestic rate. - HELD THAT: - The Tribunal found that the assessee, an entity incorporated and resident of Cyprus, had invested in CCDs in its own name through proper banking channels, bore the financial risks (including foreign currency and counter party risk), and had the unfettered right to receive and enjoy the interest without contractual obligation to pass it to any other person. The assessee produced tax residency certificates for the relevant years and evidence of board management and administrative arrangements in Cyprus. The AO's objections-based on limited transactional activity in Cyprus, shared office/administration, and common shareholder being a Mauritian entity-were rejected: shareholders are distinct from the company and such ownership does not negate beneficial ownership of the assessee over the interest. Reliance on Circular 789 and authorities recognising tax residency certificate as sufficient evidence of beneficial ownership was accepted. On these findings the conditions of Article 11(2) were satisfied and the DTAA concessional rate applied, displacing the AO's application of the domestic rate. [Paras 6, 8, 9, 11, 12]

Assessee is beneficial owner of the interest and interest is taxable in India at 10% under Article 11 of the India Cyprus DTAA; AO's taxation at domestic rate set aside.

Delay condonation - Delay of 32 days in filing the appeal before the Tribunal was condoned and the appeal admitted for adjudication. - HELD THAT: - The assessee explained non receipt of intimation of the appellate order and showed that the order was discovered only when the authorised representative approached the CIT(A)'s office; the appeal was filed promptly thereafter. On these grounds the Tribunal exercised its discretion to condone the delay and admit the appeal. [Paras 2]

Delay condoned and appeal admitted.

Interest under section 234B - Levy of interest under section 234B treated as consequential. - HELD THAT: - The Tribunal recorded that the issue of interest under section 234B arises from the outcome on taxability and therefore its fate follows the primary decision on taxability of the interest income; no separate adjudication on merit was undertaken in the appellate order. [Paras 13]

Levy of interest under section 234B treated as consequential.

Penalty proceedings under section 270A - Initiation of penalty proceedings under section 270A dismissed as premature for adjudication at this stage. - HELD THAT: - The Tribunal held that challenge to initiation of penalty proceedings was not ripe for adjudication in the appeal against assessment and thus declined to decide on the merits of penalty initiation, treating the matter as premature. [Paras 14]

Ground challenging initiation of section 270A penalty proceedings dismissed as premature.

Final Conclusion: Delay in filing the appeal was condoned; on merits the Tribunal held that the assessee is the beneficial owner of interest on CCDs and entitled to taxation at 10% under Article 11 of the India Cyprus DTAA, setting aside the AO's domestic taxation; interest under section 234B is consequential and initiation of penalty proceedings under section 270A was held premature.

Treatment of government subsidy under Package Scheme of Incentives (PSI) as capital receipt - Explanation 10 to section 43(1) - reduction of actual cost of asset for calculation of depreciation - capital receipt versus revenue receipt - deduction under section 80-IA - concept of initial assessment year - treatment of brought forward losses and unabsorbed depreciation for computing profit of eligible business under section 80-IA - judicial consistency and precedential reliance of coordinate bench decisions

Treatment of government subsidy under Package Scheme of Incentives (PSI) as capital receipt - Explanation 10 to section 43(1) - reduction of actual cost of asset for calculation of depreciation - capital receipt versus revenue receipt - Whether subsidy received under the Maharashtra Package Scheme of Incentives (PSI) for investment in plant and machinery for expansion of capacity is required to be reduced from the actual cost of assets under Explanation 10 to section 43(1) and thereby reduce depreciation. - HELD THAT: - The Tribunal examined the NFAC and the nature of the PSI subsidy quantified with reference to capital investment in plant and machinery. Relying on coordinate-bench precedents of the ITAT, Pune, which analysed the PSI scheme and applied the principle that a subsidy serving as an incentive to promote industrial development in backward areas is a capital receipt and is not a payment to meet any portion of the 'actual cost' for purposes of section 43(1), the Tribunal held that Explanation 10 does not apply to require deduction of the subsidy from the actual cost of fixed assets for computing depreciation. The Tribunal accepted the reasoning in earlier ITAT decisions (which considered Supreme Court and High Court authorities on the issue) and applied judicial consistency to allow the assessee's ground and reverse the reduction of depreciation made by the Assessing Officer. [Paras 4, 5]

Subsidy under the PSI scheme is not to be reduced from the actual cost of fixed assets under Explanation 10 to section 43(1); the addition of reduced depreciation is deleted and the assessee's appeal on this point is allowed.

Deduction under section 80-IA - concept of initial assessment year - treatment of brought forward losses and unabsorbed depreciation for computing profit of eligible business under section 80-IA - judicial consistency and precedential reliance of coordinate bench decisions - Whether, for computing deduction under section 80-IA, notionally carried forward losses or unabsorbed depreciation prior to the initial year (or year of claim treated as initial assessment year) can be set off against profits of eligible units, thereby reducing the deduction claimed. - HELD THAT: - The Tribunal noted that NFAC followed the assessee's own earlier decisions of the Pune ITAT and the reasoning of higher judicial authorities which hold that where the assessee validly exercises the option to treat a particular year as the initial assessment year, losses and unabsorbed depreciation that had already been set off against other income in prior years cannot be notionally carried forward to reduce the profits of the eligible business for computing deduction under section 80-IA. Applying those coordinate-bench precedents and the ratio of relevant High Court decisions, the Tribunal found no factual distinction urged by Revenue and, invoking judicial consistency, upheld the NFAC's allowance of the section 80-IA deduction without notionally deducting earlier set-off losses or depreciation. [Paras 7, 8]

The CIT(A)/NFAC's direction to allow the deduction under section 80-IA without notionally deducting brought forward losses or unabsorbed depreciation prior to the initial year is upheld; Revenue's cross-appeal is dismissed.

Withdrawal of appeal - Disposition of the assessee's appeal for assessment year 2018-2019 which was sought to be withdrawn by the assessee. - HELD THAT: - The assessee filed a letter seeking withdrawal of ITA No. 1157/PUN/2023 (AY 2018-2019). The learned Departmental Representative raised no objection. The Tribunal recorded the withdrawal and dismissed the appeal as withdrawn. [Paras 9, 11]

The appeal for AY 2018-2019 is dismissed as withdrawn.

Final Conclusion: The Tribunal, applying coordinate-bench precedents and principles of judicial consistency, allowed the assessee's appeal for AY 2014-2015 by holding that the PSI subsidy is not to be deducted from the actual cost of assets for depreciation purposes; dismissed the Revenue's cross-appeal concerning section 80-IA by upholding allowance of the deduction without notionally setting off earlier losses or unabsorbed depreciation; and dismissed the assessee's appeal for AY 2018-2019 as withdrawn.

Computation of full value of consideration for capital gains on transfer of unquoted shares - Substitution of sale consideration by assessing officer - Inapplicability of Section 50C to valuation of shares of a private limited company whose sole asset is immovable property - Deduction of House Rent Allowance for rent paid to a Hindu Undivided Family (HUF)

Computation of full value of consideration for capital gains on transfer of unquoted shares - Substitution of sale consideration by assessing officer - Inapplicability of Section 50C to valuation of shares of a private limited company whose sole asset is immovable property - Whether the Assessing Officer/CIT(A) was justified in treating the full value of consideration for 201 unquoted shares at a higher price received by another group of shareholders instead of the actual price received by the assessee. - HELD THAT: - The Tribunal found that although another group of shareholders received a higher price for identical shares on the same date, the factual matrix showed a distinguishing internal arrangement: that group were tenants/occupants of the premises and accordingly received higher consideration to secure peaceful and complete possession. In these circumstances the assessee furnished a reasonable explanation for receiving a lower sale price. Section 50C was not applicable to valuation of sale consideration for shares of a private limited company merely because the company's asset was immovable property; hence the reliance on precedents applying Section 50C was misplaced. The Tribunal therefore concluded that the Assessing Officer's substitution of the assessee's actual sale consideration was not justified on the record before it and allowed the ground. [Paras 9]

Assessee's contention accepted; substitution of sale consideration disallowed and ground allowed.

Deduction of House Rent Allowance for rent paid to a Hindu Undivided Family (HUF) - Whether the assessee is entitled to HRA deduction for rent paid to the HUF in whose property the assessee resided. - HELD THAT: - The Tribunal noted that the assessee resided in the house belonging to his grandfather (owned by HUF) and produced bank statements and other relevant documentation evidencing payment of rent. Applying the consistent approach in Tribunal decisions on HRA where rent is actually paid to HUF, the Tribunal held that the assessee was entitled to claim deduction of HRA against the rent paid. [Paras 10]

HRA deduction for rent paid to HUF allowed and ground allowed.

Final Conclusion: The appeal is allowed: the Assessing Officer's substitution of sale consideration for the unquoted shares is set aside and the claim for HRA deduction for rent paid to the HUF is allowed.

Summary order. Respondents granted two weeks to file counter-affidavit; petitioner granted one week thereafter to file rejoinder affidavit; matter listed for the week commencing 22.04.2024.

Threshold limit for tax effect - dismissal of appeals on account of insufficient tax effect - reservation of question of law

Threshold limit for tax effect - dismissal of appeals on account of insufficient tax effect - Appeals dismissed because the tax effect falls below the prescribed threshold limit. - HELD THAT: - The Senior Counsel for the appellant accepted that the tax effect in these appeals is an amount below the threshold limit. On that accepted position the Court dismissed the appeals. The Court recorded the dismissal without deciding any substantive question of law on the merits; the Court expressly kept any question of law, if any, open. Pending applications were directed to stand disposed of.

Appeals dismissed as the tax effect is below the threshold limit.

Final Conclusion: The appeals were dismissed on the admitted basis that the tax effect is below the threshold limit; any question of law remains reserved and pending applications are disposed of.

Maintainability of prosecution under the Indian Penal Code - application of a special statute as a complete code - Section 108 Customs Act - power to summon and compel production - Section 117 Customs Act - penalty for contravention where no specific penalty provided - Sections 174 and 175 IPC - non attendance and omission to produce documents - Sections 4 and 5 CrPC - effect of special law on general criminal procedure

Section 108 Customs Act - power to summon and compel production - Section 117 Customs Act - penalty for contravention where no specific penalty provided - Sections 174 and 175 IPC - non attendance and omission to produce documents - Sections 4 and 5 CrPC - effect of special law on general criminal procedure - application of a special statute as a complete code - Whether a complaint seeking prosecution under Sections 174 and 175 IPC is maintainable where summons were issued under Section 108 of the Customs Act and the Customs Act contains Section 117 as a residual penal provision. - HELD THAT: - Section 108 of the Customs Act empowers a Gazetted Officer to summon any person to give evidence or produce documents and treats such inquiry as a judicial proceeding. Where a person summoned under Section 108 fails to comply, Section 117 of the Customs Act provides a remedy by way of penalty for contravention of the Act where no express penalty is prescribed. The Customs Act is a special statute constituting a self contained code dealing with offences, penalties and procedure in relation to customs matters. In view of Sections 4 and 5 of the Code of Criminal Procedure, a special law governing particular offences and their procedure overrides the general penal provisions of the Indian Penal Code. Consequently, although Sections 174 and 175 IPC ordinarily punish non attendance and omission to produce documents, those provisions do not apply to contraventions falling squarely within the special regime of the Customs Act; the proper course is to invoke the penal mechanism provided by Section 117 of the Customs Act. The Court relied on the principle that a special law prevails over a general law and distinguished earlier decisions which did not consider Sections 108 and 117 in light of Sections 4 and 5 CrPC. [Paras 8, 9, 13]

Complaint seeking prosecution under Sections 174 and 175 IPC is not maintainable in respect of summons issued under Section 108 of the Customs Act; the complaint and orders summoning the petitioner under Sections 174 and 175 IPC are quashed, subject to the respondent's liberty to proceed under Section 117 of the Customs Act.

Final Conclusion: The complaint and the orders summoning the petitioner to face prosecution under Sections 174 and 175 IPC were quashed on the ground that the Customs Act, being a special code with Section 117 as the residual penal provision for contraventions of Section 108, displaces the general penal provisions of the IPC; the DRI is at liberty to proceed under Section 117 of the Customs Act.

Advance Authorization Scheme exemption - Anti-dumping duty (ADD) liability - self-assessment of bill of entry - penalty under Section 117 of the Customs Act - export obligation (EODC) - remand for fresh adjudication - amendment of bill of entry under Section 149 of the Customs Act

Advance Authorization Scheme exemption - Anti-dumping duty (ADD) liability - export obligation (EODC) - remand for fresh adjudication - Whether exemption from ADD under the Advance Authorization Scheme was rightly denied on the ground of non-fulfilment of export obligation - HELD THAT: - The adjudicating authority denied exemption under the Advance Authorization Scheme on the sole ground that the export obligation had not been fulfilled, thereby treating the imported Cold Rolled Flat products as liable to ADD. The appellant produced Export Obligation Discharge Certificates (EODC) which, prima facie, demonstrate fulfilment of the export obligation. The adjudicating authority did not consider the EODC during adjudication. Because the principal basis for denial of exemption disappears in light of the EODC, the Tribunal found that the matter requires fresh consideration by the adjudicating authority. The Tribunal therefore set aside the impugned order and remanded the matter for the adjudicating authority to pass a fresh order after taking into account the export-obligation documentation placed on record by the appellant.

Impugned order set aside and remitted to the adjudicating authority to re-decide the question of exemption from ADD after considering the EODC showing fulfilment of export obligation.

Self-assessment of bill of entry - penalty under Section 117 of the Customs Act - amendment of bill of entry under Section 149 of the Customs Act - remand for fresh adjudication - Whether penalty under Section 117 for alleged incorrect self-assessment is sustainable without re-examination of exemption in light of the EODC - HELD THAT: - The department's allegation that the appellants are liable to penalty under Section 117 stemmed from self-assessment of the bills of entry without debiting ADD. Given that the core contention-denial of exemption-was reached without considering the EODC, the Tribunal held that any consequential determination on levy of penalty cannot be finally adjudicated until the primary question of entitlement to exemption is re-examined. The Tribunal noted that self-assessment is subject to statutory verification and that the adjudicating authority must re-evaluate the assessment and any penalty after accounting for documentary evidence of export-obligation fulfilment.

Determination of liability to penalty under Section 117 is remanded to the adjudicating authority for fresh adjudication after reconsidering exemption in light of the EODC.

Final Conclusion: The impugned order is set aside and the appeal is allowed by remanding the matter to the adjudicating authority to pass a fresh order after taking into account the Export Obligation Discharge Certificates produced by the appellant and re-adjudicating entitlement to exemption from ADD and any consequential penalty.

Classification of goods - Chapter Note 2(c) to Chapter 70 - provisional assessment and finality - preferential tariff benefit under AIFTA / Notification No.46/2011 - extended period of limitation - confiscation and redemption fine - penalty under Section 114A - burden of proof in classification disputes

Classification of goods - Chapter Note 2(c) to Chapter 70 - burden of proof in classification disputes - Imported Clear Float Glass (CFG) is classifiable under CTH 70051090 and not under CTH 70052990. - HELD THAT: - The Tribunal examined the tariff entries and Chapter Note 2(c), the manufacturing process of float glass and the government laboratory test reports which recorded a microscopically thin tin coating on one side that is absorbent and non-reflective. There is no provision in the tariff or Chapter Note prescribing that the absorbent/reflective layer must be on a particular side; the only requirement is the presence of such a microscopically thin layer. The Department's contention that the tin layer arising inherently in the float process cannot be treated as an absorbent layer was rejected. The Tribunal also relied on cogent precedents, advance rulings and a coordinate bench decision of this Tribunal in the appellant's identical matter which held the goods classifiable under 70051090. On the totality of the record, including multiple CSIR-CGCRI test reports and settled practice by domestic manufacturers, the appellants' classification under CTH 70051090 is correct and the reclassification in the impugned order is unsustainable. [Paras 9, 10, 11]

Classification under CTH 70051090 is confirmed and the reclassification to CTH 70052990 is set aside.

Preferential tariff benefit under AIFTA / Notification No.46/2011 - provisional assessment and finality - Appellants are entitled to the benefit of Sl. No. 934 of Notification No.46/2011 for the imported CFG, subject to production of required origin evidence. - HELD THAT: - Given the classification under 70051090, the Tribunal held that the appellants qualify for the concessional treatment under Sl. No. 934 of the Notification, subject to fulfilment of the documentary conditions regarding origin. The Tribunal noted that many of the imports had earlier been provisionally assessed and finally regularised on the basis of test reports in favour of the importer; those finalised assessments attained finality and support the claim to exemption. The Department's denial of the notification benefit in the impugned order was therefore erroneous. [Paras 8, 12, 14]

Benefit under Sl. No. 934 of Notification No.46/2011-Cus is available to the appellants, subject to production of valid evidence of origin.

Extended period of limitation - confiscation and redemption fine - penalty under Section 114A - Invocation of the extended period, demand of duty for the extended period, confiscation (and redemption fine) and penalty are not sustainable. - HELD THAT: - The Tribunal found that the challenge to classification arose from an audit objection and that for the period November 2018 to June 2019 sixty-one Bills of Entry had been provisionally assessed and subsequently finalised in favour of the appellant based on test reports. Where imports were finally assessed on those reports, revenue could not invoke the extended period in respect of those entries. Further, because the primary demand itself (reclassification and denial of notification) was unsustainable, consequential measures - extended-period demand, mandatory penalty and confiscation with redemption fine - could not be sustained. The Tribunal emphasised that there was no suppression or mis-declaration warranting extended limitation or mandatory penalties and that confiscation of the imported goods was unjustified once classification was held correct. [Paras 11, 14, 15]

Extended period invocation, confirmed demand under extended period, penalty and confiscation (and redemption fine) are set aside.

Final Conclusion: Appeal allowed. The impugned Order-in-Original No. 101620/2023 dated 11.04.2023 is set aside: classification of the imported Clear Float Glass under CTH 70051090 is confirmed; entitlement to Sl. No. 934 of Notification No. 46/2011-Cus is recognized subject to proof of origin; demands raised by invoking the extended period, the penalty and the confiscation with redemption fine are quashed. Consequential relief, if any, to be given as per law.

Winding up of unregistered company under Section 583 - Maintainability of winding up petition against a foreign company - Company incorporated outside India treated as unregistered company in India - Transfer of pending winding up proceedings to the NCLT - Nascent-stage/advanced-stage test for transfer of winding up proceedings (Action Ispat principle)

Winding up of unregistered company under Section 583 - Maintainability of winding up petition against a foreign company - Company incorporated outside India treated as unregistered company in India - Maintainability of the winding up petition against the respondent foreign company as an unregistered company - HELD THAT: - The Court examined Section 582 and Section 583 of the Companies Act, 1956 and held that a company incorporated outside India which carries on business in India falls to be treated, for the purposes of Part II, as an unregistered company. The circumstances in which an unregistered company may be wound up are set out in Section 583(4), including inability to pay its debts. Having regard to the admitted facts that the respondent failed to discharge the debt demanded by the petitioner and the statutory framework (supported by the Supreme Court's decision in Rajah of Vizianagram v. Official Receiver and Official Liquidator), the Court concluded that the respondent is an unregistered company amenable to winding up and that the petition is maintainable on that basis. [Paras 9, 10]

Winding up petition against the respondent foreign company is maintainable under Section 583 of the Companies Act, 1956

Transfer of pending winding up proceedings to the NCLT - Nascent-stage/advanced-stage test for transfer of winding up proceedings (Action Ispat principle) - Whether the pending winding up proceedings before the High Court should be transferred to the NCLT - HELD THAT: - The Court noted that the petition, though admitted and a Liquidator appointed, had not proceeded to any substantive or irreversible stage and remained at a nascent stage with no substantive steps taken by the Official Liquidator. Applying the principle in Action Ispat that only proceedings which have progressed to an irreversible stage should be retained by the Company Court, and having regard to Section 434 which contemplates transfer of pending winding up matters to the Tribunal, the Court held that these proceedings ought to be transferred to the NCLT for continuation from the stage before transfer. [Paras 5, 12, 13, 14, 16]

Proceedings transferred to the NCLT as they are at a nascent stage and no irreversible steps have been taken

Final Conclusion: The High Court held the winding up petition maintainable against the respondent foreign (unregistered) company under Section 583, and, finding the proceedings to be at a nascent stage with no substantive or irreversible steps taken, ordered transfer of the petition to the NCLT; parties were directed to appear before the NCLT and the High Court records were to be transmitted accordingly.

Maintainability of contempt proceedings before the Tribunal - power of the Tribunal under Section 425 to punish for contempt - transfer of proceedings under Section 434 - doctrine of merger of orders in appellate hierarchy - impossibility of performance / non existence of subject matter - distinction between contempt proceedings and execution - vicarious liability of directors in contempt proceedings

Maintainability of contempt proceedings before the Tribunal - power of the Tribunal under Section 425 to punish for contempt - transfer of proceedings under Section 434 - Whether the contempt petition filed before the Tribunal alleging disobedience of the CLB order dated 27.05.2016 was maintainable. - HELD THAT: - The Tribunal lacked a valid basis to treat the contempt petition as a transferred or pending proceeding arising from the CLB on the notified date under Section 434 because no contempt application or execution was pending before the CLB as on 01.06.2016. Section 425 confers on the Tribunal the power to punish for contempt of itself; it does not, without more, create a parallel jurisdiction to punish contempt of an erstwhile CLB order that was not a transferred proceeding. The Bench recorded that the CLB had no power to initiate contempt proceedings and that only transferred matters pending as on the notified date stood revested in the Tribunal; where no such pending contempt proceeding existed on that date an original petition filed thereafter could not be treated as a transferred proceeding. The Tribunal's cursory finding that preliminary objections on maintainability were dealt with when notice issued was inadequate; the Appellate Tribunal found the contempt petition on this basis to be not maintainable and set aside the impugned order. [Paras 54, 55, 56, 61, 66]

Contempt petition founded on alleged disobedience of the CLB order was not maintainable before the Tribunal and the impugned order in that contempt petition was set aside.

Doctrine of merger of orders in appellate hierarchy - distinction between contempt proceedings and execution - Whether the CLB order of 27.05.2016, having been the subject of appeal, merged into the High Court and Supreme Court orders and whether contempt could be initiated on the CLB order rather than the appellate order. - HELD THAT: - The Appellate Tribunal applied the principle that where a higher forum entertains an appeal and passes an order on merits, the doctrine of merger operates so that the operative decree is that of the appellate court. In the present matter the CLB order was subsequently the subject of appeal to the High Court and the Supreme Court and, applying merger principle and relevant authorities, contempt, if any, would lie in relation to the appellate order and not a non operative lower forum order. Further, the Court emphasised that contempt procedure cannot be used as a surrogate for execution; execution proceedings are the proper forum to examine executability and impossibility of performance. The Tribunal's approach of proceeding against contemnors on the basis of the CLB order without addressing these aspects was held to be infirm. [Paras 59, 60, 61, 62, 65]

Because the CLB order had merged in higher orders, contempt could not properly be proceeded on the CLB order and the Tribunal erred in treating the CLB order as the basis for contempt rather than the appellate orders; contempt is not a substitute for execution.

Impossibility of performance / non existence of subject matter - distinction between contempt proceedings and execution - Whether the Tribunal could direct monetary compensation and enforcement in respect of preference shares that had been cancelled pursuant to a final reduction of capital order. - HELD THAT: - The Tribunal itself recorded that the preference shares in question had been cancelled and ceased to exist as a consequence of the High Court's order sanctioning reduction of capital; where the subject matter no longer exists a court cannot compel revival or performance that is legally impossible. The Appellate Tribunal noted that, had the claim been pursued by execution, the company would have had the opportunity to raise objections of impossibility; 3A Capital's choice to seek contempt rather than execution was held to be an attempt to bypass those safeguards. Consequently, the award of monetary compensation and additional directions (including legal costs and payment to the MCA) in respect of cancelled shares was not sustainable in the contempt proceedings. [Paras 31, 37, 64, 65]

The Tribunal's directions to pay compensation and other monetary awards in respect of shares that had been extinguished by a final reduction of capital were unsustainable; contempt was not the proper vehicle to enforce obligations in respect of non existent subject matter.

Vicarious liability of directors in contempt proceedings - maintainability of contempt proceedings before the Tribunal - Whether the non executive/independent/nominee directors could be held liable in the contempt proceedings in the circumstances of this case. - HELD THAT: - The directors-appellants were non executive, independent or nominee directors who averred lack of involvement in day to day management and there were no specific pleadings or evidence demonstrating how they were responsible for the alleged disobedience. Given the Appellate Tribunal's conclusion that the contempt petition itself was not maintainable for the reasons stated, the ancillary directions against the directors could not stand. The Tribunal had not made contrary findings establishing personal culpability under principles of vicarious liability; accordingly, directions insofar as they bound the directors pending payment were held unsustainable. [Paras 40, 66]

Directions and consequences imposed upon the non executive/independent directors in the impugned contempt order are not sustainable because the contempt petition was not maintainable and there was no specific adjudication of their personal culpability.

Final Conclusion: The appeals filed by the Company and its directors were allowed and the impugned contempt order dated 12.05.2022 was set aside; the appeal filed by 3A Capital was dismissed. The Appellate Tribunal found the contempt petition to be not maintainable for multiple reasons including absence of a transferred proceeding, operation of merger of appellate orders, and impossibility of enforcing an obligation in respect of shares extinguished by a final reduction of capital; consequential directions against the company and directors were set aside.

Liquidator's fee - Computation of liquidation period - Exclusion of periods for fee calculation - Adjudicating Authority's power to grant exclusions - Regulation 4 of the IBBI (Liquidation Process) Regulations, 2016 - IBBI clarification on exclusions for fee calculation

Computation of liquidation period - Exclusion of periods for fee calculation - Adjudicating Authority's power to grant exclusions - Liquidator's fee - Correct computation of the liquidation period for the purpose of determining the liquidator's fee after applying eligible exclusions ordered by the Adjudicating Authority - HELD THAT: - The adjudicatory exercise concerned whether certain periods were properly excluded from the liquidation period when computing the liquidator's fee under Regulation 4 of the Liquidation Process Regulations. The Adjudicating Authority (AA) had excluded, by orders dated 01.11.2021, 30.03.2022 and 02.02.2023, the period from 15.03.2020 to 02.02.2023 and, on that basis, computed the liquidation period as 174 days (para 7). The appellant challenged exclusion of the 37-day span from 03.10.2021 to 08.11.2021, contending no stay or hindrance operated during that interval. The Tribunal examined the AA's orders and noted a discrepancy: one AA order excluded the period of the stay (from 09.11.2021), while another directed exclusion of the period consumed in adjudication of IA Nos. 471/2021 and 550/2021 (paras 16-18). The Tribunal held that incapacity to act due to a stay arose only from 09.11.2021 when the stay order was passed, and that there was no valid restriction preventing the liquidator from acting during 03.10.2021-08.11.2021 (para 19). Consequently, the AA erred in granting exclusion for the period consumed in adjudication instead of excluding only the period during which the auction was under an operative stay. Adding back the 37 days to the AA's computation increased the liquidation period from 174 to 211 days; the Tribunal therefore fixed the period consumed in liquidation at 211 days and directed the Stakeholder Consultation Committee to compute and pay the liquidator's fees accordingly (para 19). The Tribunal also recorded the relevance of the IBBI circular requiring judicial authority for exclusions but based its decision on the AA's orders and on the operative dates of stay and adjudication as recorded in the orders (paras 10-13, 18-19). [Paras 7, 18, 19]

The period 03.10.2021 to 08.11.2021 is not eligible for exclusion; the correct liquidation period is 211 days and the Stakeholder Consultation Committee is directed to compute and pay the liquidator's fees accordingly, with a compliance affidavit to be filed within three weeks.

Final Conclusion: The appeal is disposed by directing that the period 03.10.2021-08.11.2021 not be excluded; the liquidation period is determined as 211 days and the Stakeholder Consultation Committee shall compute and pay the liquidator's fees in accordance with that period, with compliance to be filed within three weeks; all pending IAs, if any, are closed.

Powers of authorities to issue summons under Section 50 of PMLA - ECIR as an internal document of the Enforcement Directorate - distinction between ECIR and FIR - Article 20(3) and testimonial compulsion - premature intervention at summons stage - scope of investigation/ inquiry under PMLA versus criminal prosecution

Powers of authorities to issue summons under Section 50 of PMLA - premature intervention at summons stage - ECIR as an internal document of the Enforcement Directorate - distinction between ECIR and FIR - Article 20(3) and testimonial compulsion - Quashing of the impugned ECIRs and summons issued under Section 50 PMLA at the stage of investigation - HELD THAT: - The Court held that Section 50 empowers designated PMLA officers to summon any person to give evidence or produce records during the course of investigation/proceedings under the Act, and such power is exercisable in aid of inquiry into existence of proceeds of crime and involvement of persons. The judgment in Vijay Madanlal Choudhary was applied to recognise that an ECIR is an internal document of the ED and is not equivalent to an FIR, and that supply of ECIR is not mandatorily required at the summons stage. Article 20(3) protection against testimonial compulsion is triggered only if the person is an accused at the relevant time; mere summons under Section 50 for inquiry does not attract that protection. In the facts of this petition the applicant's grievance was premature: the applicant's status (witness or accused) was not determined, the contents of the subsequent ECIRs were not placed before the Court, and interference at the stage of issuance of summons would impede the investigation. Having regard to the special inquiry-based scheme of the PMLA and precedents limiting judicial interference at the summons stage, the petition for quashing the ECIRs/summons was refused. [Paras 26, 27, 28, 29, 30]

No ground to quash the impugned ECIRs or the summons issued under Section 50 PMLA; petition dismissed.

Distinction between multiple ECIRs and same cause of action - premature intervention at summons stage - Whether the subsequent ECIRs arise out of the same cause of action as earlier ECIR/complaint and therefore impermissible re-investigation - HELD THAT: - The Court declined to adjudicate the question in the absence of the contents of the ECIRs and necessary materials. It noted that an ECIR is not an FIR and that whether two inquiries are identical in substance is a matter of fact and material that must be shown on record; hypothetical discussion was avoided for want of requisite material. The Court recorded that the ED had not placed the ECIRs on record (though it offered to do so in sealed cover) and therefore no opinion could be formed on whether the subsequent ECIRs cover the same conspiracy or a broader/ distinct canvas. The Court indicated that determination of identity/overlap of causes of action requires perusal of the materials of investigation and is not amenable to adjudication on the present record. [Paras 18, 19, 20, 28]

Not decided on merits for want of material; determination of whether the subsequent ECIRs relate to the same cause of action must await production of the ECIRs/materials and appropriate consideration.

Final Conclusion: The petition under Section 482 Cr.P.C. seeking quashing of the impugned ECIRs and summons is dismissed; no interference is warranted at the summons stage, and the question whether the subsequent ECIRs duplicate an earlier cause of action was left undecided for want of material.

Medical condition as relevant factor for bail under Proviso to Section 45 of the Prevention of Money-Laundering Act, 2002 - grant of bail on medical grounds - conditions for bail including passport seizure and surety of close blood relative - requirement to cooperate with ongoing investigation

Medical condition as relevant factor for bail under Proviso to Section 45 of the Prevention of Money-Laundering Act, 2002 - grant of bail on medical grounds - conditions for bail including passport seizure and surety of close blood relative - requirement to cooperate with ongoing investigation - Petitioner granted bail on medical grounds subject to specified conditions. - HELD THAT: - The Court found that the petitioner's advanced age and serious medical ailments - including a non-functioning pancreatic gland requiring an insulin pump, prostate-related ailments and ongoing treatment for high blood pressure - constitute relevant considerations under the Proviso to Section 45 of the Prevention of Money-Laundering Act, 2002 for the grant of bail. The Court observed the factual background including attachment of property by the Enforcement Directorate but concluded that a case for bail is made out in view of the petitioner's medical condition. Bail was ordered to be granted on the usual conditions imposed by the concerned court, with additional safeguards: seizure of the petitioner's passport if not already seized, one of the two sureties to be a close blood relative, and an express condition that the petitioner cooperate fully in the ongoing investigation.

Petitioner to be released from jail on usual bail conditions, passport to be seized if not already taken, one of two sureties to be a close blood relative, and release is subject to full cooperation with the ongoing investigation.

Final Conclusion: Special leave petition disposed of by directing release of the petitioner on bail on medical grounds subject to the usual conditions, passport seizure, a close-relative surety and cooperation with the investigation; pending applications disposed of.

Dismissal of special leave petition - Interference with impugned judgment - Right of an accused to draw attention of investigating authority to existing complaint

Dismissal of special leave petition - Interference with impugned judgment - Validity of interfering with the impugned judgment in the special leave petition - HELD THAT: - After hearing counsel, the Court declined to interfere with the impugned judgment and judgment of the court below is left undisturbed. The Court recorded no appellate intervention on merits and refused to grant relief sought in the special leave petition. The Court, however, observed that the petitioner may draw the attention of the appropriate authorities to the fact that he is already an accused in the complaint lodged by the Enforcement Directorate, thereby leaving an administrative or investigatory avenue open to the petitioner without judicial interference in the impugned order.

Special leave petition dismissed; petitioner permitted to inform authorities that he is already an accused in the Enforcement Directorate complaint; pending applications disposed of.

Final Conclusion: The Supreme Court dismissed the special leave petition, declined to interfere with the impugned judgment, allowed the petitioner to bring to the authorities' notice that he is an accused in the Enforcement Directorate complaint, and disposed of pending applications.

Limitation and condonation of delay in filing appeal - Pre-deposit condition for admission of appeal - Remand for fresh consideration and opportunity of personal hearing

Limitation and condonation of delay in filing appeal - Whether the question of delay in filing the appeal requires fresh adjudication by the Commissioner (Appeals) - HELD THAT: - The Tribunal noted that the Commissioner (Appeals) dismissed the appellant's appeal on the ground that it was filed beyond the extended time limit and relied on settled precedent concerning the limited power of the appellate authority to condone delay. The Bench observed that the Commissioner (Appeals) did not decide the appeal on merits but dismissed it on delay. In view of the absence of a merits decision and the appellant's non-appearance before this Tribunal, the matter of the date of communication of the order-in-original and the question of delay are to be examined afresh by the Commissioner (Appeals). The appellant is directed to produce proper evidence as to the date of communication of the order-in-original so that the Commissioner (Appeals) can reconsider the issue after giving an opportunity of hearing. [Paras 5]

Remanded to the Commissioner (Appeals) to receive evidence of date of communication and to re-examine the question of delay after affording opportunity of hearing.

Pre-deposit condition for admission of appeal - Remand for fresh consideration and opportunity of personal hearing - Whether the question of compliance with the pre-deposit requirement for filing the appeal requires fresh adjudication by the Commissioner (Appeals) - HELD THAT: - The Tribunal recorded the Commissioner (Appeals) finding that the appellant had not furnished the requisite pre-deposit of 7.5% of the contested liability and that no application for dispensation or stay under the relevant provision was on record. The Bench also observed that a Challan was on file but it was not clear whether it related to the present appeal. Since the appeal was not disposed of on merits and the factual position on pre-deposit remained uncertain, the Tribunal directed that the appellant supply details of any pre-deposit made before the Commissioner (Appeals). Thereafter the Commissioner (Appeals) must give the appellant a proper personal hearing and decide the matter in accordance with law and principles of natural justice. [Paras 3, 4, 5, 6]

Remanded to the Commissioner (Appeals) to verify details/evidence of pre-deposit, grant personal hearing and decide the pre-deposit/maintainability issue in accordance with law.

Final Conclusion: The appeal was not decided on merits by the Commissioner (Appeals); the Tribunal has remanded the questions of (i) date of communication/limitation and (ii) compliance with the pre-deposit requirement to the Commissioner (Appeals) for fresh consideration after the appellant furnishes relevant evidence and is afforded a personal hearing in accordance with principles of natural justice.

Revenue sharing agreement - exclusive right to sell advertising time - sale of space or time for advertisement (taxable service) - service provider-service receiver relationship - frustration / supervening impossibility - conversion of deposit into equity (novation) - extended period of limitation (investigation-based invocation) - reasonable cause and penalty condonation under Section 80

Revenue sharing agreement - service provider-service receiver relationship - sale of space or time for advertisement (taxable service) - Characterisation of the agreement between FMPL and IMPL as a revenue sharing/partnership arrangement and not a taxable sale/provision of advertising space or time - HELD THAT: - The Tribunal accepted the Adjudicating Authority's analysis of the agreement's terms and commercial structure, holding that the contract granted IMPL an exclusive marketing/right to sell advertising time to corporate clients and prescribed a scheme for minimum guarantees, fixed remuneration to IMPL and detailed sharing of net revenues. These features demonstrate pooling of resources and profit sharing rather than an outright sale or provision of defined advertising space/time to IMPL. The agreement does not specify transfer of a defined quantity of space/time or rates for bulk sale; instead it contemplates sharing of net proceeds and a fixed fee to recognize IMPL's entitlement in the joint activity. Applying the Board's Circular on revenue sharing arrangements and the statutory definition of the taxable service, the Tribunal concluded that no taxable service of "sale of space or time for advertisement" was provided to IMPL, and therefore the amounts paid could not be treated as consideration for such a taxable service. [Paras 23, 24, 26, 27, 28]

The agreement is a revenue sharing/partnership contract and not a contract for provision/sale of advertising space/time; thus the payments are not consideration for the taxable service.

Frustration / supervening impossibility - conversion of deposit into equity (novation) - Effect of the High Court order which halted billboard operations and the parties' subsequent novation by converting deposits into equity - HELD THAT: - The Tribunal found that the business was frustrated by the High Court's order of 28.08.2007, making performance of the contract impossible. In the changed circumstances the parties agreed to novate the original arrangement by converting the amounts paid by IMPL into equity; the allotment of shares and the filing of the requisite return before the Registrar of Companies were noted as evidence of implementation. The Tribunal treated the novation and the supervening impossibility as material facts that negate the contention that services were provided or were liable to be provided under the original contract. [Paras 5, 6, 13, 29]

The contract was frustrated by supervening impossibility and was novated by conversion of the deposits into equity; obligations under the original agreement stood discharged.

Extended period of limitation (investigation-based invocation) - reasonable cause and penalty condonation under Section 80 - Whether the Department was entitled to invoke the extended period and impose penalties, and whether delay in payment/filing attracted penalties - HELD THAT: - The Tribunal recorded that FMPL had been registered, maintained records and filed returns; the disruption caused by the High Court order, business closure, resignation of a director and criminal proceedings were accepted as events giving rise to reasonable cause for delayed compliance. The Adjudicating Authority had found that the belated payments were not linked to amounts received from IMPL and, applying Section 80, refrained from imposing penalties. The Tribunal endorsed that there was reasonable cause for delay and that extended period/penalty invocation by the Commissioner was not sustainable in the circumstances. [Paras 13, 31, 32]

Extended period and penalties could not be sustained; reasonable cause existed for delay and penalty was not warranted.

Principle distinguishing revenue-sharing contracts from taxable service - Appropriate relief and final outcome of the departmental proceedings in view of the foregoing findings - HELD THAT: - On the combined conclusions that the agreement was a revenue sharing partnership, that the business was frustrated and novated into equity, and that reasonable cause existed for delayed compliance, the Tribunal found the Commissioner's review and confirmation of demand unsustainable. The Tribunal therefore set aside the Commissioner's review order and restored the Order in Original passed by the Joint Commissioner which had dropped the proceedings. [Paras 13, 14]

The review order was set aside and the Order in Original dropping the proceedings was confirmed; the appeal is allowed.

Final Conclusion: The Tribunal held that the contract between FMPL and IMPL was a revenue sharing/partnership arrangement (not a taxable sale/provision of advertising space/time), that the business was frustrated by the High Court order and novated by conversion of deposits into equity, and that reasonable cause existed for delayed compliance; accordingly the Tribunal set aside the Commissioner's review order, confirmed the Order in Original which had dropped the proceedings, and allowed the appeal.

Application of precedent - binding effect of Supreme Court precedent - confirmation of Tribunal decision - set aside duty demand - penalty and duty demand beyond the period of normal limitation

Application of precedent - binding effect of Supreme Court precedent - Civil Appeal No. 9146 of 2011 is governed by the law laid down in Commissioner of Central Excise vs. Indian Aluminium Co. Ltd and is dismissed. - HELD THAT: - The Court recorded that there was no dispute that the appeal fell squarely within the legal principle established in Commissioner of Central Excise vs. Indian Aluminium Co. Ltd. Having applied that binding precedent, the Court dismissed the appeal without further enquiry into the merits. [Paras 1]

Appeal dismissed as governed by the cited Supreme Court precedent.

Application of precedent - confirmation of Tribunal decision - set aside duty demand - penalty and duty demand beyond the period of normal limitation - Civil Appeals Nos. 6219-6220 of 2012 succeed and the duty demand is set aside in view of the authorities relied upon. - HELD THAT: - The Court accepted that these appeals were covered by the law laid down in the aforesaid Supreme Court decision and noted supporting Tribunal decisions in favour of the appellant, one of which had been confirmed by this Court. Given that the impugned judgment had already set aside the order of penalty and the duty demand for the period beyond normal limitation, the Court held that the appeals must succeed and set aside the duty demand, directing consequential actions to follow. [Paras 2, 4]

Appeals allowed; duty demand set aside and consequential actions to follow.

Final Conclusion: One appeal (Civil Appeal No. 9146 of 2011) dismissed as governed by the cited Supreme Court precedent; the other appeals (Civil Appeals Nos. 6219-6220 of 2012) allowed and the duty demand set aside, with consequential actions to follow.

Maintainability of appeal - appeal to High Court - substantial question of law - value of service - appeal to Supreme Court - exclusion of period for limitation

Appeal to High Court - value of service - substantial question of law - appeal to Supreme Court - Whether an appeal to the High Court under Section 35G is maintainable where the order relates to determination of the value of service. - HELD THAT: - The Court held that Section 35G, while providing for appeals to the High Court where a case involves a substantial question of law, does not permit the High Court to entertain appeals that relate to the determination of the value of service. The legislative scheme confines challenges on questions relating to value to the remedy under Section 35L, which contemplates appeal to the Supreme Court. In consequence, the High Court lacks jurisdiction to adjudicate the appellant's grievance on the value issue and the remedy, if any, lies before the Supreme Court. The Court therefore dismissed the appeal but granted liberty to the appellant to approach the Supreme Court and to seek that the period during which this appeal was pending be excluded for the purposes of limitation. [Paras 3, 4]

Appeal to the High Court on the question of value of service is not maintainable; appeal dismissed with liberty to approach the Supreme Court and to seek exclusion of time for limitation.

Final Conclusion: The High Court dismissed the appeal for want of jurisdiction to decide the question of value of service, holding that such matters fall to be agitated before the Supreme Court under Section 35L; liberty granted to the appellant to approach the Apex Court and to seek exclusion of the period during which this appeal was pending.

Inordinate delay in adjudication of show cause notice - limitation and time-limits under Section 11A(11) of the Central Excise Act, 1944 - extended period of limitation for fraud, collusion, wilful mis-statement or suppression of facts - transfer of CENVAT credit consequent to merger/amalgamation under Rule 10 of the Cenvat Credit Rules, 2004 - transfer to call book and duty to inform the assessee - prejudice from delay and right to speedy adjudication under Article 14 - maintainability of writ under Article 226 in presence of alternative statutory remedy (appeal under Section 35B)

Limitation and time-limits under Section 11A(11) of the Central Excise Act, 1944 - inordinate delay in adjudication of show cause notice - prejudice from delay and right to speedy adjudication under Article 14 - transfer to call book and duty to inform the assessee - Validity of the show cause notice dated 10.09.2008, consequential personal hearing notices and the Order-in-Original dated 04.09.2023 in view of prolonged delay and statutory time-limits under Section 11A(11). - HELD THAT: - Section 11A(11) requires, where possible, determination of duty within six months (for matters not involving suppression etc.) or within the stipulated extended period where proviso applies. The show cause notice dated 10.09.2008 only came to the petitioner's notice after personal hearing notices in December 2017 and January 2018-over nine years later-and the final order was passed in September 2023. The authority offered no adequate explanation to justify the prolonged interval or the retrieval of the matter from any dormant list/call book after many years. The delay in initiating and completing adjudication, together with the department's failure to inform the petitioner about transfer to call book or to take timely steps, caused prejudice and rendered the adjudication contrary to the statutory mandate and principles of fairness. Reliance on decisions holding that extended limitation is available only where suppression, fraud or similar positive conduct is shown informed the conclusion that the statutory time-limits and the requirement that matters be adjudicated within a reasonable period are not meaningless; the elasticity in "where it is possible to do so" does not permit perpetually deferred adjudication. In the facts of this case, the delay was unreasonable and fatal to the proceedings. [Paras 8, 11, 12, 13, 23]

The show cause notice dated 10.09.2008, the personal hearing notices dated 05.12.2017 and 05.01.2018, and the Order-in-Original dated 04.09.2023 are quashed as vitiated by inordinate and unexplained delay contrary to Section 11A(11) and principles of fairness.

Transfer of CENVAT credit consequent to merger/amalgamation under Rule 10 of the Cenvat Credit Rules, 2004 - extended period of limitation for fraud, collusion, wilful mis-statement or suppression of facts - Whether the department could, after granting permission for transfer of unutilised CENVAT credit consequent to amalgamation and after long lapse of time, revive demand by invoking extended limitation on account of alleged suppression of facts. - HELD THAT: - The petitioner obtained permission on 24.12.2004 for transfer of the unutilised CENVAT credit of the transferor company pursuant to merger, under Rule 10. Where the competent authority had allowed transfer after being satisfied, the department could not turn around many years later and proceed to recover the credited amount without timely adjudication. The proviso to Section 11A permitting extended limitation for fraud, suppression or similar conduct requires positive material showing deliberate suppression; where the facts were known to the department or where the department had approved the transfer, merely reviving the matter after long inaction is not a permissible basis to invoke extended limitation. The Court observed that the show cause proceedings were founded on AG (Audit) objections and that no adequate, contemporaneous justification was furnished to sustain invocation of extended limitation. [Paras 2, 8, 10, 11]

The department cannot, in these circumstances, rely on the extended period under Section 11A proviso to sustain a belated demand; the challenge to the retrospective revival of the claim succeeds.

Maintainability of writ under Article 226 in presence of alternative statutory remedy (appeal under Section 35B) - exception for exercise of writ jurisdiction where public authority has committed statutory infraction or principles of natural justice violated - Whether the writ petition under Article 226 was maintainable despite the existence of an alternative statutory remedy of appeal under Section 35B of the Central Excise Act. - HELD THAT: - Although statutory remedies ordinarily require exhaustion, the High Court has discretion to entertain a writ where exceptional circumstances exist. The Court found that the department's statutory infraction in allowing the matter to remain dormant and then adjudicating after an inordinate delay, without adequately addressing limitation objections and without informing the petitioner of transfer to call book, constituted circumstances justifying exercise of writ jurisdiction. Prejudice to the petitioner and violation of principles of fair adjudication rendered relegation to the appellate forum inappropriate in this case. Authorities establishing that writ jurisdiction should not be exercised as a norm where effective alternative remedies exist were considered, but the court concluded that the peculiar facts-long delay, absence of explanation, and procedural lapse-warranted direct relief. [Paras 4, 15, 16, 18]

The writ was maintainable in the peculiar facts of this case and the petitioner need not be relegated to the statutory appellate forum.

Final Conclusion: The High Court allowed the petition: the show cause notice dated 10.09.2008, the consequential personal hearing notices dated 05.12.2017 and 05.01.2018, and the Order-in-Original dated 04.09.2023 confirming the demand were quashed on the ground of inordinate and unexplained delay in adjudication (breach of Section 11A(11) and principles of fairness); the Court also held that in the exceptional facts the writ was maintainable despite the existence of an alternative statutory remedy. No order as to costs.

Refund of accumulated Cenvat Credit on export of exempted goods - refund under Rule 5 of Cenvat Credit Rules, 2004 for exported exempted goods - eligibility for Cenvat credit where inputs and input services are used in manufacture of exported exempted goods - export under bond as procedural requirement

Refund of accumulated Cenvat Credit on export of exempted goods - export under bond as procedural requirement - eligibility for Cenvat credit where inputs and input services are used in manufacture of exported exempted goods - refund under Rule 5 of Cenvat Credit Rules, 2004 for exported exempted goods - Whether refund of accumulated Cenvat Credit attributable to export is allowable where final products are exempted from duty but were not exported under bond - HELD THAT: - The Tribunal held that refund of accumulated Cenvat Credit is allowable on export of goods even if the final products are exempted from payment of Central Excise Duty, and non-execution of bond/LUT is a procedural lapse which does not defeat substantive refund entitlement. The decision relies on settled precedents, including Jolly Board Ltd. , Jobelle , Repro India Ltd. and Commissioner of Central Excise v. Drish Shoes Ltd. , which establish that (a) the policy is to avoid exporting domestic duties and thus to allow refund where inputs/input services bearing duty have gone into exported goods; (b) the exception in Rule 6 (6) of the Cenvat Credit Rules, 2004 contemplates availability of credit/refund for excisable goods (including exempted goods) when exported; and (c) non-execution of bond or LUT is a procedural/technical lapse and cannot be a ground to deny the substantive relief of refund where the fact of export is not in dispute. Applying these principles to the facts, and noting that the appellant had earlier been allowed refund for prior periods, the Tribunal concluded that the appellant is entitled to Cenvat credit/refund attributable to export under Rule 5 of the Cenvat Credit Rules, 2004. [Paras 6, 10, 11]

Appellant entitled to refund of accumulated Cenvat Credit attributable to export of exempted goods; non-submission of bond is only a procedural lapse and does not disentitle appellant to refund.

Final Conclusion: Impugned order rejecting refund is set aside; appeal allowed and appellant granted consequential relief in respect of refund for April, 2017 to June, 2017, following the settled principle that refund under Rule 5 CCR, 2004 is available for exported exempted goods and non-execution of bond/LUT is a procedural lapse.

Cenvat credit of Clean Energy Cess - Interpretation of CENVAT Credit Rules (Rule 3, CCR 2004) - Applicability of Section 37 of the Central Excise Act to Clean Energy Cess - Polluter pays principle - Interest on wrongly availed Cenvat credit (availed and utilized v. availed but reversed) - Penalty under Rule 15 of CENVAT Credit Rules, 2004 - Tribunal's power to test vires of subordinate legislation (subject to judicial review)

Cenvat credit of Clean Energy Cess - Interpretation of CENVAT Credit Rules (Rule 3, CCR 2004) - Applicability of Section 37 of the Central Excise Act to Clean Energy Cess - Polluter pays principle - Entitlement to Cenvat credit of Clean Energy Cess paid on coal - HELD THAT: - The Tribunal held that Rule 3 of the CENVAT Credit Rules, 2004 expressly lists the duties and cesses eligible for credit and does not include the Clean Energy Cess (CEC). Section 37 of the Central Excise Act, under which the CCR, 2004 are framed, has not been made applicable to the CEC by the Finance Act, 2010; only select provisions of the Central Excise Act were made applicable to CEC. In these circumstances the Tribunal declined to extend or enlarge the scope of Rule 3 by judicial construction. The Tribunal also examined the purpose of the CEC - levied to discourage polluting fuels and to finance clean energy initiatives - and observed that allowing Cenvat credit would defeat the legislative purpose and the polluter pays principle. The decision in Shree Renuka Sugars was distinguished on the ground that the entire Central Excise Act and rules were held applicable to sugar cess in that case, whereas for CEC Section 37 and CCR, 2004 are not made applicable. For these reasons the Tribunal upheld denial of Cenvat credit of CEC. [Paras 12, 13, 14, 15, 19]

Denial of Cenvat credit on Clean Energy Cess upheld; assessees are not entitled to Cenvat credit under Rule 3 of CCR, 2004.

Interest on wrongly availed Cenvat credit (availed and utilized v. availed but reversed) - Liability to pay interest on Cenvat credit taken in respect of CEC - HELD THAT: - Applying settled authority, the Tribunal held that interest is payable where Cenvat credit has been both availed and utilized. Where credit was availed but subsequently reversed before utilisation, it is treated as not having been availed for purposes of interest and no interest is payable. The Tribunal therefore directed that interest be levied only in cases where the credit was availed and utilized and not where it was availed and reversed prior to utilisation. [Paras 20, 21]

Interest payable only where Cenvat credit was availed and utilized; no interest where credit was availed but reversed before utilisation.

Penalty under Rule 15 of CENVAT Credit Rules, 2004 - Imposition of penalty for taking Cenvat credit of CEC - HELD THAT: - The Tribunal found the question of imposing penalty to be one of interpretation and noted that assessees could have held a genuine belief that Cenvat credit on CEC was admissible. In view of this possible bona fide belief and the interpretational nature of the controversy, the Tribunal held that imposition of penalty under Rule 15 of CCR, 2004 was not justified and set aside all penalties. [Paras 21]

Penalties under Rule 15 are set aside.

Final Conclusion: Appeals partly allowed: denial of Cenvat credit on Clean Energy Cess upheld; interest limited to cases where the credit was availed and utilized (no interest where reversed prior to utilisation); all penalties under Rule 15 set aside.

Failure to record reasons - violation of principle of natural justice - deemed assessment - quasi-judicial orders must record reasons - exceptions to alternative remedy

Failure to record reasons - quasi-judicial orders must record reasons - violation of principle of natural justice - Validity of the assessment order passed by a computer-generated/deemed assessment which disallowed Input Tax Credit without recording reasons and without application of mind. - HELD THAT: - The Court found that the impugned assessment order is a computer-generated computation which does not mention the basic facts regarding issuance of notice, non-compliance, nor does it state reasons for disallowance of the claimed Input Tax Credit. Citing the principle that judicial and quasi-judicial decisions affecting rights must be supported by reasons, the Court held that absence of cogent, recorded reasons and the non application of mind amounts to a breach of the requirement to give reasoned decisions. The absence of reasons also implicates the principle of fairness and renders the order vulnerable to judicial review. On these grounds the assessment order was held to be invalid and was quashed, while permitting the executive to proceed afresh in accordance with law. [Paras 7, 8, 9, 11, 12]

Impugned assessment order quashed for being computer-generated and bereft of recorded reasons, thereby violating principles of fair decision-making; respondents permitted to proceed in accordance with law.

Exceptions to alternative remedy - deemed assessment - Maintainability of writ petition despite availability of alternative remedy and interaction between deemed assessment under Section 23 and procedural requirements under Section 24. - HELD THAT: - The Court applied established exceptions to the rule of abstention where an alternative remedy exists, observing that writ jurisdiction is available where there is a violation of natural justice or where an order is wholly without jurisdiction. Given the finding that the order was passed without application of mind and violated natural justice, the petition fell within those exceptions and was maintainable notwithstanding the availability of statutory appellate remedies. The Court also noted the inconsistency in treating the assessment as a deemed assessment under Section 23 while creating demand by disallowing ITC without any proceedings under Section 24, reinforcing the view that the process was defective. [Paras 6, 10, 11]

Writ petition entertained under the exceptions to alternative remedy because the assessment order violated natural justice and was procedurally defective; petition allowed.

Final Conclusion: The High Court quashed the assessment order for want of reasons and breach of natural justice; the writ petition was entertained under established exceptions to alternative remedies and allowed, with liberty to the authorities to proceed afresh in accordance with law.

Driver's duty to carry and produce goods vehicle record, challans, bilties and prescribed declaration forms under Section 78(2) - requirement of reasonable opportunity of hearing and inquiry as may be deemed fit under Section 78(5) - penalty for abstaining from stopping at the nearest check-post under Section 78(10A) - breach of the principles of natural justice - duty of an appellate/tribunal authority to consider and meet the reasoning of the lower forum

Driver's duty to carry and produce goods vehicle record, challans, bilties and prescribed declaration forms under Section 78(2) - requirement of reasonable opportunity of hearing and inquiry as may be deemed fit under Section 78(5) - breach of the principles of natural justice - Whether the authorities imposed penalty without complying with the statutory mandate of inquiry and reasonable opportunity of hearing and thereby violated principles of natural justice - HELD THAT: - The Court found that the initial order imposing 50% penalty was passed hurriedly on 17.04.2003 without conducting an inquiry or affording a proper opportunity to examine the petitioner's defence that he had produced the papers at the check-post but a stamp was not affixed due to rush. The authority assumed deliberate retention or production of blank forms without any inquiry report on record. Such omission amounted to non-compliance with the procedure envisaged by the provision dealing with production of documents and the prescribed opportunity of hearing. Reliance on the Division Bench authority noted by counsel underscores that denial of a reasonable opportunity vitiates the order. In these circumstances the Tribunal's restoration of the initial penalty could not be sustained when the statutory safeguards of inquiry and hearing were not observed. [Paras 6, 9, 11]

The order imposing penalty was set aside on the ground of failure to conduct the statutory inquiry and to afford a reasonable opportunity of hearing; the appellate authority's conclusion that there was no evasion (subject to reduction of penalty) is affirmed on this ground.

Duty of an appellate/tribunal authority to consider and meet the reasoning of the lower forum - penalty for abstaining from stopping at the nearest check-post under Section 78(10A) - Whether the Tax Board was justified in reversing the appellate authority's findings and restoring the initial penalty without addressing the appellate authority's reasons and the earlier judicial finding in favour of the owner - HELD THAT: - The Court held that the Tax Board was bound to grapple with and meet the reasons given by the appellate authority before recording a contrary finding. The Board's one-line restoration of the initial penalty, without dealing with the appellate authority's factual and legal conclusions, was legally unsustainable. Further, the owner of the goods had earlier been exonerated by this Court on the ground that the material did not disclose tax evasion, and in that backdrop holding only the driver liable for non-production of documents (which were shown to be in the consignment's possession) could not be sustained. For these reasons the Tax Board's order restoring the 50% penalty was set aside and the appellate authority's order affirmed. [Paras 10, 11]

The Tax Board's order restoring the initial penalty is set aside for failing to meet the appellate authority's reasons and for disregarding the contextual finding of no tax evasion; the appellate authority's order is affirmed.

Final Conclusion: Revision allowed; the impugned order of the Tax Board restoring the 50% penalty is set aside and the appellate authority's order (which reduced/limited the penalty and found lack of evasion) is affirmed on the grounds of denial of statutory inquiry and hearing and the Tax Board's failure to address the appellate reasoning.

Interest on delayed refund - Procedure for refund - Relevant date for computation of interest - Exclusion of period attributable to the taxable person

Interest on delayed refund - Relevant date for computation of interest - Procedure for refund - Exclusion of period attributable to the taxable person - Whether interest under Section 40 of the Punjab VAT Act is payable from the date sixty days after the original refund application dated 27.11.2020 or from the date sixty days after the later application on 24.02.2023 - HELD THAT: - A joint reading of the Act and the Rules shows that the relevant date for computation of interest is the date of submission of the refund application and interest becomes payable after expiry of sixty days from that application. The original application dated 27.11.2020 sought refund of excess ITC accrued for 2010-11 to 2013-14 and the subsequent assessment proceedings for later years do not divest the petitioner of the right to interest on the amount claimed in that original application. The DETC(A)'s setting aside of the 2014-15 assessment order reinforces that withholding the refund was not justified. Accordingly interest under Section 40 accrues from 27.01.2021 (sixty days after 27.11.2020) on the total amount claimed in the 27.11.2020 application until payment was made on 20.02.2023, subject to the statutory exclusion of any period attributable to the taxable person as provided in the Explanation to Section 40. [Paras 11, 12, 13, 15, 16]

Interest is payable from 27.01.2021 on the amount claimed in the refund application of 27.11.2020 up to 20.02.2023; subsequent assessments do not defeat the entitlement to such interest, subject to exclusion of any period attributable to the taxable person.

Final Conclusion: Writ petition allowed: respondents directed to pay interest under Section 40 of the Punjab VAT Act on the refund claimed by the petitioner in the application dated 27.11.2020 from 27.01.2021 to 20.02.2023, subject to statutory exclusions; petition otherwise disposed of.

Tax on sale of goods - separate taxation of goods and services - VAT on service component in catering - service tax - sale price - deemed sale of food and drink - aspect theory - quash of departmental clarification

VAT on service component in catering - separate taxation of goods and services - tax on sale of goods - service tax - deemed sale of food and drink - aspect theory - VAT cannot be imposed on the service element of a catering transaction which is liable to service tax; only the turnover attributable to sale of goods is subject to VAT. - HELD THAT: - The Court applied the principle that levy of sales tax (or VAT) requires a transaction to be a 'sale' in the legal sense and the legislature cannot expand the concept of sale to cover transactions which are services. Relying on the ratio in Tamil Nadu Kalyana Mandapam Assn. (as cited) and the Division Bench decision in M/s Cap 'N' Chops Caterers, the Court held that catering transactions may contain both sale of goods (food) and rendering of services; VAT is chargeable only on the turnover attributable to sale of goods and not on the service component. The Court rejected the view that the inclusion of service tax or the service element in an invoice automatically enlarges the sale price so as to attract VAT on that element; for catering the service element must be treated separately and taxed under service tax (with the accepted assessment practice of considering the service element up to 60% where applicable). The determinative legal reasoning rests on distinguishing supply of goods from supply of services and upholding the aspect theory that permits concurrent taxation of the goods element by the State and of the service element by the Centre without treating the entire catering turnover as a sale of goods. [Paras 5, 6, 7, 8]

Action of respondents seeking to impose VAT on the service component of catering transactions is unjustified; VAT limited to turnover attributable to sale of goods and service element not subject to VAT.

Sale price - gross turnover - quash of departmental clarification - The departmental clarification in M/s Redington India Limited treating service tax as part of sale price for VAT purposes is erroneous and liable to be quashed. - HELD THAT: - The Court examined the departmental clarification which interpreted 'sale price' to include amounts received as consideration for services (service tax) and thereby concluded VAT would apply on basic price plus service tax. The Court found that such an interpretation conflicts with settled judicial authority distinguishing sale of goods from services and thus is legally unsustainable. The clarification failed to take into account the Division Bench decision in M/s Cap 'N' Chops Caterers and the Supreme Court's exposition that supply of food and drink alone may be a deemed sale but does not absorb the service element into the concept of sale. Consequently, the Court set aside the departmental clarification and directed that the view of this Court in Cap 'N' Chops apply to like matters, with administrative communication to the Principal Secretary, Excise and Taxation Department, Haryana to prevent further litigation. [Paras 5, 6, 9]

Principal Secretary's clarification in M/s Redington India Limited is quashed and set aside; departmental position held to be contrary to settled law and withdrawn for like matters.

Quash of departmental clarification - The revision notice dated 17.08.2021 proposing reassessment to impose VAT on the service tax component is unjustified and liable to be quashed. - HELD THAT: - Applying the legal conclusions above, the Court held that the specific notice seeking revision of the assessment to demand VAT on the service tax component was founded on the same erroneous interpretation set out in the departmental clarification. Since the departmental view was quashed and settled law requires separation of service and goods elements in catering, the impugned revision notice could not stand. The Court therefore set aside the show cause/revision notice and disposed of the writ accordingly. [Paras 1, 2, 9]

Impugned notice dated 17.08.2021 (proposing revision of assessment dated 05.09.2016) is quashed as being based on wrongful interpretation.

Final Conclusion: The writ petition is allowed: the respondents' attempt to impose VAT on the service component of the petitioner's catering transactions is disapproved; the departmental clarification in M/s Redington India Limited is quashed; the view in M/s Cap 'N' Chops Caterers shall govern like cases and the Principal Secretary, Excise and Taxation Department, Haryana is directed to issue a circular to this effect. All pending miscellaneous applications disposed of.

Summary order. Civil appeal dismissed as withdrawn at the appellant's instance; since the appeal was withdrawn the Court made no comment on the merits of the impugned judgment and did not record any ruling that the impugned judgment shall not be cited as a precedent.

Ingredient of offence under Section 420 IPC - Dishonest intention at inception - Issuance of cheque from a closed account - Section 313 Cr.P.C. - duty to put material questions - Presumption under Section 139 of the Negotiable Instruments Act - Section 138 NI Act - cause of action and premature complaint - Service of legal notice and the 15 day period

Ingredient of offence under Section 420 IPC - Dishonest intention at inception - Issuance of cheque from a closed account - Section 313 Cr.P.C. - duty to put material questions - Validity of conviction under Section 420 IPC - HELD THAT: - The Court examined whether the conviction under Section 420 IPC was sustainable where the prosecution relied principally on the fact that the accused issued a cheque drawn on a closed account. The court held that the offence under Section 420 requires proof of deceit coupled with dishonest intention at the time the victim was induced to part with property; mere issuance of a cheque (even from a closed account) as an act of purported refund does not, by itself, establish dishonest intention at the inception of the transaction. The court further observed that both trial and appellate courts failed to put material questions under Section 313 Cr.P.C. concerning the essential ingredient of dishonest intention and did not consider the petitioner's answers; that omission vitiated the process of adjudication on the charge of cheating. Applying these principles to the facts - where the complaint alleged an oral land-sale transaction that did not materialize and a consequent refund cheque that bounced - the Court found the element of dishonest intention at the inception absent and the conviction under Section 420 to be perverse and unsustainable. [Paras 23, 24, 25, 26, 27]

Conviction and sentence under Section 420 IPC set aside.

Section 138 NI Act - cause of action and premature complaint - Service of legal notice and the 15 day period - Presumption under Section 139 of the Negotiable Instruments Act - Maintainability of the complaint under Section 138 of the Negotiable Instruments Act - HELD THAT: - The Court considered whether the complaint under Section 138 NI Act was maintainable when filed on the date shown in the record. Applying the Supreme Court precedent cited (Yogendra Pratap Singh v. Savitri Pandey), the Court reiterated that all eventualities in the proviso to Section 138 must be satisfied before a complaint can be filed and that a complaint filed before the expiry of 15 days from service of the legal notice is premature. Here, there was no evidence of actual service of the legal notice and, even on deemed service, the statutory timeline would not have elapsed so as to confer cause of action at the date of filing. Consequently the complaint, insofar as it proceeded under Section 138, was held to be premature and not maintainable. Noting the Supreme Court's guidance, the Court afforded the complainant liberty to file a fresh complaint within a limited period and to seek condonation if delay is shown. [Paras 34, 35, 36, 37, 38]

Conviction and sentence under Section 138 NI Act set aside as the complaint was premature; complainant granted liberty to file a fresh complaint within two months.

Final Conclusion: The revisional court set aside the convictions and sentences passed by the trial and appellate courts: conviction under Section 420 IPC was quashed for lack of proof of dishonest intention at the inception and for failure to put material questions under Section 313 Cr.P.C.; conviction under Section 138 NI Act was quashed as the complaint was premature, subject to the complainant's liberty to file a fresh complaint within two months.

Prohibition on export of narcotic drugs and psychotropic substances without authorization - Export authorization under Rule 58 of the NDPS Rules - Scope of Section 8(c) of the NDPS Act - Mandatory character of statutory negative language - Rigor of Section 37 of the NDPS Act and bail bar in NDPS cases - Prima facie complicity and conspiracy to export a psychotropic substance - Admissibility and effect of statements recorded under Section 67 of the NDPS Act - Entitlement to bail in NDPS offences

Scope of Section 8(c) of the NDPS Act - Export authorization under Rule 58 of the NDPS Rules - Mandatory character of statutory negative language - Export of psychotropic substances requires an export authorization under Rule 58 and cannot be treated as subsumed by a licence under Section 8(c). - HELD THAT: - Section 8(c) prohibits dealing in narcotic drugs or psychotropic substances except for medical or scientific purposes in the manner provided by the Act, rules or orders and, where required, in accordance with licence, permit or authorization. The Court construed the disjunctive use of the words 'licence', 'permit' and 'authorization' as deliberate and not interchangeable; a licence to possess or sell does not obviate the separate export authorization mandated by Chapter VI. Rule 53 expressly prohibits import/export except with an import certificate or export authorization, and Rule 58(1) positively states that 'No' psychotropic substance shall be exported without an export authorization. The negative and mandatory language employed in these provisions underscores that export without the specific authorization is impermissible. Consequently, the submission that the proviso to Rule 53 or possession of a licence under Section 8(c) renders Rule 58 inapplicable was rejected. [Paras 21, 22, 23, 24, 25]

Submission that export authorization under Rule 58 was not required was rejected; export sans authorization is prohibited and the applicants' contention on this ground fails.

Prima facie complicity and conspiracy to export a psychotropic substance - Rigor of Section 37 of the NDPS Act and bail bar in NDPS cases - There is prima facie material to show that Gudipati (A1) and Ahmed Saleh (A4) were parties to a conspiracy to export Tramadol disguised as another pharmaceutical product; thus Section 37 operates to displace ordinary bail entitlement. - HELD THAT: - The prosecution material includes altered export invoices, WhatsApp conversations evidencing deliberate change of description to evade authorization requirements and destination-country restrictions, evidence of recurring consignments exported in similar fashion, records of commission and financial transactions, and a cash recovery from Ahmed Saleh. On statutory construction the necessity of export authorization is mandatory; given the prima facie evidence of an attempt to export without authorization and the alleged centrality of Gudipati and Ahmed Saleh in the scheme, the interdict in Section 37 applies. The Court found that there is no substantial probable cause to believe Ahmed Saleh may not be guilty and that Gudipati's complicity is overwhelming; accordingly both applications were rejected. [Paras 13, 25, 26, 27, 28]

BA/4210/2023 (Gudipati) and BA/4160/2023 (Ahmed Saleh) rejected; Section 37 attracted on the available prima facie material.

Admissibility and effect of statements recorded under Section 67 of the NDPS Act - Entitlement to bail in NDPS offences - The material against Ravindra (A5) is insufficient prima facie to attract the rigour of Section 37; statements under Section 67 do not amount to confession against co-accused and do not, in this case, support his complicity, therefore bail is allowable. - HELD THAT: - Prosecution relied on statements recorded under Section 67, WhatsApp transcripts and credits to Ravindra's account. The Court noted that statements under Section 67 are not admissible as confessions against co-accused and, on perusal, Gudipati's Section 67 statement does not implicate Ravindra. The WhatsApp transcript and the fact of forwarding invoices, without other independent inculpatory material, do not prima facie demonstrate mens rea or active participation in the conspiracy. The isolated credits to Ravindra's account, given the history of consignments entrusted to his employer, likewise do not establish culpability. Considering Ravindra's limited role as a freight manager, absence of antecedents, and the debatable nature of his complicity, the Court held Section 37's bail bar may not apply to him and granted bail subject to conditions. [Paras 33, 34, 35, 36, 37]

BA/223/2024 (Ravindra) allowed; Ravindra to be released on bail on conditions specified by the Court.

Final Conclusion: The Court rejected the bail applications of Gudipati and Ahmed Saleh, finding prima facie conspiracy and that export without Rule 58 authorization is prohibited; the Court allowed the bail application of Ravindra Rajaram Kavthankar, holding the material against him insufficient prima facie to attract the Section 37 bail bar and imposing conditions for his release.

Maintainability of writ for recovery of money against the State - writ jurisdiction in private law realm - arbitrariness as basis for writ relief - CPWD Reasonable Rent Certificate as basis for rent fixation - non-statutory contract and disputed questions of fact

Maintainability of writ for recovery of money against the State - non-statutory contract and disputed questions of fact - Writ petition seeking payment of arrears of rent by the Income Tax Department was maintainable. - HELD THAT: - The Court applied the principle that writ jurisdiction is essentially a public law remedy but may be invoked in disputes arising in the private realm where the State's action or inaction is arbitrary and there are no serious and genuine disputes of fact impeding adjudication. Relying on the caveats articulated by the Supreme Court, the Court examined the record and concluded that there were no contested factual issues necessitating reference to a civil trial. The department had consistently acted on CPWD rates, had unilaterally fixed and failed to communicate revised rates, and had delayed compliance with earlier judicial directions; these features established arbitrariness and justified exercising writ jurisdiction to direct payment of arrears. [Paras 6, 7, 10, 12, 16]

Writ petition was maintainable and rightly entertained by the Single Bench.

CPWD Reasonable Rent Certificate as basis for rent fixation - arbitrariness as basis for writ relief - The income tax department's adoption of CPWD rates and its failure to communicate or implement revised rent rendered its conduct arbitrary and entitled the landlords to payment based on the recognised CPWD fixation. - HELD THAT: - The Court noted the CPWD mechanism for determination of reasonable rent and that the Chief Commissioner had accepted the CPWD recommendation fixing consolidated rent. The department, although habitually assessing rent on CPWD norms, unilaterally fixed revised rents without communicating them to the owners and failed to act on directions in earlier proceedings. Given the consistent reliance on CPWD rates in departmental correspondence and the absence of a timely challenge asserting genuine factual dispute, the Court held that the department could not deviate from those norms and that the owners were entitled to arrears calculated on the recognised principles of valuation adopted by the Single Bench. [Paras 8, 10, 12, 13, 15]

Department's conduct was arbitrary vis-a -vis CPWD fixation and the landlords were entitled to payment based on CPWD-determined rent.

Non-statutory contract and disputed questions of fact - maintainability of writ for recovery of money against the State - There were no serious disputed questions of fact as to the quantum of arrears; the tabulated claim stood uncontroverted and could be adjudicated in writ proceedings. - HELD THAT: - The Court observed that the writ petitioners furnished a detailed tabulation showing the rent assessed according to recognised principles, amounts received, and the balance claimed for defined intervals. The department did not specifically deny those particulars. In light of the admitted facts, interim orders earlier passed, and the absence of a substantive factual controversy over the figures, the Single Bench correctly accepted the plaintiffs' computation and directed payment of the balance shown in the statement. [Paras 14, 15]

No substantial factual dispute existed regarding the quantum; the computation in the writ petition could be accepted for directing payment.

Final Conclusion: The appeal is dismissed. The High Court upheld the Single Bench's exercise of writ jurisdiction to direct payment of rent arrears determined on CPWD principles, concluding that the department's conduct was arbitrary and that there were no serious disputed questions of fact preventing relief; compliance time extended by two weeks from receipt of the order's server copy.

Exemption under clause (i) of Section 8(1) of the Right to Information Act - Right to Information Act - refusal of information - tax evasion petition confidentiality - roving enquiry

Exemption under clause (i) of Section 8(1) of the Right to Information Act - roving enquiry - tax evasion petition confidentiality - Legitimacy of refusal to disclose information sought under the Right to Information Act concerning a tax evasion petition - HELD THAT: - The Court examined the RTI application and found that the information sought comprised detailed material relating to a tax evasion petition against third parties, including progress, preliminary assessments/investigation, identities and designations of officers, investigation status, assessment orders and communication records. Such requests amounted to a roving enquiry and sought materials pertaining to proceedings which are not to be disclosed under clause (i) of Section 8(1) of the Right to Information Act. The petitioner subsequently contended before the Court that he only sought disclosure of the "broad outcome" of the tax evasion petition, but that limited request was not made in the original RTI application. In view of the content of the application as filed, the Public Information Officer's rejection and confirmation by the first and second appellate authorities were held to be in accordance with the statutory exemption and not liable to interference. [Paras 7, 8]

Refusal to disclose the information under the Right to Information Act was justified and the impugned orders upholding the refusal were lawful.

Final Conclusion: Writ petition dismissed; the orders refusing the RTI disclosure concerning the tax evasion petition are sustained as validly applying the exemption under clause (i) of Section 8(1) of the Right to Information Act.