TaxTMI Updates e-Newsletter
May 24,2024

Return of non-relied documents - Obligation under Section 67(3) of the CGST Act and Rule 27 of the Central Excise Rules, 2017 - Right to cross-examination of witnesses relied upon in adjudication - Right to personal hearing and fair hearing - Provision of certified copies of relied documents for defence

Return of non-relied documents - Obligation under Section 67(3) of the CGST Act and Rule 27 of the Central Excise Rules, 2017 - Petitioner's entitlement to return of original documents seized but not relied upon in the show cause notices and the duty of the department to return them within the statutory period. - HELD THAT: - The Court examined Section 67(3) of the CGST Act and Rule 27 of the Central Excise Rules, 2017 and held that documents, books or things produced or seized which have not been relied upon for issuance of a show cause notice are required to be returned within thirty days of the notice unless retention is ordered for reasons recorded in writing. The Court followed the view in Methodex Systems Ltd. that the department has no authority to retain non-relied records indefinitely and must return them where not relied upon. In the facts, the petitioner had requested original non-relied documents necessary for preparing defence and the respondents did not provide them; the Court therefore directed that all original documents seized but not relied upon in the show cause notices dated 08.06.2022 and 03.08.2022 be handed over to the petitioner so as to enable preparation of reply. [Paras 6, 8, 9, 11]

Direct respondents to hand over all original documents seized and not relied upon in the two show cause notices so the petitioner may prepare its reply.

Provision of certified copies of relied documents for defence - Right to personal hearing and fair hearing - Petitioner's right to receive certified copies of documents relied upon in the show cause notices and to a fair opportunity to file reply after receipt of the originals. - HELD THAT: - The Court noted that certified copies of relied documents are necessary for filing a proper reply and preparing defence. To secure fair hearing, the Court ordered that upon receipt of the original non-relied documents the petitioner shall file its reply within thirty days and the respondents shall adjudicate the matter on merits after affording due opportunity of hearing. The Court clarified it has not expressed any view on the merits of the case. [Paras 9, 11, 12]

Petitioner to file reply within 30 days of receiving original documents; respondents to adjudicate on merits after affording personal hearing.

Right to cross-examination of witnesses relied upon in adjudication - Right to personal hearing and fair hearing - Whether the petitioner is entitled to cross-examine witnesses whose evidence has been relied upon in the show cause notices during adjudication proceedings. - HELD THAT: - Relying on principles of natural justice and the Apex Court decision in Andaman Timber Industries, the Court held that where the statements of witnesses are made the basis of an order, denial of opportunity to cross-examine is a serious flaw. Accordingly, the Court explained that the petitioner shall have the right to cross-examine witnesses whose evidence has been relied upon in the show cause notices at the appropriate stage of adjudication; the petitioner is entitled to move the adjudicating authority by way of appropriate application to secure that right during the course of personal hearing and proceedings. [Paras 10, 11]

Petitioner entitled to seek and be afforded the opportunity to cross-examine witnesses relied upon in the show cause notices at the appropriate stage of adjudication.

Final Conclusion: Writ petition allowed: respondents directed to hand over original documents seized but not relied upon in the show cause notices; petitioner to file reply within 30 days of receipt and respondents to adjudicate on merits after affording personal hearing; petitioner entitled to seek and be afforded opportunity to cross-examine witnesses relied upon in the show cause notices. Court did not express any opinion on merits.

Cancellation of registration for non-filing of returns - validity of show-cause notice - mandatory compliance with prescribed procedural forms and rules - jurisdictional excess by issuing an invalid notice - availability of writ remedy notwithstanding alternative statutory appeal where vires of notice is in issue - equitable consideration in view of pandemic disruptions - restoration and conditional revocation of cancellation

Validity of show-cause notice - mandatory compliance with prescribed procedural forms and rules - The show-cause notice dated 29th November, 2021 is bad in law as a combined/dual notice issued in respect of distinct statutory procedures. - HELD THAT: - The notice combined the procedures and forms applicable to suspension and to cancellation respectively (FORM GST REG-31 under Rule 21A(2A) and FORM GST REG-17 under Rule 22(1)). The court applied the settled principle that where a statutory power prescribes a specific mode, that mode must be followed and other methods are forbidden. The WBGST Act and Rules prescribe separate and mandatory procedures for suspension and for cancellation of registration; a composite notice conflating the two is a nullity. Once the initiating notice is invalid for non-compliance with the mandatory procedural scheme, any consequential order of cancellation founded on that notice is vitiated irrespective of whether the addressee replied to the notice or not.

Show-cause notice dated 29th November, 2021 held bad in law; cancellation founded on it suffers from patent illegality.

Availability of writ remedy notwithstanding alternative statutory appeal where vires of notice is in issue - jurisdictional excess by issuing an invalid notice - Writ petition maintainable despite existence of an alternate appeal because the challenge is to the vires/validity of the initiating notice and the appellate forum cannot decide that preliminary vires issue. - HELD THAT: - Although the order of cancellation is appealable, the court observed that where the issuing officer has exceeded jurisdiction by issuing an invalid show-cause notice, the validity of that notice can be challenged by writ without first availing the statutory appeal. The Appellate Authority under the statutory scheme is not the appropriate forum to decide the preliminary question of whether the issuing authority acted within jurisdiction in issuing the notice. The court also noted supportive authority where similar relief was granted in the absence of an appeal, underscoring that alternative remedy does not invariably bar writ jurisdiction when the challenge is to jurisdictional vires.

Writ jurisdiction is available to challenge the invalidity of the show-cause notice notwithstanding the availability of a statutory appeal.

Equitable consideration in view of pandemic disruptions - restoration and conditional revocation of cancellation - Cancellation order dated 25th January, 2022 is set aside and the registration is restored conditionally, having regard to pandemic-related disruption and the limited ground of cancellation. - HELD THAT: - The court noted that the petitioner's default in filing returns for the relevant six-month period occurred during the pandemic period (March, 2020 uptil 28th February, 2022) and that businesses suffered abnormal disruption. Considering that the only ground for cancellation was non-filing for six consecutive months and that retention of the cancellation would deprive the petitioner of livelihood (with potential loss to the exchequer), the court exercised its supervisory jurisdiction to set aside the cancellation. Restoration was ordered on condition that the petitioner file all outstanding returns from December, 2020 till date within three weeks and comply with future filing obligations; failure to do so would result in automatic re-cancellation. The petitioner remains liable for tax, interest, late fees and applicable penalties under the statute.

Order of cancellation set aside; registration restored subject to filing outstanding returns within three weeks and future compliance; liability for tax and penalties preserved.

Final Conclusion: The writ petition succeeds: the combined show-cause notice of 29th November, 2021 is held invalid, writ jurisdiction is available to challenge that invalidity despite an alternative appeal, and the cancellation order dated 25th January, 2022 is set aside with conditional restoration of registration subject to filing outstanding returns and compliance with law; tax, interest, fees and penalties remain payable.

Refund of tax - relevant date - limitation period for refund - writ jurisdiction - availability of statutory alternative remedy - determination of disputed question of fact

Relevant date - limitation period for refund - determination of disputed question of fact - writ jurisdiction - availability of statutory alternative remedy - Writ petition seeking quashing of Form GST RFD-03 rejecting refund claim was not entertained and was dismissed on the ground of availability of a statutory alternative remedy; the Court declined to determine the disputed factual question of the "relevant date". - HELD THAT: - The rejection of the refund claim turned on whether the application was filed within two years from the "relevant date" under Section 54 read with the Explanation (2)(a)(i). The authority took the view that the application was barred by limitation and issued a deficiency memo permitting a fresh application after removal of deficiencies. The Court found that the determination of the "relevant date" as claimed by the petitioner involves a disputed question of fact requiring consideration of export documents and evidence to establish the date on which the ship carrying the goods left India. Such factual determination and evaluation of documents is more appropriately undertaken by the statutory appellate/administrative forum and not in writ proceedings under Article 226. Because an effective statutory alternative remedy in the form of appeal is available to the petitioner, the Court declined to exercise writ jurisdiction to decide the question on merits at this stage and left the petitioner free to approach the appellate forum or the competent authority (including pursuant to the deficiency memo). [Paras 6, 7, 8, 9]

Writ petition dismissed on the ground of availability of statutory alternative remedy; petitioner permitted to approach the appellate forum or the competent authority and to remove deficiencies as advised.

Final Conclusion: The writ petition challenging rejection of the refund claim for the period January-2022 to March-2022 is dismissed for want of appropriate jurisdiction in view of the availability of statutory alternative remedies; liberty granted to the petitioner to pursue the appellate forum or to act on the deficiency memo. No order as to costs.

Statutory alternative remedy of appeal - entertainability of writ petition - pre-deposit requirement for statutory appeal - applicability of administrative circular - principles of natural justice - vires of statute

Statutory alternative remedy of appeal - entertainability of writ petition - pre-deposit requirement for statutory appeal - Writ petition not maintainable and dismissed on the ground of availability of the statutory alternative remedy of appeal - HELD THAT: - The Court held that the petitioner did not impugn the impugned order on grounds such as violation of principles of natural justice, want of jurisdiction, or the vires of any statutory provision, but raised points which could be adequately ventilated before the appellate authority. In these circumstances the matter falls outside the recognized exceptions permitting writ relief in the presence of an effective statutory remedy. The court refused to permit the pre deposit condition for filing an appeal to be bypassed by entertaining the writ petition and observed that the condition of pre deposit cannot be set aside by exercising writ jurisdiction. The view expressed in the earlier prima facie order was reiterated and the petition was not entertained for these reasons. [Paras 4, 11, 14]

Writ petition dismissed on the ground that the petitioner must first avail the statutory appellate remedy; no adjudication on the merits.

Applicability of administrative circular - statutory alternative remedy of appeal - Applicability of Circular dated 17.07.2023 to the petitioner's facts was not decided and is left open for consideration by the appellate authority - HELD THAT: - Although the petitioner contended that the clarificatory circular dated 17.07.2023 ought to apply to intra company services between units (and thereby negate the tax liability), the Court refrained from deciding that question because it was remitting the matter to the appellate forum. The Court noted that the respondents and the assessing authority had already taken a view on applicability and that the question can be raised and examined in the statutory appeal; accordingly the Court did not express any opinion on the circular's applicability. [Paras 9, 13]

Question of applicability of the circular left open for determination by the appellate authority; no adjudication by this Court.

Final Conclusion: The writ petition is dismissed solely on the ground that the petitioner has an effective statutory alternative remedy of appeal and must pursue that remedy; the Court makes no adjudication on the applicability of the circular dated 17.07.2023 or on the merits of the tax liability, and leaves those questions open for consideration in the appellate proceedings.

Addition as undisclosed income - reliance on documents found during search - confirmation by recipient versus contemporaneous receipt - search-based additions under Section 158BC - finality of Tribunal as fact-finding authority - perverse finding of fact

Addition as undisclosed income - reliance on documents found during search - confirmation by recipient versus contemporaneous receipt - search-based additions under Section 158BC - Whether the Income Tax Appellate Tribunal was justified in reversing the CIT(A) and confirming the addition of Rs. 5,00,000/- as undisclosed income - HELD THAT: - The Court accepted the Tribunal's conclusion that contemporaneous material found during the search - in particular a receipt reflecting that the recipient had acknowledged full payment and the possession change - could be relied upon to infer that the disputed sum had been paid. The CIT(A)'s reliance on a post-search certificate from the sister-in-law stating that an amount remained due was held to be unreliable given its timing and apparent supportive purpose. The Tribunal, as final fact-finding authority, examined the documents discovered during the search (including a demand draft receipt for part payment) and reasonably inferred payment of the balance; that factual conclusion was not shown to be arbitrary or perverse. Subsequent payments made by the assessee after the search were found irrelevant to negate the search-recorded receipt because there was no indication those payments expressly related to extinguishing the earlier alleged balance. The Court applied the settled principle that a High Court will not reappraise concurrent findings of fact by the Tribunal unless the finding is perverse, and relied on authority supporting non-interference with Tribunal's factual conclusions where they are tenable on the record. [Paras 9, 10, 11, 12, 13]

The ITAT's reversal of the CIT(A) and confirmation of the addition of Rs. 5,00,000/- as undisclosed income is upheld; the Tribunal's factual finding based on documents discovered during search is not perverse.

Final Conclusion: The appeal is dismissed and the order of the Income Tax Appellate Tribunal confirming the addition is upheld; there is no interference with the Tribunal's fact-finding on the material produced during the search.

Appellate order vitiated for lack of application of mind - Incorrect reproduction of grounds of appeal and statement of facts by appellate authority - Remand to appellate authority for fresh adjudication after giving opportunity of hearing

Appellate order vitiated for lack of application of mind - Incorrect reproduction of grounds of appeal and statement of facts by appellate authority - Whether the appellate order passed by the CIT (A)/NFAC is liable to be set aside because it records incorrect facts and grounds of appeal and was passed without application of mind. - HELD THAT: - The Tribunal found that the appellate order under challenge contained factual recitals and grounds of appeal that did not correspond to the grounds filed in Form No.35 or to the assessment record. The CIT(A)'s order reproduced an incorrect assessment reference in the body, narrated facts not matching those on record and decided grounds which were not raised in the appeal memo. The Tribunal characterised the appellate order as a 'cut & paste' exercise devoid of application of mind, unsustainable and perverse. On this basis the Tribunal held the appellate order to be vitiated and liable to be set aside. [Paras 10, 12, 13, 14, 15]

Appellate order set aside for being passed without application of mind and for reproducing incorrect facts and grounds.

Remand to appellate authority for fresh adjudication after giving opportunity of hearing - Whether the matter should be remanded to the CIT (A)/NFAC for fresh consideration on merits after rectifying the defects in the appellate order. - HELD THAT: - Having held the appellate order vitiated, the Tribunal directed that the order be set aside and remitted the matter to the CIT (A)/NFAC for fresh adjudication. The Tribunal instructed the appellate authority to consider the appeal on its merits, with reference to the correct grounds as filed and the assessment record, and after affording the assessee a proper opportunity of hearing. [Paras 16]

Matter remitted to the CIT (A)/NFAC for fresh adjudication on merits after providing proper opportunity of hearing to the assessee.

Final Conclusion: The appeal filed by the Assessing Officer is allowed: the appellate order is set aside for being passed without application of mind and reproducing incorrect facts and grounds, and the matter is remitted to the CIT (A)/NFAC for fresh adjudication after affording the assessee a proper opportunity of hearing.

Deduction under section 54F - dismissal for non prosecution - ex parte order - additional evidence under Rule 29 ITAT Rules - remand for fresh adjudication - principle of natural justice - reconsideration on production of corroborative documents

Dismissal for non prosecution - ex parte order - principle of natural justice - remand for fresh adjudication - Whether the order of the CIT(A) treating the appeal as dismissed for non prosecution and confirming the AO's addition without considering additional material ought to be sustained or the matter should be restored for fresh adjudication - HELD THAT: - The Tribunal recorded that although the CIT(A) had treated the appeal as dismissed for non prosecution after noting multiple adjournments and non filing of submissions, material subsequently placed before the Tribunal by the assessee under Rule 29 included documents which were not before the CIT(A) or AO. In the circumstances, and having regard to the principle of natural justice and the need to consider relevant corroborative material, the Tribunal concluded that the CIT(A)'s order could not be allowed to stand without giving the appellate authority an opportunity to consider that material. Accordingly the matter was held fit to be restored to the file of the CIT(A) for fresh adjudication with directions to afford the assessee reasonable opportunity to produce evidence and be heard. [Paras 6, 15]

Order of the CIT(A) set aside and matter remanded to CIT(A) for fresh adjudication with liberty to the assessee to produce evidence and be heard.

Deduction under section 54F - additional evidence under Rule 29 ITAT Rules - reconsideration on production of corroborative documents - Whether the denial of exemption claimed under section 54F for investment in house property was justified in absence of documentary corroboration, or requires fresh consideration in light of additional evidence - HELD THAT: - The Tribunal noted the AO disallowed the claim under section 54F because the assessee did not produce corroborative documentary proof of investment in the new house property during assessment proceedings and the CIT(A) confirmed that disallowance after treating the appeal as dismissed for non prosecution. The assessee filed before the Tribunal valuation report, municipal permission and statements of affairs as additional evidence under Rule 29. The Tribunal observed that coordinate bench decisions indicate that denial of relief solely for absence of bills/vouchers may not be appropriate where other relevant corroborative material exists. As the Rule 29 documents were not before the revenue authorities, the Tribunal held that the question of allowance of the deduction required fresh consideration by the CIT(A) in the light of those documents and directed re adjudication rather than deciding the 54F claim finally. [Paras 11, 13, 15]

Claim under section 54F not finally determined by the Tribunal; matter remitted to CIT(A) to decide afresh on merits after considering the additional evidence and affording opportunity to the assessee.

Final Conclusion: Appeal partly allowed for statistical purposes: the orders below are set aside to the extent that the CIT(A) is directed to re adjudicate the claim under section 54F in light of the additional evidence filed under Rule 29, with liberty to the assessee to produce necessary documents and be heard.

Disapplication of deeming under section 50C where stamp duty value is disputed - reference to Valuation Officer under section 50C(2) - quasi-judicial duty of assessing authority to refer disputed valuation to DVO - rebuttable nature of deeming provision in section 50C - remand versus deletion where the AO fails to follow statutory procedure

Disapplication of deeming under section 50C where stamp duty value is disputed - reference to Valuation Officer under section 50C(2) - quasi-judicial duty of assessing authority to refer disputed valuation to DVO - remand versus deletion where the AO fails to follow statutory procedure - Validity of addition under section 50C where assessee disputed stamp duty (circle) value and requested reference to the Departmental Valuation Officer (DVO), but AO and CIT(A) rejected the request without reasons. - HELD THAT: - The Tribunal found that the assessee from the outset contended that the stamp duty value exceeded the fair market value and sought reference to the DVO under section 50C(2). Both the AO and the CIT(A) rejected this plea summarily without assigning reasons or obtaining a DVO report. The Tribunal held that where an objection is raised that the stamp valuation exceeds fair market value, the Assessing Officer has a duty to apply his mind and, if appropriate, refer the matter to the Valuation Officer; the deeming provision in section 50C is rebuttable and cannot be mechanically applied. Reliance was placed on Coordinate Bench and High Court decisions that the Stamp Valuation Authority's circle rates do not necessarily reflect the fair market value and that the AO must follow the procedure prescribed by law. Having found that the authorities failed to follow the statutory procedure and gave cryptic orders without dealing with the assessee's contention or producing corroborative material to sustain the addition, the Tribunal concluded that the addition could not be sustained. The Tribunal further observed that remanding the matter merely to enable the department to fill lacunae would be inappropriate and, in the facts of this case, deletion rather than remand was warranted. [Paras 6, 7]

Addition under section 50C set aside and deleted for failure of AO and CIT(A) to refer disputed valuation to DVO or to record reasons; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, set aside and deleted the addition made under section 50C because the assessing authority and first appellate authority failed to follow the statutory mandate to refer the disputed stamp duty valuation to the Departmental Valuation Officer and did not record reasons; remand was declined and deletion was directed.

Segmentation and aggregation for transfer-pricing benchmarking - restriction of transfer-pricing adjustment to associated enterprise transactions - application of Transactional Net Margin Method (TNMM) and internal comparables - application of Resale Price Method (RPM) for distributor/trading segment - verification of segmental financials and cost/profit allocation

Segmentation and aggregation for transfer-pricing benchmarking - verification of segmental financials and cost/profit allocation - Whether the Revenue could aggregate manufacturing and trading segments for entity-level benchmarking instead of restricting analysis to AE transactions and certified segmental results - HELD THAT: - The Tribunal found that the assessee had furnished CMA-certified segmental information derived from audited segment reporting and that the remand report of the TPO appropriately considered segmental results and proposed restriction of adjustment to AE transactions. Relying on co-ordinate authority following the Bombay High Court decision in Tara Jewels Exports (P.) Ltd., the Tribunal held that where details of transactions with AEs and non-AEs are available, margins relating to the AE segment alone should be considered. The matter was restored to the file of the Assessing Officer/TPO to undertake the exercise of benchmarking AE transactions separately and to verify segmental data and allocations. [Paras 6, 8, 11, 12]

Issue restored to the Assessing Officer/TPO for benchmarking and adjustment considering only AE transactions based on segmental information; ground allowed.

Application of Transactional Net Margin Method (TNMM) and internal comparables - verification of segmental financials and cost/profit allocation - Whether TNMM should be considered as the Most Appropriate Method for the manufacturing segment and whether internal TNMM is to be used - HELD THAT: - The Tribunal noted the assessee had furnished segmental analysis in remand proceedings and that Rule 10B and OECD guidance support use of internal comparables and entity-level TNMM where appropriate. Prior Tribunal decisions were followed which directed consideration of segmental results of AE transactions and internal TNMM where services to AEs and non-AEs are similar. Given these principles and the availability of segmental data, the Tribunal directed restoration to the Assessing Officer/TPO to consider only operating profit/operating cost of the AE segment and to consider internal TNMM where applicable. The ground was allowed for statistical purposes. [Paras 13, 16, 17, 18]

Issue restored to the Assessing Officer/TPO to consider internal TNMM and AE-segment operating margins; ground allowed for statistical purposes.

Application of Resale Price Method (RPM) for distributor/trading segment - verification of segmental financials and cost/profit allocation - Whether RPM is the Most Appropriate Method for the trading segment where no value addition is claimed - HELD THAT: - The Tribunal accepted the principle that RPM is appropriate for distributors but emphasised that the assessee's status as a distributor and the absence of value addition must be verified. Ledger copies and gross-level segmental financials were found on record supporting the assessee's claim of no value addition. Accordingly, the issue was restored to the Assessing Officer/TPO to verify whether goods purchased from AEs were sold without value addition and, if segmental financials support such sales, to accept RPM for that portion. [Paras 19, 23, 24]

Issue restored to the Assessing Officer/TPO to verify absence of value addition and, if established, to accept RPM as MAM for the relevant trading sales; grounds answered accordingly.

Classification of taxpayer operations for economic analysis - verification of volumes and predominant activities - Whether the assessee should be classified under manufacturing or trading segment for benchmarking based on transaction volumes - HELD THAT: - The Tribunal observed the assessee's contention that AE transactions in the manufacturing segment are only 5.2% of non-AE transactions, making entity-level classification as manufacturing unreasonable if trading volumes predominate. The Tribunal restored the issue to the Assessing Officer/TPO to verify the actual volumes and, if a majority of AE transactions relate to trading, to classify the assessee under the trading segment for economic analysis. The ground was treated as allowed for statistical purposes. [Paras 25]

Issue remanded to the Assessing Officer/TPO to verify volumes and, if trading predominates, to classify the assessee under the trading segment for benchmarking; ground allowed for statistical purposes.

Restriction of transfer-pricing adjustment to associated enterprise transactions - segmentation and aggregation for transfer-pricing benchmarking - Whether the transfer-pricing adjustment should be restricted to AE transactions rather than applied at entity level - HELD THAT: - The Tribunal agreed with the remand view of the TPO and with co-ordinate precedent that transactions with non-AEs are not relevant for computing ALP where AE-specific data is available. Given the availability of segmental information and prior authority, the Tribunal directed the Assessing Officer/TPO to consider margin analysis for the AE segment alone and restrict the TP adjustment accordingly. [Paras 26, 27, 28]

TP adjustment to be restricted to AE transactions; matter remitted to Assessing Officer/TPO to implement this direction.

Final Conclusion: Appeal allowed for statistical purposes; matters remanded to the Assessing Officer/Transfer Pricing Officer to verify segmental data, apply AE-segment benchmarking, consider internal TNMM where applicable, verify distributor status/value addition for RPM applicability, and classify the assessee's predominant activity for economic analysis; consequential transfer-pricing adjustments to be restricted to AE transactions.

Restriction of donations exceeding ten per cent of gross total income for computing deduction under Section 80G - Deduction for donations to institutions approved under Section 80G(2)(a)(iiif) - Allowability of deduction claimed in the return when clubbed under a different Chapter VIA head - Obligation on Assessing Officer to verify documentary claims and give effect to appellate directions

Restriction of donations exceeding ten per cent of gross total income for computing deduction under Section 80G - Deduction for donations to institutions approved under Section 80G(2)(a)(iiif) - Applicability of the 10% gross total income cap under Section 80G(4) to donations made to an institution approved under Section 80G(2)(a)(iiif). - HELD THAT: - The Tribunal examined the statutory language of Section 80G(4) and noted that donations to entities specified under clause (iiif) of sub-section (2) are not included within the categories enumerated in sub-section (4). The CIT(A) had held that the 10% cap does not apply to donations to an entity approved under Section 80G(2)(a)(iiif) (Tata Institute of Social Sciences) and directed verification by the Assessing Officer. The Tribunal agreed with the CIT(A)'s interpretation that Section 80G(4) does not restrict deductions in respect of donations to such approved institutions and confirmed the appellate direction to the Assessing Officer to allow the deduction after verification. [Paras 11]

The 10% cap under Section 80G(4) does not apply to donations to institutions approved under Section 80G(2)(a)(iiif); the CIT(A)'s order is confirmed.

Allowability of deduction claimed in the return when clubbed under a different Chapter VIA head - Obligation on Assessing Officer to verify documentary claims and give effect to appellate directions - Whether the deduction under Section 80GGA, though not shown in a separate ITR field and clubbed with Section 80G in the return, was a claimed deduction and can be considered by the Assessing Officer on verification as directed by the CIT(A). - HELD THAT: - The Tribunal noted that the assessee had disclosed the deduction under Chapter VIA in the return and, because no separate functionality existed in the ITR at the relevant time, had clubbed the Section 80GGA amount with Section 80G; the Assessing Officer himself recorded the claim in the assessment proceedings. Relying on the CIT(A)'s direction (which drew on administrative guidance and precedent) the Tribunal held that it cannot be said the deduction was unclaimed. The CIT(A) correctly directed the Assessing Officer to verify supporting documents and allow the deduction if conditions for deductibility are met. Accordingly, the Tribunal found no infirmity in that appellate direction. [Paras 12]

The claim for deduction under Section 80GGA, though clubbed in the return, was a disclosed claim and the Assessing Officer is to verify and allow it if eligible; the CIT(A)'s direction is upheld.

Infructuousness of claim for carry forward under Sections 11 and 12 where not claimed - Whether the appellate direction concerning opportunity to the Assessing Officer on carry forward of deficit (excess expenditure over income) requires adjudication where the assessee had surrendered registration under Section 12A and did not claim Sections 11/12 benefits. - HELD THAT: - The Tribunal observed that the assessee had surrendered registration under Section 12A and had not claimed exemption under Sections 11 and 12; therefore any direction relating to carry forward of deficits under those provisions was inapplicable. Consequently, the grievance raised by the Assessing Officer on this point was rendered infructuous. [Paras 13]

The ground relating to carry forward under Sections 11/12 is infructuous and does not call for relief.

Final Conclusion: The appeal filed by the Assessing Officer is dismissed: the Tribunal confirms that the Section 80G(4) ten per cent cap does not apply to donations to institutions approved under Section 80G(2)(a)(iiif), upholds the CIT(A)'s direction to verify and consider the Section 80GGA claim (clubbed in the return) and finds the carry forward contention infructuous.

Exemption under section 54 of the Income Tax Act - Capital Gains Account Scheme deposit and utilisation - treatment of unutilised capital gains under proviso to section 54(2) - booking of under construction flat treated as investment in construction - addition under section 45 on expiry of three year period

Exemption under section 54 of the Income Tax Act - booking of under construction flat treated as investment in construction - Capital Gains Account Scheme deposit and utilisation - treatment of unutilised capital gains under proviso to section 54(2) - Extent of exemption under section 54 in respect of long term capital gain arising on sale of residential property and correctness of addition of entire capital gain by the AO - HELD THAT: - The assessee sold original residential property on 31/07/2012 and deposited the capital gain in the Capital Gains Account Scheme on 29/07/2013. The assessee booked an under construction flat on 10/09/2014 and paid Rs. 50,86,472 to the builder; construction was not completed within three years. The Tribunal accepted that booking and payments to the developer constitute investment in construction for the purpose of section 54 and relied upon precedents holding that booking an under construction flat amounts to construction. However, the proviso to section 54(2) requires that any amount deposited in the Capital Gains Account Scheme but not utilised wholly or partly for purchase or construction within the three year period must be charged to tax under section 45 in the year in which the three year period expires. In the facts, the assessee utilised part of the capital gain (Rs. 50,86,472) for the new house; she therefore is entitled to exemption to that extent. The AO erred in adding the entire capital gain; only the balance unutilised amount is exigible to tax under section 45 on expiry of the three year period. The AO is directed to restrict the addition to the unutilised portion and to allow exemption for the amount paid to the builder. [Paras 15]

Exemption under section 54 is allowed to the extent of Rs. 50,86,472 paid for the new residential flat; the AO must restrict addition to the balance unutilised capital gain which shall be charged under section 45 on expiry of the three year period.

Reassessment proceedings under section 147 - Challenge to initiation of reassessment proceedings under section 147 - HELD THAT: - The ground challenging initiation of reassessment proceedings was not pressed by the assessee before the Tribunal. Consequently the Tribunal dismissed that ground as not pressed without adjudicating its merits. [Paras 16]

Ground challenging initiation of reassessment proceedings is dismissed as not pressed.

Principles of natural justice in appellate proceedings - Allegation that learned CIT(A) passed the order under section 250 without complying with principles of natural justice - HELD THAT: - The Tribunal examined the impugned order and noted that the learned CIT(A) considered the assessee's submissions as recorded in the order. There was no merit in the contention that natural justice was violated; the ground was therefore rejected. [Paras 17]

Ground alleging breach of natural justice by the learned CIT(A) is dismissed.

Final Conclusion: The appeal is partly allowed: exemption under section 54 is granted to the extent of the amount paid by the assessee for the new residential flat (Rs. 50,86,472); the Assessing Officer is directed to restrict addition to the unutilised portion of the capital gain which shall be taxable under section 45 on expiry of the three year period. Grounds contesting initiation of reassessment and breach of natural justice are dismissed.

Unexplained cash credit - application of section 68 of the Income Tax Act - onus to establish identity, creditworthiness and genuineness of creditor - genuineness of unsecured loan - creditworthiness of creditor as evidenced by tax audit balance sheet - source of source need not be proved for unsecured loan - Roshan Di Hatti - onus principle

Application of section 68 of the Income Tax Act - onus to establish identity, creditworthiness and genuineness of creditor - genuineness of unsecured loan - creditworthiness of creditor as evidenced by tax audit balance sheet - source of source need not be proved for unsecured loan - Whether the addition of Rs. 25,00,000 made under section 68 as unexplained cash credit was sustainable. - HELD THAT: - The Tribunal examined the documentary evidence produced by the assessee to establish identity, creditworthiness and genuineness of the lender. The assessee produced a confirmatory letter, the lender's bank account statements, income-tax return acknowledgement and the lender's audited balance sheets/tax audit reports which reflected the loan and showed subsequent adjustments. The Tribunal noted that the lender was an income-tax assessee and that the loan was reflected in the lender's audited accounts; the tax auditor did not adverse comment on the cash deposits relied upon by the lender. The Tribunal accepted the principle that the assessee bears the onus under section 68 to prove the nature and source of credits, but concluded on the material on record that the assessee had discharged that onus in respect of the Rs. 25,00,000 unsecured loan. The Tribunal further recorded that, for an unsecured loan, it was not necessary for the assessee to prove the 'source of source' of the funds. Having found the transaction genuine and the creditor creditworthy, the addition could not be sustained. [Paras 12, 15, 17]

Addition of Rs. 25,00,000 under section 68 was not sustainable and is disallowed.

Unexplained cash credit - reliance on audit report under section 142(2A) - Whether the unexplained cash credit of Rs. 6,96,700 required to be added to the assessee's income. - HELD THAT: - The assessment proceedings recorded the Special Auditor's report under section 142(2A) which had treated certain cash transactions as unexplained, resulting in an alleged net negative cash credit of Rs. 6,96,700. The Commissioner (Appeals) had set aside that amount. The Tribunal, having granted relief on merits to the assessee in respect of the principal contested addition and having found the overall impugned orders to have led to miscarriage of justice, set aside the impugned orders. The Tribunal did not rest its decision on an extended examination of evidentiary minutiae recorded by the assessing authorities but allowed the appeal and set aside the impugned assessment and appellate orders. [Paras 12, 15, 17]

The addition of Rs. 6,96,700 was not sustained by the Tribunal as the impugned orders were set aside.

Final Conclusion: The Tribunal allowed the assessee's appeal on merits, held that the Rs. 25,00,000 unsecured loan was genuine and that the creditor's identity and creditworthiness were established, and set aside the impugned assessment and appellate orders (both additions).

Applicability of section 14A read with Rule 8D where no exempt income is earned - Characterisation of fees as fees for technical services under section 9(1)(vii) and application of DTAA - Allowability of prior period expenses - Tax treatment and reversal of previously offered notional carbon credit income

Applicability of section 14A read with Rule 8D where no exempt income is earned - Disallowance under section 14A r.w. Rule 8D of Rs. 7,46,393/- - HELD THAT: - The Tribunal found that the Assessing Officer disallowed expenses under section 14A read with Rule 8D on the premise of investments yielding exempt income. The CIT(A) accepted the assessee's primary contention that no exempt income was earned in the year and held that no disallowance can be made if there is no exempt income. The Tribunal observed that the CIT(A) had not found any exempt income for the year and concluded that full relief must follow: where no exempt income is earned, the disallowance under section 14A/Rule 8D cannot stand. The AO is directed to delete the addition of Rs. 7,46,393/- from the total income. [Paras 6]

Disallowance under section 14A r.w. Rule 8D set aside and deletion of Rs. 7,46,393/- directed.

Characterisation of fees as fees for technical services under section 9(1)(vii) and application of DTAA - Addition of Rs. 4,87,247/- treated as payment for technical services and disallowance for failure to deduct TDS - HELD THAT: - The CIT(A) upheld the AO's view that the amount paid to the Bank of New York related to technical services attractable to section 9(1)(vii) and that TDS was required. The Tribunal noted that the CIT(A) examined section 9(1)(vii) but did not examine the relevant DTAA provisions. Because the DTAA may affect characterisation and taxability of the payment and the withholding obligation, the Tribunal directed the AO to re-examine the issue in the light of the DTAA after giving the assessee a reasonable opportunity of being heard. The matter is therefore remitted for fresh consideration by the AO. [Paras 9]

Addition set aside for remand to the AO to re-examine the question of characterisation, withholding and DTAA applicability; matter allowed for statistical purposes pending fresh adjudication.

Allowability of prior period expenses - Disallowance of prior period expenditure of Rs. 33,74,251/- claimed in the year under appeal - HELD THAT: - The assessee sought to allow expenses accounted as prior period items in the year under appeal. The CIT(A) observed there was no provision made in the earlier year nor a revised return; each year is a separate self-contained period and prior period expenses cannot be allowed in assessing income of a different year. The Tribunal concurred with the CIT(A)'s conclusion and upheld the disallowance. [Paras 11]

Claim for prior period expenses dismissed and disallowance upheld.

Tax treatment and reversal of previously offered notional carbon credit income - Treatment of reversal/write-off of carbon credit income previously offered to tax - HELD THAT: - The assessee had earlier offered income from carbon credits for assessment years 2007-08 to 2011-12 and the Department had accepted that treatment as other income. The assessee wrote off the notional carbon credit income in the year under appeal due to non-recognition of the project. The CIT(A) treated carbon credit as capital in nature and disallowed the write-off. The Tribunal held that the income had been treated by the Department in prior years and therefore the same treatment ought to be considered; accordingly the matter is remitted to the AO to re-examine the disallowance afresh. The remand is for reconsideration and not a final adjudication on merits by the Tribunal. [Paras 13]

Issue remitted to the AO for fresh examination of the tax treatment of the carbon credit reversal; set aside the CIT(A) order on this point (statistical relief to assessee).

Final Conclusion: The appeal is partly allowed: the Tribunal directs deletion of the section 14A/Rule 8D disallowance; upholds the disallowance of prior period expenses; and remits for fresh examination by the Assessing Officer the additions relating to listing/technical services (withholding and DTAA issues) and the reversal/write-off of carbon credit income.

Re-characterisation of revenue expenditure as capital expenditure - Principle that absence of income chargeable u/s 28 does not preclude claiming expenses u/s 30 to 37 - Application of Accounting Standard-26 to classification of expenditure as intangible asset

HC [2023 (10) TMI 329 - DELHI HIGH COURT] upheld Tribunal's order reversing the Assessing Officer's disallowance is upheld; the AO's approach of linking entitlement to expenses to absence of income was held unsustainable. No substantial question of law arises and the appeals are closed.

HELD THAT:- There is delay of 152 days in filing the present special leave petition. Even on merits, we do not see any good ground and reason to interfere with the impugned judgment.

Recording the aforesaid, the application for condonation of delay and consequently the Special Leave Petition are dismissed.

Carry forward and set off of unabsorbed depreciation without any limitation of period - carry forward after period of 8 years - As decided by HC [2023 (7) TMI 20 - GUJARAT HIGH COURT] once the Circular No.14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y.1997- 98 upto the A.Y.2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever - HELD THAT:- We are not inclined to interfere with the impugned judgment and order passed by the High Court [2023 (7) TMI 20 - GUJARAT HIGH COURT]. Hence, the Special Leave Petition is dismissed.

Limitation under Section 153(3) - extension by reference under Section 153(4) - reference to Transfer Pricing Officer under Section 92CA(1) - order of the Transfer Pricing Officer under Section 92CA(3) - power of the Dispute Resolution Panel under Section 144C(8) - ITAT's power to remit for fresh adjudication including to the TPO

Power of the Dispute Resolution Panel under Section 144C(8) - Whether the DRP was obliged to adjudicate a limitation/jurisdictional objection raised under Section 153 when considering objections to the draft assessment order. - HELD THAT: - The court recognised that Section 144C(8) confines the DRP to confirming, reducing or enhancing the variations proposed in the draft order and that the DRP therefore refused to entertain the limitation objection. Nonetheless, the petition attacked the existence of any power in the respondents to make a consequential assessment (not merely the DRP direction). Because the petitioner sought a declaration that the respondents had become bereft of authority to assess (a challenge going to the foundation of power to assess), the court held that writ jurisdiction under Article 226 was available. Accordingly, while the DRP may be correct in declining to decide the limitation point in its proceedings under Section 144C(8), that refusal did not oust the petitioner from approaching the High Court for a declaration that the authority to assess had lapsed by limitation. [Paras 24, 61, 84, 85, 86]

DRP's refusal to entertain the limitation objection did not preclude the petitioner from seeking and obtaining declaratory relief under Article 226 where the challenge goes to the authority to assess.

Reference to Transfer Pricing Officer under Section 92CA(1) - ITAT's power to remit for fresh adjudication including to the TPO - order of the Transfer Pricing Officer under Section 92CA(3) - Whether the ITAT could remit directly to the TPO and whether a TPO order passed on the basis of such remit suffices without a fresh reference by the Assessing Officer. - HELD THAT: - The court analysed Section 92CA and Section 153 together and concluded that the statutory scheme contemplates an adjudication by the TPO (Section 92CA(3)) and that Section 153(3) expressly contemplates 'fresh order under Section 92CA'. On a conjoint reading, the ITAT is empowered to remit matters directly to the TPO when circumstances warrant and such remittance is accommodated by Section 153(3). The fact that the ITAT's remittal to the TPO in this case was neither challenged nor acted upon inconsistently by the parties (the TPO in fact passed an order on 17 October 2017 and notices were issued) reinforced that the ITAT could remit directly and that the TPO's order pursuant to the ITAT's directions was operative without requiring a fresh AO-initiated reference. [Paras 63, 65, 66, 67, 69]

The ITAT may remit directly to the TPO and the TPO is obliged to act pursuant to the ITAT's remit; a fresh AO reference is not always a precondition to the TPO's lawful adjudication when the ITAT has directed remittal.

Limitation under Section 153(3) - extension by reference under Section 153(4) - reference to Transfer Pricing Officer under Section 92CA(1) - Whether the subsequent reference by the AO dated 27 December 2018 and the draft assessment framed thereafter extended the limitation to permit a final assessment after 31 December 2018, or whether the respondents stood barred by expiry of the nine month period under Section 153(3). - HELD THAT: - The court found that the ITAT's order of 14 July 2017 remitted issues to the TPO and thereby required a fresh assessment/order within the period prescribed by Section 153(3). The nine month period computed from the ITAT order expired on 31 December 2018. Although Section 153(4) extends time where a reference under Section 92CA(1) is made 'during the course of the proceeding for assessment', that subsection is confined to AO initiated references made in the assessment proceedings. The court held that the AO's fresh reference of 27 December 2018 was unnecessary and could not be relied upon to revive or extend the respondents' power to assess because the TPO had already acted on the ITAT remit on 17 October 2017 and the contingency of a fresh assessment was governed by Section 153(3). The submission that the ITAT remittal should be treated as a 'deemed reference' under Section 153(4) was rejected because Section 153(3) already provides for fresh orders under Section 92CA consequent to ITAT directions, and the principle generalia specialibus non derogant applies. [Paras 80, 81, 83, 86, 87]

The period under Section 153(3) expired on 31 December 2018 and the respondents were thereafter bereft of jurisdiction to pass any further final assessment for AY 2009-10; the AO's reference of 27 December 2018 could not sustain an extension under Section 153(4).

Final Conclusion: Writ petition allowed in part: the court declined to set aside the DRP's directions but declared that, as the nine month limitation under Section 153(3) computed from the ITAT order of 14 July 2017 expired on 31 December 2018, the respondents are barred in law from passing any further final assessment order for AY 2009-10; the petitioner is entitled to consequential reliefs.

Provisional attachment - revocation of attachment - Section 281B of the Income Tax Act - corrective action by revenue - disposal of writ petition

Provisional attachment - revocation of attachment - Section 281B of the Income Tax Act - Revocation of the provisional attachment of the petitioner's FDRs and disposal of the writ petition on account of corrective steps taken by the revenue. - HELD THAT: - The petitioner sought quashing of the provisional attachment dated 07.02.2024 and release of FDRs attached under the provisions of Section 281B. The Court directed the revenue to obtain instructions and permitted filing of a counter-affidavit. The revenue filed a counter-affidavit disclosing that, by communication dated 16.04.2024 issued by the ACIT on behalf of the PCIT (Central), Kanpur Nagar, the PCIT has revoked all provisional attachments made under Section 281B in respect of the petitioner's FDRs and requested the DCIT to take immediate steps to release the FDRs and send an action taken report. In view of this corrective action by the revenue, the Court found the grievance of the petitioner addressed and disposed of the writ petition. The Court did not pronounce on the substantive legality of Section 281B safeguards in this order but concluded the matter in light of the revocation and the revenue's steps to implement it.

The provisional attachments of the petitioner's FDRs were revoked by the revenue and, accordingly, the writ petition is disposed of.

Final Conclusion: Because the revenue has revoked the provisional attachments and directed release of the FDRs, the Court disposed of the writ petition without adjudicating the substantive legality of the attachment order.

Summary order. Hearing adjourned; matter posted for further hearing on 15.5.2024 at 10:30 a.m.

Addition on account of bogus purchases - accommodation entries - application of gross profit rate for disallowance - coordinate bench precedent - infructuous appeal

Addition on account of bogus purchases - application of gross profit rate for disallowance - coordinate bench precedent - infructuous appeal - Whether the Revenue's appeal against the CIT(A)'s adjustment of bogus purchases is maintainable in view of a co-ordinate Bench decision limiting the addition by applying a gross profit rate - HELD THAT: - The Bench recorded that the assessee's assessment was reopened and an addition was made of the full amount alleged to be bogus purchases. The CIT(A) reduced the addition by applying the assessee's average three year gross profit rate and confirmed an addition of a lesser amount. A co ordinate Bench in ITA No.2948/Mum/2023 (A.Y. 2012-13) subsequently decided the same issue on 26th February, 2024, restricting the addition to 3% gross profit and thereby confirming only the excess over the declared gross profit of 1.42% (i.e., 1.58%). Although the Registry did not tag the cross appeal for joint hearing, the Bench held that in view of the co ordinate Bench's binding outcome on the same question for the same assessment year and assessee, the Revenue's appeal has become infructuous. The Bench therefore dismissed the appeal without adjudicating the merits of the Revenue's grounds challenging the CIT(A)'s application of the gross profit rate. [Paras 6, 7]

Appeal dismissed as infructuous in view of the co ordinate Bench's decision limiting the addition by applying a gross profit rate.

Final Conclusion: The Revenue's appeal is dismissed as infructuous because a co ordinate Bench has already restricted the addition for A.Y. 2012-13 by applying a gross profit rate (limiting the addition to 3% with only the excess over the declared 1.42%-i.e. 1.58%-confirmed).

Summary order. Application for condonation of delay of 331 days in filing review petition dismissed; permission to file review petition and application for listing in open court rejected; review petition dismissed; pending applications disposed of.

Undervaluation and admissibility of third party documents and retracted statements - transaction value presumptions and sequential application of Customs Valuation Rules - burden of proof on Revenue to establish under invoicing by cogent and corroborated evidence - contemporaneous imports as evidence to rebut declared transaction value - reliance on documents not shown to the importer and denial of opportunity for explanation

Undervaluation and admissibility of third party documents and retracted statements - reliance on documents not shown to the importer and denial of opportunity for explanation - Whether the differential duty demands and penalties could be sustained on the basis of documents and statements recovered from third parties which were retracted or not corroborated and not shown to the appellants. - HELD THAT: - The Tribunal found that the impugned demands were founded predominantly on documents retrieved from third parties (notably Shri Rajendra Agarwal and Shri Avinash Jindal) and on their statements, many of which were retracted on cross examination. The records and emails relied upon were not shown to the appellants and no independent corroborative evidence was produced from the appellants' files. The Tribunal applied the principle that third party documents and retracted or untested statements lack the cogency required to discard the declared transaction value. The decision notes multiple instances where container numbers or entries matched third party records but, standing alone, such matches did not establish that the appellants had imported at different values or paid any undisclosed consideration. The Tribunal also observed that certain witnesses were not made available for cross examination and that unsigned/uncorroborated copies and made up files could not be the sole basis for enhancing value or imposing penalties. On these grounds the Tribunal held that the Revenue failed to prove under valuation by cogent and corroborated evidence and that the demand and penalties were not sustainable. [Paras 7, 17]

Differential duty demands and penalties based solely on the said third party documents and retracted/uncorroborated statements are set aside; the evidence is insufficient to sustain a finding of undervaluation.

Transaction value presumptions and sequential application of Customs Valuation Rules - contemporaneous imports as evidence to rebut declared transaction value - burden of proof on Revenue to establish under invoicing by cogent and corroborated evidence - Whether the declared transaction value could be rejected and valuation enhanced in the absence of independent evidence of contemporaneous imports at higher prices and without following the sequential valuation rules. - HELD THAT: - The Tribunal reaffirmed the settled principle that the transaction value must be accepted unless it falls within the exceptions warranting rejection, and that, if rejected, the Customs Valuation Rules must be applied sequentially (Rules 5-8). The Tribunal found no reliable evidence of contemporaneous imports at higher prices that would rebut the appellants' declared values; indeed, the appellants produced contemporaneous import data showing comparable prices. The Tribunal relied on authorities stressing that the Department bears the onus to prove that the invoice price is incorrect and that casting suspicion is not enough. The Tribunal also recorded that many consignments were physically examined and cleared after reassessment, and that a substantial portion of imports were of rejected/ inferior grade, which cannot be valued as if they were good quality timber. Applying these legal principles, and having regard to the absence of independent corroboration, the Tribunal concluded that the transaction values could not be discarded and that enhancement under the Valuation Rules was not permissible. [Paras 8, 13, 14, 15, 16]

Declared transaction value held to be acceptable; sequential valuation rules and requirement of contemporaneous higher priced imports not satisfied, therefore valuation enhancement and consequential interest/penalties are unsustainable.

Final Conclusion: Following the Tribunal's reasoning in Beena Sales Corporation (upheld by the Supreme Court), and for the reasons recorded, the impugned adjudication orders enhancing value and imposing duty, interest and penalties are set aside and the appeals are allowed with consequential reliefs.

KYC obligations of Customs Brokers - verification of Importer-Exporter Code and GSTIN - due diligence of Customs Broker - presumption of genuineness of government-issued documents - scope of obligation under Regulation 10(n) of CBLR, 2018 - revocation of Customs Broker licence for client frauds

KYC obligations of Customs Brokers - verification of Importer-Exporter Code and GSTIN - presumption of genuineness of government-issued documents - due diligence of Customs Broker - Whether revocation of the Customs Broker's licence, forfeiture of security and imposition of penalty were justified for alleged failure to comply with Regulation 10(n) of CBLR, 2018 where exporters handled by the broker were found untraceable and implicated in IGST refund frauds. - HELD THAT: - The Tribunal applied the reasoning in earlier decisions (summarised in Mauli Worldwide Logistics) and examined the four limbs of Regulation 10(n): verification of IEC, verification of GSTIN, verification of client identity by reliable independent documents/data/information, and verification of client functioning at declared address by reliable independent documents/data/information. It held that verification of IEC and GSTIN requires the Customs Broker to satisfy itself that such documents were issued by the concerned government authorities, which can be done by online verification or comparison with originals, and does not obligate the Broker to oversee the correctness of issuance by those officers. The Tribunal relied on the principle that certificates or registrations issued by government officers attract a presumption of genuineness (as embodied in Section 79 of the Evidence Act) and that documents such as GSTIN, IEC and PAN obtained from official databases are independent, reliable and authentic. The Tribunal further held that verification of functioning at the declared address may be discharged by reliable documents, data or information and does not mandate physical visitation of each client premises by the Broker. Applying these principles to the facts, the appellant had verified antecedents and KYC documents from official government websites (DGFT, GST, Income Tax) before clearance; there was no material to show documents were forged or that the Broker knew of any fraud in obtaining such documents. In that factual matrix, revocation, forfeiture and penalty were not justified because the Broker fulfilled the obligations under Regulation 10(n) by relying on authentic government-issued records and online verification. [Paras 7, 8]

Impugned order revoking the Customs Broker's licence, forfeiting the security and imposing penalty set aside; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the Customs Broker satisfied Regulation 10(n) by verifying official government records and that licence revocation, forfeiture and penalty were unwarranted in the absence of forged documents or knowledge of fraudulent issuance.

Interpretation of exemption notification - strict interpretation of exemption clause - burden of proof on claimant for exemption - scope of "Solar Power Generating System" under List 8 - exemption for parts consumed within factory and Condition 2 compliance

Scope of "Solar Power Generating System" under List 8 - exemption for parts consumed within factory and Condition 2 compliance - Grid Tied Solar Inverter is not a "Solar Power Generating System" as described in List 8 and the importer, having not complied with Condition 2, is not eligible for exemption under Notification No.12/2012 CE as amended. - HELD THAT: - The Tribunal examined List 8 and observed that the phrase "Solar Power Generating System" refers to the complete system (comprising solar photovoltaic module, mounting structure and inverter) and that the Notification grants exemption only to the non conventional energy devices or systems specified in List 8 and to parts consumed within the factory of production. While a grid tied solar inverter forms part of a solar system and converts DC to AC, it cannot be equated to the Solar Power Generating System itself. Further, the amended notification permits exemption for parts used elsewhere than in the factory only upon compliance with the procedure laid down in the relevant rules (Condition 2). The respondent failed to satisfy Condition 2, and therefore the claim for exemption on the imported inverter could not be allowed. The Tribunal also rejected reliance on precedents dealing with different notifications or factual matrices, distinguishing those authorities on their facts and scope. [Paras 6]

Allowing the appeal of the Commissioner, the benefit of the exemption Notification was denied to the respondent in respect of the imported inverter.

Interpretation of exemption notification - strict interpretation of exemption clause - burden of proof on claimant for exemption - Exemption notifications must be strictly construed and the burden to prove eligibility for exemption lies on the claimant; ambiguity in exemption notifications is resolved in favour of revenue. - HELD THAT: - Applying the ratio of the Supreme Court in Commnr. of Cus. (Import), Mumbai v. Dilip Kumar & Co., the Tribunal reiterated that exemption notifications are to be strictly interpreted. Where ambiguity exists, the benefit cannot be claimed by the assessee; rather such ambiguity is interpreted in favour of the revenue. Consequently, the Commissioner (Appeals)'s view that exemption notifications should be liberally construed in favour of the assessee and that revenue bears the burden to disprove eligibility was rejected. The Tribunal held that the respondent, as claimant of the exemption, bore the onus of establishing that the imported goods squarely fell within the parameters of the notification and satisfied all conditions precedent. [Paras 6]

The Commissioner (Appeals)'s approach was reversed; strict construction and onus on the claimant were affirmed.

Final Conclusion: The Tribunal set aside the Commissioner (Appeals) order, held that the imported Grid Tied Solar Inverter does not qualify as a "Solar Power Generating System" under Notification No.12/2012 CE (as amended) and that the respondent, having failed to comply with Condition 2, is not entitled to the exemption; the appeal by the Department is allowed.

Sanction under Section 212 of the Companies Act - Formation of opinion by Central Government - Public interest requirement for SFIO investigation - Judicial review limited to existence of opinion and material - Double jeopardy arising from parallel IBC proceedings - Reliance on liquidator's presentation and transaction audit report

Sanction under Section 212 of the Companies Act - Formation of opinion by Central Government - Judicial review limited to existence of opinion and material - Validity of the sanction dated 30.11.2021 ordering SFIO investigation into the company's affairs - HELD THAT: - The Court held that a sanction under Section 212 must stand on its own and demonstrate that the Central Government formed an opinion, based on material and circumstances, that investigation by SFIO is necessary. Judicial review does not enter into the merits of the opinion but must test whether the required opinion was honestly formed and whether there existed material and circumstances to support it. The impugned sanction was non-speaking, mechanical and did not reflect any independent application of mind by the Central Government; it simply records a recital that an opinion was formed without setting out reasons or the material basis for such opinion. Consequently, the sanction fails the mandatory prerequisites of Section 212 and is vitiated for being perverse and without reasons. The Court emphasised that commencement of SFIO investigation has far-reaching consequences and the discretion under Section 212 must be exercised responsibly and on demonstrable material. [Paras 33, 34, 35, 36, 42]

The sanction dated 30.11.2021 is quashed as it does not record any reasoned opinion or demonstrate existence of material and circumstances required by Section 212.

Public interest requirement for SFIO investigation - Reliance on liquidator's presentation and transaction audit report - Whether the material placed before the Central Government (liquidator's presentation and transaction audit report) prima facie established public interest to warrant SFIO investigation - HELD THAT: - The Court examined the transaction audit report and the liquidator's presentation which formed the basis of the impugned sanction and concluded that these materials only alleged transactions which, at best, fall within Section 66 of the IBC. The transaction audit report did not recommend SFIO investigation nor indicate prejudice to the public interest. The opinion of a liquidator is not a substitute for an independent opinion of the Central Government; reliance solely on the liquidator's material without independent application of mind is inadequate. Where the alleged transactions are essentially disputes recoverable under the IBC or arise from private commercial dealings with a bank, such facts do not, prima facie, demonstrate public interest necessary for Section 212(1)(c). [Paras 37, 38, 39, 40, 41]

The materials before the Central Government did not prima facie establish public interest or relevant circumstances to justify SFIO investigation; reliance on the liquidator's presentation and the transaction audit report was insufficient.

Double jeopardy arising from parallel IBC proceedings - Sanction under Section 212 of the Companies Act - Whether initiation of SFIO investigation pursuant to the sanction would amount to double jeopardy given pending proceedings under Section 66 of the IBC - HELD THAT: - The Court found that the liquidator had already initiated proceedings under Section 66 of the IBC (preferential/avoidance application) on the same cause of action and those proceedings were pending before the NCLT. Commencing an SFIO investigation into the same transactions and cause of action would force the petitioners to defend essentially identical allegations twice and therefore amount to double jeopardy. The Court observed that where the IBC code is engaged and adjudicatory proceedings are pending on the same cause, a parallel SFIO probe into the same transactions is impermissible. [Paras 23, 40, 43]

Investigation by SFIO into the same transactions that are the subject of pending Section 66 IBC proceedings would amount to double jeopardy and is impermissible; the sanction cannot stand for that reason.

Final Conclusion: The writ petition is allowed: the sanction dated 30.11.2021 under Section 212 (1)(c) of the Companies Act, 2013, any steps taken in furtherance thereof, and the Look Out Circulars issued against the petitioners are quashed and set aside; no order as to costs.

Summary order. Delay condoned; appeal disposed of in view of the Coordinate Bench order in C.A. No. 1335 of 2022 titled "Commissioner of Service Tax Vs. Inox Leisure Ltd."; pending applications, if any, disposed of.

Banking and Other Financial Services - consideration - reverse charge mechanism - negative list - extended period

Banking and Other Financial Services - consideration - negative list - Whether receipt of corporate guarantee from the parent company amounted to a taxable service under Banking and Other Financial Services for the period prior to 01.07.2012. - HELD THAT: - The Tribunal examined the statutory definition of Banking and Other Financial Services and consideration and held that the definition is a comprehensive and restrictive taxonomy identifying only services provided by entities that are banks, financial institutions, non-banking financial companies, or other corporate/commercial concerns engaged in specified financial activities. The parent company was not shown to be in the business of lending or carrying on the listed financial activities. The act of providing a corporate guarantee by a third party not in the business of lending is a mechanism to secure lending and is not itself a lending activity or a listed financial service. Hence the guarantee fee paid to the parent company did not constitute consideration for a BOFS prior to the introduction of the negative list w.e.f. 01.07.2012; accordingly, no service tax could be demanded for the pre-01.07.2012 period under the reverse charge mechanism. The Tribunal relied on precedents holding corporate guarantees outside the ambit of BOFS to support this interpretive conclusion. [Paras 8, 10, 11]

Corporate guarantee did not attract service tax as BOFS for the period before 01.07.2012; demand for that period set aside.

Reverse charge mechanism - consideration - Whether the demand for the post-01.07.2012 period (specifically invoice dated 28.02.2013) was maintainable given the appellant's subsequent payment. - HELD THAT: - The show cause notice disclosed only one invoice for the post-01.07.2012 period (dated 28.02.2013). The appellant admitted that tax on that invoice was not paid initially but proved that service tax and interest were deposited in May 2015, prior to issuance of the Order-in-Original. Since the liability for that invoice had been discharged before the adjudicatory order, the authorities could not validly re-impose the same demand. Consequently, the part of the order seeking recovery for the post-01.07.2012 transaction already paid by the appellant was unsustainable. [Paras 12]

Demand for the post-01.07.2012 invoice (28.02.2013) was not maintainable because tax and interest had already been paid prior to the adjudication.

Extended period - Whether invocation of the extended period for recovery was justified. - HELD THAT: - The appellant explained the non-payment on account of lack of clarity regarding taxability of guarantee fees and there was no evidence of mala fide intention or evasion. The department failed to prove deliberate suppression or wilful evasion warranting invocation of the extended period. In view of the absence of requisite culpability and the acknowledged uncertainty on the issue, the Tribunal held that the extended period was wrongly invoked. [Paras 14]

Invocation of the extended period was unjustified and therefore wrongly invoked.

Final Conclusion: The appeal is allowed. The demand of service tax under the reverse charge mechanism in respect of corporate guarantee for the period prior to 01.07.2012 is set aside; the demand relating to the post-01.07.2012 invoice cannot be sustained as the tax and interest were paid before adjudication; and the extended period was wrongly invoked.

Eligibility for refund of service tax paid under the exemption in Section 102(1) of the Finance Act - date of contract execution as determinative for exemption under Section 102(1) - works contract services provided to a government local authority or government authority

Date of contract execution as determinative for exemption under Section 102(1) - eligibility for refund of service tax paid under the exemption in Section 102(1) of the Finance Act - Contracts relied upon by the appellant were executed prior to 1 March 2015 and therefore satisfy the condition for the exemption and refund under Section 102(1) of the Finance Act. - HELD THAT: - The sole question for determination was whether the contracts on the basis of which the appellant rendered works contract services were entered into before 1 March 2015. The adjudicating authority had examined the contracts and recorded a categorical finding that they were executed prior to that date and accordingly allowed the refund. The Commissioner (Appeals) reversed that finding by treating the dates of subsequent work orders (issued on 10 March 2015) as the operative dates of the contracts. The Tribunal holds that for the purpose of Section 102(1) the relevant date is the date on which the contract was entered into and not the date of later-issued work orders. The chart of documents and the Assistant Commissioner's finding demonstrate that the agreements were executed before 1 March 2015, and the refund claim was filed within the prescribed temporal limit. The Commissioner (Appeals) therefore erred in basing his conclusion on the dates of work orders rather than the contract execution dates. [Paras 10, 11, 12, 13]

The finding that the contracts were executed prior to 1 March 2015 is affirmed; the Commissioner (Appeals)'s order is set aside and the appeal is allowed.

Final Conclusion: The appeal is allowed; the Commissioner (Appeals)'s order dated 19 September 2017 is set aside as the contracts were executed before 1 March 2015, entitling the appellant to refund under Section 102(1) for the period 01.04.2015 to 29.02.2016.

Liquidated damages - declared service under Section 66E(e) - consideration for toleration of an act - no-service on penalty or compensatory recovery - reliance on Tribunal precedents and departmental circular

Liquidated damages - declared service under Section 66E(e) - consideration for toleration of an act - no-service on penalty or compensatory recovery - reliance on Tribunal precedents and departmental circular - Whether amounts recovered as liquidated damages/penalty for delay in supply liable to service tax as a declared service under Section 66E(e). - HELD THAT: - The Tribunal examined whether recovery of liquidated damages arising from breach of contractual timelines constitutes a consideration for agreeing to tolerate an act or situation such as would attract the declared service under Section 66E(e). Relying on earlier Tribunal decisions in the appellant's own cases and other Benches, the Tribunal held that liquidated damages are compensatory in nature and are not consideration for any activity carried out by the appellant to tolerate or agree to an act. The intention of the parties in the contracts was to procure supply of goods/services for consideration; penal clauses operate as safeguards and are triggered only upon breach, and do not evidence an agreement to tolerate an act for consideration. The Tribunal further observed that the Departmental Circular dated 03.08.2022 underscores that mere flow of money between parties does not by itself create a deemed service unless there is an express or implied agreement to do or abstain from doing something for consideration. Applying these principles and following consistent precedents, the Tribunal concluded that the impugned demand was not sustainable and set aside the order under challenge.

Demand of service tax on liquidated damages/penalty for delay set aside; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that recoveries characterised as liquidated damages/penalty for delayed supply do not constitute a declared service under Section 66E(e) and quashed the impugned demand with consequential relief, following earlier Tribunal decisions and the departmental circular.

Stock verification - CENVAT credit disallowance - suppression with intent to evade duty - clandestine removal - admissibility of computer printouts - Section 36B compliance - penalty under Rule 26/Rule 15

Stock verification - CENVAT credit disallowance - suppression with intent to evade duty - Validity of demand and disallowance of CENVAT credit based on shortages found during joint stock verification and entitlement to penalty - HELD THAT: - The Tribunal found that joint stock verification was conducted in the factory premises in the presence of the Director, who provided counts and piecewise weights which were recorded, authenticated on the spot and later confirmed in his statement of 23.08.2008. Subsequent stock-taking by the assessee in the officers' absence and retraction of the earlier statement were treated as afterthoughts. Comparison with books of account established shortages and the quantification and valuation adopted by the adjudicating authority were accepted. The Tribunal concluded that the suppression with intent to evade duty in respect of the shortages was established and that disallowance of CENVAT credit on inputs found short was justified. On that basis the imposition of penalty equal to the duty and credit disallowed was upheld. [Paras 7]

Demand of Central Excise duty of Rs.48,41,515/- and disallowance of CENVAT credit of Rs.7,86,930/- upheld along with interest; penalty equal to the duty and credit disallowed upheld.

Clandestine removal - admissibility of computer printouts - Section 36B compliance - Sustainability of demand based on computer printouts alleging clandestine removals for financial years 2004-2005 and 2005-2006 - HELD THAT: - The Tribunal held that the computerized printouts and pen drive data recovered from office equipment could not be relied upon because the mandatory safeguards under Section 36B were not complied with and the author(s) of the entries were not identified. The pen drives were floating devices used by multiple staff and no evidence established who entered the data. Further, the alleged clandestine removals related to an earlier period and were not corroborated by independent evidence such as admissions from buyers, enquiries at buyers' or transporters' end, receipts of consideration, or evidence of unaccounted raw material consumption. In the absence of mandatory procedural compliance and corroborative material, the demand based on such printouts was held unsustainable. [Paras 8]

Demand of duty on alleged clandestine clearances for 2004-2005 and 2005-2006 set aside.

Penalty under Rule 26/Rule 15 - stock verification - Liability and quantum of penalty imposed on the Managing Director and Director in respect of shortages found during joint stock verification - HELD THAT: - The Tribunal observed that both directors were in charge of day-to-day affairs and had admitted the shortages during joint stock verification, rendering them liable for penalty for those shortages. However, since the demand on clandestine removal was not sustained, the Tribunal exercised its power to reduce the exemplary penalties to an amount commensurate with the proven offence. In view of the limited proven count (shortages only), the penalty originally fixed was moderated to meet the ends of justice. [Paras 9]

Penalties of Rs.10,00,000/- each imposed on the Managing Director and the Director reduced to Rs.1,00,000/- each.

Final Conclusion: The Tribunal upheld the demand and CENVAT disallowance arising from shortages found during joint stock verification and the corresponding penalty equal to duty and credit disallowed; it set aside the demand based on alleged clandestine removals for 2004-05 and 2005-06 for want of Section 36B compliance and corroborative evidence; and it reduced the personal penalties on the directors to Rs.1,00,000/- each.

Judicial discipline - binding nature of Tribunal orders on subordinate authorities - invocability of Section 11A for recovery of sanctioned refunds - finality of tribunal orders and consequential refund orders - remedy by appeal/revision not collateral proceedings - export of services - receipt in convertible foreign exchange

Judicial discipline - binding nature of Tribunal orders on subordinate authorities - invocability of Section 11A for recovery of sanctioned refunds - finality of tribunal orders and consequential refund orders - remedy by appeal/revision not collateral proceedings - Whether the Department could initiate recovery proceedings under Section 11A in respect of a refund granted and disbursed pursuant to a final Tribunal order and a consequential refund order which were not stayed or set aside - HELD THAT: - The Tribunal held that once the CESTAT final order dated 22.05.2017 and the consequential refund order dated 17.11.2017 had attained finality and were not stayed or set aside, the adjudicating authorities had no jurisdiction to reopen the matter by treating the sanctioned refund as an "erroneous refund" and recover it under Section 11A. The correct course for the revenue, if aggrieved, was to pursue the remedy of appeal or revision; mere preferring of an SLP or pendency of departmental proceedings before higher fora does not justify ignoring or refusing to implement a binding appellate order unless its operation is suspended. The Court relied on the well established doctrine of judicial discipline that orders of the Tribunal are binding on subordinate authorities and that collateral proceedings cannot be launched to evade that binding effect. The impugned recovery order was therefore beyond jurisdiction and set aside. [Paras 11, 12, 19, 23]

Recovery order under Section 11A set aside; appeal allowed

Final Conclusion: The Commissioner (Appeals) order upholding recovery of the refund was quashed: where a Tribunal's final order and the consequential refund order have attained finality and are not stayed or set aside, the revenue cannot reopen the matter by issuing show cause notices under Section 11A; the proper remedy is appeal or revision.

Clandestine removal - onus to prove clandestine removal - retracted statements and necessity of corroboration - reliability of statements - third party/private records require corroboration - Section 9D of the Central Excise Act, 1944 - testing of statements - refund of amounts paid under protest - unjust enrichment not applicable

Clandestine removal - onus to prove clandestine removal - third party/private records require corroboration - Allegation of clandestine removal of excisable goods by the appellants is unsustainable. - HELD THAT: - The Tribunal found that the Department relied primarily on statements obtained during investigation, certain torn challans, and documents recovered from premises; however, there was no tangible, corroborative evidence of clandestine manufacture or clearance such as excess raw material receipt, unaccounted finished goods discovered, transportation evidence, excess electricity consumption, or flow back of funds to the manufacturer. Mere presence of documents in the manufacturer's premises or entries in third party/private records is insufficient to establish clandestine removal. Applying the established parameters (as in Arya Fibres and other authorities), the Department failed to discharge the burden to prove clandestine removal by cogent and unimpeachable evidence, and inferences drawn on assumptions cannot sustain a demand. Consequently the demand of duty and penalties founded on clandestine removal were held unsustainable. [Paras 30, 31, 32, 36, 38]

The allegation of clandestine removal against the appellants is rejected and the consequential duty demand and penalties are unsustainable.

Retracted statements and necessity of corroboration - reliability of statements - Section 9D of the Central Excise Act, 1944 - testing of statements - Reliance on retracted statements which were not tested under Section 9D is impermissible without independent corroboration. - HELD THAT: - The Tribunal noted that statements recorded during investigation were retracted by the appellants and that the authorities did not test the veracity of investigation statements in accordance with the procedure under Section 9D. Once a maker resiles from a statement, reliance on it as substantive evidence requires independent corroboration; absent such corroboration and absent proper examination in chief and cross examination of third party witnesses, the statements lose reliability and cannot form the sole basis for confirming the demand. The adjudicating authority's failure to afford or obtain proper opportunity for testing and cross examination vitiated reliance on those statements. [Paras 29, 31, 37, 38]

Retracted and untested statements cannot be relied upon to uphold the demand; the impugned findings based thereon are unsustainable.

Third party/private records require corroboration - retracted statements and necessity of corroboration - reliability of statements - Documents and private/third party records seized during investigation do not constitute conclusive evidence of clandestine clearances without corroborative inquiry. - HELD THAT: - The Tribunal emphasised that private or third party records (letters, torn invoices, bank documents, notebooks) may at best raise suspicion and are only a starting point for investigation. It is incumbent on the Department to carry the investigation forward to link such records to actual clandestine manufacture or clearance by producing corroborative material - e.g., evidence of receipt of unaccounted raw material, mode of transportation, discovery of unaccounted finished goods, or demonstrable flow back of sale proceeds to the manufacturer. The Department did not pursue such corroborative enquiries or produce independent evidence linking the seized documents to clandestine clearances by the appellants, rendering reliance on those records legally insufficient. [Paras 29, 30, 34, 35, 36]

Seized third party/private records without corroboration cannot sustain a finding of clandestine manufacture or clearance.

Refund of amounts paid under protest - unjust enrichment not applicable - Amount of duty, interest and penalty paid by the appellant under protest after adjudication is refundable. - HELD THAT: - The Tribunal recorded that the appellant deposited the whole duty with interest and 25% of penalty under protest after adjudication. Since the Tribunal has held the demand and penalties to be unsustainable, the bar of unjust enrichment does not apply to these facts and the sums so paid are to be refunded to the appellant. [Paras 39, 40]

The amounts of duty, interest and penalty paid under protest after adjudication shall be refunded to the appellant.

Final Conclusion: The appeals are allowed: the Department's allegation of clandestine removal is rejected for lack of cogent corroborative evidence and for reliance on untested/retracted statements and private records; consequential duty, interest and penalties confirmed by the impugned order are set aside and amounts paid under protest after adjudication are ordered to be refunded.

Works contract - service tax vs excise duty distinction - assessable value - valuation of clearances - CAS-4 valuation - extended period of limitation - penalty on director

Service tax vs excise duty distinction - works contract - assessable value - Whether the 30% balance billed after installation formed part of the assessable value of manufactured goods liable to Excise Duty or constituted remuneration for services liable to Service Tax - HELD THAT: - The Tribunal examined the contract between the parties and the service agreement which characterized the engagement as a works contract involving both supply of materials and provision of services including design and installation. The Appellant had split the contract value into 70% treated as material (on which Excise Duty was paid) and 30% treated as service/installation. The Tribunal found that the balance 30% related to services (designing, installation and allied activities) and thus should not have been treated as part of the assessable value of the manufactured goods for excise valuation. The Tribunal further observed that, given the works-contract nature of the transaction, the Department ought to have proceeded, if at all, for recovery of Service Tax in respect of the service portion; instead it pursued a valuation enhancement treating the entire amount as part of the value of goods. The Tribunal therefore concluded that the confirmed demand based on enhancement of assessable value was unsustainable and set aside the demand and penalty on the company. [Paras 8, 9, 10]

The 30% balance constituted service consideration and not part of the assessable value of the manufactured goods; the demand based on valuation enhancement was set aside.

Extended period of limitation - assessable value - Whether confirmation of demand for the extended period was sustainable - HELD THAT: - The Tribunal noted that the Appellant was a registered manufacturer filing ER-1 returns and that there was no material on record to show that the self-assessed ER-1 returns had been subjected to scrutiny or that any query was raised about the assessable value adopted by the Appellant prior to issuance of the Show Cause Notice. The Show Cause Notice was issued within one year from the date of audit reply, but in the absence of prior scrutiny or notice justifying invocation of the extended period, the Tribunal held that the extended period could not be sustained. [Paras 11]

Confirmed demand for the extended period set aside.

Penalty on director - Whether penalty imposed on the Director was liable to be sustained - HELD THAT: - Having held that the confirmed demand against the company was unsustainable on merits and that the extended period finding was set aside, the Tribunal held that there was no basis to sustain the penalty imposed on the Director. The penalty was therefore set aside. [Paras 12]

Penalty imposed on the Director set aside.

Final Conclusion: Appeals allowed: confirmed demand and penalty against the company set aside on merits; extended period disallowed; penalty on the Director quashed; consequential relief to follow as per law.

Penalty under Rule 26 of the Central Excise Rules, 2002 - knowledge requirement for imposition of penalty - liability of artificial persons/companies for penal provisions - application of corporate veil doctrine in penal liability

Penalty under Rule 26 of the Central Excise Rules, 2002 - knowledge requirement for imposition of penalty - liability of artificial persons/companies for penal provisions - Imposability of penalty under Rule 26 on the appellant company - HELD THAT: - The Tribunal considered whether Rule 26, which penalises a person who acquires possession of or in any manner deals with excisable goods known or reasonably believed to be liable to confiscation, permits imposition of penalty on a company. The Court held that the statutory provision presupposes individual knowledge that goods are liable to confiscation and, in ordinary circumstances, such knowledge is attributable to natural persons. Even if the term 'person' is read to include legal persons, liability would require a finding that the company itself (through its individuals) had such knowledge; no such finding exists on the record. The contract between the appellant and the manufacturer expressly stated prices as "inclusive of Excise and any other levies/cesses applicable", which negates the conclusion that the company had knowledge of non-payment of duty. The Tribunal relied on its earlier decisions holding Rule 26 inapplicable to artificial persons where requisite individual knowledge is not established, concluded that penalty cannot be sustained against the appellant company, and set aside the penalty imposed under Rule 26. [Paras 8, 9, 10]

Penalty under Rule 26 cannot be sustained against the appellant company; impugned penalty set aside.

Final Conclusion: The appeal is allowed to the limited extent of setting aside the penalty imposed under Rule 26 of the Central Excise Rules, 2002 on the appellant company; the penalty is not legally sustainable against the company in the absence of a finding that the company itself had the requisite knowledge of non-payment of duty.

Levy of Education Cess and Higher Secondary Education Cess on clearances by 100% EOU to DTA - Once Customs-duty-equivalent is determined, no separate Education Cess is leviable - Binding effect of Tribunal decision in assessee's own case upheld by the Supreme Court - Absence of stay does not permit reopening of settled issue

Levy of Education Cess and Higher Secondary Education Cess on clearances by 100% EOU to DTA - Once Customs-duty-equivalent is determined, no separate Education Cess is leviable - Binding effect of Tribunal decision in assessee's own case upheld by the Supreme Court - Whether education cess and higher secondary education cess are leviable separately on the excise duty chargeable on goods cleared by a 100% EOU into DTA after determining the customs-duty-equivalent measure. - HELD THAT: - The Tribunal held that where the measure of duty has been determined by calculating the Customs duty equivalent to Central Excise duty for clearances by a 100% EOU to DTA, the question of levying Education Cess and Higher Secondary Education Cess separately does not arise. The Revenue's contention that the matter remained open because related appeals were pending before the Hon'ble Supreme Court was considered but rejected on facts: there was no stay on the Revenue and, critically, the issue in the appellant's own case had been decided in its favour by this Tribunal and that order was upheld by the Hon'ble Supreme Court. Reliance on earlier Tribunal and High Court decisions following the same principle reinforced that the issue is not res-integra for the appellant. In these circumstances the Commissioner (Appeals) correctly set aside the Revenue's appeal against the original orders and the appellate challenge by Revenue does not survive. [Paras 4, 5]

Revenue's appeal dismissed and the impugned order upholding non-levy of Education Cess and Higher Secondary Education Cess is affirmed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal, affirming that where the Customs-duty-equivalent measure of duty has been applied for clearances by a 100% EOU to DTA, Education Cess and Higher Secondary Education Cess are not leviable separately; the appellant's favourable Tribunal decision having been upheld by the Supreme Court and no stay operating, the appeal fails.

Relevancy and admissibility of statements under

Transaction value - additional consideration - subsidy not includible in transaction value - Rajasthan Investment Promotion Policy subsidy in VAT 37B challan - application of section 4 of the Central Excise Act - distinction from Super Synotex India

Transaction value - additional consideration - subsidy not includible in transaction value - Rajasthan Investment Promotion Policy subsidy in VAT 37B challan - application of section 4 of the Central Excise Act - distinction from Super Synotex India - Whether the subsidy received in the form of VAT 37B challans under the Rajasthan Investment Promotion Policy, which is adjusted against the assessee's VAT liability, forms part of the transaction value for levy of central excise duty under section 4 of the Central Excise Act. - HELD THAT: - The Tribunal held that the subsidy issued as VAT 37B challans under the promotion policy does not reduce the sales tax required to be paid by the assessee; the entire sales tax collected from customers is ultimately paid, part by utilizing the VAT 37B challan and the balance by cash through VAT 37A challan. The subsidy therefore represents an amount provided by the State and retained by the assessee as subsidy, and is not consideration directly or indirectly related to the sale of goods. Following the reasoning in M/s. Harit Polytech Pvt. Ltd. (as applied in the present proceedings), merely because the subsidy is computed with reference to tax paid or is a percentage of tax paid does not render it additional consideration forming part of transaction value. The Tribunal distinguished the facts from Super Synotex India where a substantial portion of tax collected was retained by the seller and treated as price; that decision was held inapplicable because, under the promotion policy, the subsidy does not diminish the assessee's obligation to pay the sales tax collected from customers. Applying these principles, the Tribunal concluded that the Commissioner's inclusion of the subsidy amount in transaction value under section 4 could not be sustained. [Paras 5]

The Commissioner's order confirming duty by including the subsidy in transaction value is set aside and the appeal is allowed.

Final Conclusion: The appeal is allowed: the Tribunal set aside the Commissioner (Appeals) order of 10.05.2019, holding that the subsidy provided as VAT 37B challans under the Rajasthan promotion policy is not includible in the transaction value for central excise duty under section 4.

Trade discount - additional consideration - transaction value under amended valuation provisions of section 4 of the Central Excise Act, 1944 - assessable value - Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - quid pro quo - commercial consideration

Trade discount - additional consideration - transaction value under amended valuation provisions of section 4 of the Central Excise Act, 1944 - assessable value - Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - quid pro quo - commercial consideration - Whether the trade discount granted by the appellant to BEST is an additional consideration that must be included in the assessable value of CNG supplies for central excise valuation purposes or whether the transaction value (price charged to BEST) is the assessable value. - HELD THAT: - The Tribunal concluded that the trade discount offered to BEST does not qualify as an additional consideration to be added to assessable value. The amended valuation regime under section 4 requires using transaction value where sales are commercial, at arm's length and the price is the sole consideration at time and place of delivery. Revenue did not contend that the parties were related, nor did it produce evidence that the discount represented a flow-back in lieu of infrastructural facilities; accordingly there is no basis to treat the discount as an additional receipt under Rule 6. The Tribunal relied on earlier decisions in the appellant's own cases holding that deduction of trade discount from assessable value is permissible, and observed that the agreement(s) between the parties either envisaged discounts or separately provided for fees where supplies to outside vehicles were permitted, undermining the contention of a concealed quid pro quo. The issue was further fortified by a prior Tribunal final order which was not entertained by the Supreme Court (Civil Appeal dismissed at admission), indicating the question is no longer open for debate. On these grounds the adjudicated demand was set aside. [Paras 4, 5, 6, 7]

Trade discount to BEST is not an additional consideration for inclusion in assessable value; the transaction value (price charged to BEST) is the value for central excise assessment and the confirmed duty demand is set aside.

Final Conclusion: Appeal allowed: the impugned order confirming central excise duty on account of the trade discount is set aside for the period February, 2013 to December, 2013, the transaction value charged to BEST being the assessable value.

Emergence of an intermediate product - marketability of intermediate product - excisability of intermediate goods - captively consumed goods - National Calamity Contingent Duty (NCCD) - exemption under Notification No.67/1995-CE - interpretation of HSN Chapter Note 3 to Chapter 87

Emergence of an intermediate product - marketability of intermediate product - excisability of intermediate goods - interpretation of HSN Chapter Note 3 to Chapter 87 - captively consumed goods - Whether chassis fitted with engine emerges as an intermediate product during the manufacture of dumpers and is captively consumed - HELD THAT: - The Tribunal analysed the manufacturing stages of the dumper as evidenced by process flow charts, shop manuals, affidavits and technical material and reviewed its earlier Final Order No.1466/2009 and the Commissioner's Order in Original No.2/2007. The question whether an intermediate, marketable chassis comes into existence is a question of fact. On the materials before it the Tribunal reaffirmed the earlier factual finding that the entity emerging at the end of Assembly Stage IV lacks essential characteristics (notably a fitted, functional steering mechanism and completed controls) to qualify as a 'drive away' chassis known to the market. The amendment to Chapter Note 3 (w.e.f. 07.03.2005) altering the wording to include chassis whether or not fitted with a cab was considered but the Tribunal held that no new material was placed on record in the present show cause notices to displace the earlier factual conclusion. The Tribunal therefore concluded that no separate excisable chassis emerges at the intermediary stage in the appellant's manufacturing process and that the earlier findings have attained finality; Revenue failed to bring forward fresh evidence or changed facts to reopen the factual conclusion.

The finding that no separate, marketable chassis emerges at the intermediate stage is affirmed; therefore there is no captive consumption of an excisable chassis.

National Calamity Contingent Duty (NCCD) - exemption under Notification No.67/1995-CE - Whether NCCD is leviable on the (alleged) captively consumed chassis or is exempt under Notification No.67/1995-CE - HELD THAT: - Because the Tribunal concluded that no intermediate chassis emerges and hence there is no captive consumption, the question of levy or exemption of NCCD on such captively consumed chassis was not examined on its merits. The Tribunal observed that the legal controversy over Notification No.67/1995-CE and applicability to NCCD had been the subject of earlier proceedings and of orders at higher forums, but in the present appeals the point became academic once the factual prerequisite (emergence of an excisable intermediate chassis) was negatived. Consequently the Tribunal did not adjudicate the exemption plea on the substantive legal merits in these proceedings.

Not adjudicated as the question is academic given the factual conclusion that no intermediate chassis emerges; the Tribunal did not decide entitlement to exemption under Notification No.67/1995-CE in these notices.

Final Conclusion: The appeals are allowed: the impugned Order in Original is set aside because the Tribunal holds that no separate, marketable chassis fitted with engine emerges at an intermediate stage of the appellant's dumper manufacture and therefore there is no captive consumption to be subjected to duty; the question of NCCD exemption under Notification No.67/1995 CE was rendered academic and was not decided.

Manufacture - excisable goods - movability versus immovability of furniture - assembly of CKD parts and components - interpretation of CKD under Rule 2(a) - extended period of limitation - burden of proof in clandestine manufacture - cum-duty valuation - cenvat credit - penalty for failure to discharge duty

Manufacture - assembly of CKD parts and components - excisable goods - Assembly of imported CKD parts and locally procured components into furniture results in manufacture and is excisable as furniture classifiable under CTH 9403. - HELD THAT: - The Tribunal upheld the adjudicating authority's conclusion that systematically assembling imported and indigenous parts into commercially identifiable articles such as tables, chairs, modular workstations, filing racks and storage cabinets yields distinct commercial products. The Commissioner's findings (57.1-57.3) described the nature of inputs and the processes (including upholstery operations) and concluded that parts when assembled become furniture within Section 2(f) of the Central Excise Act. Earlier decisions dealing with assembly from CKD kits were treated as applicable, and the Tribunal found no flaw in that reasoning. The Tribunal distinguished the limited purpose of Rule 2(a) for classification at import from the test of manufacture under Section 2(f), and relied on precedents holding that conversion of incomplete articles into finished articles amounts to manufacture when a new commercially known product emerges. [Paras 16, 57]

Assembly amounts to manufacture and is excisable.

Movability versus immovability of furniture - excisable goods - Workstations installed at customer sites were held to be movable (removable by unscrewing/with minor damage) and therefore liable to excise duty as furniture. - HELD THAT: - The Tribunal accepted the Commissioner's factual findings based on statements and cross examination of the assessee's witnesses (recorded at 58.3-58.4) that modular workstations could be dismantled, shifted and reinstalled by unscrewing nuts and bolts with only minor damage, and that demo units were routinely assembled and dismantled. Applying the principle in Craft Interiors and subsequent authorities, the Tribunal examined movability as a question of fact and concluded that, on the evidence, the workstations are movable and thus fall within 'furniture' liable to excise. [Paras 13, 58]

Installed workstations are movable and excisable.

Extended period of limitation - burden of proof in clandestine manufacture - Demands framed by invoking the extended period of limitation for the years up to 2006-07 cannot be sustained; demands are to be restricted to the normal period of limitation. - HELD THAT: - The Tribunal observed that the Supreme Court decision in Craft Interiors (2006) clarified the law on excisability and that the assessee had a bona fide belief (having paid customs duty on CKD consignments and relying on the prior law) that assembly would not attract excise. Given that Craft Interiors was decided in 2006 and the impugned demands cover 2004 to 2006-07, the Tribunal found the invocation of extended limitation unjustified on the facts and directed that recovery be limited to the normal period. [Paras 17]

Extended period invocation not sustained; limit demands to normal period.

Penalty for failure to discharge duty - Penalty on the assessee is not sustainable for the relevant period and penalty imposed on the Director is set aside. - HELD THAT: - Because the Tribunal restricted the demand to the normal period on the basis of the assessee's bona fide belief and changed legal position around 2006, it held that imposition of penalty for earlier periods lacked substance. Consequently, penalties were disallowed and the appeals filed by the Director were allowed. [Paras 17, 19]

Penalties quashed; director's penalty set aside.

Cum-duty valuation - cenvat credit - Cum-duty valuation and cenvat credit are admissible in principle if supported by proper documentary evidence; computation remitted for verification and recalculation for the normal period of limitation. - HELD THAT: - The Tribunal held that, if proper invoices showing sale price and evidence of duty payment on inputs are produced and are found genuine, the assessee is entitled to cum-duty valuation benefit (post amendment to Section 4 effective 14.05.2003) and to cenvat credit of duty paid on inputs. The Tribunal remanded the matter to the adjudicating authority to recompute demands for the normal limitation period and to allow cum-duty price and cenvat credit upon production and satisfaction of requisite documents. [Paras 18, 19]

Cum-duty valuation and cenvat credit to be allowed subject to documentary proof; matter remanded for computation for normal period.

Final Conclusion: The Tribunal held that assembly of CKD-imported and locally procured parts into furniture amounts to manufacture and is excisable; modular workstations were found movable and therefore liable to duty. However, demands were confined to the normal period of limitation (extended period not sustained for the years up to 2006-07), penalties were disallowed and the Director's penalty set aside. The matters were remitted for recomputation for the normal period and for verification of entitlement to cum duty valuation and cenvat credit on production of supporting documents.

Entitlement to benefits under an Industrial Incentive Policy - Repugnancy of executive notification to declared industrial policy - Validity of retrospective amendment imposing a cut off for effective steps - Quashing of notification provision repugnant to policy - Revival of exemption certificate and quashing of withdrawal order

Repugnancy of executive notification to declared industrial policy - Validity of retrospective amendment imposing a cut off for effective steps - Condition in sub para V of Rule 2 of the Punjab General Sales Tax (Deferred and Exemption) (first amendment) Rules, 2004 fixing 30.04.2000 as the cut off for taking effective steps is unlawful to the extent it negates benefits under the Information Technology Policy dated 15.03.2000. - HELD THAT: - The Court examined the Industrial Policy (Special Package of Incentives to Information Technology Industry dated 15.03.2000) which granted sales tax exemption/deferment for ten years to eligible IT units, and contrasted it with the retrospective amendment contained in the Rules (Notification dated 16.09.2004) that added a new condition requiring that effective steps be taken by 30.04.2000. Relying on the principle that a notification issued to implement a cabinet approved industrial policy cannot deny benefits otherwise available under the policy, the Court held that a subordinate notification or rule provision which is repugnant to the policy must be struck down to that extent. The retrospective deeming of the Rules to the date of the policy did not justify imposing a substantive additional eligibility cutoff that negates the policy entitlement. [Paras 18, 20, 21]

Condition requiring effective steps by 30.04.2000 (sub para V of Rule 2 of the Amendment Rules dated 16.09.2004) is struck down as repugnant to the Information Technology Policy.

Entitlement to benefits under an Industrial Incentive Policy - Revival of exemption certificate and quashing of withdrawal order - Order dated 28.06.2002 withdrawing the exemption certificate granted to the petitioner is quashed and the exemption certificate dated 26.09.2001 is revived. - HELD THAT: - The record shows the petitioner obtained registration and an exemption certificate under the Information Technology Policy, and the withdrawal order of 28.06.2002 was premised on the contention that the Excise & Taxation Department had not notified rules for grant of sales tax exemption. This Court, having earlier restrained the department from giving effect to the withdrawal pending amendment of the Rules, found that the subsequent imposition of the 30.04.2000 cut off was not a valid ground to deprive the petitioner of the policy benefit. Consequently the withdrawal order was held to be contrary to the Notification dated 26.04.2000 and the policy, and therefore liable to be set aside; the exemption certificate is to be restored. [Paras 13, 17, 19, 22]

Order dated 28.06.2002 withdrawing the exemption is quashed and the exemption certificate dated 26.09.2001 is revived.

Final Conclusion: The Court declared invalid the cut off condition introduced by the 16.09.2004 amendment insofar as it negated entitlements under the Information Technology Policy dated 15.03.2000; consequently the 28.06.2002 withdrawal of the petitioner's exemption was quashed and the exemption certificate dated 26.09.2001 reinstated.

Suo-moto revisional power - repeal and saving clause - contrary intention in repealing Act - non-est order - power of Revisional Authority under Section 40 of the 1973 Act

Suo-moto revisional power - power of Revisional Authority under Section 40 of the 1973 Act - repeal and saving clause - non-est order - Validity of suo-moto revisional proceedings initiated under Section 40 of the Haryana General Sales Tax Act, 1973 after repeal of that Act when no proceedings were pending on the appointed day - HELD THAT: - The Full Bench and the Court applied the principle that repeal followed by fresh legislation requires examination of the new Act to ascertain legislative intent as to survival of prior powers. The 2003 Act came into force on 1.4.2003 and its saving clause in Section 61 preserved only proceedings pending under the repealed 1973 Act. Consequently, in the absence of any proceedings pending on 1.4.2003, the suo-moto revisional power under Section 40 of the 1973 Act could not be exercised thereafter. The Full Bench's reasoning-that Section 4 of the Punjab General Clauses Act, 1858 cannot be resorted to so as to revive or sustain revisional jurisdiction in face of the clear contrary intendment of Section 61 of the 2003 Act-was affirmed and treated as finally settled (including dismissal of the SLP). Applying that principle to the present facts, the Revisional Authority issued notice and exercised revision after repeal of the 1973 Act; hence the revisional proceedings and the order passed were without jurisdiction and rendered non-est. The consequential order of the Haryana Tax Tribunal upholding the revisional order therefore could not stand. [Paras 4, 9, 11, 13]

The revisional proceedings initiated after repeal of the 1973 Act were without jurisdiction; the revisional order and the consequential Tribunal order are non-est and are quashed; the VAT appeal is allowed.

Final Conclusion: The appeal is allowed on the ground that the Revisional Authority had no jurisdiction to initiate or pass suo-moto revisional orders under Section 40 of the repealed 1973 Act after 1.4.2003 in the absence of pending proceedings; accordingly the revisional order and the Tribunal's order are quashed and the matter is disposed of with consequences to follow.

Priority of secured creditors under Section 26-E of the SARFAESI Act - registration of security interest with CERSAI - effect of Chapter IV-A (registration and priority) on attachment orders - protection of purchaser of a secured asset from subsequent enforcement - payment of surplus from sale proceeds to revenue authorities

Priority of secured creditors under Section 26-E of the SARFAESI Act - registration of security interest with CERSAI - effect of Chapter IV-A (registration and priority) on attachment orders - protection of purchaser of a secured asset from subsequent enforcement - Priority of the petitioner-bank's registered security interest over the State Tax Authorities' claim and removal of recorded encumbrance from the property card and consequent free registration of sale certificate/deed. - HELD THAT: - The Court held that Chapter IV-A of the SARFAESI Act, read together and in particular Section 26-E, gives priority to debts due to a secured creditor after registration of the security interest with CERSAI, over all other debts including taxes and attachment orders. Where the secured creditor's registration predates any competing claim or attachment registration, the secured creditor has priority in respect of the asset and the sale proceeds. On the undisputed facts the petitioner-bank registered its charge with CERSAI on 25th July 2015, whereas the State Tax Authorities' attachment order was passed on 11th February 2021 and their entry in the property card was recorded only on 16th April 2021 without registration under Section 26-B(5). Applying Section 26-E and following earlier decisions of this Court, the State cannot enforce its claim against the same asset sold under SARFAESI or prevent transfer to the purchaser; the recorded claim/encumbrance on the property card must therefore yield and be removed so that the sale certificate/deed can be registered without marking the State's encumbrance. [Paras 11, 12, 13, 14, 15]

Writ petition allowed insofar as the petitioner's priority and the removal of the State's recorded encumbrance are concerned; sale certificate/deed to be registered without marking the State's encumbrance.

Payment of surplus from sale proceeds to revenue authorities - rights of purchaser of a secured asset - Entitlement of the State Tax Authorities to any surplus from sale proceeds and obligations of the secured creditor regarding appropriation accounts. - HELD THAT: - The Court clarified that while the secured creditor has priority over the asset and sale proceeds, any surplus remaining after the secured creditor appropriates the sale proceeds towards its dues must be paid to the State Tax Authorities and not to the borrowers. To ensure transparency and compliance with this direction, the petitioner-bank was directed to furnish to the State Tax Authorities all account statements of appropriation within two weeks. This preserves the priority of the secured creditor over the asset while ensuring revenue claims may be met from any surplus. [Paras 15, 16]

Petitioner-bank to appropriate sale proceeds towards its dues first; any surplus thereafter to be paid to the State Tax Authorities; bank to furnish appropriation account statements to the State Authorities within two weeks.

Final Conclusion: The writ petition is allowed: the petitioner-bank's earlier-registered security interest with CERSAI has priority over the State Tax Authorities' later claim, the State's encumbrance recorded on the property card is to be removed and the sale certificate/deed registered without that encumbrance; after appropriation of sale proceeds by the bank the surplus, if any, shall be paid to the State Tax Authorities and the bank shall furnish account statements of appropriation within two weeks.

Power of review of quasi-judicial authority - finality of adjudication under Section 47-A of the Indian Stamp Act - absence of inherent powers in statutory quasi-judicial authorities - recall/review of Collector (Stamp) orders - exercise of power beyond statutory mandate void ab initio

Power of review of quasi-judicial authority - finality of adjudication under Section 47-A of the Indian Stamp Act - recall/review of Collector (Stamp) orders - Collector (Stamp) does not possess power to recall or review an order passed under Section 47-A of the Indian Stamp Act, 1899. - HELD THAT: - The Collector acts as a quasi judicial authority when adjudicating matters under Section 47 A and such adjudications attain finality subject only to powers expressly conferred by statute. Absent an express statutory provision permitting review, the Collector cannot reopen or reassess an order once made. The Court relied on established authorities holding that review is not an inherent power and must be conferred either expressly or by necessary implication. The judgment examined prior decisions, including Milap Chandra Jain and Sunil Kumar , to reaffirm that proceedings under Section 47 A are quasi judicial and cannot be revisited by the same authority in the absence of statutory power to do so. Any attempt by the Collector to recall or review his earlier order therefore amounts to an exercise beyond the statutory mandate and is unlawful. [Paras 5, 7, 12]

The Collector (Stamp) has no power to recall or review an order under Section 47 A; any such exercise is bad in law.

Exercise of power beyond statutory mandate void ab initio - recall/review of Collector (Stamp) orders - The subsequent order dated February 3, 2023 passed by the Collector (Stamp) reopening/reviewing the earlier order is quashed and set aside. - HELD THAT: - Applying the principle that a quasi judicial authority may not review its own final orders in the absence of statutory power, the Court held that the impugned order dated February 3, 2023, which purported to reassess/review the Collector's earlier adjudication under Section 47 A, was beyond jurisdiction. The exercise of recalling/reviewing the earlier adjudication was therefore void ab initio and cannot be sustained. [Paras 12]

Impugned order dated February 3, 2023 is quashed and set aside.

Inquiry into alleged forgery by Sub Registrar - administrative accountability and investigation by State - Direction to continue and conclude the inquiry against the Sub Registrar into alleged fabrication/forgery and to report completion within six months. - HELD THAT: - The affidavit of the State indicates a show cause notice was issued to the Sub Registrar and an explanation was filed, but does not disclose subsequent steps. Given the gravity of the allegations touching on public trust in a registration functionary, the Court directed administrative action. The Principal Secretary, Stamp and Registration, U.P. is ordered to initiate/continue and conclude the inquiry and to file a report within six months of receipt of this order, ensuring that the matter is taken to a logical end. [Paras 13, 15]

Principal Secretary, Stamp and Registration, U.P. to conclude the inquiry within six months and report to the Court.

Final Conclusion: Writ petition allowed: the Collector's exercise of recalling/reviewing his order under Section 47 A was held to be beyond jurisdiction and the impugned order dated 3.2.2023 is quashed; the State is directed to complete the inquiry into the Sub Registrar within six months and report to the Court; no order as to costs.