TaxTMI Updates e-Newsletter
May 24,2022

Deemed service via common GST portal - Removal of Difficulties order dated 25.6.2020 - suspension of limitation by Supreme Court orders - appeal not time barred where limitation remained suspended - remittance for adjudication on merits

Deemed service via common GST portal - Removal of Difficulties order dated 25.6.2020 - suspension of limitation by Supreme Court orders - Whether the appeal filed by the petitioner was barred by limitation. - HELD THAT: - The court accepted the petitioner's submission that the order of cancellation dated 26.11.2018 had been uploaded on the common GST portal and, in terms of the Removal of Difficulties order dated 25.6.2020, such upload constitutes deemed service (treated as service on 31.8.2020). Further, the court noted that the period of limitation for filing appeals was suspended by orders of the Supreme Court until 28.2.2022. Applying these legal consequences, the time for preferring an appeal did not run against the petitioner so as to render the appeal filed on 1.12.2021 time barred. The court observed that the issue is squarely covered by the earlier decision of this Court in Writ Tax No. 76 of 2022, which the Standing Counsel did not dispute.

The appeal cannot be held time barred; it is to be treated as filed within time.

Appeal not time barred where limitation remained suspended - remittance for adjudication on merits - Appropriate remedy now that the appellate authority dismissed the appeal on limitation grounds. - HELD THAT: - Because the appellate authority dismissed the appeal on the ground of limitation notwithstanding the deemed service and suspension principles, the court quashed the impugned order dated 23.12.2021. The matter was remitted to the appellate authority with a direction to hear and decide the appeal on merits treating it as filed within time, thereby confining the appellate authority to decide the substantive claims without reopening the limitation question already resolved by the court.

Impugned order quashed and appeal remitted to the appellate authority for decision on merits treating the appeal as within time.

Final Conclusion: Petition allowed; the order dismissing the appeal as time barred is quashed and the matter is remitted to the appellate authority to decide the appeal on merits treating it as filed within time.

Goods and Services Tax on royalty for mining of minor minerals - interim restraint on passing final orders - direction for submission of reply and filing of counter affidavit - connection/relisting with analogous writ petition

Goods and Services Tax on royalty for mining of minor minerals - interim restraint on passing final orders - Application for interim protection against final action on a show cause notice challenging levy of GST on royalty paid for mining of minor minerals - HELD THAT: - Petitioner urged that, under the Goods and Services Tax regime, GST is not leviable on the royalty paid for undertaking mining operations in respect of minor minerals and relied upon orders of this Court in challenges to show cause notices of a like nature (including Writ Tax No.11 of 2022). Proceeding on that basis, the Court did not decide the substantive question on merits but granted interim relief restraining the authority from passing any final order pursuant to the show cause notice dated 23.03.2022 until the next date of listing. The petitioner was directed to submit a reply to the notice in the meantime. The Court's order is interlocutory and founded on the existence of parallel/challenging proceedings and earlier coordinate-bench orders rather than on an adjudication of the legal point raised.

Interim protection granted; authority restrained from passing final order on the show cause notice dated 23.03.2022 until the next listing, petitioner to file reply meanwhile.

Direction for submission of reply and filing of counter affidavit - connection/relisting with analogous writ petition - Directions for further procedure in the writ petition and linkage with an analogous pending petition - HELD THAT: - The Court directed that respondents file their counter affidavit within four weeks and permitted the petitioner two weeks thereafter to file a rejoinder. The matter was ordered to be connected and listed along with Writ Tax No.11 of 2022 after completion of the specified timelines. These directions are procedural and intended to facilitate adjudication on the merits at a subsequent hearing; no substantive determination on the levy was made at this stage.

Respondents to file counter within four weeks; petitioner to file rejoinder within two weeks thereafter; matter to be connected and listed with Writ Tax No.11 of 2022.

Final Conclusion: The Court granted interlocutory protection restraining the authority from passing any final order pursuant to the show cause notice dated 23.03.2022 until the next date of listing, directed exchange of pleadings on a fixed timetable, and ordered the petition to be connected and listed with an analogous pending writ petition for further consideration; no substantive pronouncement was made on the question whether GST is leviable on royalty for mining of minor minerals.

Cancellation of registration under WBGST Act - revocation of cancellation of registration - jurisdiction under Article 226 - violation of principles of natural justice - remand for fresh enquiry - personal service and opportunity of hearing - inadmissibility of sole reliance on third party non identification

Jurisdiction under Article 226 - violation of principles of natural justice - Maintainability of writ petition under Article 226 to challenge cancellation of GST registration when no alternate remedy exists and whether the court may examine the decision making process. - HELD THAT: - The Court held that, in absence of any alternative remedy under the Act to challenge the order of cancellation, the appellant was entitled to invoke the extraordinary jurisdiction of the High Court under Article 226. While the Court will not ordinarily re adjudicate disputed questions of fact, it may examine whether the decision making process was proper, including whether there was a breach of principles of natural justice, lack of jurisdiction or other procedural infirmity. The Single Bench's conclusion that the writ petition was not maintainable for raising disputed factual questions was therefore set aside. [Paras 4]

Writ petition was maintainable and the order dismissing it on the stated ground was set aside.

Inadmissibility of sole reliance on third party non identification - remand for fresh enquiry - personal service and opportunity of hearing - Whether the cancellation of registration was vitiated by procedural infirmity and whether the matter should be remanded for a fresh enquiry with directions for personal service and appearance. - HELD THAT: - The Court found that the authority had relied primarily on a statement of a building receptionist and her inability to identify the appellant from a photograph, and that cancellation could not be based solely on such evidence without affording the appellant, his authorised agent and the landlord an opportunity to be heard. The appropriate remedy was to set aside the impugned order and remand the matter to the original authority to conduct a proper enquiry. The Court directed issuance of notices to the proprietor, his power of attorney agent and the landlord, mandated personal appearance on the specified date, required personal service on the landlord, permitted production of documents, and instructed the authority to pass a reasoned order on merits in accordance with law. [Paras 10, 11, 12, 13, 14]

Order of cancellation and the rejection of the revocation application were set aside; the matter was remanded for a fresh enquiry with specific directions for notice, personal appearance, service and a reasoned decision.

Cancellation of registration under WBGST Act - revocation of cancellation of registration - Whether the challenge to the second show cause notice (and its validity) on the ground that the same allegations had been earlier processed and the registration restored was finally adjudicated. - HELD THAT: - The Court expressly refrained from deciding the legal contention that issuance of the second show cause notice was without jurisdiction because the same allegations had earlier resulted in cancellation and subsequent restoration of registration. That question was left open for determination by the appropriate authority during the remand; the Court proceeded to remit the matter for a fresh enquiry limited to procedural fairness and factual verification rather than adjudicating the point on merits at this stage. [Paras 9, 10, 11]

The legal objection to the second show cause notice was left open for consideration and not finally decided; the matter stands remanded for fresh enquiry where such issues can be examined.

Final Conclusion: The High Court allowed the appeal, set aside the order dismissing the writ petition and the orders cancelling the registration and rejecting revocation; it restored the revocation application and remanded the matter to the original authority to conduct a fresh, reasoned enquiry after personal service and personal attendance of the proprietor, his agent and the landlord, leaving the separate legal objection to the second show cause notice open for consideration.

Detention of goods - e-way bill validity - bona fides of the transaction - willful evasion of tax - power under Section 129 of the Act

E-way bill validity - detention of goods - willful evasion of tax - Whether detention of the vehicle and demand of tax and penalty under the facts of the case was justified where the e-way bill carried in the vehicle had expired and the vehicle was intercepted the following day. - HELD THAT: - The Court examined documentary records on file, including the tax invoice and two e-way bills dated 7th September, 2019. The vendor's e-way bill showing despatch to the respondent was valid up to 9th September, 2019, whereas a second e-way bill raised for a shorter intra-Durgapur movement was valid only up to midnight of 8th September, 2019. The Court accepted that, on the basis of the documents, the first e-way bill would have covered the movement and that the factual controversy (such as alleged vehicle breakdown) need not be gone into. On this basis the Court concluded that the authorities at Durgapur could not have validly intercepted or detained the vehicle and that the respondent's explanation on the facts was an acceptable one. Consequently, there was no case of deliberate or willful attempt to evade payment of tax justifying exercise of powers under Section 129. [Paras 7, 8, 9, 11]

Detention and demand were unjustified on the available documentary record; there was no willful evasion of tax.

Bona fides of the transaction - power under Section 129 of the Act - Whether the writ court's grant of relief setting aside the demand and directing refund was sustainable and what consequential directions should follow. - HELD THAT: - Having held that the respondent's transaction and documentary evidence established bona fides and that invocation of Section 129 was not justified, the Court concurred with the writ court's conclusion. The appellate challenge by the department was dismissed. The department was directed to process the respondent's refund application filed on 7th March, 2022 and pass orders in terms of the writ court's direction within two weeks from receipt of the server copy of this judgment. The Court clarified that the decision was confined to the peculiar facts and bona fides in the case and is not to be treated as a precedent. [Paras 9, 10, 11]

Appeal dismissed; refund application to be processed and orders passed within two weeks; decision confined to the facts and bona fides of the case.

Final Conclusion: The departmental intra Court appeal is dismissed. On the documentary record the detention and demand could not be sustained and there was no willful evasion of tax; the respondent is entitled to refund and the department is directed to process and decide the refund application within two weeks, the decision being confined to the peculiar facts of the case.

Rectification under Section 161 of the CGST Act - requirement of natural justice where rectification adversely affects a person - assessment of non-filers under Section 62 - scope limited to tax, interest and late fee; does not itself impose penalty - imposition of penalty under Section 122 - distinct penal provision requiring statutory applicability - power to impose penalty under Section 127 - requirement of reasonable opportunity of hearing before levy of penalty

Rectification under Section 161 of the CGST Act - requirement of natural justice where rectification adversely affects a person - assessment of non-filers under Section 62 - scope limited to tax, interest and late fee; does not itself impose penalty - Validity of imposing penalty by inserting additional liability through Corrigendum-cum-Addendum/rectification without affording opportunity of hearing to the petitioner - HELD THAT: - The Court observed that Section 62, which governs assessment of non-filers, authorises assessment to the best of the officer's judgment and contemplates interest and late fee consequences but does not itself provide for imposition of penalty. The Corrigendum-cum-Addendum dated 27.08.2020 and the subsequent rectification dated 12.11.2020 introduced penalty liability under Section 122(2)(a) which was not part of the original assessment notice dated 13.08.2020. Section 161 expressly mandates that where a rectification adversely affects any person, the authority carrying out such rectification must follow the principles of natural justice. The Court found that penalties creating additional liability were imposed without giving the petitioner any opportunity of hearing; consequently the exercise amounted to imposing a new adverse obligation through rectification without complying with the audi alteram partem requirement. For these reasons the impugned orders imposing penalty by way of corrigendum/rectification were held unsustainable and were set aside. [Paras 16, 17, 18]

The additions imposing penalty by corrigendum/rectification without affording opportunity of hearing are set aside.

Power to impose penalty under Section 127 - requirement of reasonable opportunity of hearing before levy of penalty - imposition of penalty under Section 122 - distinct penal provision requiring statutory applicability - Remedial course available to revenue after setting aside the impugned orders - HELD THAT: - Having set aside the orders which imposed penalty without hearing, the Court permitted the respondents to proceed afresh. The Court indicated that the respondents may issue a fresh notice and deal with the matter in accordance with law, ensuring compliance with the requirements of natural justice and the proper statutory forum and provisions for levy of penalty. The Court thereby did not decide the merits of any penalty claim on facts or on applicability of specific penal clauses, but remitted the matter for fresh consideration and adjudication in accordance with law. [Paras 18, 19]

Matter remitted to respondents to issue fresh notice and pass orders in accordance with law after affording opportunity of hearing.

Final Conclusion: Writ petition allowed; impugned corrigendum/rectification orders imposing penalty without hearing set aside, and respondents permitted to proceed afresh by issuing notice and deciding the matter in accordance with law (no costs).

Levy of GST on penalty imposed in disciplinary/service proceedings - Applicability of the concept of "supply" to penalties under Schedule II - Effect of omission of Section 7(1)(d) and interplay with Section 7(1A) - Interim stay and its temporal applicability to earlier judicial orders

Levy of GST on penalty imposed in disciplinary/service proceedings - Effect of omission of Section 7(1)(d) and interplay with Section 7(1A) - Applicability of the concept of "supply" to penalties under Schedule II - Whether GST is leviable on the penalty imposed in disciplinary proceedings in the facts of the present case. - HELD THAT: - The High Court, following its earlier orders in WP(MD)No.10355 of 2020 and WP.No.12657 of 2020 (etc. batch), held that a penalty imposed in disciplinary/service proceedings does not attract GST because imposition of GST requires the penalty to arise in the course of trade or commerce as a supply. The court noted the omission of the earlier provision relied upon and accepted the reasoning that Section 7(1A) and Rule 5(e) cannot be construed to bring a disciplinary penalty within the ambit of taxable supply where the penalty arises from a service matter rather than from a commercial agreement. The court therefore concluded that, as on the date of the impugned order, GST could not be levied on the penalty amount. [Paras 6, 7]

GST cannot be levied on the penalty imposed in the disciplinary proceedings and the finding of the learned Judge that 'post 01.07.2017, there can be no levy of GST on the amount of penalty' is sustained.

Natural justice and fresh hearing before imposing penalty - Interim stay and its temporal applicability to earlier judicial orders - Whether the order setting aside the penalty on the ground of violation of principles of natural justice ought to be interfered with in this appeal. - HELD THAT: - The Division Bench declined to re-examine the correctness of the learned Judge's order setting aside the penalty on natural justice grounds, having regard to the admitted fact that no enquiry was conducted before imposing the penalty. The court observed that it would not go into the merits of that decision and accordingly left intact the direction permitting initiation of fresh proceedings after issuing fresh show cause notices and hearing the respondents. The court, however, made clear that while fresh disciplinary proceedings may be conducted, the question of imposition of GST on the penalty remains subject to the result of WA(MD)No.679 of 2021. [Paras 5, 8]

The court declined to disturb the learned Judge's order on natural justice and granted liberty to the authority to proceed afresh after issuing fresh show cause notices and providing hearing; the imposition of GST on the penalty is left subject to the outcome of the pending appeal.

Final Conclusion: The intra-court appeal is disposed of by upholding the learned Judge's conclusion that GST could not be levied on the disciplinary penalty as on the date of the impugned order; the court refused to revisit the setting aside of the penalty for breach of natural justice and permitted the authority to reinitiate proceedings with fresh show cause notices, while leaving the question of GST on the penalty subject to the result of the pending appellate proceeding.

Exemption under Notification No.12/2017 Central Tax (Rate) (Sl. No.66(aa)) for conduct of entrance/qualification examinations by an educational institution - exemption under Notification No.12/2017 Central Tax (Rate) (Sl. No.5) for services by a Governmental Authority in relation to functions entrusted to Panchayat under Article 243G - definition of "educational institution" for limited purpose of conduct of examinations (para 2(y) and clause (iv) clarification) - criteria for treating an examination as part of an education course leading to a recognised qualification - scope of supply under section 7 of the CGST Act - examination as an essential component of "education" (constitutional Eleventh Schedule, Entry 17)

Exemption under Notification No.12/2017 Central Tax (Rate) (Sl. No.66(aa)) for conduct of entrance/qualification examinations by an educational institution - definition of "educational institution" for limited purpose of conduct of examinations (para 2(y) and clause (iv) clarification) - criteria for treating an examination as part of an education course leading to a recognised qualification - Appellant's entitlement to exemption under Sl. No. 66(aa) of Notification No.12/2017 for exams at Sr. No. 1 to 12 of the list - HELD THAT: - The Appellate Authority examined the statutory definition of "educational institution" (Para 2(y)) and the clarifying insertion treating Central and State Educational Boards as educational institutions for the limited purpose of conducting examinations. It formulated objective criteria to attract Sl. No. 66(aa): (i) a specific curriculum for the education course/programme; (ii) the examination leads to a recognised qualification; (iii) the qualification is recognised by law for particular objectives (e.g., eligibility for appointment); and (iv) the institution is assigned the task of conducting the examination. Applying these criteria to exams numbered 1-12 (TET 1, TET 2, TAT (Sec.), TAT (HS), HMAT, HTAT, DPSE, D.El.Ed., ATD, Applied Arts, Drawing & Painting, Sculpture), the Authority found documentary evidence of prescribed curricula, statutory recognition (RTE Act, GSHSE Act, NCTE Act and Regulations), and governmental assignments entrusting the State Examination Board to conduct those exams. Consequently, the Board, in so far as it conducts those examinations, qualifies as an "educational institution" and the services are eligible for exemption under Sl. No. 66(aa). [Paras 29, 30, 33, 34, 35]

The appellant is eligible to claim exemption under Sl. No. 66(aa) for exams at Sr. No. 1 to 12.

Exemption under Notification No.12/2017 Central Tax (Rate) (Sl. No.5) for services by a Governmental Authority in relation to functions entrusted to Panchayat under Article 243G - examination as an essential component of "education" (Eleventh Schedule, Entry 17) - Appellant's entitlement to exemption under Sl. No. 5 of Notification No.12/2017 for exams at Sr. No. 13 and 14 (Diploma in Home Science and GCC Type Steno) - HELD THAT: - Entry 5 requires services by a Governmental Authority that are in relation to functions entrusted to Panchayats under Article 243G; Entry 17 of the Eleventh Schedule is "Education, including primary and secondary schools." While examinations are recognised as an essential component of education, the Authority required that the specific education programmes be recognised by law and supported by a defined curriculum/recognition. The appellant failed to produce particulars of a specific curriculum or statutory recognition for the Diploma in Home Science and GCC Type Steno. Absent recognition by law that would bring these programmes within the Eleventh Schedule function, the conduct of these exams cannot be treated as activity in relation to a Panchayat entrusted function. Therefore, exemption under Sl. No. 5 does not apply to Sr. No. 13 and 14. [Paras 38, 40, 41, 42, 43]

The appellant is not eligible to claim exemption under Sl. No. 5 for exams at Sr. No. 13 and 14.

Scope of supply under section 7 of the CGST Act - applicability of Notification No.12/2017 (Sl. No.5 and Sl. No.66) to departmental examinations - Whether departmental examinations (Sr. No. 15) fall outside the scope of section 7 and/or are eligible for exemption under Sl. No.5 or Sl. No.66(a)/(aa) - HELD THAT: - The Authority confined the reference to the applicability of the exemption notifications to departmental exams. It noted that the departmental exams neither satisfy the criteria for Sl. No. 66(aa) nor for Sl. No. 5. The Board did not demonstrate that those exams correspond to an education programme recognised by law or that they relate to a Panchayat function; accordingly the conditions for the notified exemptions are not met. Although the appellant contended that some departmental exams are provided free for initial trials and later for a fee, the Appellate Authority's conclusion on exemption was based on non fulfillment of the statutory conditions of the notification rather than on a factual finding of absence of consideration under section 7. The ultimate finding was that departmental examinations are not eligible for exemption under either Sl. No. 5 or Sl. No. 66(a)/(aa). [Paras 44, 45, 46]

Departmental examinations (Sr. No. 15) are not eligible for exemption under Sl. No. 5 or Sl. No. 66(a)/(aa).

Final Conclusion: Advance Ruling No. GUJ/GAAR/R/105/2020 dated 05.11.2020 is modified: the State Examination Board is entitled to exemption under Sl. No. 66(aa) of Notification No.12/2017 Central Tax (Rate) for exams at Sr. No.1-12, and is not eligible for exemption under Sl. No.5 for exams at Sr. No.13-14 nor for exemption under Sl. No.5 or Sl. No.66(a)/(aa) for departmental exams at Sr. No.15.

Remand to the Assessing Officer - infructuousness of an appeal - application of binding precedent - duty of the appellate forum to decide versus remit

Remand to the Assessing Officer - infructuousness of an appeal - application of binding precedent - Whether the appeal against the ITAT's order remanding the royalty issue for fresh adjudication is maintainable or has become infructuous in view of subsequent decisions and proceedings. - HELD THAT: - The Court examined the impugned ITAT order remanding the issue to the Assessing Officer to be adjudicated afresh. Subsequent to that remand, the Assessing Officer and the Dispute Resolution Panel have adjudicated the matter, and further appellate consideration by the ITAT has taken place. The Supreme Court in Engineering Analysis Centre of Excellence Pvt. Ltd. confirmed the view earlier taken by this Court in DIT v. Infrasoft Ltd., a precedent relied upon in the proceedings. The ITAT, in orders passed during the pendency of the present appeal, applied the Supreme Court's decision and followed the decisions of this Court, thereby deciding the royalty issue on merits in subsequent proceedings. Given these developments, the present challenge to the remand order no longer presents a live controversy: the remanded issue has been dealt with by the assessing authorities and in subsequent ITAT orders which adopted the binding precedent. Consequently the appeal challenging only the remand has lost its practical efficacy and is rendered infructuous. [Paras 5, 6]

The appeal challenging the ITAT's remand order is dismissed as infructuous.

Final Conclusion: The revenue's appeal against the ITAT's remand order is dismissed as infructuous since the matter was subsequently adjudicated by the AO/DRP and ITAT orders applying the relevant Supreme Court precedent have rendered the challenge ineffective.

Royalty under Section 9(1)(vi) of the Income Tax Act - Article 12 of the Indo US DTAA - transfer of copyright - End User Licence Agreement (EULA) and non exclusive licence - benefit of the DTAA over wider municipal explanations - Engineering Analysis Centre of Excellence precedent

Royalty under Section 9(1)(vi) of the Income Tax Act - Article 12 of the Indo US DTAA - End User Licence Agreement (EULA) and non exclusive licence - transfer of copyright - Engineering Analysis Centre of Excellence precedent - Whether amounts paid for licensing/distribution of computer software in India by the non resident respondent constituted 'royalty' taxable in India for the Assessment Years 1997-98 and 1999-2000. - HELD THAT: - The High Court held that the question is conclusively answered by the Supreme Court in Engineering Analysis Centre of Excellence, which determined that payments by resident end users or distributors to non resident software suppliers under EULAs/distribution agreements do not constitute payment for the use of copyright and therefore do not amount to 'royalty' taxable in India. The Court accepted that a non exclusive licence or an EULA that merely grants the right to use software does not part with the proprietary rights enumerated in the Copyright Act and cannot be equated to transfer of copyright for the purposes of Section 9(1)(vi). The Court further noted that wider municipal explanations cannot override the more beneficial definition contained in the DTAA, as applied by the Supreme Court, and that the AAR decision in Citrix (relied upon by Revenue) has been set aside by that precedent. Applying these principles to the facts and earlier consistent decisions of this Court, the appeals raised no substantial question of law in favour of Revenue and were dismissed. [Paras 6]

Appeals dismissed; amounts paid for the licensing/distribution model in question do not amount to 'royalty' taxable in India for Assessment Years 1997-98 and 1999-2000.

Final Conclusion: The High Court dismissed the Revenue appeals, holding that the question whether payments for licensing/distribution of software amounted to 'royalty' was settled by the Supreme Court in Engineering Analysis Centre of Excellence in favour of the assessee, and that no substantial question of law arose for the Assessment Years 1997-98 and 1999-2000.

Violation of principles of natural justice - Duty to consider reply under Section 148A(c) - Order under Section 148A(d) - Scope of enquiry under Section 148A(a) and Explanation 1 to Section 148 - Remand for passing a reasoned order

Violation of principles of natural justice - Duty to consider reply under Section 148A(c) - Order under Section 148A(d) - The order under Section 148A(d) dated 5th April, 2022 was passed without considering the petitioner's reply dated 4th April, 2022 and thereby violated the statutory mandate and principles of natural justice. - HELD THAT: - The Court found on the material placed before it that the petitioner had filed a reply on 4th April, 2022 (acknowledgement number 579354131040422) which was available on the record before the Assessing Officer. Section 148A(c) uses mandatory language ('shall') requiring the Assessing Officer to consider the assessee's reply to the notice issued under Section 148A(b) before making an order under Section 148A(d). Having passed the order under Section 148A(d) on 5th April, 2022, after receipt of the petitioner's reply, the Assessing Officer failed to discharge that statutory duty and thereby breached principles of natural justice by drawing an adverse inference that no response had been filed. The Court noted that similar approach had been quashed in earlier decision cited by it, reinforcing that replies and supporting documents must be considered prior to passing a Section 148A(d) order. [Paras 6, 7, 8]

Impugned order under Section 148A(d) dated 5th April, 2022 was quashed for failure to consider the reply dated 4th April, 2022 and for violation of natural justice.

Scope of enquiry under Section 148A(a) and Explanation 1 to Section 148 - Whether a notice under Section 148 could be issued for verification of information and whether an enquiry under Section 148A(a) is permissible for such verification. - HELD THAT: - The Court held that Section 148A contemplates an 'enquiry' and that the Assessing Officer is entitled to conduct an enquiry for verification of information received to ascertain whether income has escaped assessment. Even where reassessment is initiated for verification in terms of Explanation 1 to Section 148, the Assessing Officer may proceed under Section 148A(a) to examine the information. Nonetheless, the statutory scheme requires that any contentions and submissions of the assessee be thoroughly scrutinised before passing orders under Section 148A(d). [Paras 5, 6]

Issuance of notice for verification and conduct of enquiry under Section 148A(a) in aid of Explanation 1 to Section 148 is permissible, subject to the obligation to consider the assessee's submissions before making a consequential order.

Remand for passing a reasoned order - Relief to be granted in view of the procedural breach and appropriate remedial direction. - HELD THAT: - Having found that the Assessing Officer did not consider the petitioner's reply before passing the Section 148A(d) order, the Court held that the appropriate remedy was to quash the impugned order and the notice issued on the same date and to remit the matter to the Assessing Officer. The Court directed that the Assessing Officer shall pass a reasoned order in accordance with law after considering the reply dated 4th April, 2022 and doing so within a stipulated time frame, thereby enabling complete and fair adjudication in accordance with the statutory procedure. [Paras 10]

Impugned order under Section 148A(d) and the notice under Section 148 dated 5th April, 2022 are quashed and set aside; matter remitted to the Assessing Officer to pass a reasoned order after considering the reply dated 4th April, 2022 within eight weeks.

Final Conclusion: The writ petition is allowed: the order under Section 148A(d) and the notice under Section 148 dated 5th April, 2022 are quashed for failure to consider the reply filed on 4th April, 2022; the matter is remanded to the Assessing Officer to pass a reasoned order in accordance with law within eight weeks after considering the petitioner's reply.

Faceless assessment - personal hearing through video conference - principles of natural justice (audi alteram partem) - Section 144B(7)(vii) of the Income tax Act, 1961 - standard operating procedure for faceless assessment - remand for fresh assessment after affording hearing

Section 144B(7)(vii) of the Income tax Act, 1961 - personal hearing through video conference - principles of natural justice (audi alteram partem) - Impugned assessment order passed without granting the requested personal hearing and whether that omission violated principles of natural justice. - HELD THAT: - The Court examined the scheme under Section 144B(7), noting that where a variation is proposed in a draft assessment order an opportunity is to be provided and the assessee may request personal hearing to make oral submissions. The petitioner had requested personal hearing through the e portal (shown as an "open" request) prior to the finalisation of the assessment, but the assessment order was passed without the request being considered and while the portal status remained open. Relying on precedent and the statutory scheme, the Court held that where hearing is envisaged by the provision and the assessee requests it, denial of that opportunity amounts to breach of the audi alteram partem principle. The impugned order was therefore found to have been passed in violation of natural justice. [Paras 15]

Assessment order set aside for having been passed without affording the requested personal hearing, as contrary to principles of natural justice.

Standard operating procedure for faceless assessment - faceless assessment - remand for fresh assessment after affording hearing - Whether standards, procedures and processes under the faceless assessment scheme had been framed and whether the assessee has a vested right to personal hearing requiring remand. - HELD THAT: - The Court found that no standards, procedures and processes under clause (xii) of Section 144B(7) had been framed in a manner that would guide the assessing officer on grant or denial of personal hearing. In light of the statutory provision envisaging a hearing and the absence of operative procedures to regulate exercise of discretion, the Court held that the assessee has a vested right to personal hearing if such a request is made and that the right should not be made to depend on unframed or ad hoc criteria. Consequently, the Court remitted the matter to the Assessing Officer to conduct a fresh assessment after affording a reasonable opportunity of hearing and to pass appropriate orders in accordance with law. [Paras 15, 16]

Matter remitted for fresh assessment after affording a reasonable opportunity of personal hearing; consequential demand and penalty proceedings set aside.

Final Conclusion: Writ petition allowed: the Assessment Order dated 30.03.2022 for AY 2016 2017, the consequential demand notice and the penalty notice are set aside and the matter is remitted to the Assessing Officer for fresh assessment after affording a reasonable opportunity of personal hearing, to be decided expeditiously and in accordance with law.

Quasi-judicial authority - stay of demand pending appeal - administrative circular not binding on quasi-judicial authority - application of independent mind - principles of natural justice - remand for fresh decision

Administrative circular not binding on quasi-judicial authority - quasi-judicial authority - application of independent mind - Whether the Commissioner (Appeals) was bound to follow the CBDT office memorandum directing grant of stay only on deposit of 20% of disputed demand. - HELD THAT: - The Court observed that the Commissioner (Appeals) is a quasi-judicial authority and hence not bound by administrative circulars issued by the CBDT. While the CBDT office memorandum of 31.07.2017 provides a guideline that stay may be granted subject to deposit of 20% of the disputed demand, a quasi-judicial authority must apply its own independent mind to the facts of each case. The Supreme Court's decision in Principal Commissioner of Income Tax v. L.G. Electronics India Pvt. Ltd., cited in the judgment, was noted to the effect that an administrative circular does not fetter the discretion of a quasi-judicial authority and that on the facts of a case the authority may grant stay on terms different from the administrative guideline. The impugned order indicates that the Commissioner (Appeals) followed the CBDT memorandum rather than recording independent reasons for fixing the 20% deposit condition. [Paras 9, 10, 11]

Administrative circular could not be applied as binding; the Commissioner (Appeals) must apply independent judgment in deciding stay applications under the facts of each case.

Stay of demand pending appeal - principles of natural justice - remand for fresh decision - Validity of the conditional stay order directing 20% deposit and the appropriate remedial direction. - HELD THAT: - The Court found that the impugned order dated 04.03.2022 was passed following the CBDT memorandum without adequate exercise of independent quasi judicial discretion and without the requisite application of principles of natural justice. Consequently, the Court set aside the impugned order and remanded the matter to the Commissioner (Appeals) for fresh adjudication of the petitioner's stay application. The Commissioner (Appeals) was directed to reconsider the stay petition in accordance with law and after complying with principles of natural justice within four weeks from receipt of the order. Pending such reconsideration, the demand pursuant to the assessment order dated 21.12.2019 was ordered to remain stayed. [Paras 12]

Impugned conditional stay order set aside; matter remitted to the Commissioner (Appeals) for fresh decision in accordance with law and natural justice within four weeks, with interim stay of the demand until such decision.

Final Conclusion: The conditional deposit order of the Commissioner (Appeals) was set aside because a quasi judicial authority is not bound by the CBDT memorandum; the appeal stay petition is remanded for fresh consideration in accordance with law and principles of natural justice within four weeks, and the demand under assessment order dated 21.12.2019 shall remain stayed pending that decision.

Additional depreciation under section 32(1)(iia) of the Income Tax Act - acquired or installed after 31.03.2002 - operational connectivity between new plant/machinery and existing business not required - generation of electricity treated as setting up of new machinery or plant - remand for recomputation of depreciation

Additional depreciation under section 32(1)(iia) of the Income Tax Act - acquired or installed after 31.03.2002 - operational connectivity between new plant/machinery and existing business not required - generation of electricity treated as setting up of new machinery or plant - Whether the assessee is entitled to claim additional depreciation on the windmill under section 32(1)(iia) despite the windmill not being operationally connected to the assessee's existing manufacturing business. - HELD THAT: - The Court applied settled construction of section 32(1)(iia) requiring that the new machinery or plant must have been acquired or installed after 31.03.2002. The Court followed authoritative precedent of this High Court holding that the statutory test does not require the new machinery to have operational connectivity with the article or thing already being manufactured by the assessee. A windmill constitutes setting up of new machinery or plant and, having been acquired/installed after 31.03.2002, the claim for additional depreciation cannot be denied on the ground that generation of electricity is unrelated to the assessee's existing manufacture of textiles. The Tribunal's contrary conclusion was held to be erroneous. In consequence, the appellate authority's order allowing additional depreciation was to be restored in effect and the matter remitted to the assessing officer to recompute depreciation allowing the additional depreciation, subject to hearing and in accordance with law. [Paras 8]

The Tribunal's order disallowing additional depreciation is set aside; the matter is remanded to the assessing officer to recompute depreciation after allowing the claim for additional depreciation (having regard to acquisition/installation after 31.03.2002), and to pass fresh orders on merits after opportunity of personal hearing within six weeks.

Final Conclusion: The appeal is allowed in part: the Tribunal's disallowance of additional depreciation on the windmill is set aside, and the matter is remitted to the assessing officer to recompute and allow additional depreciation (subject to hearing and law) for AY 2006-07.

Deduction under Section 80P - Net profit attributable to non-members - Assessee's burden of proof - Disallowance for lack of documentary evidence - Verification of retail trade profit allocation

Deduction under Section 80P - Net profit attributable to non-members - Assessee's burden of proof - Disallowance for lack of documentary evidence - Validity of the disallowance of Rs. 8,97,854/- by treating net profit from retail trade attributable to non-members as taxable income by denying part of the claim under Section 80P. - HELD THAT: - The Tribunal upheld the addition because the assessee failed to substantiate the claim of deduction under Section 80P. The assessing officer computed net profit from retail sales to non-members by applying the overall net-to-gross profit ratio to gross profit from retail divisions and after allowing the statutory Rs. 1,00,000/- deduction under Section 80P(2)(c) arrived at the disallowed amount. A show-cause notice was issued and the assessee did not file any response; no documentary break-up of sales between members and non-members or other evidence was produced before the AO, CIT(A) or the Tribunal. The CIT(A) confirmed the disallowance for want of credible documentary evidence. The Tribunal, after affording multiple opportunities and noting repeated non-appearance and failure to produce required details (including an adjournment request which did not result in production of records), found no material before it to justify deletion of the addition. On this basis the disallowance was sustained. [Paras 6, 7, 8, 10]

Addition of Rs. 8,97,854/- upheld and appeal dismissed for lack of substantiation of the Section 80P claim.

Final Conclusion: The Tribunal dismissed the appeal for AY 2009-10 and sustained the disallowance of Rs. 8,97,854/- as the assessee failed to produce documentary evidence to allocate retail profits to members and non-members and to substantiate the claim under Section 80P.

Penalty under section 271(1)(c) - Tax sought to be evaded - Furnishing inaccurate particulars of income - Treatment of income as unexplained cash credit under section 68 - Change of head of income

Penalty under section 271(1)(c) - Tax sought to be evaded - Furnishing inaccurate particulars of income - Change of head of income - Treatment of income as unexplained cash credit under section 68 - Validity of levy of penalty under section 271(1)(c) where the assessing officer reclassified declared income from 'income from other sources' to unexplained cash credit under section 68 but there is no difference between returned income and assessed income. - HELD THAT: - The Tribunal found that there was only a change in the head of income: the assessee declared the amount as interest under 'income from other sources' but could not substantiate evidences and the AO treated it as unexplained cash credit under section 68. The Tribunal held that the essential condition for invoking penalty under section 271(1)(c) is that there must be 'tax sought to be evaded'. Where assessment under a different head does not result in any additional tax liability, the requisite element of tax sought to be evaded is missing. The Tribunal relied on the principle laid down by the Hon'ble Supreme Court in CIT vs. Reliance Petroproducts Pvt. Ltd. that 'particulars' in section 271(1)(c) embraces details of the claim made and that penalty cannot be imposed if no incorrect or inaccurate particulars in the return result in additional tax liability. Applying that principle, the Tribunal concluded that reclassification alone, without any resulting tax liability, does not constitute furnishing of inaccurate particulars attracting penalty under section 271(1)(c), and therefore the penalty levied by the AO and confirmed by the CIT(A) could not be sustained. [Paras 5, 6]

Penalty under section 271(1)(c) set aside as there was no tax sought to be evaded; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, held that reclassification of the amount from 'income from other sources' to unexplained cash credit under section 68 without any additional tax liability does not satisfy the requirement of 'tax sought to be evaded' for levy of penalty under section 271(1)(c), and set aside the penalty.

Deduction under section 80P(2)(d) for interest earned from co-operative banks - Interest from investment of surplus funds - Distinction between interest from co-operative banks and nationalised banks for 80P relief - Treatment of interest as income from other sources where 80P deduction is disallowed

Deduction under section 80P(2)(d) for interest earned from co-operative banks - Interest from investment of surplus funds - Distinction between interest from co-operative banks and nationalised banks for 80P relief - Deduction under section 80P(2)(d) is allowable in respect of interest earned by the assessee on surplus funds deposited with other co-operative banks but not for interest earned from deposits with nationalised/private banks. - HELD THAT: - The Tribunal examined whether interest income earned on deposits of surplus funds with co-operative banks falls within the scope of deduction under section 80P(2)(d). Having regard to the judicial precedents of the Gujarat and Karnataka High Courts and earlier Tribunal decisions which distinguish interest attributable to deposits with co-operative banks from interest earned on deposits with nationalised/private banks, the Tribunal held that interest on surplus funds deposited with co-operative banks is eligible for deduction under section 80P(2)(d). The assessing officer's view that the entire interest income should be taxed as income from other sources was therefore not sustained to the extent such interest arose from deposits with co-operative banks. The Tribunal followed the High Court rulings that permit a co-operative society to claim section 80P(2)(d) relief for interest received from co-operative banks while interest from nationalised banks remains outside that relief.

Revenue appeal dismissed insofar as it sought to disallow deduction under section 80P(2)(d) in respect of interest earned on deposits with other co-operative banks; interest from nationalised/private banks remains non-deductive under 80P.

Final Conclusion: The appeal by the revenue is dismissed; the assessee is entitled to deduction under section 80P(2)(d) for interest earned on surplus funds deposited with other co-operative banks for Assessment Year 2016-17, while interest from nationalised/private banks is not eligible for such deduction.

Deduction under section 80P(2)(d) - Eligibility of co-operative societies for deduction on interest from co-operative banks - Condonation of delay in filing appeal - sufficient cause

Condonation of delay in filing appeal - sufficient cause - Delay of two days in filing the appeal was condoned. - HELD THAT: - The Tribunal applied the principle of liberal construction of limitation where substantial justice outweighs technical disbarment, relying on the reasoning in Collector, Land Acquisition v. Mst. Katiji that the expression 'sufficient cause' is elastic and courts should prefer resolution on merits where delay is short and non-deliberate. Considering the delay of two days and the interest of justice, the Tribunal exercised discretion to condone the delay and admit the appeal for hearing on merits. [Paras 3]

Delay of two days in filing the appeal is condoned.

Deduction under section 80P(2)(d) - Eligibility of co-operative societies for deduction on interest from co-operative banks - Interest earned by the assessee from Banaskantha District Co-operative Bank is eligible for deduction under section 80P(2)(d). - HELD THAT: - The Tribunal examined the eligibility of the assessee (a co-operative credit society) to claim deduction for interest earned on surplus funds deposited with a co-operative bank. Following authoritative decisions of the Gujarat High Court and relevant Tribunal precedents, the Tribunal held that interest derived by a co-operative society on investments or deposits with a co-operative bank falls within the ambit of section 80P(2)(d). The Tribunal rejected the Assessing Officer's view that interest from deposits with a co-operative bank is not deductible, and, having regard to the cited High Court and Tribunal authorities, concluded that the interest of Rs. 14,07,035 received from the co-operative bank qualifies for deduction under section 80P(2)(d). [Paras 6, 7]

Interest earned from deposits with the Banaskantha District Co-operative Bank is deductible under section 80P(2)(d); the assessee's appeal is allowed on this ground.

Final Conclusion: The Tribunal condoned the two day delay in filing the appeal and allowed the appeal on merits by holding that interest earned by the assessee from deposits with a co operative bank is deductible under section 80P(2)(d) for AY 2017-18.

Non-speaking order - failure to comply with requirement to state points of determination, decision and reasons - right to be heard / audi alteram partem - remand for fresh adjudication - assessment passed in absence of evidence - re-determination of additions under Section 50C and claims under Section 54F

Non-speaking order - failure to comply with requirement to state points of determination, decision and reasons - right to be heard / audi alteram partem - Validity of the Commissioner (Appeals) order which dismissed the appeal in limine without dealing with the merits and without stating points of determination, decision and reasons as required by law. - HELD THAT: - The Tribunal found that the learned CIT(A) dismissed the assessee's appeal in limine after notices were returned unserved, without adjudicating the merits. Section 250(6) requires that the order of the Commissioner (Appeals) contain the points of determination, the decision thereon and the reasons for such decision. The impugned order was non-speaking and did not comply with that statutory mandate. Given the importance of opportunity to be heard and reasoned decisions, the Tribunal held that the assessee was entitled to adjudication on merits rather than an ex parte, non-speaking dismissal. The Tribunal therefore set aside the CIT(A)'s order and directed further proceedings.

The CIT(A) order was set aside for failure to comply with Section 250(6) and for being a non-speaking, in limine dismissal; the assessee must be afforded an opportunity to have the appeal decided on merits.

Remand for fresh adjudication - assessment passed in absence of evidence - re-determination of additions under Section 50C and claims under Section 54F - Whether the matter should be restored to the file of the Assessing Officer for fresh adjudication of the addition under Section 50C, claim of exemption under Section 54F, and related consequential issues. - HELD THAT: - The Tribunal noted that the Assessing Officer had completed assessment under Section 144 treating cost of acquisition and improvement as nil due to absence of documents, and made a large addition by reference to stamp duty valuation under Section 50C. Since the CIT(A) did not decide merits and procedural defects in service were claimed by the assessee (an NRI), the Tribunal directed restoration of all issues to the Assessing Officer for fresh determination. The AO is required to grant a fair and proper opportunity of hearing before passing the assessment afresh; the assessee is directed to attend hearings and furnish requisite details. The Tribunal did not adjudicate the correctness of the additions, exemption claim, interest or penalty on merits but remanded them for fresh consideration.

All issues including the addition under Section 50C, claim under Section 54F, and consequential matters are restored to the file of the Assessing Officer for fresh adjudication with a fair opportunity of hearing.

Final Conclusion: The appeal is allowed for statistical purposes: the CIT(A)'s non-speaking dismissal is set aside for non-compliance with the statutory requirement to state points and reasons, and the matter is remanded to the Assessing Officer for fresh adjudication of all issues (including the Section 50C addition and Section 54F claim) after granting the assessee a fair opportunity of hearing.

Deduction under section 80HHE - Computation of profits for deduction - Brought forward business losses and set-off - Deduction under section 10A - unit-wise stand-alone computation - Transfer pricing adjustments and deduction under section 10A - Book profits under section 115JB and add-backs - Retrospective amendments affecting book profit add-backs - Revision jurisdiction under section 263

Deduction under section 80HHE - Computation of profits for deduction - Brought forward business losses and set-off - Whether brought forward business losses reduce the profits eligible for deduction under section 80HHE - HELD THAT: - The Tribunal held that the profit qualifying for deduction under section 80HHE is the profit of the current year computed under the head 'profits and gains of business or profession' in accordance with sections 30-43D (per section 29 and explanation to section 80HHE). Set-off of brought forward business losses governed by section 72 has no relevance to computation of the profit eligible for deduction under section 80HHE. The Tribunal explained the two-stage computation: (i) compute eligible profit as (profits of business x export turnover / total turnover) where 'profits of business' is current year profit; and (ii) restrict the deduction so computed to the gross total income at the stage of allowance. Earlier decisions relied upon by Revenue were found factually distinguishable, and the Tribunal placed reliance on Supreme Court and High Court precedents holding that the deduction is of the business profit of the year and is allowable from gross total income. Applying this principle, the Assessing Officer's approach to compute eligible profit without reducing it by brought forward losses was held correct and no adjustment was warranted as proposed by the Commissioner. [Paras 6]

Brought forward business losses do not reduce the current year profits eligible for deduction under section 80HHE; grounds 2(a) and 2(b) allowed.

Deduction under section 80HHE - Disposition of ground no.8 (whether deduction under section 80HHE is unavailable because no eligible profits exist) as pressed before the Tribunal - HELD THAT: - The Tribunal recorded that ground No.8 was not pressed by the assessee at hearing and that no adjustment arising from section 263 proceedings had been given effect to by the Assessing Officer. As a result the point had become academic for purposes of the appeal. [Paras 6]

Ground No.8 dismissed as not pressed.

Deduction under section 10A - unit-wise stand-alone computation - Whether losses of other units can be set off against profits of a unit eligible for deduction under section 10A before granting the deduction - HELD THAT: - Following the Supreme Court decision in CIT v. Yokogawa India Ltd., the Tribunal held that section 10A deduction is qua the eligible undertaking and must be determined on a stand-alone basis; set-off of losses of other eligible or non-eligible units is not permissible at the stage of computing the deduction for the eligible undertaking. The deduction under section 10A is to be allowed while computing the gross total income of the eligible undertaking under Chapter IV (i.e., immediately after determining the undertaking's profits and gains), and application of chapters dealing with set-off and carry forward would be premature at that stage. Applying this principle, the Assessing Officer's allowance of section 10A deduction on a stand-alone basis was upheld and the Commissioner's contrary view was set aside. [Paras 7]

Grounds 3(a)-3(c) allowed; losses of other units cannot be set off against the profits of a section 10A eligible unit for computing the deduction under section 10A.

Revision jurisdiction under section 263 - Disposition of ground No.4 (allegation that CIT set aside matter without indicating basis / denial of opportunity) as pressed before the Tribunal - HELD THAT: - The Tribunal recorded that ground No.4 was not pressed at hearing and that no adjustment had been made by the Assessing Officer while giving effect to the section 263 proceedings, rendering the issue academic. [Paras 8]

Ground No.4 dismissed as not pressed / academic.

Transfer pricing adjustments and deduction under section 10A - Whether Assessing Officer allowed section 10A deduction after incorporating transfer pricing adjustments and whether the Commissioner was correct in alleging failure to consider TPO findings - HELD THAT: - On examination of the assessment record, the Tribunal found that the Assessing Officer did not allow section 10A deduction by inflating eligible unit profits by any transfer pricing adjustment; only the claimed quantum was allowed. The Commissioner had proceeded on an incorrect factual premise that the AO had allowed section 10A deduction on an inflated base including transfer pricing additions. Because the CIT's conclusion was based on that incorrect assumption, the Tribunal allowed the assessee's challenge to the CIT's finding. [Paras 9]

Ground No.5 allowed; the CIT's finding about failure to take TPO adjustment into account was based on an incorrect assumption and is set aside.

Book profits under section 115JB and add-backs - Whether book profit under section 115JB should be increased by losses pertaining to units eligible for deduction under section 10A - HELD THAT: - The Tribunal found from the computation of book profit in the assessment order that the Assessing Officer had already made the adjustment required by clause (f) of Explanation 1 to section 115JB(2). The Commissioner therefore proceeded on an incorrect assumption of fact in holding that book profits had to be increased by the section 10A unit losses. Given that the required adjustment was already reflected in the AO's computation, the Tribunal allowed the assessee's ground on this point. [Paras 10]

Ground No.6 allowed; no further increase to book profits on account of section 10A unit losses was necessary as AO had already made the adjustment.

Book profits under section 115JB and add-backs - Retrospective amendments affecting book profit add-backs - Whether deferred tax liability and various provisions (provision for doubtful debts, diminution in value of assets, provision for doubtful recovery) are required to be added back while computing book profit under section 115JB - HELD THAT: - The Tribunal noted that the Commissioner passed the section 263 order before the Finance Act amendments that introduced Clause (h) and Clause (i) of Explanation 1 to section 115JB(2). However, on merits the Tribunal held that those amendments (which were made with retrospective effect from 01/04/2001) require addition back of deferred tax provision and provisions for diminution/ doubtful debts etc. Accordingly, in light of the retrospective legislative amendments, these items are to be added back in computing book profit under section 115JB. The Tribunal observed that the assessee had not challenged the Commissioner's assumption of jurisdiction under section 263 and therefore addressed the matter on merits. [Paras 11]

Ground No.7 dismissed (i.e., the assessee's challenge to adding back these items fails) - the deferred tax and specified provisions are required to be added back to book profit in view of retrospective amendments to Explanation 1 to section 115JB(2).

Final Conclusion: The appeal is partly allowed: the Tribunal upheld that brought forward losses do not reduce current-year profits eligible for deduction under section 80HHE and confirmed the stand-alone treatment of section 10A units (allowing several assessee grounds), set aside the CIT's incorrect factual findings regarding transfer pricing and book-profit adjustments where the AO had already made required computations, but held that, on merits and in view of retrospective legislative amendments, deferred tax and specified provisions must be added back while computing book profits under section 115JB.

Charitable purpose - proviso to Section 2(15) - commercial character test - letting out of community hall and attribution of income - public participation in advancement of arts as charitable activity

Proviso to Section 2(15) - commercial character test - letting out of community hall and attribution of income - charitable purpose - public participation in advancement of arts as charitable activity - Whether the receipts from letting the community hall constitute commercial income hit by the proviso to Section 2(15) or form part of the trust's charitable application of funds. - HELD THAT: - The Tribunal recorded that the assessee is a registered charitable trust running a community hall to enable poor and middle class persons to conduct family functions at moderate rentals and to encourage cultural activities. As against total receipts of Rs.1827.92 lacs, rental receipts amounted to Rs.72.93 lacs (about 4% of total receipts). The Tribunal found no indication that the trust's objects were profit motivated or that conditions of charitable registration were breached. Applying the commercial character test under the proviso to Section 2(15), the Tribunal held that the modest and incidental nature of the letting activity, its alignment with the trust's objects (including promotion of arts and public participation), and consistent conduct over several years preclude treating the activity as a separate commercial enterprise. Reliance was placed on the coordinate bench decision in Mylapore Fine Arts Club recognising public support for advancement of arts as charitable in modern society. For these reasons the proviso to Section 2(15) was held not attracted and the income from the community hall was not excluded from charitable purposes. [Paras 4, 5]

The impugned receipts from letting the community hall are not commercial income hit by the proviso to Section 2(15); appeal allowed and matter remitted to the AO for recomputation in terms of the order.

Final Conclusion: Tribunal allowed the assessee's appeal for AY 2014-15, holding that letting of the community hall formed part of the trust's charitable activities and was not hit by the proviso to Section 2(15); the AO was directed to recompute income accordingly.

Treatment of receipts as revenue receipt - appropriation of receipts to development fund and its effect on taxability - remand for fresh adjudication under Section 250(6) of the Income Tax Act, 1961 - disallowance of ceremonial expenses as business expenditure - restriction of ad hoc disallowance and non-precedential character of appellate estimation

Treatment of receipts as revenue receipt - appropriation of receipts to development fund and its effect on taxability - remand for fresh adjudication under Section 250(6) of the Income Tax Act, 1961 - Whether the amount of Rs.1,01,11,934 received from other sugar factories should be treated as taxable income or otherwise and whether the matter requires fresh adjudication in light of higher court directions. - HELD THAT: - The Tribunal observed that the earlier appellate order did not expressly consider the directions of the higher court which had restored the issue for fresh decision in light of authoritative precedent concerning receipts of co-operative sugar societies. The CIT(A)'s second-round order affirmed the AO's conclusion that the receipts represented revenue and described the transfer to the cane development fund as an appropriation of income; however, the Tribunal found that the CIT(A)'s detailed discussion failed to comply with the higher court's directions by not addressing the relevant legal considerations afresh. For these reasons the Tribunal restored the issue to the CIT(A) for fresh adjudication on merits in accordance with the power to remit under Section 250(6), so that the matter may be examined and decided consistently with the higher court's guidance. [Paras 3, 4]

Issue remanded to the CIT(A) for fresh adjudication on merits in accordance with the higher court's directions.

Disallowance of ceremonial expenses as business expenditure - restriction of ad hoc disallowance and non-precedential character of appellate estimation - Whether the disallowance of ceremonial expenses should be sustained and if so to what extent. - HELD THAT: - The Tribunal examined the CIT(A)'s adoption of a 25% restriction on the disallowance, noting the CIT(A) relied on an earlier tribunal order but had not discussed the evidence on record. The Tribunal held that routine day-to-day ceremonial expenses, though susceptible to denial on an ad hoc basis, do not render the estimating approach a binding precedent where the appellate authority has not considered the material evidence. In the interest of justice the Tribunal reduced the disallowance to 10%, while expressly declaring that this reduction shall not be treated as a precedent for other cases. [Paras 5]

Disallowance restricted to 10% of the claimed ceremonial expenses; the order is non-precedential.

Final Conclusion: The appeal is partly allowed: the cane-price receipt issue (AY 1997-98) is remanded to the CIT(A) for fresh adjudication in accordance with higher court directions; the disallowance of ceremonial expenses is reduced to 10% and the reduction is made non-precedential.

Permanent establishment - attribution of business profits to a permanent establishment - reimbursement versus income - Fees for technical services - gross taxation regime - condonation of delay - application of precedent to subsequent assessment year

Permanent establishment - attribution of business profits to a permanent establishment - Whether the Indian subsidiary (EPCOS India Pvt. Ltd.) constituted a permanent establishment of the non-resident assessee in India. - HELD THAT: - Having regard to the factual matrix and the Tribunal's consistent earlier decisions from A.Y. 2003-04 up to A.Y. 2014-15 in favour of the assessee, and there being no change in the facts for the year under appeal, the Tribunal followed the earlier precedent and concluded that the Indian subsidiary does not constitute the assessee's permanent establishment in India. The Dispute Resolution Panel's reliance on the Assessing Officer's contrary view was rejected as the Tribunal considered the prior consistent determinations decisive for the instant year. [Paras 3]

EPCOS India Pvt. Ltd. is not the permanent establishment of the assessee; this issue is decided in favour of the assessee.

Reimbursement versus income - Fees for technical services - gross taxation regime - Whether the sums described as reimbursements (inclusive of a 1% mark-up) received from the Indian subsidiary are non-taxable reimbursements or taxable income (FTS) under the gross taxation regime. - HELD THAT: - The Tribunal noted as admitted that the amounts received included a 1% mark-up over actual costs. Where a receipt is not a pure reimbursement but includes a mark-up it cannot be treated as mere reimbursement. The presence of mark-up makes the receipt chargeable to tax under the gross basis applicable to the category of receipts treated as Fees for Technical Services. Consequently the Tribunal upheld the Assessing Officer's addition of the amount to the taxable income and agreed with the DRP's confirmation of that view. [Paras 5]

The amounts received from the Indian subsidiary that include a mark-up are not reimbursements and are taxable as income (FTS) under the gross taxation regime; the addition is upheld.

Condonation of delay - application of precedent to subsequent assessment year - Admissibility of the appeal for A.Y. 2017-18 (condonation of 30 days' delay) and whether the conclusions on PE and reimbursement apply to A.Y. 2017-18. - HELD THAT: - The Tribunal exercised its discretion to condone the 30-day delay in filing the appeal for A.Y. 2017-18. Both parties accepted that the facts for A.Y. 2017-18 were mutatis mutandis the same as for A.Y. 2016-17; accordingly the Tribunal applied the same conclusions reached for A.Y. 2016-17-namely, that the subsidiary is not the assessee's PE and that amounts shown as reimbursements that include mark-up are taxable. [Paras 6, 7]

Delay in filing the appeal for A.Y. 2017-18 is condoned and the findings on PE and taxable reimbursements as decided for A.Y. 2016-17 are applied to A.Y. 2017-18.

Final Conclusion: Both appeals are partly allowed: the Tribunal held that the Indian subsidiary is not the assessee's permanent establishment (favouring the assessee) but upheld the inclusion in income of receipts labelled as reimbursements which included a mark up (against the assessee); the appeal for A.Y. 2017-18 was admitted after condonation of delay and the same conclusions were applied to that year.

Voluntary Disclosure Scheme - immunity for declarations within six months - inapplicability of Customs/Wild Life law to exotic species not notified - seizure under the Customs Act, 1962 - provisional release on furnishing bond - abuse of process of law - condonation of delay

Condonation of delay - Application to condone 13 days' delay in filing the appeal was allowed. - HELD THAT: - The Court considered the explanation furnished by the appellant for the delay and found that the appellant was prevented from filing the appeal within time for bona fide reasons. Having regard to that explanation the Court exercised its discretion in favour of the appellant and condoned the delay.

CAN 1 of 2022 allowed and delay in filing the appeal condoned.

Voluntary Disclosure Scheme - immunity for declarations within six months - inapplicability of Customs/Wild Life law to exotic species not notified - seizure under the Customs Act, 1962 - abuse of process of law - Seizure of appellant's exotic bird and subsequent summons under the Customs Act were illegal and amounted to abuse of process, where the species was not notified and the appellant had made a voluntary disclosure within the six month window. - HELD THAT: - The Court examined the Voluntary Disclosure Scheme issued by the Ministry and noted that the scheme granted immunity to declarers who disclosed their stock of exotic live species within six months and exempted them from producing documentation under extant laws. The court also observed that the exotic birds in question were neither notified under section 11B of the Customs Act nor included in the schedules of the Wild Life (Protection) Act, 1972, and therefore the presumption of illegal importation or applicability of customs confiscation provisions could not be mechanically applied. In the present case the appellant had declared the stock via the portal within the six month period and had informed the authorities about progeny and a proposed transfer; the bird was provisionally released on bond. Having regard to these facts and the settled position in other High Court decisions relied upon, the seizure and subsequent proceedings initiated by the Customs officer were contrary to the statutory scheme and constituted an abuse of process.

Seizure and the summons/proceedings in Seizure Case No. 39/IMP/CL/Macaw/CUS/BCD/DPU/2021-22 set aside and quashed.

Voluntary Disclosure Scheme - ownership certificate for progeny - provisional release on furnishing bond - Declarations made on the Parivesh portal and the scheme's provisions regarding registration of progeny and issuance of ownership certificate were recognised as operative facts supporting the appellant's claim. - HELD THAT: - The Court recorded that the appellant had made the initial disclosure within the six month window and had subsequently declared the birth of progeny and the intended transfer on the Parivesh portal. The Scheme contemplates registration of progeny and issuance of an ownership certificate after verification; meanwhile, declarers who complied within the window are not required to produce documentary proof. The appellant's compliance with the advisory and the provisional administrative steps taken (including provisional release on bond) were treated as supporting the conclusion that criminal or confiscatory action was not warranted.

The appellant's voluntary disclosures and related administrative steps weighed against the validity of the seizure and supported setting aside the impugned proceedings.

Seizure under the Customs Act, 1962 - inapplicability of Customs/Wild Life law to exotic species not notified - The Division Bench's earlier administrative direction in WPA No. 10138 of 2020 did not render the seizure lawful where the exotic species are not statutorily notified. - HELD THAT: - Respondents relied on a coordinate bench order directing interception of wildlife trafficking. The Court distinguished that administrative direction from the legal question before it, observing that it could not supply statutory basis to treat unnotified exotic species as goods within the forfeiture/detection provisions of the Customs Act or as protected under schedules of the Wild Life Act. Consequently, the administrative direction did not validate the seizure of an exotic bird that fell outside the statutory notifications.

The WPA No. 10138 of 2020 direction was held not applicable to justify the seizure in this case.

Final Conclusion: The appeal was allowed: the condonation application was granted; the Single Judge's order was set aside; and the seizure proceedings in Seizure Case No. 39/IMP/CL/Macaw/CUS/BCD/DPU/2021-22 dated 24.12.2021 were quashed on the basis that the appellant had made timely voluntary disclosures under the Voluntary Disclosure Scheme and the exotic birds were not statutorily notified so as to justify the impugned Customs action.

Powers under Section 451 of the Cr.P.C. to release seized property - lawful entitlement of claimant to custody of seized articles - requirement of detailed panchnama, photographs and security bond prior to release - prevention of spoilage and loss of value of detained property - use of samples, panchnama and photographs as sufficient evidence in trial

Powers under Section 451 of the Cr.P.C. to release seized property - lawful entitlement of claimant to custody of seized articles - prevention of spoilage and loss of value of detained property - Whether the seized base oil (muddamal) imported by the petitioner should be released to the petitioner who claims lawful entitlement. - HELD THAT: - The Court held that articles seized by police may be released to a person whom the Court considers lawfully entitled, subject to safeguards, and that powers under Section 451 Cr.P.C. should be exercised promptly to prevent articles from becoming junk or losing value. Applying these principles, the Court found that the seized base oil had been imported after requisite port formalities and was about to be delivered to storage when detained; samples were already taken pursuant to the FIR and the petitioner is an authorised person of the company. The Courts below therefore failed to exercise their powers judiciously in declining release. Prompt release, subject to appropriate conditions, would avoid spoilage, reduce custody costs and protect the proprietor's commercial interest. [Paras 6, 7]

Seized base oil shall be released to the petitioner subject to conditions; the impugned orders rejecting release are quashed.

Requirement of detailed panchnama, photographs and security bond prior to release - use of samples, panchnama and photographs as sufficient evidence in trial - On what terms and conditions the seized muddamal should be handed over and whether production of the seized goods must be insisted upon at trial. - HELD THAT: - The Court directed release on specified safeguards: preparation (or completion) of a detailed panchnama and photographs before handing over, and furnishing of a solvent surety (1.5 times the panchnama value) to secure the property for trial. The Court further ruled that physical production of the muddamal need not be insisted upon during trial because samples, together with the panchnama and photographs, would constitute sufficient evidence at the trial stage. The petitioner was also required to use the released muddamal in accordance with applicable laws and rules. [Paras 8]

Release subject to furnishing of surety, preparation of panchnama and photographs, non-obstipation to production at trial (sample and panchnama suffice), and lawful use of the material.

Final Conclusion: Petition allowed; orders refusing release of seized base oil quashed and the seized muddamal ordered released to the petitioner on conditions of detailed panchnama and photographs, provision of a solvent surety, non-requisitioning of the physical material at trial (samples to suffice), and lawful use of the goods.

Jurisdiction of DRI officers to issue show cause notice under Section 28 of the Customs Act - power of appellate tribunal to remand matters without deciding merits - status quo / await higher court decision pending resolution of conflicting High Court precedents - retrospective validation of officers' powers by legislative amendment

Jurisdiction of DRI officers to issue show cause notice under Section 28 of the Customs Act - retrospective validation of officers' powers by legislative amendment - Correctness of remand by CESTAT in appeals where the jurisdiction of DRI officers to issue SCNs is in dispute despite conflicting High Court decisions and pending Supreme Court proceedings. - HELD THAT: - The Court examined orders in which the Tribunal set aside adjudication orders and remanded matters for determination of the preliminary jurisdictional question whether DRI officers were proper officers empowered under Section 28 to issue show cause notices. Noting conflicting High Court decisions and the pendency of the matter before the Supreme Court in appeals arising from Mangali Impex, the Court followed its recent coordinate decision in Commissioner of Customs, Tuticorin v. Sanket Praful Tolia which held that the Tribunal was not justified in allowing appeals by remanding for fresh adjudication and directing status quo. Applying that reasoning to the present cases, the High Court set aside the impugned CESTAT orders which remanded the matters and restored the appeals to the Tribunal to be kept pending to await the Supreme Court's decision, while protecting the assessees from coercive action until final adjudication by the Supreme Court. [Paras 5, 6]

Impugned remand orders set aside; appeals restored to Tribunal to be kept pending and await Supreme Court decision; no coercive action to be taken against assessees.

Power of appellate tribunal to remand matters without deciding merits - status quo / await higher court decision pending resolution of conflicting High Court precedents - Whether the Tribunal may remit appeals to the adjudicating authority instead of keeping appeals pending where the jurisdictional question is sub judice before the Supreme Court. - HELD THAT: - The Court held that where identical orders were considered by a Division Bench in Sanket Praful Tolia and it was concluded that the appropriate course is to restore appeals to the Tribunal and keep them pending awaiting the Supreme Court's decision, similar treatment is required in the present matters. Consequently, the Tribunal ought not to have remanded the matters for fresh adjudication on the jurisdiction point; instead, the appeals must be retained at the appellate stage pending the higher court outcome. The Court emphasised safeguarding the interests of both Revenue and assessees by prohibiting coercive measures until final determination by the Supreme Court. [Paras 6]

Tribunal's power to remand should not have been exercised; appeals to be kept pending before the Tribunal and await the Supreme Court's decision, with prohibition on coercive action.

Final Conclusion: Civil Miscellaneous Appeals allowed; impugned CESTAT remand orders set aside; matters restored to the Tribunal to be kept pending and to await the Supreme Court's decision in the appeals arising from Mangali Impex; Department restrained from initiating coercive action; substantial questions of law left open.

Violation of due diligence obligations by Customs Broker under CBLR - Liability for facilitating fake importers - Forfeiture of security deposit and imposition of penalty on customs broker - Regulation 11(a), (b), (d) and (e) of CBLR 2013 - Role of prior record as contextual factor in disciplinary action

Violation of due diligence obligations by Customs Broker under CBLR - Liability for facilitating fake importers - Regulation 11(a), (b), (d) and (e) of CBLR 2013 - Appellant Custom Broker breached obligations under CBLR by failing to verify client credentials and by allowing unauthorized persons to handle customs documents. - HELD THAT: - The Tribunal accepted the findings of the Department and the enquiry report that the appellant did not make adequate enquiries or produce independent reliable documents to verify the genuineness or whereabouts of the purported importers, and permitted persons without valid 'G' or 'H' passes to handle customs documents. The proprietor's admissions recorded before customs were not retracted. While the Tribunal agreed that brokers need not physically visit client premises in every case, it held that they must exercise due diligence through independent and reliable sources/documents before dealing with representatives like Shri Kamat. On this basis the Tribunal held that the appellant had violated the duties embodied in the cited regulations of CBLR 2013 and thereby facilitated fake importers.

Findings that the appellant violated Regulation 11(a), (b), (d) and (e) of CBLR 2013 are upheld.

Forfeiture of security deposit and imposition of penalty on customs broker - Role of prior record as contextual factor in disciplinary action - Forfeiture of the security deposit and imposition of penalty on the appellant were justified and legally maintainable; revocation of licence was not ordered. - HELD THAT: - The Tribunal noted the Commissioner had considered the appellant's past punishments and the nature of the present violations before imposing penalty and forfeiting the security deposit. Although the Tribunal observed it is not fair to judge solely on past records, it regarded earlier adverse findings as informative of the appellant's activities. Having found that the appellant failed to prove bona fides or exercise due diligence, and that the Commissioner did not act excessively (he did not revoke the licence), the Tribunal held the penalty and forfeiture were proportionate and sustain the impugned order.

Imposition of penalty and forfeiture of security deposit affirmed; licence revocation was not imposed and the Commissioner's order is upheld.

Final Conclusion: The appeal is dismissed. The Tribunal upholds the finding that the customs broker breached CBLR due diligence obligations, and affirms the penalty and forfeiture of security deposit while noting licence revocation was not imposed.

Penalty under Section 112 of the Customs Act - Confiscation and liability for smuggled goods - Reliability and corroboration of statements of co-accused - Voluntariness and retraction of recorded statements - Onus under provision regarding proving non-smuggling by bearer - Abetment/connivance and criminal conspiracy in smuggling - Corroboration by independent recovery (marked currency note) - Insufficiency of suspicion without corroborative evidence

Penalty under Section 112 of the Customs Act - Reliability and corroboration of statements of co-accused - Voluntariness and retraction of recorded statements - Imposition of penalty under Section 112 on appellant Pawan Kumar Arora - HELD THAT: - The Tribunal found that no incriminating material was recovered from the premises or person of the appellant Pawan Kumar Arora and that he was not in Delhi on the relevant date. The Revenue's case against him rested principally on statements made during investigation by co-accused which were subsequently retracted and which did not survive cross-examination. There was no direct evidence of any telephone exchange between Arora and the Filipino nationals, and the mobile number relied upon was not his. Applying the established principle that adverse inference cannot be drawn solely from statements of co-accused in absence of independent corroboration, and that suspicion is not proof, the Tribunal held the penalty unsustainable and set aside the order against Arora. [Paras 25, 26, 27, 28, 30]

Penalty imposed under Section 112 on Pawan Kumar Arora set aside and his appeal allowed.

Penalty under Section 112 of the Customs Act - Complicity limited to accompaniment without possession - Insufficiency of evidence to prove abetment - Imposition of penalty under Section 112 on appellant Amrit Pal - HELD THAT: - The Tribunal accepted that Amrit Pal accompanied Rajeev Kumar to the hotel and was waiting outside, and that no gold was found in his possession. His explanation that he had accompanied Rajeev while searching for part-time work was not found to be untrue. There was no independent evidence of complicity or of any role in receipt or delivery of the smuggled gold. In absence of corroboration and given retracted statements, the penalty could not be sustained. [Paras 24, 25, 30]

Penalty imposed under Section 112 on Amrit Pal set aside and his appeal allowed.

Penalty under Section 112 of the Customs Act - Corroboration by independent recovery (marked currency note) - Reliability and corroboration of statements of co-accused - Imposition and quantum of penalty under Section 112 on appellant Rajeev Kumar - HELD THAT: - Although no gold was recovered from Rajeev Kumar, the Tribunal found strong evidence that he went to the hotel to receive the gold: notably the recovery from him of the marked ten-rupee note with the serial number which matched the delivery instruction given by the Filipino national. That independent corroboration distinguished his case from other appellants. Accordingly the Tribunal upheld imposition of penalty but, exercising discretion on quantum considering the circumstances, reduced the penalty from the amount imposed originally to a lesser sum. [Paras 29, 31]

Penalty under Section 112 on Rajeev Kumar upheld but reduced in quantum.

Reliability and corroboration of statements of co-accused - Voluntariness and retraction of recorded statements - Insufficiency of suspicion without corroborative evidence - Whether statements recorded during investigation (and later retracted) of co-accused can sustain confiscation/penalty in absence of corroboration - HELD THAT: - The Tribunal applied the well-settled principle that convictions or penalties cannot be based solely on statements of co-accused unless corroborated by independent evidence. It observed that several statements relied upon by the adjudicating authority were retracted and did not withstand cross-examination. Except for the marked currency note recovered from Rajeev Kumar, the Revenue failed to produce independent corroboration connecting the other appellants to receipt or possession of the seized gold. Accordingly, reliance on the retracted investigative statements was rejected as insufficient to sustain penalty against those appellants. [Paras 25, 28, 29]

Statements of co-accused, when retracted and unsupported by independent corroboration, cannot alone sustain penalty or adverse inference.

Final Conclusion: The appeals are allowed in part: penalties under Section 112 imposed on Pawan Kumar Arora and Amrit Pal are set aside; penalty on Rajeev Kumar is sustained but reduced in quantum. The Tribunal reversed the adverse findings against Arora and Amrit Pal for lack of corroborative evidence and upheld the penalty against Rajeev Kumar based on independent corroboration (the marked currency note).

Limitation period for initiation of insolvency proceedings under Section 7 - acknowledgement under Section 18 - part-payment/last payment restarting the period of limitation - rejoinder-affidavit as part of pleadings

Rejoinder-affidavit as part of pleadings - limitation period for initiation of insolvency proceedings under Section 7 - Admissibility of payments relied upon by the Financial Creditor when those payments were pleaded in the rejoinder-affidavit and reflected in the Section 7 application ledger - HELD THAT: - The Tribunal held that the Rejoinder-Affidavit formed part of the pleadings before the Adjudicating Authority and it was therefore open to the Adjudicating Authority to consider the payments recorded therein. Moreover, the Section 7 application itself contained the customer account ledger evidencing payments up to 02.09.2019. The appellant did not deny that part-payments had been made. In those circumstances the Adjudicating Authority correctly relied on the material on record to determine whether the application was time-barred. [Paras 7, 8]

Payments reflected in the rejoinder-affidavit and the ledger accompanying the Section 7 application were properly considered by the Adjudicating Authority; reliance on those payments was permissible.

Acknowledgement under Section 18 - part-payment/last payment restarting the period of limitation - limitation period for initiation of insolvency proceedings under Section 7 - Whether the payments made by the Corporate Debtor up to 02.09.2019 constituted an acknowledgement resetting the three-year limitation so that the Section 7 application filed on 06.12.2019 was within time - HELD THAT: - The Tribunal applied the settled principle that a part-payment (or last payment) restarts the period of limitation such that the three-year limitation for filing an application under Section 7 is measured from the date of the last payment. Having recorded that the Corporate Debtor made payments, lastly on 02.09.2019, and noting that these payments were not disputed by the appellant, the Tribunal concluded that there was an acknowledgement within the meaning of Section 18 and that the limitation period was accordingly extended so as to render the Section 7 application, filed on 06.12.2019, timely. The Tribunal distinguished cases where pleadings were deficient and the plaintiff was afforded an opportunity to amend, observing that in the present case the payments were on record. [Paras 4, 8, 12]

The last payment on 02.09.2019 restarted the period of limitation; the Section 7 application filed on 06.12.2019 was not barred by limitation.

Final Conclusion: The appeal is dismissed: the Adjudicating Authority rightly relied upon the payments recorded in the pleadings and ledger, which constituted an acknowledgement restarting the limitation period, and therefore the Section 7 application filed on 06.12.2019 was within time.

Operational Debt - Default - Admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Section 8 demand notice - Dispute under section 5(6) - Interim Resolution Professional - Moratorium - Corporate Insolvency Resolution Process

Operational Debt - Default - Section 8 demand notice - Dispute under section 5(6) - Admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Whether the Operational Creditor proved existence of an operational debt and default and whether the petition under Section 9 is maintainable in absence of a bona fide dispute. - HELD THAT: - The Tribunal found that the Operational Creditor produced invoices, ledger entries and a bank certificate corroborating non-receipt of payment, and that the demand notice under Section 8 was served on the Corporate Debtor. The Corporate Debtor neither filed a reply nor raised any dispute under section 5(6) within the prescribed period and failed to appear despite opportunities. On the materials on record the debt claimed was held to be an Operational Debt and a Default had occurred. The Tribunal therefore concluded that the statutory pre-conditions for admission under Section 9 were satisfied and there was no subsisting dispute preventing admission. [Paras 9, 10, 11, 12]

The petition under Section 9 is admitted on the basis that the Operational Creditor proved operational debt and default and no bona fide dispute was shown by the Corporate Debtor.

Corporate Insolvency Resolution Process - Interim Resolution Professional - Moratorium - Relief consequential to admission: appointment of Interim Resolution Professional, imposition of moratorium and directions for conduct of CIRP. - HELD THAT: - Upon admitting the petition the Tribunal appointed an Interim Resolution Professional as proposed by the Operational Creditor and directed deposit towards initial CIRP costs. The order imposed the statutory moratorium prohibiting initiation or continuation of suits, enforcement of security, transfer or disposal of assets and similar actions against the corporate debtor for the CIRP period, preserved supply of essential goods or services, and directed public announcement and communication to the Registrar of Companies. Management of the corporate debtor was ordered to vest with the IRP and suspended directors and employees were directed to cooperate with the IRP. [Paras 18, 20, 21, 22, 23]

CIRP is ordered against the corporate debtor; an IRP is appointed; moratorium and related directions are imposed and consequential steps for conduct of CIRP are directed.

Final Conclusion: The Tribunal admitted the Section 9 petition: finding that the Operational Creditor proved operational debt and default with no effective dispute, it ordered initiation of CIRP against the corporate debtor, appointed the Interim Resolution Professional, directed initial CIRP funding, imposed the moratorium and issued consequential directions for conducting the insolvency process.

Corporate Insolvency Resolution Process - financial debt / default - admission of petition under section 7 of the Insolvency and Bankruptcy Code - acknowledgement resetting limitation period - moratorium under section 14 of the IBC - appointment of Interim Resolution Professional

Financial debt / default - admission of petition under section 7 of the Insolvency and Bankruptcy Code - acknowledgement resetting limitation period - The petition under section 7 of the IBC by the Financial Creditor is complete and the Corporate Debtor is in default, permitting initiation of CIRP. - HELD THAT: - The Adjudicating Authority examined the loan sanction, disbursement, security documents and account statements and found that the transactions constitute a financial transaction and that default subsists. Although the date of default was stated as 19 July, 2014, the Corporate Debtor made a payment on 31 January, 2017 and there were prior cash deposits; such payment within the prescribed limitation period was held to attract the doctrine of acknowledgement under the Limitation Act as applied in the cited authority, thereby giving rise to a fresh period of limitation. On this basis the petition was held to be complete in all respects and to disclose a debt in default exceeding the statutory minimum for filing under section 7 of the Code. [Paras 9, 10]

Petition under section 7 is admitted as the Financial Creditor established existence of financial debt and continuing default, with the payment of 31 January, 2017 operating as an acknowledgement resetting limitation.

Corporate Insolvency Resolution Process - moratorium under section 14 of the IBC - appointment of Interim Resolution Professional - Reliefs and administrative measures on admission of the petition were directed, including imposition of moratorium, public announcement, appointment of IRP and directions regarding cooperation and costs. - HELD THAT: - On admission of the petition the Adjudicating Authority directed a moratorium in terms of the Code to operate from the date of the order until completion of CIRP or approval of a resolution plan or liquidation. The Authority directed immediate public announcement of the CIRP, appointed an Interim Resolution Professional subject to regulatory compliance, mandated cooperation by the corporate debtor's officers and managers, required periodical reports from the IRP, and directed the Financial Creditor to deposit an amount to meet CIRP-related public notice and claim-invitation expenses. Administrative communication of the order to the Financial Creditor, Corporate Debtor, IRP and Registrar of Companies was also directed. [Paras 11]

Moratorium imposed; public announcement, appointment of IRP and ancillary directions were issued to give effect to the admitted CIRP.

Final Conclusion: The Company Petition under section 7 filed by the Financial Creditor was admitted; the Corporate Debtor was found to be in default (with the 31 January 2017 payment treated as an acknowledgement resetting limitation), a moratorium under section 14 was imposed, an Interim Resolution Professional was appointed and consequential directions for initiation and conduct of the CIRP were issued.

Dissolution of corporate debtor under section 54 of the Insolvency and Bankruptcy Code, 2016 - liquidator's compliance with the IBBI (Liquidation Process) Regulations, 2016 - insufficiency of realisable assets to meet liquidation costs - formation of Stakeholder Consultation Committee - payment of liquidator's fees and liquidation costs by the Committee of Creditors - directions to Registrar of Companies following dissolution

Dissolution of corporate debtor under section 54 of the Insolvency and Bankruptcy Code, 2016 - insufficiency of realisable assets to meet liquidation costs - Corporate Debtor ordered to be dissolved under section 54 of the Code read with regulation 14 of the IBBI (Liquidation Process) Regulations, 2016. - HELD THAT: - The liquidator filed the Final Report and Compliance Certificate and reported that the Corporate Debtor is not a going concern, no viable resolution is possible and no saleable assets other than a commercial vehicle could be identified. It was further recorded that available assets are insufficient to cover liquidation process costs. In these circumstances the Tribunal held that continuation of the liquidation process would serve no purpose and therefore ordered dissolution of the Corporate Debtor. [Paras 8, 10, 11, 12]

Dissolution of the Corporate Debtor is ordered.

Formation of Stakeholder Consultation Committee - liquidator's compliance with the IBBI (Liquidation Process) Regulations, 2016 - No Stakeholder Consultation Committee was constituted owing to absence of valid claims; liquidator had complied with public announcement and reporting requirements under the Regulations. - HELD THAT: - Public announcement in Form 'B' was made and uploaded on the IBBI website; only one incomplete claim from a creditor was received and was not accepted despite reminders. Consequently, no other creditors filed claims and the Stakeholder Consultation Committee could not be formed; the liquidator filed the Preliminary Report and the Final Report along with Compliance Certificate, evidencing regulatory compliance. The Tribunal recorded these facts as part of the rationale for dissolution. [Paras 5, 7]

Stakeholder Consultation Committee not constituted; liquidator's procedural filings accepted.

Payment of liquidator's fees and liquidation costs by the Committee of Creditors - payment direction to Committee of Creditors - Committee of Creditors directed to pay the liquidator's fees and costs as approved in the 8th CoC meeting, if not already paid. - HELD THAT: - The liquidator reported outstanding fees and expenses approved by the 8th CoC meeting. Having regard to those approvals and the liquidator's submissions, the Tribunal directed the CoC to pay the approved fees and costs to the liquidator. [Paras 9, 14]

CoC directed to pay approved fees and costs to the liquidator.

Directions to Registrar of Companies following dissolution - Liquidator directed to serve copy of the dissolution order upon the Registrar of Companies, Kolkata, for further action within fourteen days. - HELD THAT: - Following the order for dissolution, the Tribunal mandated that the liquidator promptly serve the Registrar of Companies with the dissolution order so that the Registrar may take statutory steps consequent to dissolution. [Paras 13]

Liquidator to serve the Registrar of Companies with the order; ROC to take further necessary action.

Effect of dissolution on pending applications - Other pending applications before the Tribunal rendered infructuous by the dissolution order and thus dismissed. - HELD THAT: - In view of the dissolution directed in IA(IBC)/286(KB)2022, the Tribunal recorded that IA(IBC)/470(KB)2020 and IA(IBC)/154(KB)2021 had become infructuous and should stand dismissed accordingly. [Paras 16]

Pending IAs rendered infructuous and dismissed.

Final Conclusion: The Tribunal ordered dissolution of Nekka Oil and Fats Private Limited under section 54 of the Code read with the Liquidation Process Regulations, recorded the liquidator's procedural compliance and lack of realisable assets, directed the Registrar of Companies to be served for consequential action, and directed the Committee of Creditors to pay the liquidator's approved fees and costs; other pending IAs were dismissed as infructuous.

Corporate Insolvency Resolution Process - admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - default in repayment of financial debt - declaration of Non-Performing Asset as evidence of default - moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - public announcement and claims procedure under Section 15 of the Insolvency and Bankruptcy Code, 2016 - appointment of Interim Resolution Professional - constitution and convening of Committee of Creditors and identification of Resolution Applicant

Admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - default in repayment of financial debt - declaration of Non-Performing Asset as evidence of default - one-time settlement as admission of liability - The application under Section 7 of the Insolvency and Bankruptcy Code, 2016 filed by the Financial Creditor for initiation of Corporate Insolvency Resolution Process against the Corporate Debtor is liable to be admitted. - HELD THAT: - The Tribunal examined the loan documents placed on record, including demand promissory note, balance confirmation dated 06.11.2017, notices under the SARFAESI Act and the account classification as NPA. The Corporate Debtor had executed security and acknowledgement documents and had entered into a one-time settlement which was approved by the Financial Creditor; the Corporate Debtor in its reply admitted liability. The account was declared NPA after defaults in servicing interest and the Tribunal found these materials sufficient to establish existence of a financial debt and default for the purposes of admission under Section 7. The petition was held complete and, on the material before it, admission was warranted. [Paras 21, 23, 24]

Petition under Section 7 admitted and CIRP ordered to be initiated.

Appointment of Interim Resolution Professional - consent of proposed IRP - The proposal of Mr. Santanu Brahma as Interim Resolution Professional (IRP) is accepted subject to his written consent and he is appointed as IRP. - HELD THAT: - The Financial Creditor proposed the name of Mr. Santanu Brahma who filed affidavit and Form-2 expressing consent to act as IRP and stating that no disciplinary proceedings are pending against him. On that basis and having admitted the application, the Tribunal appointed him as Interim Resolution Professional and directed production of written consent within one week. [Paras 22, 24]

Mr. Santanu Brahma appointed as Interim Resolution Professional, subject to production of written consent.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - public announcement and claims procedure under Section 15 of the Insolvency and Bankruptcy Code, 2016 - Moratorium is declared and the IRP is directed to cause a public announcement and invite claims in accordance with the Code. - HELD THAT: - On admission of the Section 7 petition the Tribunal declared a moratorium effective from the date of admission till completion of the CIRP and recorded the prohibitions ordinarily arising under Section 14 (institution or continuation of suits, transfer or disposal of assets, enforcement of security, recovery of property by owner or lessor). The Tribunal also directed the IRP to make the public announcement and call for submission of claims in accordance with Section 15, and reminded that supply of essential goods or services shall not be terminated during the moratorium. [Paras 24]

Moratorium declared; IRP to make public announcement and invite claims as mandated by the Code.

Constitution and convening of Committee of Creditors and identification of Resolution Applicant - timeline for CoC and identification of prospective Resolution Applicant - preliminary expenses and fees subject to CoC approval - The IRP is directed to convene the Committee of Creditors, submit resolutions passed by the CoC and identify prospective Resolution Applicant within the stipulated period; preliminary fees and expenses to be claimed subject to CoC approval; Financial Creditor to deposit preliminary amount with IRP. - HELD THAT: - The Tribunal directed the IRP to ascertain particulars of creditors, convene the CoC and procure its resolution and identification of prospective Resolution Applicant within 105 days from the insolvency commencement date. The IRP may claim preliminary expenses and fees subject to CoC approval after constitution. The Financial Creditor was directed to deposit a specified preliminary amount with the IRP within three days to meet initial expenses. [Paras 24]

IRP to convene CoC, pursue resolution process within prescribed timeline; Financial Creditor to deposit initial amount for IRP's preliminary expenses.

Final Conclusion: The Section 7 petition filed by the Financial Creditor is admitted and the Corporate Insolvency Resolution Process against the Corporate Debtor is initiated; moratorium declared and public announcement ordered; Mr. Santanu Brahma appointed as Interim Resolution Professional (subject to written consent); IRP directed to convene the Committee of Creditors, invite claims and identify prospective Resolution Applicant within the time frames specified, with preliminary expenses to be met as directed.

Offence of money-laundering under Section 3 of the PMLA - Proceeds of crime - Burden of proof under Section 24 of the PMLA - Independent nature of PMLA prosecution vis-a -vis the predicate/scheduled offence - Trial of scheduled offence and PMLA together under Section 44 - Prima facie case for quashing criminal prosecution - Misuse of process of law

Prima facie case for quashing criminal prosecution - Offence of money-laundering under Section 3 of the PMLA - Quashing of the impugned PMLA prosecution and the summoning order insofar as they relate to the petitioners (accused Nos.5 and 6). - HELD THAT: - The Court examined the CBI investigation and the Enforcement Directorate records, including statements of the petitioners recorded under Section 161 Cr.P.C. and Section 50 of the PMLA. The CBI charge-sheet had cited the petitioners only as witnesses and the CBI investigation did not produce cogent material to arraign them for the predicate offences. The second supplementary prosecution complaint by the Enforcement Directorate arraigned the petitioners as accused for the first time, relying on the same set of allegations which, on the material available, rest on preponderance of probabilities rather than evidence capable of supporting a prima facie case beyond reasonable doubt. The complaint does not show that the petitioners applied for licences, conspired with public servants, or had knowledge that the property constituted "proceeds of crime"; their consistent statements deny any such involvement and indicate lawful investment through registered sale deeds and subsequent sale of company shares. Applying the standards for prima facie satisfaction, the Court held that on the face of the impugned complaint and the gathered material no offence under Section 3 of the PMLA is made out against the petitioners.

Impugned prosecution complaint and the summoning order quashed qua the petitioners; no prima facie case made out under Section 3 of the PMLA against them.

Independent nature of PMLA prosecution vis-a -vis the predicate/scheduled offence - Burden of proof under Section 24 of the PMLA - Whether the proposition that PMLA prosecution is independent of a predicate offence justified the continuation of proceedings against the petitioners. - HELD THAT: - The Court acknowledged the legal proposition that prosecution under PMLA is an independent offence and may, in general, proceed even absent a proved predicate offence. However, that general proposition was held inapplicable on the facts of this case because the CBI investigation - conducted after transfer and direction pursuant to Rameshwar - did not find evidence to implicate the petitioners in the scheduled offences and cited them only as witnesses. Section 24 creates presumptions in proceedings relating to proceeds of crime, but it does not itself substitute for satisfaction of the specific ingredients of Section 3 (knowledge/attempt/actual involvement and projection as untainted property). Absent material to satisfy Section 3, the independence of PMLA prosecution cannot validate continuation of proceedings which are otherwise unsupported by the investigative record.

Although PMLA prosecutions are in principle independent of predicate offences, that principle did not permit continuation of PMLA proceedings against these petitioners given the CBI findings and lack of material satisfying the requirements of Section 3.

Trial of scheduled offence and PMLA together under Section 44 - Misuse of process of law - Whether prosecuting the petitioners under PMLA before the Special Court - when they are witnesses in the scheduled offence proceedings tried by the same Court - amounted to misuse of process. - HELD THAT: - Section 44 provides for joint trial of scheduled offences and offences under the PMLA by the same Special Court. The Court found that where, after CBI investigation, petitioners stand only as witnesses in the scheduled offence proceedings, arraigning them as accused in a later supplementary PMLA complaint based on the same allegations constitutes misuse of the process of law. The impugned complaint effectively mirrors the accused list in the CBI prosecution while elevating petitioners from witnesses to accused without fresh incriminating material; this procedural posture cannot be permitted when the investigative record does not sustain the allegations against them.

Prosecution under the PMLA in these circumstances amounts to misuse of process; proceedings quashed insofar as they relate to the petitioners.

Final Conclusion: The writ petition is allowed. The impugned prosecution complaint ECIR/CDZO/04/2015 and the Special Judge's summoning order dated 30.06.2020, and consequent proceedings, are quashed as regards the petitioners (accused Nos.5 and 6) for lack of a prima facie case under Section 3 of the PMLA and because continuation of PMLA prosecution in the face of the CBI investigation that cited the petitioners only as witnesses would constitute misuse of process.

Adjudication under Section 8 of the Prevention of Money Laundering Act - Remedies under Section 9 and Section 26 of the Prevention of Money Laundering Act - Third party claim to attached property and jurisdiction of the Special Court - Principles of natural justice in attachment/eviction proceedings - Procedure for taking possession under the Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013

Remedies under Section 9 and Section 26 of the Prevention of Money Laundering Act - Third party claim to attached property and jurisdiction of the Special Court - Maintainability of the writ petition when statutory remedies under the Act (appeal to Appellate Tribunal and petitions before the Special Court) are available to a third party affected by attachment/eviction. - HELD THAT: - The Court found as an admitted fact that the petitioner is not the registered owner and that the property was in the name of a person who was subject to PMLA proceedings. The Act provides specific remedies: a person claiming entitlement to possession may approach the Special Court (Section 9 and Section 8(7)) and an appeal lies under Section 26. Given those statutory provisions, the Special Court has the primary jurisdiction to adjudicate third party claims and the Appellate Tribunal provides an appellate remedy. The existence of these alternative, efficacious remedies under the PMLA weighs against quashing the attachment/eviction by writ. The Court observed that the petitioner may more effectively place his case (including his claim of bonafide possession) before the Special Court and, if aggrieved, before the Appellate Tribunal. [Paras 8, 10]

The writ petition is not maintainable as the petitioner has statutory remedies under Sections 8, 9 and 26 of the Act and should seek relief before the Special Court or by appeal as provided under the statute.

Adjudication under Section 8 of the Prevention of Money Laundering Act - Procedure for taking possession under the Prevention of Money Laundering Rules, 2013 - Principles of natural justice in attachment/eviction proceedings - Validity of the eviction/possession action and the contention of breach of principles of natural justice and statutory procedure in issuance and service of notice leading to eviction. - HELD THAT: - The Court examined Section 8(1) (4) of the Act and noted that the statute prescribes issuance of notice, an opportunity to be heard and prescribed modes of taking possession (Rules/Form 1 and Form 2). Facts are disputed between the parties on service and compliance; the Enforcement Directorate contends notices were served and possession was taken following the statutory timeline. Although the petitioner alleged violation of natural justice and non compliance with the Rules, the Court observed that even if a defect in procedure were found, remitting the matter to the authority would be futile because the property has already been taken possession of and the Special Court is seised of the matter. Consequently, the Court declined to quash the eviction notice on the present record and directed the petitioner to pursue the statutory remedies. [Paras 9, 10, 11]

The challenge to the eviction/possession notice is not accepted on writ; the petition seeking quashing of the notice dated 08.06.2021 is dismissed and the petitioner is directed to avail remedies under the Act.

Final Conclusion: Writ petition dismissed. The petitioner is left to pursue remedies available under the Prevention of Money Laundering Act before the Special Court and by appeal under Section 26; pendency of the writ will be taken into account for limitation if relevant.

Scope of show-cause notice - composite service versus separate service agreements - classification of services as GTA service or C&F agency service - reverse charge mechanism and double taxation - negative list exclusion for transportation other than by GTA - extended period of limitation and suppression

Scope of show-cause notice - Whether the adjudicating authority travelled beyond the scope of the show-cause notice in confirming demand under a different service head. - HELD THAT: - The show-cause notice proposed demand under the head 'cargo handling service' whereas the impugned order confirmed demand under the head 'C&F agency service'. The Tribunal found this to be a change in the basis of adjudication that went beyond the allegations made in the SCN. As the impugned order adopted a ground not raised in the SCN, the order is vitiated on that score. [Paras 18]

Impugned order set aside as it travelled beyond the scope of the show-cause notice.

Composite service versus separate service agreements - classification of services as GTA service or C&F agency service - Whether the appellant's transportation agreements (including where consignment notes were issued) could be clubbed with handling/C&F agreements and treated as C&F agency services. - HELD THAT: - On examination of sample agreements, the Tribunal found distinct contracts: rake/godown handling agreements under which the appellant had paid service tax on full consideration, and separate transportation agreements where the appellant performed pure transportation and issued consignment notes. The transport agreements were correctly treated as GTA services with liability discharged by the recipient under reverse charge; other transactions where appellant merely facilitated transportation and consignment notes were issued by another GTA fell under the negative list and were not taxable. The Tribunal held that the adjudicating authority's view of clubbing distinct agreements lacked basis and was contrary to the contractual scope. [Paras 19, 20, 21, 23]

The separate transportation agreements are not to be clubbed with handling/C&F agreements; demands confirmed on that basis were untenable and are set aside.

Reverse charge mechanism and double taxation - negative list exclusion for transportation other than by GTA - Whether demand could be sustained where the service recipient had already discharged tax under reverse charge or where the service was covered by the negative list. - HELD THAT: - The Tribunal noted that where the appellant issued consignment notes and qualified as a GTA the service tax liability rested on the recipient under RCM and could not be doubly demanded from the appellant. Further, where appellant merely facilitated transportation performed by other GTAs (consignment notes issued by them), such facilitation was covered by the negative list and not taxable. Revenue had not shown that service tax remained unpaid by the recipient in respect of such GTA transactions. [Paras 12, 13, 21]

Demand in respect of services for which recipient paid under RCM or which fall under negative list is unsustainable.

Extended period of limitation and suppression - Whether the extended period of limitation, interest and penalty could be invoked against the appellant for suppression or deliberate default. - HELD THAT: - The Tribunal found no positive act of suppression or contumacious conduct by the appellant. The matters involved interpretation of contractual arrangements and differing departmental standpoints at audit, SCN and adjudication showed possible reasonable difference of opinion. In these circumstances the extended period could not be invoked and imposition of interest and penalty was not justified. [Paras 15, 22]

Extended period of limitation not attracted; interest and penalty cannot be sustained.

Final Conclusion: The appeal is allowed: the impugned order is set aside as it travelled beyond the SCN and wrongly clubbed distinct agreements; transportation agreements where consignment notes were issued are GTA transactions with tax discharged by the recipient or fall outside tax under the negative list when facilitated by other GTAs; extended limitation, interest and penalty are not attracted; appellant entitled to consequential relief in accordance with law.

Fixation of special rate - limitation / time bar for filing special rate application - effect of stay versus quashing of judicial orders - effect of the Supreme Court judgment in V.V.F. Ltd. on pending refund applications - doctrine of substantial compliance - application of COVID-19 limitation extensions and the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020

Fixation of special rate - limitation / time bar for filing special rate application - effect of stay versus quashing of judicial orders - effect of the Supreme Court judgment in V.V.F. Ltd. on pending refund applications - The impugned order dated 5/8/2021 rejecting the Petitioner's ten applications (filed 18/3/2021) for fixation of special rates for financial years 2009-10 to 2018-19 as barred by limitation is not sustainable. - HELD THAT: - The Court held that the Principal Commissioner's conclusion treating the applications as time barred ignored the Supreme Court's decision in V.V.F. Ltd., which declared the subsequent notifications clarificatory and directed that pending refund applications be decided in accordance with those subsequent notifications on merits. A stay of the earlier Division Bench order did not obliterate the existence or operation of the subsequent notifications so as to permanently preclude the filing or consideration of special rate applications; a stay is different from quashing. The filing deadline (not later than 30th September of a financial year, subject to a 30 day condonation) is a procedural mechanism to streamline applications and not an immutable substantive bar in circumstances where the occasion to invoke the option only arose after the Supreme Court's judgment. Applying the doctrine of substantial compliance and having regard to the particular litigation history and the fact that the Petitioner filed the special rate applications soon after V.V.F. Ltd., the impugned rejection on limitation grounds was contrary to law and therefore set aside. [Paras 24, 25, 26, 30, 31]

The impugned order dated 5/8/2021 is set aside and quashed; the rejection of the Petitioner's special rate applications as time barred is annulled.

Effect of the Supreme Court judgment in V.V.F. Ltd. on pending refund applications - application of COVID-19 limitation extensions and the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 - doctrine of substantial compliance - The Principal Commissioner is directed to decide the Petitioner's applications dated 18/3/2021 on merits and the respondent authority is restrained from giving effect to Order in Original No.11 dated 16/2/2022 until such decision is rendered. - HELD THAT: - In view of the mandate in V.V.F. Ltd. that pending refund applications be decided as per the subsequent notifications and in light of the Court's prior decision in Jyothy Labs (which recognises that the 30th September filing requirement is procedural and for streamlining), coupled with the COVID related exclusion/extension of limitation periods (as reflected in the Supreme Court orders in Suo Motu W.P.(C) No.3/2020 and related circulars), the Petitioner's filings of 18/3/2021 must be considered on their merits. Because the outcome of the special rate fixation directly affects the demand confirmed by Order in Original No.11, the Court found it appropriate to restrain the Department from giving effect to that recovery order until the special rate applications are decided. [Paras 26, 31, 33, 34]

Respondent No.2 (Principal Commissioner, CGST, Dibrugarh) shall decide the applications dated 18/3/2021 on merits; the Department shall not give effect to Order in Original No.11 dated 16/2/2022 until that decision is taken.

Final Conclusion: Writ petition allowed: the order rejecting the Petitioner's applications for fixation of special rates as barred by limitation is quashed; the Principal Commissioner is directed to decide those applications on merits and the demand/order of 16/2/2022 shall not be given effect to until such decision is rendered.

Summary order. Civil Miscellaneous Appeals dismissed as withdrawn; no costs.

Interest on delayed refund - pre-deposit under section 35F - proviso to amended section 35FF - three months limitation for interest under unamended section 35FF

Pre-deposit under section 35F - proviso to amended section 35FF - three months limitation for interest under unamended section 35FF - interest on delayed refund - Applicability of amended versus unamended Section 35FF for payment of interest on pre-deposit made before 06.08.2014 where refund was sanctioned within three months of communication of the appellate order. - HELD THAT: - The Tribunal found that the pre-deposit was paid on 30.08.2012, i.e., prior to the amendment of Section 35FF effective 06.08.2014, and that the proviso to the amended Section 35FF expressly preserves the unamended law for amounts deposited before 06.08.2014. Under the unamended Section 35FF interest becomes payable only if the refunded amount is not paid within three months from communication of the appellate order; if refunded within three months no interest is payable. As the refund in the present matters was sanctioned within three months from communication of the Tribunal's order, the appellant cannot claim interest. The Tribunal rejected reliance on Sandvik Asia Ltd. and decisions following it, holding that those authorities do not alter the express proviso preserving the unamended regime for pre-amendment deposits, and thus do not support application of the post-amendment interest regime to deposits made prior to 06.08.2014. [Paras 8, 9, 16, 17]

The claim for interest on the pre-deposit is rejected because the unamended Section 35FF governs deposits made prior to 06.08.2014 and no interest is payable where the refund was made within three months of communication of the appellate order.

Final Conclusion: The appeals are dismissed; the Commissioner (Appeals) correctly applied the proviso to the amended Section 35FF to hold that unamended Section 35FF governs pre-06.08.2014 deposits and, since the refunds were sanctioned within three months of communication, no interest is payable.

Cenvat credit on Input Services - Construction and architectural services for repair and renovation - Exclusion of construction services used for initial setting up - Insurance services as admissible input services (group Medi-claim, personal accident, motor vehicle insurance) - Nexus with manufacture / services "in or in relation to" manufacture

Construction and architectural services for repair and renovation - Exclusion of construction services used for initial setting up - Cenvat credit on Input Services - Cenvat credit admissible for construction and architectural services used for repair and renovation of an existing factory; exclusion applies only to services used for initial setting up of plant. - HELD THAT: - The appellant consistently maintained that the construction and architectural services were employed for repair and renovation of an existing factory plant. The Revenue did not effectively rebut this position and denied credit relying on the exclusion introduced by Notification No. 3/2011-CE(NT) (construction services excluded when used for initial setting up). The Tribunal held that the exclusion applies only to services used in the initial setting up of a factory; repair, renovation or modernization of an existing plant falls within the inclusion clause of the definition of Input Services and therefore such construction and architectural services qualify for Cenvat credit. [Paras 4]

Credit allowed in respect of construction and architectural services used for repair and renovation of the existing factory.

Insurance services as admissible input services (group Medi-claim, personal accident, motor vehicle insurance) - Nexus with manufacture / services "in or in relation to" manufacture - Cenvat credit on Input Services - Cenvat credit admissible for group Medi-claim insurance, group personal accident insurance, motor vehicle insurance and similar insurance services as they are procured under statutory/factory requirements and have nexus with manufacture/business activity. - HELD THAT: - The Tribunal examined the nature of the insurance-related services and accepted that they were mandated under statutory norms for employee safety and were accounted as business expenditure. Such services are not for personal use and have sufficient nexus with the assessee's manufacture and business activities. The Tribunal referred to earlier decisions recognising insurance services as admissible input services and concluded that the appellant is entitled to Cenvat credit on these insurance services. [Paras 4, 5]

Credit allowed in respect of the insurance services (group Medi-claim, group personal accident, motor vehicle insurance, etc.).

Cenvat credit assessment, interest and penalty - Partial allowance and quantification - The appellant's admitted payment of Rs. 2,29,752/- is upheld and not disturbed; disputed amount of Rs. 5,72,011/- (with interest and penalty) is set aside. No interest or penalty is payable on the admitted amount insofar as it was not utilized. - HELD THAT: - The Tribunal observed that the appellant had admittedly paid a specified amount which the lower authority had sustained; the appellant only disputed the larger sum which the Tribunal set aside along with attendant penalty and interest. Further, because the admitted amount was not utilized by the appellant, no interest or penalty corresponding to that admitted amount is payable. Accordingly the impugned order was modified to this limited extent and the appeal was partly allowed. [Paras 6]

Admitted amount upheld; disputed amount along with penalty and interest set aside; no interest/penalty on the admitted but unutilized amount.

Final Conclusion: The appeal is partly allowed: Cenvat credit is permitted for construction and architectural services used for repair/renovation and for the insurance services held to have nexus with manufacture; the admitted amount is upheld while the disputed amount with penalty and interest is set aside, and no interest or penalty is payable on the admitted unutilized amount.

Cenvat credit - valid cenvatable invoice - association and its members treated as same - services provided to association deemed provided to members

Cenvat credit - valid cenvatable invoice - services provided to association deemed provided to members - Whether the appellant is entitled to avail Cenvat credit though invoices were issued in the name of the Industries Association of which the appellant is a member, where the appellant received the services and proportionately bore the expenditure including service tax. - HELD THAT: - The Tribunal found on the material on record, including the Deed of Association dated 30.06.2008, that the association was formed to operate a common water supply for members and that Shree Rang Services was engaged to provide the service. The service-provider issued cenvatable invoices in the name of M/s. Valia Industries Association and the association apportioned the expenditure among members according to actual use. Given that the appellant actually received the service and bore the proportionate cost including service tax, the Tribunal applied the principle that there is no difference between an association and its members as laid down by the Hon'ble Supreme Court in State of West Bengal Vs. Calcutta Club Limited , treating services rendered to the association as deemed rendered to its members. On these facts, an invoice issued in the association's name did not preclude the appellant from claiming Cenvat credit when the appellant was the ultimate recipient and payer of the service tax. [Paras 4, 5, 6]

Appellant entitled to Cenvat credit; impugned order set aside and appeal allowed.

Final Conclusion: On the facts found, services billed to the association were held to be deemed provided to its members who actually used and bore the cost; the appellant was granted Cenvat credit and the impugned order was set aside.

Refund of excess duty paid - provisional assessment not prerequisite for refund - price variation clause as basis for downward revision and refund - claim within limitation under Section 11B - revenue cannot retain tax not due / unjust enrichment

Refund of excess duty paid - provisional assessment not prerequisite for refund - price variation clause as basis for downward revision and refund - claim within limitation under Section 11B - revenue cannot retain tax not due / unjust enrichment - Whether refund of duty paid in excess can be allowed despite absence of provisional assessment where goods cleared at a higher price were subsequently sold at a lower transaction value and the refund claim was filed within the prescribed period. - HELD THAT: - The Tribunal found no dispute that duty was paid on a higher price at the time of clearance and subsequently the transaction value was lower, giving rise to an excess duty payment. The lower authorities had rejected the refund solely because the assessee had not opted for provisional assessment. Relying on earlier decisions of this Tribunal and other tribunals, the Court held that the existence or absence of provisional assessment is not determinative where a refund claim of excess duty is filed within the statutory time limit. Price variation clauses in contracts, which lead to downward revision of price after removal, are relevant to establish that duty was overpaid and may support a refund claim. The Tribunal reiterated the principle that Revenue cannot retain amounts not due under law (unjust enrichment) and that excess duty paid-whether under provisional or final assessment-may be refundable if the claim is timely. Applying these principles to the facts, the Tribunal concluded that rejection only on account of non-resort to provisional assessment was incorrect and that the refund claim deserved allowance. [Paras 3, 4]

Impugned order rejecting refund for lack of provisional assessment set aside; appeal allowed and refund claim to be admitted as the excess duty was paid and claim was within time.

Final Conclusion: The Tribunal allowed the appeal, holding that non resort to provisional assessment is not a valid ground to deny a refund of duty paid in excess where the claim (premised on price variation/downward revision) is filed within the statutory period and the Revenue cannot retain amounts not due.

Cenvat credit entitlement under Rule 3 and Rule 5 of Cenvat Credit Rules, 2004 - Prohibition of double taxation where duty is paid at import - Liability to deposit duty collected from customers where duty has already been paid to Government - Interplay of Section 28B of the Customs Act, 1962 and Section 11D of the Central Excise Act, 1944 with Cenvat Credit Rules - Onus of proof of payment of duty to the Government Exchequer

Cenvat credit entitlement under Rule 3 and Rule 5 of Cenvat Credit Rules, 2004 - Liability to deposit duty collected from customers where duty has already been paid to Government - Prohibition of double taxation where duty is paid at import - Onus of proof of payment of duty to the Government Exchequer - Whether the appellant was liable to pay again to the Government the amount of CVD and additional duty charged from customers when those duties had been paid at the time of import and Cenvat credit was not availed. - HELD THAT: - The Tribunal found that the appellant produced commercial invoices, bills of entry and challans showing payment of duty inclusive of CVD and additional duty at the time of clearance of the imported machines (paras 5.2). As the appellant admittedly did not avail Cenvat credit, Rules 3 and 5 of the Cenvat Credit Rules, 2004 entitled the appellant to take such credit; charging the un-credited amount from customers was not irregular (paras 5.1, 5.3). The Commissioner (Appeals) erred in treating the absence of an express reference to availment of credit in Section 28B or Section 11D as a ground to confirm demand, and also erred in referring to excise duty where the appellant was an importer (para 5.4). Requiring the appellant to pay again what was already deposited at import would amount to double taxation without authority of law. On the basis of the documents produced showing payment at import, the confirmed demand was unsustainable and required to be set aside (paras 5.1-5.4). [Paras 5, 6]

The demand confirmed by the adjudicating authority and upheld on appeal was set aside; the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, setting aside the confirmed demand and holding that where CVD and additional duty were paid at import (and the appellant had not availed Cenvat credit), the appellants could not be compelled to pay the same amounts again to the Government; the order under challenge was quashed and the appeal allowed.

Cognizance under section 142 of the Negotiable Instruments Act - limitation for complaint under section 138 of the Negotiable Instruments Act - proviso to section 142(b) - power to condone delay - jurisdiction to issue summons - requirement to decide limitation before taking cognizance

Cognizance under section 142 of the Negotiable Instruments Act - limitation for complaint under section 138 of the Negotiable Instruments Act - jurisdiction to issue summons - Validity of magistrate's taking of cognizance and issuance of summons without first satisfying statutory limitation requirements under section 142 read with section 138 of the Negotiable Instruments Act - HELD THAT: - The court held that a magistrate has no jurisdiction to take cognizance of an offence under section 138 if the complaint is barred by limitation. The issuance of summons and continuation of proceedings where the complaint was filed beyond the statutory period cannot be remedial by mere issuance of process; taking of cognizance after satisfaction as to condonation of delay is a statutory precondition. On the facts, the complaint was filed after the prescribed period and the learned Magistrate issued summons and proceeded without first being satisfied about condonation of delay. Such action was beyond jurisdiction and therefore unlawful. The court therefore set aside the order of 15.1.2013 and all successive orders which stemmed from cognizance taken without fulfilling the statutory requirement. [Paras 16]

Order taking cognizance and issuing summons without satisfying the limitation/condonation requirement is bad in law and is set aside.

Proviso to section 142(b) - power to condone delay - requirement to decide limitation before taking cognizance - Requirement that, after the 2002 amendment, complainant be given opportunity to seek condonation under the proviso to section 142(b) and the matter be reconsidered by the magistrate - HELD THAT: - Recognising that the proviso to section 142(b) (introduced by the 2002 amendment) confers jurisdiction on the court to condone delay if the complainant satisfies the court of sufficient cause for not filing within the prescribed period, the High Court directed that the learned Magistrate must provide the complainant an opportunity to invoke the proviso and to satisfy the court about sufficient cause. The Magistrate must first consider and record whether condonation is permissible under the proviso before taking cognizance and proceeding further. This directs fresh consideration limited to the question of limitation/condonation; other aspects of the complaint remain for adjudication according to law. [Paras 17, 18]

Complainant to be afforded opportunity to seek condonation under the proviso to section 142(b); magistrate to decide the limitation/condonation question afresh and thereafter proceed in accordance with law.

Final Conclusion: The revisional application is allowed: the magistrate's earlier cognizance and issuance of summons without deciding limitation/condonation was set aside; the complainant is directed to appear and be given opportunity to seek condonation under the proviso to section 142(b), and the learned Magistrate shall thereupon decide the limitation/condonation issue afresh and proceed according to law.

Expeditious disposal of NI Act cases - practice directions - pre-summons mediation - National Portal for summons - special courts under the Negotiable Instruments Act - constitution of special courts - response within two weeks

Practice directions - expeditious disposal of NI Act cases - High Courts to issue practice directions as directed by this Court to facilitate early disposal of cases under the Negotiable Instruments Act. - HELD THAT: - This Court noted that most High Courts have issued the practice directions contemplated by the order dated 16.04.2021, but that the High Courts of Madras, Sikkim, Uttarakhand, Patna and Orissa had not yet done so. The learned counsel for those High Courts informed the Court that the practice directions would be issued expeditiously without further delay. The Court recorded that the practice directions should be issued in accordance with the observations in the earlier order.

Practice directions to be issued by the remaining High Courts expeditiously in accordance with this Court's earlier order.

Pre-summons mediation - National Portal for summons - special courts under the Negotiable Instruments Act - Union of India, High Courts and State Governments to submit suggestions on pre-summons mediation, the National Portal for summons and the scheme for establishment of special courts. - HELD THAT: - The Court directed the Union of India, the High Courts and the State Governments to furnish their suggestions concerning pre-summons mediation, the National Portal for summons and the proposed scheme for special courts for NI Act cases. A time-limit of two weeks from the date of the order was fixed for submission of these suggestions, reflecting the Court's aim to expedite formulation of implementable measures to accelerate disposal of NI Act matters.

Interested constitutional and judicial authorities to submit their suggestions within two weeks.

Constitution of special courts - constitution of special courts - response within two weeks - Proposal for constitution of special courts in selected districts of specified States and requirement that those High Courts respond to the proposal. - HELD THAT: - The learned Amicus Curiae identified Maharashtra, Delhi, Gujarat, Uttar Pradesh and Rajasthan as States having relatively higher pendency of NI Act cases and suggested selecting five districts in each State for establishment of one special court per district. The Court directed the High Courts of the named States to respond to that suggestion within two weeks, thereby placing the proposal for the constitution of special courts before the concerned High Courts for their considered response and further action.

High Courts of Maharashtra, Delhi, Gujarat, Uttar Pradesh and Rajasthan to respond to the Amicus Curiae's suggestion within two weeks; matter listed for further directions on 12.05.2022.

Final Conclusion: The Court recorded the Committee's report and the Amicus Curiae's note, directed remaining High Courts to issue the prescribed practice directions forthwith, called for suggestions from the Union, High Courts and State Governments on mediation, a summons portal and special courts within two weeks, invited responses from specified High Courts on the Amicus proposal to constitute special courts in selected districts, and listed the matter for further directions on 12.05.2022.